METLIFE INVESTORS DISTRIBUTION COMPANY
SALES AGREEMENT
TABLE OF CONTENTS
I. DEFINITIONS ..................................................... 1
II. AUTHORIZATION, REPRESENTATIONS, AND COVENANTS OF METLIFE ........ 4
III. REPRESENTATIONS AND COVENANTS OF BROKER ......................... 5
IV. COMPLIANCE WITH APPLICABLE LAW .................................. 10
4.1 APPLICABLE LAW ........................................... 10
4.2 ANTI-MONEY LAUNDERING AND CUSTOMER IDENTIFICATION ........ 10
V. PRINCIPLES OF ETHICAL MARKET CONDUCT ............................ 11
VI. COMPENSATION .................................................... 11
VII. COMPLAINTS AND INVESTIGATIONS ................................... 13
VIII. RECORDS AND ADMINISTRATION ...................................... 13
IX. CUSTOMER INFORMATION AND PROTECTED HEALTH INFORMATION ........... 14
9.1 CUSTOMER INFORMATION ..................................... 14
9.2 PROTECTED HELATH INFORMATION ("PHI") ..................... 14
9.3 PRIVACY NOTICES AND AUTHORIZATION ........................ 15
X. CONFIDENTIAL INFORMATION ........................................ 15
10.1 CONFIDENTIAL INFORMATION ................................. 15
10.2 RETURN OF CONFIDENTIAL INFORMATION ....................... 15
10.3 DAMAGES ....................................................... 15
XI. INDEMNIFICATION ................................................. 16
XII. GENERAL PROVISIONS .............................................. 17
12.1 TERM AND TERMINATION ..................................... 17
12.2. ASSIGNABILITY ............................................ 18
12.3 AMENDMENTS ............................................... 18
12.4 NOTICES .................................................. 18
12.5 ARBITRATION .............................................. 18
12.6 GOVERNING LAW ............................................ 19
12.7 ENTIRE UNDERSTANDING ..................................... 19
12.8 THIRD PARTY BENEFICIARIES ................................ 19
12.9 NON-EXCLUSIVITY .......................................... 19
12.10 NON-SOLICITATION OF EMPLOYEES AND AGENTS ................. 19
12.11 WAIVER ................................................... 20
12.12 COUNTERPARTS ............................................. 20
12.13 SEVERABILITY ............................................. 20
12.14 TRADEMARKS ............................................... 20
12.15 PREPARATION OF CERTIFICATES .............................. 20
12.16 PARTIES' CONTROL OF BUSINESS AND OPERATIONS .............. 20
Enterprise Selling Agreement 11-07
METLIFE INVESTORS DISTRIBUTION COMPANY
SALES AGREEMENT
This agreement, including the exhibits attached hereto (collectively the
"Agreement") is made, entered into and effective as of January 1, 2008,
("Effective Date") by and among MetLife Investors Distribution Company, a
Missouri corporation ("MLIDC"), and WACHOVIA SECURITIES, LLC, a Delaware
Corporation, also doing business as X.X. XXXXXXX, A DIVISION OF WACHOVIA
SECURITIES, LLC, (the "Broker") that is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (the "1934 Act") and a member of the Financial Industry
Regulatory Authority ("FINRA") and is also either licensed as an insurance
agency or is affiliated with one or more validly licensed insurance agencies.
WITNESSETH:
WHEREAS, MLIDC and its Affiliates (as hereafter defined) issue or provide access
to certain insurance and financial products;
WHEREAS, Broker sells and services insurance and financial products and wishes
to sell and service certain of MLIDC's and its Affiliates insurance and
financial products;
WHEREAS, MLIDC proposes to compensate Broker for such sales and servicing;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
-----------
Section 1.1. The following terms, when used in this Agreement, shall have the
meanings set forth in this Article I. Other terms may be defined throughout this
Agreement. Definitions shall be deemed to refer to the singular or plural as the
context requires:
(a) Affiliate - Any entity that directly or indirectly controls, is
controlled by or is under common control with MLIDC or Broker, as
applicable, including, without limitation, any entity that owns 25% or
more of the voting securities of any of the foregoing and any entity
that is a subsidiary of any of the foregoing.
(b) Agency - Those agencies identified in Exhibit D hereto, which are
properly licensed to participate in the business of insurance.
(c) Applicable Law - Shall have the meaning given to such term in Article
IV of this Agreement.
(d) Business Day - Any day other than a Saturday, Sunday or a federal
legal holiday.
Enterprise Selling Agreement 11-07
Page 1 of 21
(e) Confidential Information - Includes without limitation, (i)
statistical, premium rate and other information that is identified by
MLIDC as commercially valuable, confidential, proprietary or a trade
secret, including but not limited to information regarding MLIDC's
systems and rating methodology; and (ii) any information identified in
writing by a party as confidential at the time the information is
divulged to the other party.
Confidential Information does not include any information, written or
oral, which (i) at the time of disclosure or thereafter is generally
available in the public domain (other than as a result of a disclosure
in violation of this Agreement), (ii) has been received, obtained,
developed or created by the receiving party independently from the
performance of its obligations under this Agreement, or (iii) was made
available to the receiving party on a non-confidential basis from a
source other than the disclosing party, provided that such source is
not and was not bound by an independent obligation of confidentiality.
(f) Contracts - Those contracts and policies that are identified on
Exhibits A and B attached hereto, which Exhibits may be amended at any
time by MLIDC in its sole discretion.
(g) Customer Complaint - Shall have the meaning given to such term in
Section 7.2 of this Agreement.
(h) Customer Information - Information in electronic, paper or any other
form that Broker or its representatives obtained, had access to or
created in connection with its obligations under this Agreement
regarding individuals who applied for or purchased MLIDC products.
Customer Information includes Nonpublic Personal Information, as
defined below in paragraph (j), and Protected Health Information, as
defined in paragraph (m). Customer Information may also include, but
is not limited to, information such as the individual's name, address,
telephone number, social security number, as well as the fact that the
individual has applied for, is insured under, or has purchased a MLIDC
product. Customer Information does not, however, include information
that is (i) generally available in the public domain (other than as a
result of a disclosure in violation of this Agreement) and is derived
or received from such public sources by Broker; (ii) received,
obtained, developed or created by the Broker independently from the
performance of its obligations under this Agreement; (iii) disclosed
to the Broker by a Third Party, provided such disclosure was made to
Broker without any violation of an independent obligation of
confidentiality or Applicable Law.
(i) HIPAA - The Health Insurance Portability and Accountability Act of
1996, as now in force or hereafter amended, and all related
regulations.
(j) Nonpublic Personal Information - Nonpublic personal information means
financial or health related information by which a financial
institution's consumers and customers are individually identifiable,
including but not limited to nonpublic personal information as defined
by Title V of the Xxxxx-Xxxxx-Xxxxxx Act and regulations adopted
pursuant to the Act.
Enterprise Selling Agreement 11-07
Page 2 of 21
(k) Non-variable Contracts - Those Contracts that include, without
limitation, non-variable rate annuity contracts, non-variable life
insurance policies, long term care insurance and other fixed insurance
contracts, issued by MLIDC or its Affiliates, as identified in Exhibit
B, which Exhibit may be amended at any time by MLIDC in its sole
discretion.
(l) Prospectus - The prospectuses and statements of additional information
included within the Registration Statements referred to herein or
filed pursuant to the Securities Act of 1933 and the Investment
Company Act of 1940, as amended.
(m) Protected Health Information ("PHI") - Information related to
individuals who have applied for, have purchased or are insured under
MLIDC products that are considered to be health plans subject to
HIPAA, such as MLIDC's long-term care insurance policies and riders,
for the purposes of this Agreement and, consistent with regulations
issued pursuant to HIPAA. PHI is defined as 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. This definition of PHI includes demographic information
about the individual, including, but not limited to, names, geographic
subdivisions smaller than a state (including but not limited to street
addresses and ZIP codes); all elements of dates (except year) for
dates directly related to an individual, including but not limited to
birth date; telephone numbers; fax numbers; electronic mail (E-mail)
addresses; Social Security numbers; medical record numbers; health
plan beneficiary numbers; account numbers; certificate/license
numbers; vehicle identifiers and serial numbers, including license
plate numbers; device identifiers and serial numbers; Web Universal
Resource Locators; Internet Protocol address numbers; biometric
identifiers, including finger and voice prints; full face photographic
images and any comparable images; and any other unique identifying
number, characteristic, or code.
(n) Registration Statements - Registration statements and amendments
thereto filed with the SEC relating to the Variable Contracts,
including those for any underlying investment vehicle or variable
insurance rider.
(o) Representatives - Those individuals, accepted by MLIDC or its
Affiliates to solicit and sell Contracts under the terms of this
Agreement, who are licensed and appointed as a life insurance agent of
MLIDC or its Affiliates, and with respect to registered products, are
also registered with Broker in compliance with the 1934 Act.
(p) Third Party - A party that is not a signatory to this Agreement.
(q) Variable Contracts - Those Contracts that include variable life
insurance policies, variable annuity contracts, variable insurance
riders and other variable insurance contracts, issued by MLIDC or its
Affiliates, as identified in Exhibit A, which Exhibit may be amended
at any time by MLIDC in its sole discretion.
(r) 1933 Act - The Securities Act of 1933, as amended.
(s) 1934 Act - The Securities Exchange Act of 1934, as amended.
Enterprise Selling Agreement 11-07
Page 3 of 21
ARTICLE II
AUTHORIZATIONS, REPRESENTATIONS, AND COVENANTS OF MLIDC
-------------------------------------------------------
Section 2.1. Authorization. MLIDC represents that it is duly authorized, on
-------------
behalf of itself and each Affiliate that issues or provides access to the
Contracts, to enter into this Agreement with Broker to distribute such
Contracts.
Section 2.2. Solicitation of Applications.
-----------------------------
(a) Solicit Non-variable Contract Applications. MLIDC authorizes Broker
------------------------------------------
through its Representatives to solicit applications for the
Non-variable Contracts, provided that (i) Broker shall not solicit
applications for Non-variable Contracts except in those states where
it and its Representatives are appropriately licensed; (ii) in which
the Non-variable Contracts are qualified for sale under Applicable
Law; and (iii) Broker complies in all other respects with the
published policies and procedures of MLIDC or its Affiliates, as
applicable, and with the terms of this Agreement.
(b) Solicit Variable Contract Applications. MLIDC authorizes Broker
--------------------------------------
through its Representatives to offer and sell the Variable Contracts,
provided that (i) Broker shall not solicit applications for Variable
Contracts except in those states where it is and its Representatives
are appropriately licensed; (ii) there is an effective Registration
Statement relating to such Variable Contracts; (iii) such Variable
Contracts are qualified for sale under Applicable Law in such state in
which the sale or solicitation is to take place; and (iv) Broker
complies in all other respects with the published policies and
procedures of MLIDC and its Affiliates, and with the terms of the
Agreement.
Section 2.3. Required Notices to Broker. MLIDC shall notify Broker or its
--------------------------
designee of the issuance by the SEC of any stop order with respect to a
Registration Statement or the initiation of any proceeding by the SEC relating
to the registration and/or offering of Variable Contracts and of any other
action or circumstances that makes it no longer lawful for MLIDC or its
Affiliates to offer or issue one or more of Variable Contracts. MLIDC shall
advise Broker of any revision of or supplement to any Prospectus related to the
Variable Contracts or underlying investments of such Variable Contracts.
Section 2.4. Rights of MLIDC. Without limiting MLIDC and its Affiliates absolute
---------------
control of their business and operations or other rights under this Agreement,
MLIDC and its Affiliates shall specifically retain authority to:
a) refuse for any reason to appoint a Representative and cancel any
existing appointment at any time;
b) direct the marketing of its financial and insurance products and
services;
c) refuse to issue any Product;
d) underwrite all insurance policies issued by it;
e) cancel risks;
f) handle all matters involving claims adjusting and payment;
g) prepare all policy forms and amendments;
h) maintain custody of, responsibility for and control of all
investments; and
i) withdraw a Contract from sale or change or amend a Contract at MLIDC's
discretion.
Enterprise Selling Agreement 11-07
Page 4 of 21
Section 2.5. Broker's Access to Copies of Documents. During the term of this
--------------------------------------
Agreement, MLIDC shall provide Broker, without charge and when applicable, with
as many copies of the Contract prospectus(es), current underlying mutual fund
prospectus(es), statements of additional information and applications for the
Contracts, as Broker may reasonably request. Upon receipt from MLIDC of updated
copies of the Contract prospectus(es), current underlying mutual fund
prospectus(es), statements of additional information and applications for the
Contracts, Broker shall promptly discard or destroy all copies of such documents
previously provided to them, except such copies as are needed for purposes of
maintaining records as may be required in Article VIII and by Applicable Law.
Upon termination of this Agreement, Broker shall promptly return to MLIDC all
Contract prospectus(es), current underlying mutual fund prospectus(es),
statements of additional information, Contract applications and other materials
and supplies furnished by MLIDC to Broker or to its Representatives, except for
copies required for maintaining records as may be required in Article VIII and
by Applicable Law.
Section 2.6. Advertising Material. During the term of this Agreement, MLIDC or
--------------------
its Affiliates shall be responsible for providing and approving all promotional,
sales and advertising material to be used by Broker. MLIDC shall file such
materials or shall cause such materials to be filed with the SEC, FINRA, and any
state securities or insurance regulatory authorities, as required by Applicable
Law.
Section 2.7. Marketing Reports. MLIDC or its Affiliate shall compile periodic
-----------------
marketing reports summarizing sales results to the extent reasonably requested
by Broker.
ARTICLE III
REPRESENTATIONS AND COVENANTS OF BROKER
---------------------------------------
Section 3.1. Appointment of Broker. Broker shall solicit, sell and service the
---------------------
Contracts and shall use commercially reasonable efforts to find suitable
purchasers for the Contracts. Broker represents and warrants that it shall only
offer Contracts in those states where it or its Agency is appropriately licensed
and has obtained any other appointments, approvals, licenses, authorizations,
orders or consents which are necessary to enter into this Agreement and to
perform its duties hereunder.
Section 3.2. Licenses, Appointments and Approvals. Broker represents and
------------------------------------
warrants that it is a registered broker-dealer under the 1934 Act, has all
necessary broker-dealer licenses, is a member in good standing with the FINRA,
and is licensed as an insurance broker and has obtained any other approvals,
licenses, authorizations, orders or consents which are necessary to enter into
this Agreement and to perform its duties hereunder. Broker further represents
that its Representatives who shall be soliciting applications for the Contracts,
whether alone or jointly with representatives of MLIDC or its designee, shall at
all times be appropriately registered and/or licensed as required by Applicable
Law and shall comply with all requirements of Applicable Law. Broker further
represents that neither it nor any of its Representatives are currently under
investigation by any insurance regulator, the FINRA, any other self-regulatory
organization or other governmental authority, including but not limited to the
SEC and Departments of Insurance (except for any investigations of which it has
notified MLIDC in writing). Broker further represents that it shall notify MLIDC
of the existence and subject matter of any formal or informal investigation of
Broker or any of its agents that is commenced by any insurance regulator, the
FINRA or SEC, any other self regulatory organization or other governmental
authority, in connection with the sale of the Contracts. Broker further
represents that it shall immediately notify MLIDC in writing if it or any of its
Representatives have any of their respective licenses, which are required under
this Agreement for the solicitation of, sale of or provision of services to the
Contracts, surrendered, removed, revoked, cancelled or suspended, whether
voluntarily or involuntarily.
Section 3.3. Policies and Procedures. Broker shall comply with the policies and
-----------------------
procedures of MLIDC and its Affiliates with respect to the solicitation, sales
and administration of Contracts and services Broker and Representatives are
authorized to sell and service under the Agreement, including, but not limited
to, privacy policies and procedures, as those policies and procedures may be
provided to Broker by MLIDC from time to time.
Enterprise Selling Agreement 11-07
Page 5 of 21
Section 3.4. Disclosure of Relationship with MLIDC and Disclosure of
-------------------------------------------------------
Compensation. If and as required by Applicable Law, Broker shall disclose in
------------
writing to each applicant for a Contract Broker's relationship with MLIDC and
the compensation, and anything of value, Broker receives from MLIDC for the
services performed under this or any other Agreement. MLIDC reserves the right
to disclose to its purchasers of Contracts, and potential purchasers of
Contracts, details regarding compensation, and anything of value, it, and any
MLIDC affiliate, may pay to Broker, or any of its affiliates, under this
Agreement and any other agreement.
Section 3.5. Education, Training, Supervision and Control of Representatives.
---------------------------------------------------------------
Broker shall train, supervise and be solely responsible for the conduct of its
Representatives in their solicitation and servicing activities in connection
with the Contracts, and shall supervise Representatives' strict compliance with
Applicable Law, as well as the rules and procedures of MLIDC pertaining to the
solicitation, sale and submission of applications for the Contracts and the
provision of services relating to the Contracts. Broker shall conduct background
investigations of its current and proposed new Representatives to determine
their qualifications, good character and moral fitness to sell the Contracts and
shall provide MLIDC with copies of such investigations upon MLIDC's written
request. Likewise, Broker is solely liable for the acts and omissions of its
Representatives in the course of conducting its business.
Section 3.6. Broker/Representative Communications. Neither Broker nor any of its
------------------------------------
Representatives, are authorized by MLIDC or its Affiliates to give any
information or make any representation in connection with this Agreement or the
offering of the Contracts other than those contained in the Contract,
Prospectus, or promotional material authorized for use in writing by MLIDC or
its Affiliates. Broker shall not make any representations or give information
that is not contained in the Contract, Prospectus or promotional material of the
Contracts.
Section 3.7. Suitability Requirements. Broker shall establish and maintain a
------------------------
system to supervise its Representatives reasonably designed to ensure that, in
making a recommendation to purchase a Contract (including as a part of an
exchange), the Representative has reasonable grounds to believe that, based on
facts disclosed by the purchaser, the purchase of the Contract is suitable for
the purchaser as and to the extent required by Applicable Law. As part of the
supervisory system, Broker shall maintain written procedures and conduct
periodic reviews of its records that are reasonably designed to achieve
compliance with these requirements. Broker shall be solely responsible for
determining the suitability of recommendations to purchase a Contract made by
its Representatives in accordance with Applicable Law, and shall, upon a
reasonable written request from MLIDC, provide written documentation of such
process, including without limitation the certifications required in Section
4.3. To the extent required by Applicable Law and upon written request from
MLIDC, Broker shall promptly provide documentation and other information
reasonably necessary to allow MLIDC or its Affiliates to determine that Broker
is performing the required functions described above.
Section 3.8. Application Review. Broker shall review diligently all Contract
------------------
applications for accuracy and completeness and for compliance with the
conditions herein, including the suitability and prospectus delivery
requirements, and shall take all reasonable and appropriate measures to ensure
that applications submitted to MLIDC are accurate, complete, compliant with the
conditions herein, and approved by a qualified registered principal.
Section 3.9. Replacement. Broker certifies on behalf of itself, its
-----------
Representatives and its Agencies that it shall adhere to Applicable Law before
it receives or solicits any applications for Contracts. In addition to the
conditions and limitations elsewhere contained in this Agreement and the
Compensation Schedules, no first year commission shall be payable on
replacements or switches of any Contract with another Contract, which are
undisclosed, and which require disclosure by Applicable Law or MLIDC's or its
Affiliates' rules on replacement transactions. Specific replacement or switching
rules of each applicable Affiliate are described in the Rewritten Business
Rules, which are attached hereto as Exhibit C and incorporated herein by
reference and which may be amended at any time by MLIDC in its sole discretion.
Enterprise Selling Agreement 11-07
Page 6 of 21
MLIDC shall provide Broker with written guidelines of MLIDC's position with
respect to the acceptability of replacements (the "Replacement Guidelines"),
which Replacement Guidelines may be amended at any time by MLIDC in its sole
discretion. Broker shall provide each of its Representatives with a copy of the
Replacement Guidelines. Broker shall establish and maintain a system to
supervise its Representatives reasonably designed to review the appropriateness
of each replacement transaction and each transaction's conformity with the
Replacements Guidelines. As part of its supervisory system, Broker shall
implement procedures that are reasonably designed to detect transactions that
are replacements of existing policies or contracts, but that have not been
reported as such by the Representative making the sale. These procedures must
include, but are not limited to, systematic customer surveys and interviews,
confirmation letters and programs of internal monitoring. Broker shall be solely
responsible for determining that a replacement transaction by any of its
Representatives is in compliance with MLIDC's Replacement Guidelines and with
Applicable Law. To the extent required by Applicable Law and upon written
request from MLIDC, Broker shall promptly provide documentation and other
information reasonably necessary to allow MLIDC or its Affiliates to determine
that Broker is performing the required functions described in this Section 3.9.
Section 3.10. Audit of Representatives. Broker shall maintain reasonable
------------------------
procedures for its periodic audit of its Representatives' sales practices and
shall, upon a reasonable written request from MLIDC, provide a written report to
MLIDC on the results of such audits; provided, however, that Broker shall retain
sole responsibility for the supervision, inspection and control of its
Representatives.
Section 3.11. Collection of Payments. Only the initial purchase payments for the
----------------------
Contracts shall be collected by Representatives of Broker. All such purchase
payments shall be remitted promptly in full (and in no event later than the time
permitted under Applicable Law) together with any related application, forms and
any other required documentation to MLIDC or the appropriate Affiliate. The
Broker shall make such remittances in accordance with any and all policies and
procedures described in the Contract, prospectus, if appropriate, or as
otherwise adopted by MLIDC and its Affiliates.
Section 3.12. Contract Delivery. Unless otherwise requested by Broker and agreed
-----------------
to by MLIDC, once a Contract has been issued, it shall be delivered to Broker
and, after review by Broker, shall be timely delivered by Broker to the
applicant, accompanied by any documents required to be delivered by Applicable
Law and any additional appropriate documents. In the case of long-term care
insurance, Broker shall ensure delivery of each new long-term care insurance
contract within thirty (30) days of the contract's approval date. MLIDC shall
confirm or cause to be confirmed to customers all Contract transactions, to the
extent required by Applicable Law, and shall administer the Contracts after they
have been delivered, but may from time to time require assistance from Broker.
If a purchaser exercises the free look rights under a Contract, Broker shall
indemnify MLIDC for any loss incurred by MLIDC or its Affiliates that results
from Broker's failure to promptly deliver such Contract to its purchaser.
Section 3.13. Rejection of Applications and Return of Contracts. Broker
-------------------------------------------------
acknowledges that MLIDC, on behalf of itself and its Affiliates, shall have the
unconditional right to reject, in whole or in part, any application for a
Contract. If MLIDC rejects an application, MLIDC or its Affiliate shall
immediately return any purchase payments received directly to the Broker, and
Broker shall be responsible for promptly returning such payments to the
purchaser. If any purchaser of a Contract elects to return such Contract
pursuant to any law or contractual provision, any purchase payment made or such
other amount, as the Contract or Applicable Law shall specify, shall be returned
by MLIDC or its Affiliates to the Broker and the Broker shall be responsible for
promptly returning such payments to the purchaser.
Enterprise Selling Agreement 11-07
Page 7 of 21
Section 3.14. Independent Contractor. Except as otherwise required by Applicable
----------------------
Law, Broker is not a principal, underwriter or agent of MLIDC or its Affiliates,
or any separate account of MLIDC or its Affiliates. It is understood and
acknowledged that Broker, its agents, designees or Representatives are
independent contractors and not employees of MLIDC or any of its subsidiaries or
affiliates. None of the terms of this Agreement shall be construed as creating
an employer-employee relationship between Broker, its agents, designees or
Representatives, on the one hand, and MLIDC, on the other hand. Broker, its
agents and its other representatives, shall not hold themselves out to be
employees of MLIDC or its Affiliates in this connection or in any dealings with
the public. Neither Broker nor its agents, designees or other representatives
shall have authority on behalf of MLIDC or its Affiliates to alter or amend any
Contract or any form related to a Contract to adjust or settle any claim or
commit MLIDC or its Affiliates with respect thereto, or bind MLIDC or its
Affiliates in any way; or enter into legal proceedings in connection with any
matter pertaining to MLIDC's business without its prior written consent. Broker
shall not expend, nor contract for the expenditure of, funds of MLIDC or its
Affiliates nor shall Broker possess or exercise any authority on behalf of MLIDC
other than that expressly conferred on Broker by this Agreement.
Section 3.15. Promotional Materials. To the extent that Broker uses brochures,
---------------------
other promotional materials and literature, and training material in connection
with marketing or servicing Contracts, or that mention MLIDC, its products or
services in any way (collectively referred to herein as "MLIDC Materials"), such
MLIDC Materials shall only be used with the prior written approval of MLIDC.
Similarly, Broker shall not use any information related to MLIDC or Contracts on
any Web site without the prior written consent of MLIDC. Any requests for
written approval of materials for use by Broker shall be submitted in writing by
Broker to the individual and offices as directed by MLIDC.
Section 3.16. Instructions by Representative. Broker and Agency shall be solely
------------------------------
responsible for the accuracy and propriety of any (i) instruction given to MLIDC
by a Representative on behalf of an owner or prospective owner of a Contract, or
(ii) action taken by a Representative on behalf of an owner or prospective owner
of a Contract. MLIDC shall have no responsibility or liability for any action
taken or omitted by it in reliance on or by acceptance of such an instruction or
action.
Section 3.17. Furnishing Information. Broker shall furnish MLIDC and any
----------------------
regulatory authority with jurisdiction over the subject matter of this Agreement
with any information, documentation, or reports prepared in connection with or
related to this Agreement which may be requested by MLIDC or such a regulatory
authority in order to ascertain whether the operations of MLIDC or Broker
related to the Contracts are being conducted in a manner consistent with
Applicable Law.
Section 3.18. Authority. Broker represents that it has full authority to enter
---------
into this Agreement and that by entering into this Agreement it shall not impair
any other of its contractual obligations with respect to sales of any Contract.
Section 3.19. Insurance Coverage.
------------------
a) Fidelity Bond. Broker shall secure and maintain a fidelity bond
-------------
(including coverage for larceny and embezzlement), issued by a bonding
company acceptable to MLIDC, covering all of its directors, officers,
agents, Representatives, associated persons and employees who have
access to funds of MLIDC or its Affiliates. This bond shall be
maintained at Broker's expense in at least the amount prescribed under
Rule 3020 of the FINRA Conduct Rules or future amendments thereto.
Broker shall provide MLIDC with satisfactory evidence of said bond
upon MLIDC's reasonable request. Broker hereby assigns any proceeds
received from a fidelity bonding company, or other liability coverage,
to MLIDC, for itself or on behalf of its Affiliates, as their interest
may appear, to the extent of its loss due to activities covered by the
bond, policy or other liability coverage.
Enterprise Selling Agreement 11-07
Page 8 of 21
b) Plan of Insurance. Broker shall maintain in full force and effect
-----------------
during the term of this Agreement a plan of insurance (which may be a
plan of self-insurance if agreed to by MLIDC) which shall provide
coverage for errors and omissions of Broker and its directors,
officers, employees, agents, Agencies and Representatives, in such
amounts and scope of coverage as are acceptable to MLIDC in its sole
discretion. If requested by MLIDC, Broker shall provide evidence of
coverage under an insurance policy, or a plan of self-insurance,
satisfactory to MLIDC showing the amount and scope of coverage
provided. If such insurance plan terminates for any reason during the
term of this Agreement, Broker shall immediately notify MLIDC in
writing of such termination and MLIDC shall have the right to
immediately terminate this Agreement.
c) Loss of coverage. The authority of any Representative to solicit and
----------------
procure Contracts hereunder shall terminate automatically upon the
termination of such Representative's coverage under the Broker's
fidelity bond or plan of insurance referred to in subsections (a) and
(b) above.
Section 3.20. Agency Distribution of Variable Contracts. In such cases where
-----------------------------------------
Broker intends to distribute the Variable Contracts through an Agency, Broker
further represents that Agency shall engage in the offer or sale of Variable
Contracts only through persons who are Representatives of the Broker. Broker
shall further ensure that unregistered employees shall not engage in any
securities activities requiring registration, nor receive any compensation based
on transactions in securities or the provision of securities advice.
Section 3.21. Market Timing.
-------------
(a) Broker shall not, and Broker shall take all steps necessary to ensure
that its Representatives and any Agency shall not (i) solicit, offer
or sell Variable Contracts in connection with or to facilitate any
program, plan or arrangement involving market timing transactions in
underlying mutual funds within Variable Contracts, or (ii) take any
other actions that would promote, encourage or facilitate market
timing transactions in the underlying mutual funds within Variable
Contracts.
(b) Notwithstanding the foregoing, Broker and its Representatives may
provide incidental services in the form of guidance to applicants and
owners of Variable Contracts regarding the allocation of premium and
Variable Contract value, provided that such services are (i) solely
incidental to Broker's activities in connection with the sales of the
Variable Contracts, (ii) subject to the supervision and control of
Broker, (iii) furnished in accordance with any rules and procedures
that may be prescribed by MLIDC, and (iv) not promoting, encouraging
or facilitating market timing transactions in the underlying mutual
funds within Variable Contracts.
Section 3.22. Prohibited Solicitation With Contract Holders. For a period of 12
---------------------------------------------
months after termination of the Agreement, the Broker and Agency shall not,
directly or indirectly, and on a systematic basis, contact the contract holders
of MLIDC or its Affiliates or condone such contact for the purpose of inducing
any such contract holders to lapse, cancel, and fail to renew or replace any
Contract. If the Broker or Agency, in the judgment of MLIDC is determined to
have engaged in such prohibited activity, then MLIDC shall have the right to
declare the Broker's and Agency's claims for compensation or any other benefit
under the Agreement to be forfeited and void. MLIDC, on behalf of itself and its
Affiliates, may also pursue all remedies, including injunction, to assure
compliance with the covenants in this Section 3.22 and shall, if successful, be
entitled to recover from the Broker and Agency all costs and expenses incurred
in pursuing such remedies, including reasonable attorneys' fees.
Enterprise Selling Agreement 11-07
Page 9 of 21
ARTICLE IV
COMPLIANCE WITH APPLICABLE LAW
------------------------------
Section 4.1. Applicable Law. MLIDC and Broker shall comply with all applicable
--------------
state and federal statutes, laws, rules, and regulations including without
limitation, state insurance laws, rules and regulations, and federal and state
securities laws, rules and regulations ("Applicable Law"). Applicable Law also
includes applicable guidelines, policies, and rulings of federal and state
regulatory organizations and agencies, including without limitation state
insurance departments, the SEC and the FINRA, consumer privacy laws, HIPAA and
any other state or federal laws, rules or regulations and decisions, orders and
rulings of state and federal regulatory agencies that are now or may hereafter
become applicable to the parties hereto and the transactions that are the
subject of this Agreement.
Section 4.2. Anti-Money Laundering and Customer Identification.
-------------------------------------------------
a) Broker shall comply with all applicable anti-money laundering laws,
regulations, rules and government guidance, including the reporting,
recordkeeping and compliance requirements of the Bank Secrecy Act
("BSA"), as amended by The International Money Laundering Abatement
and Financial Anti-Terrorism Act of 2002, Title III of the USA PATRIOT
Act ("the Act"), its implementing regulations, and related SEC and SRO
rules. These requirements include requirements to identify and report
currency transactions and suspicious activity, to implement a customer
identification program to verify the identity of customers, and to
implement an anti- money laundering compliance program. As required by
the Act, Broker certifies that it has: a comprehensive anti-money
laundering compliance program that includes, policies, procedures and
internal controls for complying with the BSA; policies, procedures and
internal controls for identifying, evaluating and reporting suspicious
activity; a designated compliance officer or officers; training for
appropriate persons; and an independent audit function.
b) Further Broker certifies, and shall certify to MLIDC annually
hereafter, that it has established and implemented a training program
for appropriate persons, including appropriate employees and all
Representatives registered with Broker, and that such program includes
training on the requirements of Broker's anti-money laundering
compliance program and on the identification of "red flags" associated
with money laundering risks related to MLIDC's covered products, as
they are defined in the regulations promulgated under Section 352 of
the Act in accordance with the definitions provided in Section
103.37(a)(4).
Broker shall provide training to all appropriate persons, including
its appropriate employees and all Representatives registered with
Broker concerning their responsibilities under the company's anti-
money laundering program, and that such training shall include
instruction on the identification of "red flags" associated with money
laundering risks related to MLIDC's covered products, as they are
defined in the regulations promulgated under Section 352 of the Act in
accordance with the definitions provided in Section 103.37(a)(4).
c) Further Broker certifies, and shall certify to MLIDC annually
hereafter, that it has established and implemented a Customer
Identification Program, in compliance with applicable regulations, as
part of its anti-money laundering compliance program that, at a
minimum, requires: (i) the verification of the identity of any
customer seeking to open an account; (ii) the retention of a record of
the information used to verify each customer's identity; and (iii) the
determination, within a reasonable time before or after the account is
opened, as to whether the customer appears on any lists of known or
suspected terrorists or terrorist organizations as provided to it by
any government agency.
d) Broker shall verify the identity of each customer that it introduces
to MLIDC, whether through documentary or non-documentary means, and
that MLIDC shall rely upon such verification, as prescribed by the
regulations promulgated under Section 326 of the Act in accordance
with the safe-harbor provided in Section 103.122(b)(6) of the
regulations under the Act.
Enterprise Selling Agreement 11-07
Page 10 of 21
e) Broker shall immediately notify MLIDC of any activity, behavior, or
transaction that results in Broker filing a suspicious activity report
and that it shall share information to the extent permissible under
the regulations promulgated under Section 314 of the Act in accordance
with the safe harbor provided in Section 103.110(b)(5) of the
regulations under the Act.
Section 4.3. Suitability Certification. To the extent required by Applicable Law
-------------------------
and in accordance with Section 3.7, Broker hereby certifies, and shall hereafter
annually certify in writing to MLIDC, to the following:
With respect to the solicitation and sale of fixed and variable
annuity Contracts offered by MLIDC and its Affiliates, Broker has in
place a system to supervise recommendations made for the Contracts
that is reasonably designed to achieve compliance with state insurance
laws or regulations regarding suitability and, with respect to
variable annuities, to comply with applicable FINRA Conduct Rules,
including Rule 2310, regarding suitability. As part of this
supervisory system Broker maintains written procedures and conducts
periodic reviews of its records that are reasonably designed to
achieve compliance with these requirements.
Annual certificates shall be signed by an authorized senior officer or manager
of the Broker with responsibility for overseeing annuity sales practices and who
has a reasonable basis on which to make the certification on behalf of the
Broker.
ARTICLE V
PRINCIPLES OF ETHICAL MARKET CONDUCT
------------------------------------
Section 5.1. IMSA. MLIDC is a member of the American Council of Life Insurance's
----
Insurance Marketplace Standards Association (IMSA), and expects that Broker
shall abide by the six principles of ethical market conduct set forth by IMSA in
connection with all Contracts sold pursuant to this Agreement. The six
principles are as follows: (a) to conduct business according to high standards
of honesty and fairness and to render that service to its customers which in the
same circumstances, it would apply to or demand for itself; (b) to provide
competent and customer focused sales and service; (c) to engage in active and
fair competition; (d) to provide advertising and sales material that are clear
as to purpose and honest and fair as to content; (e) to provide fair and
expeditious handling of customer complaints and disputes; and (f) to maintain a
system of supervision and review that is reasonably designed to achieve
compliance with these principles of ethical market conduct. Broker shall furnish
information, documentation and reports to MLIDC as it may reasonably request in
order to permit MLIDC to ascertain whether Broker is conducting its operations
in accordance with the Principles of Ethical Market Conduct.
ARTICLE VI
COMPENSATION
------------
Section 6.1. Payment Under Compensation Schedules. MLIDC shall pay Broker
------------------------------------
compensation for the sale of each Contract sold by Representatives of Broker as
set forth in Exhibits A and B. MLIDC shall identify to Broker with each such
payment the name or names of the Representative(s) of Broker who solicited each
Contract covered by the payment. Broker shall be responsible for issuing checks,
statements or forms for tax purposes and other administrative duties connected
with compensation of such Representatives. Unless otherwise agreed upon by the
parties, MLIDC shall have no obligation to any of the employees, agents or
Representatives of Broker or Agency for the payment of any compensation. Unless
otherwise provided in Exhibits A and B, compensation on the Contracts, including
the commissions and fees therein, may be amended by MLIDC at any time, in any
manner, and without prior notice.
Section 6.2. Sole Discretion to Refund Premiums. Broker recognizes that MLIDC
----------------------------------
and its Affiliates have sole discretion to refund or return purchase payments
paid by applicants.
Enterprise Selling Agreement 11-07
Page 11 of 21
Section 6.3. Chargeback of Compensation. Except as otherwise may be provided in
--------------------------
Exhibit A and B, no compensation shall be payable in connection with a purchase
payment, and any compensation already paid shall be promptly returned to MLIDC
on request, under each of the following conditions:
a) if MLIDC or its Affiliates, in their sole discretion, determine not to
issue the Contract applied for;
b) if MLIDC or its Affiliates refund or return the purchase payment paid
by the applicant for any reason, in whole or in part; or
c) MLIDC or its Affiliates determine that any person signing an
application who is required to be registered and/or licensed or any
other person or entity receiving compensation for soliciting purchases
of the Contracts is not duly registered and/or licensed to sell the
Contracts in the jurisdiction of such attempted sale.
Section 6.4. Offset. When commission has been paid to a Broker hereunder for a
------
purchase payment that has since been refunded or returned to the purchaser,
MLIDC may, at its option, offset the amount of that commission against any other
amounts payable to Broker by MLIDC or any one or more of its Affiliates. In
addition, MLIDC may at any time offset against any compensation payable to the
Agency or its successors or assigns, any indebtedness due from the Agency to
MLIDC or its Affiliates. Nothing contained herein shall be construed as giving
Broker, Agency or Representative the right to incur any indebtedness on behalf
of MLIDC or its Affiliates. Any remaining indebtedness of Broker to MLIDC or its
Affiliates arising under this Agreement shall be a first lien against any monies
payable hereunder. The right of Broker, or any person claiming through Broker to
receive any compensation provided by this Agreement shall be subordinate to the
right of MLIDC to offset such compensation against any such indebtedness of the
Broker to MLIDC or its Affiliates.
Section 6.5. No Right to Withhold. Neither Broker nor any of its Representatives
--------------------
shall have any right to withhold or deduct any part of any premium or other
purchase payment it shall receive with respect to the Contracts covered by this
Agreement for purposes of payment of commission or for any other purpose.
Section 6.6. Impact on Termination. MLIDC shall pay compensation to Broker for
---------------------
Contracts credited to an Agency prior to the termination date of this Agreement,
as set forth in Exhibits A and B. Such compensation shall be payable when the
premium is due and paid to MLIDC subject to the provisions of this Agreement and
of the Compensation Schedule(s).
Section 6.7. MLIDC Payment of Compensation; Discharge of Obligation. Agency and
------------------------------------------------------
Broker hereby acknowledge that compensation attributable to the sale of any
Contract issued by an Affiliate may be payable directly by MLIDC, in its
discretion, to Agency or Broker where permitted, and not by the Affiliate.
Agency and Broker further acknowledge that such payment of compensation by MLIDC
attributable to the sale of such Contracts shall constitute a complete discharge
of the obligation to pay compensation by the Affiliate issuer under this
Agreement. The foregoing manner of payment shall not affect the right of offset
or chargeback as referred to in Sections 6.3 and 6.4 of this Agreement, or other
compensation rules as may be set forth in this Agreement, Exhibits A and B, or
rules of the MLIDC or its Affiliates.
Section 6.8. Expenses. Broker is responsible for all expenses incurred by the
--------
Broker, except as may be agreed to in writing by MLIDC prior to the Broker
incurring such expenses. Additionally, MLIDC shall, at its expense, provide its
standard advertising and promotional material to the Broker when deemed
appropriate by MLIDC.
Section 6.9. Conflict. With respect to compensation under this Agreement, in the
--------
event that anything contained in this Article 6 conflicts with the terms of the
compensation described in the attached Exhibits A and B, the terms contained in
Exhibits A and B shall prevail.
Enterprise Selling Agreement 11-07
Page 12 of 21
ARTICLE VII
COMPLAINTS AND INVESTIGATIONS
-----------------------------
Section 7.1. Investigation by Regulator. Broker and MLIDC shall cooperate fully
--------------------------
in any regulatory investigation or proceeding or judicial proceeding arising in
connection with the offer, sale, and/or servicing of the Contracts.
Section 7.2. Customer Complaints. The term Customer Complaint shall mean an oral
-------------------
or written communication either directly from the purchaser of or applicant for
a Contract covered by this Agreement or his/her legal representative, or
indirectly from a regulatory agency to which he/she or his/her legal
representative has expressed a grievance.
Section 7.3. Notice and Handling of Customer Complaints.
------------------------------------------
a) MLIDC shall promptly notify Broker of MLIDC's receipt of notice of any
Customer Complaints relating to sales practices or marketing issues
relating to the Contracts by forwarding to Broker a copy of any
written materials in connection with such Customer Complaint and any
additional information as may be necessary to furnish a complete
understanding of same. Broker shall be responsible for resolving
Customer Complaints involving sales practices or marketing issues.
MLIDC shall cooperate with Broker and provide information to Broker
related to sales practices and marketing Customer Complaints that is
reasonably required by Broker to facilitate the resolution of such
Customer Complaints. During the resolution of a sales practices or
marketing related Customer Complaint, Broker shall provide MLIDC with
a copy of all correspondence sent and received regarding that Customer
Complaint. Nothing contained in this Section 7.3 (a) shall limit
MLIDC's right to settle as described in Section 7.4.
b) Broker shall promptly notify MLIDC of Broker's receipt of notice of
any Customer Complaint by forwarding to MLIDC a copy of any written
materials in connection with the Customer Complaint and such
additional information as may be necessary to furnish a complete
understanding of same. MLIDC shall be responsible for resolving
Customer Complaints involving administrative issues. Broker shall
cooperate with MLIDC and provide information to MLIDC related to
administrative Customer Complaints that is reasonably required by
MLIDC to facilitate the resolution of such Customer Complaints.
Section 7.4. Right to Settle. MLIDC reserves the right to settle on behalf of
---------------
itself, and on behalf of itself and Broker collectively if Broker agrees, any
claims, complaints or grievances made by applicants, contract holders or others
in connection with the Contracts, and concerning any conduct, act or omission by
the Broker or its agents or representatives with respect to the Contracts or any
transactions arising out of this Agreement. If Broker does not agree to a
collective settlement with MLIDC and MLIDC, on behalf of itself, settles the
matter, Broker shall indemnify and hold harmless MLIDC from any and all claims,
complaints or grievances made by Broker or any applicant, contract holder or
other person or entity made in connection with such matter.
ARTICLE VIII
RECORDS AND ADMINISTRATION
--------------------------
Section 8.1. Books and Records. Broker shall maintain all books and records as
-----------------
required by Rules 17a-3 and 17a-4 under the 1934 Act, except to the extent that
MLIDC may agree in writing to maintain any such records on Broker's behalf.
Records subject to any such agreement shall be maintained by MLIDC as agent for
Broker in compliance with said rules, and such records shall be and remain the
property of Broker and be at all times subject to inspection by the SEC in
accordance with Section 17(a) of that Act. Nothing contained herein shall be
construed to affect MLIDC's or its Affiliates' right to ownership and control of
all records and documents pertaining to its business operations including,
without limitation, its operations relating to the Contracts. MLIDC and Broker
shall each retain all records related to this Agreement as required by the 1934
Act, and the rules and regulations thereunder and by any other Applicable Law,
as Confidential Information.
Enterprise Selling Agreement 11-07
Page 13 of 21
ARTICLE IX
CUSTOMER INFORMATION AND PROTECTED HEALTH INFORMATION
-----------------------------------------------------
Section 9.1. Treatment of Customer Information. Broker shall treat Customer
---------------------------------
Information confidentially as required by Applicable Law and by MLIDC, as
described in MLIDC's privacy notices and in accordance with MLIDC policies and
procedures. Broker shall also take reasonable and appropriate steps to establish
and implement administrative, physical and technical procedures to ensure the
confidentiality, security and integrity of Customer Information in accordance
with Applicable Law. Broker shall comply with MLIDC's terms of use, policies and
procedures with respect to use of MLIDC electronic systems and databases
providing access to Customer Information by Broker, its employees and
Representatives, and shall promptly report to MLIDC any breach of security
related to such systems and databases of which it becomes aware. To the extent
that Broker becomes aware of any security breach or unauthorized use,
disclosure, acquisition or access to any Customer Information, Broker shall: (i)
promptly notify MLIDC, (ii) take all necessary and advisable corrective actions,
and (iii) cooperate fully with MLIDC in all reasonable and lawful efforts to
prevent, mitigate or rectify such security breach or unauthorized use,
disclosure, acquisition, or access to the Customer Information. Broker may use
Customer Information only for the purpose of fulfilling its obligations under
the Agreement. Broker shall limit access to Customer Information to its
employees, Representatives and other Third Parties who need to know such
Customer Information to permit Broker to fulfill its obligations under this
Agreement and who have agreed to treat such Customer Information in accordance
with the terms of this Agreement. Broker shall not disclose or otherwise make
accessible Customer Information to anyone other than to the individual to whom
the information relates (or to his or her legally authorized representative) or
to other persons pursuant to a valid authorization signed by the individual to
whom the information relates (or by his or her legally authorized
representative), except as required for Broker to fulfill its obligations under
this Agreement, as otherwise directed by MLIDC, or as expressly required by
Applicable Law. MLIDC and its Affiliates may market, offer, sell or distribute
insurance products, including, but not limited to, the Contracts, or any of
their other products and related services, outside of this Agreement to
customers of Broker provided they do not use Nonpublic Personal Information
regarding Broker's customers provided by Broker to specifically target those
customers, and such marketing, offering, selling or distributing by MLIDC and
its Affiliates of insurance (including but not limited to the Contracts) or any
of their other products or services shall not be subject to the terms of this
Agreement.
Section 9.2. Protected Health Information ("PHI"). Notwithstanding anything to
------------------------------------
the contrary in this Agreement, in order to comply with HIPAA requirements,
Broker agrees with respect to any PHI received, obtained or created by Broker,
or disclosed or made accessible to Broker, that Broker: (a) shall not use or
disclose PHI except to provide services pursuant to this Agreement and
consistent with Applicable Law; (b) shall limit the use of, access to and
disclosure of PHI to the minimum required to perform services or by Applicable
Law; (c) shall use appropriate safeguards to prevent use or disclosure of PHI
except as permitted by this Agreement; (d) shall promptly report to MLIDC any
use or disclosure of MLIDC PHI not permitted by this Agreement of which it
becomes aware; (e) shall take reasonable steps to mitigate any harmful effect of
any use or disclosure of PHI by Broker in violation of the terms of this
Agreement or Applicable Law; (f) shall require that any of its Representatives
and independent contractors to whom PHI is disclosed or made accessible or who
uses PHI has agreed to the same restrictions and conditions that apply to Broker
with respect to PHI pursuant to this Agreement; (g) shall, within fifteen (15)
days of MLIDC's request, provide to MLIDC any PHI or information relating to PHI
as deemed necessary by MLIDC to provide individuals with access to, amendment
of, and an accounting of disclosures of their PHI, and to incorporate any
amendments of the PHI as requested by MLIDC; (h) shall make its internal
practices, books and records relating to its use or disclosure of PHI available
to the Secretary of the United States Department of Health and Human Services at
his/her request to determine MLIDC's compliance with Applicable Law; (i) agrees
that upon termination of this Agreement it shall, if feasible, return to MLIDC
or destroy all PHI it maintains in any form and retain no copies, and if such
return or destruction is not feasible, to extend the protections of this
Agreement to the PHI beyond the termination of this Agreement and for as long as
Broker has PHI, and FURTHER agrees that any further use or disclosure of the PHI
shall be solely for the purposes that make return or destruction infeasible.
Destruction without retention of copies is not deemed feasible if prohibited by
the terms of this Agreement or by Applicable Law, including record retention
requirements under state insurance laws. With respect to PHI received made
accessible, maintained or transmitted electronically in the performance of its
obligations under this Agreement, Broker further agrees that it shall (1)
implement administrative, physical, and technical safeguards that
Enterprise Selling Agreement 11-07
Page 14 of 21
reasonably and appropriately protect the confidentiality, integrity, and
availability or any such electronic PHI; (2) ensure that its Representatives
agree to implement reasonable and appropriate safeguards to protect such
electronic PHI.
Section 9.3. Privacy Notices and Authorization. Broker shall provide to
---------------------------------
customers and prospective customers who apply for or purchase MLIDC products,
and shall ensure that its Representatives provide to such customers and
prospective customers, MLIDC privacy notices as required by Applicable Law and
by MLIDC. Broker shall also ensure that its Representatives obtain signed
authorizations from customers and prospective customers who apply for MLIDC
products, as required by MLIDC, and provide upon request of such customers and
prospective customers, copies of their signed authorizations as required by
Applicable Law and MLIDC policy. In the event that a customer or prospective
customer has signed a MLIDC authorization and subsequently informs Broker or
Representatives that he or she is revoking that authorization, Broker shall
promptly inform MLIDC in writing of such revocation.
ARTICLE X
CONFIDENTIAL INFORMATION
------------------------
Section 10.1. Treatment of Confidential Information. MLIDC and Broker and their
-------------------------------------
respective Affiliates each shall keep confidential all Confidential Information
of the other. Without limiting the generality of the foregoing, MLIDC and Broker
and their respective Affiliates shall not disclose any Confidential Information
to any Third Party without the prior written consent of the other; provided,
however, that each may disclose Confidential Information (a) to those of its
Representatives who have a need to know the Confidential Information in the
ordinary course of business and who are informed of the confidential nature of
the Confidential Information, and (b) as and to the extent required by
Applicable Law or by legal process or requested by an insurance regulatory or
administrative body. However, in the event that clause (b) of the preceding
sentence is applicable, the party required or requested to disclose Confidential
Information shall give prompt written notice thereof to the other party and
shall reasonably cooperate in the other party's efforts to obtain an appropriate
remedy to prevent or limit such disclosure. It is understood by MLIDC and Broker
that this Section 10.1 shall not prevent Broker from quoting MLIDC premium rates
in the ordinary course of business.
Section 10.2. Return of Confidential Information. Promptly upon the termination
----------------------------------
of this Agreement or the request of the providing party, the receiving party
shall return to the providing party all Confidential Information furnished by
the providing party or its Representatives. Neither the receiving party nor any
of its Representatives shall make any copies in any form of any documents
containing Confidential Information of the providing party without the prior
written consent of an officer of the providing party, except such copies as need
to be made in the ordinary course of business by MLIDC or Broker to fulfill
their respective obligations under this Agreement.
Section 10.3. Damages. MLIDC and Broker each acknowledge that (a) money damages
-------
may not be a sufficient remedy for breach of this Article X, (b) the Party
aggrieved by any such breach may be entitled to specific performance and
injunctive and other equitable relief with respect to such breach, (c) such
remedies shall not be deemed to be the exclusive remedies for any such breach
but shall be in addition to all other remedies available at law or in equity,
and (d) in the event of litigation relating to this Article X, if a court of
competent jurisdiction determines in a final non-appealable order that either
MLIDC or Broker or any of their respective Representatives has breached this
Article X, then the party that is found (or whose Representative is found) to
have committed such breach shall be liable for reasonable legal fees incurred by
the aggrieved party or its affiliates in connection with such litigation
including, without limitation, any appeals.
Enterprise Selling Agreement 11-07
Page 15 of 21
ARTICLE XI
INDEMNIFICATION AND INSURANCE
-----------------------------
Section 11.1. Indemnification. Each party shall hold harmless, defend, exonerate
---------------
and indemnify each other party to this Agreement, as well as their respective
employees, agents, trustees, Representatives, officers or directors, for any and
all losses, claims, judgments, fines, penalties, damages, or liabilities (or any
actions or threatened actions in respect of any of the foregoing) the other
party suffers that results from the actions of the indemnifying party or its
representatives with respect to its/their obligations under this Agreement, or
breach of any representation, warranty, covenant, condition or duty contained in
this Agreement or violation of Applicable Law with respect to its services
required under this Agreement.
Section 11.2. Notice of Claim. After receipt of notice of the commencement of,
---------------
or threat of, any claim, action, or proceeding by a third party (a "Third Party
Action") by a party that believes it is entitled to indemnification under this
Article XI (the "Indemnified Party"), the Indemnified Party shall notify the
party obligated to provide indemnification under this Article XI (the
"Indemnifying Party") in writing of the commencement thereof as soon as
practicable thereafter, provided that the omission to so notify the Indemnifying
Party shall not relieve it from any liability under this Article XI, except to
the extent that the Indemnifying Party demonstrates that the defense of such
Third Party Action is materially prejudiced by the failure to give timely
notice. Such notice shall describe the claim in reasonable detail.
Section 11.3. Defense, Settlement and Subrogation.
-----------------------------------
a) The Indemnifying Party shall have the right to assume control of the
defense of such Third Party Action and shall retain counsel reasonably
satisfactory to the Indemnified Party to represent the Indemnified
Party and shall pay the reasonable fees and disbursements of such
counsel related to such Third Party Action. The Indemnified Party
shall cooperate and provide such assistance as the Indemnifying Party
reasonably may request in connection with the Indemnifying Party's
defense and shall be entitled to recover from the Indemnifying Party
the reasonable out-of-pocket costs of providing such assistance
(including reasonable fees of any counsel retained by the Indemnified
Party with the consent of the Indemnifying Party to facilitate such
assistance). The Indemnifying Party shall inform the Indemnified Party
on a regular basis of the status of any Third Party Action and the
Indemnifying Party's defense thereof.
b) In any such Third Party Action, the Indemnified Party may, but shall
not be obligated to, participate in the defense of any Third Party
Action, at its own expense and using counsel of its own choosing, but
the Indemnifying Party shall be entitled to control the defense
thereof unless the Indemnified Party has relieved the Indemnifying
Party from liability with respect to the particular Third Party
Action.
c) If notice is given to the Indemnifying Party of the commencement of
any Third Party Action hereunder and the Indemnifying Party does not,
either (i) within ten (10) Business Days after the receipt of such
notice, give notice to the Indemnified Party of its election to assume
the defense of such Third Party Action, or (ii) give notice to the
Indemnified Party that it rejects the claim for indemnification
pursuant to Section 11.5 herein, the Indemnified Party shall have the
right, at its option and at the Indemnifying Party's expense, to
defend such Third Party Action in a manner that the Indemnified Party
deems appropriate. In such a case, the Indemnified Party shall not
consent to the settlement, compromise or entry of judgment with
respect to the Third Party Action without prior written notice to,
consultation with, and written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld.
Enterprise Selling Agreement 11-07
Page 16 of 21
d) In any Third Party Action, the defense of which is controlled by the
Indemnifying Party: (i) the Indemnifying Party shall not, without the
Indemnified Party's prior written consent, compromise or settle such
Third Party Action, if (1) such compromise or settlement would impose
an injunction or other equitable relief upon the Indemnified Party or
(2) such compromise or settlement does not include the Third Party's
release of the Indemnified Party from all liability relating to such
Third Party Action; and (ii) the Indemnified Party shall not
compromise or settle such Third Party Action without the prior written
consent of the Indemnifying Party, which consent shall not be
unreasonably withheld, provided that, if the Indemnified Party desires
to compromise or settle such claim, suit or proceeding and the
Indemnifying Party reasonably refuses to consent to such compromise or
settlement, the Indemnified Party may enter into a compromise or
settlement but shall be solely responsible for the cost of any
compromise or settlement amount.
Section 11.4. Claim Not Involving Third Party Action. A claim for
--------------------------------------
indemnification by a party hereunder for any matter not involving a Third Party
Action may be asserted by notice to another party.
Section 11.5. Notice of Rejection of Claim. Notwithstanding anything within this
----------------------------
Article XI to the contrary, a party who has received a notice of claim for
indemnification under this Article XI, may notify the party asserting such claim
for indemnification that it rejects the claim. Such notice rejecting a claim for
indemnification must be given by the rejecting party within ten (10) business
days of its receipt of the notice of claim and shall describe the basis for the
rejection of the claim in reasonable detail.
Section 11.6. Provisions Not to Control. Notwithstanding anything in this
-------------------------
Article XI to the contrary, the terms and provisions of Article VII shall
control in the event of any conflict or alleged conflict with this Article XI.
ARTICLE XI
GENERAL PROVISIONS
------------------
Section 12.1. Term and Termination.
--------------------
a) Term. This Agreement shall continue in force from the Effective Date,
----
provided that any party may unilaterally terminate this Agreement with
or without cause upon thirty (30) days prior written notice of
termination to the other parties.
b) Termination Due to Change in Status.
-----------------------------------
1) Broker-Dealer Status. The Agreement shall terminate immediately
--------------------
upon MLIDC or Broker ceasing to be a registered broker-dealer or
a member of the FINRA.
2) Legal Status. The Agreement shall terminate immediately upon the
------------
termination of the legal existence of Selling Broker-Dealer or
the Agency, or the merger, consolidation, reorganization,
dissolution, receivership or bankruptcy of either, or whenever
the Agency is no longer licensed under law to solicit and procure
applications for Contracts, unless the Agency notifies the other
parties in writing at least thirty (30) days' prior to the
occurrence of any of the above events and obtains written
permission to continue on a basis approved by the other parties.
c) Continuing Obligations. Upon termination of this Agreement, all
----------------------
authorizations, rights and obligations shall cease except (a) the
agreements contained in Articles VII, VIII, IX, X and XI, Sections
12.4, 12.5, 12.6 and 12.10 hereof; and (b) the obligation to settle
accounts hereunder. Except with respect to records required to be
maintained by Broker pursuant to Rules 17a-3 and 17a-4 under the 1934
Act, Broker shall return to MLIDC, within 30 days after the Effective
Date of termination, any and all records in its possession which have
been specifically maintained in connection with MLIDC's operations
related to the Contracts.
Enterprise Selling Agreement 11-07
Page 17 of 21
Section 12.2. Assignability. This Agreement shall not be assigned by either
-------------
party without the written consent of the other; provided, however, that MLIDC
may assign this Agreement to its Affiliates at any time. Any purported
assignment in violation of this Section 12.2 shall be void.
Section 12.3. Amendments. No oral promises or representations shall be binding
----------
nor shall this Agreement be modified except by agreement in writing, executed on
behalf of the parties by a duly authorized officer of each of them.
Section 12.4. Notices. All notices, demands and other communications required or
-------
permitted to be given to any party under this Agreement shall be in writing and
any such notice, demand or other communication shall be deemed to have been duly
given when delivered by hand, courier or overnight delivery service or, if
mailed, two (2) Business Days after deposit in the mail and sent certified or
registered mail, return receipt requested and with first-class postage prepaid:
(a) If to Broker, to the address on the signature page of this Agreement.
(b) If to MLIDC:
MetLife
0 Xxxx Xxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attn: Installations
Either party may change its respective notice address by advance written
notice to the other.
Section 12.5. Arbitration.
-----------
a) When Arbitration Required. All disputes and differences between the
-------------------------
parties, other than those seeking injunctive relief or a restraining
order under this Agreement, or arising with respect to the use of
Customer Information, PHI or Confidential Information under Articles
IX and X, must be decided by arbitration in accordance with the rules
of arbitration of the American Arbitration Association, regardless of
the insolvency of either party, unless the conservator, receiver,
liquidator or statutory successor is specifically exempted from an
arbitration proceeding by applicable state law.
b) Initiation of Arbitration. Either party may initiate arbitration by
-------------------------
providing written notification to the other party. Such written notice
shall set forth (i) a brief statement of the issue(s); (ii) the
failure of the parties to reach agreement; and (iii) the date of the
demand for arbitration.
c) Arbitration Panel. The arbitration panel shall consist of three
-----------------
arbitrators. The arbitrators must be impartial and must be or must
have been officers of life insurance and or securities companies other
than the parties or their affiliates.
d) Selection of Arbitrators. Each party shall select an arbitrator within
------------------------
thirty (30) days from the date of the demand. If either party shall
refuse or fail to appoint an arbitrator within the time allowed, the
party that has appointed an arbitrator may notify the other party
that, if it has not appointed its arbitrator within the following ten
(10) days, an arbitrator shall be appointed on its behalf. The two (2)
arbitrators shall select the third arbitrator within thirty (30) days
of the appointment of the second arbitrator. If the two arbitrators
fail to agree on the selection of the third arbitrator within the time
allowed, each arbitrator shall submit to the other a list of three (3)
candidates. Each arbitrator shall select one name from the list
submitted by the other and the third arbitrator shall be selected from
the two names chosen by drawing lots.
Enterprise Selling Agreement 11-07
Page 18 of 21
e) Rules; Place for Meetings; Majority Vote. The arbitrators shall
----------------------------------------
determine all arbitration schedules and procedural rules.
Organizational and other meetings shall be held in New York, unless
the arbitrators select another location. The arbitrators shall decide
all matters by majority vote.
f) Decision Final. The decisions of the arbitrators shall be final and
--------------
binding on both parties. The arbitrators may, at their discretion,
award costs and expenses, as they deem appropriate, including but not
limited to legal fees and interest. The arbitrators may not award
exemplary or punitive damages. Judgment may be entered upon the final
decision of the arbitrators in any court of competent jurisdiction.
g) Fees and Expenses. Each party shall be responsible for (a) all fees
-----------------
and expenses of its respective counsel, accountants, actuaries and any
other representatives in connection with the arbitration and (b)
unless the arbitrators shall provide otherwise, one-half (1/2) of the
expenses of the arbitration, including the fees and expenses of the
arbitrators.
Section 12.6. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York without regard to New York
choice of law provisions.
Section 12.7. Entire Understanding. This Agreement and any reference
--------------------
incorporated herein constitute the complete understanding of the parties and
supersedes in its entirety any and all prior and contemporaneous agreements
among the parties with respect to the subject matter discussed herein. No oral
agreements or representations shall be binding.
Section 12.8. Third Party Beneficiaries. Nothing in the Agreement shall convey
-------------------------
any rights upon any person or entity, which is not a party to the Agreement.
MLIDC's Affiliates shall be Third Party beneficiaries of this Agreement,
entitled to enforce the provision hereof as if they were a party to this
Agreement.
Section 12.9. Non-Exclusivity. No territory or product is assigned exclusively
---------------
hereunder to Broker and Agency and MLIDC reserves the right in its discretion to
enter into selling agreements with other broker-dealers, and to contract with or
establish one or more insurance agencies in any jurisdiction in which Broker
transacts business hereunder.
Section 12.10. Non-Solicitation of Employees and Agents. For purposes of this
----------------------------------------
Section 12.10 only, the term "agent" shall include all appointed agents and
Representatives. The parties to this Agreement acknowledge that each may have
access to the names and identities of agents of each party as a result of
performing their respective obligations under this Agreement, and that each may
establish close working relationships with such persons. Therefore:
a) Broker and Agency (for purposes of this Section 12.10, "Selling
Group"), shall not solicit any agent of MLIDC while an agent maintains
his/ her affiliation with MLIDC and for twelve (12) months after
termination of the affiliation. In addition, Selling Group shall not
interfere in any way with the relationships, contractual or otherwise,
between MLIDC and its agents. Selling Group shall not induce or
encourage, or attempt to induce or encourage, any agent of MLIDC to
terminate or change his/ her relationship with MLIDC; and
b) MLIDC shall not solicit any agent of Selling Group while an agent
maintains his/ her affiliation with Selling Group and for twelve (12)
months after termination of the affiliation. In addition, MLIDC shall
not interfere in any way with the relationships, contractual or
otherwise, between Selling Group and its agents. MLIDC shall not
induce or encourage, or attempt to induce or encourage, any agent of
Selling Group to terminate or change his/ her relationship with
Selling Group.
Enterprise Selling Agreement 11-07
Page 19 of 21
Section 12.11. Waiver. The failure of either party to strictly enforce any
------
provision of this Agreement shall not operate as a waiver of such provision or
release either party from its obligation to perform strictly in accordance with
such provision.
Section 12.12. Counterparts. This Agreement may be executed in counterparts,
------------
with the same force and effect as if executed in one complete document.
Section 12.13. Severability. If any provision of this Agreement is 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 the 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 of this Agreement.
Section 12.14. Trademarks. Neither party may use the other party's trademarks,
----------
service marks, trade names, logos, or other commercial or product designations
(collectively, "Marks") for any purpose whatsoever without the prior written
consent of the other party.
a) Permission not Implied. Nothing in this Agreement shall be construed
----------------------
as prior written consent to permit (i) any party to use the Marks of
the other party, or (ii) any other individual or entity to use the
Marks of any party.
b) UFS. Nothing contained in this Agreement shall be construed as
---
conferring upon Broker or Representatives any right to use or refer to
in advertising, publicity, promotion, marketing or other activities,
any Marks, or any other designation or likeness of any of the
Peanuts(R) characters or any other character licensed by United
Feature Syndicate (including any contraction, abbreviation or
simulation of any kind of the foregoing) without prior express
permission from United Feature Syndicate, which Broker and
Representatives must obtain through Company.
Section 12.15. Preparation of Certificates. Notwithstanding anything to the
---------------------------
contrary in this Agreement, Broker and MLIDC shall cooperate fully in the
preparation of and execution of any certificates that may be required by a
regulatory authority or by Applicable Law, in connection with the offer, sale,
and/or servicing of the Contracts.
Section 12.16. Parties' Control of Business and Operations. The performance or
-------------------------------------------
receipt of services pursuant to this Agreement shall in no way impair the
absolute control of the business and operations of each of the parties and their
respective Affiliates by their own Board of Directors.
Enterprise Selling Agreement 11-07
Page 20 of 21
In reliance on the representations set forth and in consideration of the
undertakings described, the parties represented below do hereby contract and
agree.
"COMPANY"
METLIFE INVESTORS DISTRIBUTION COMPANY
(Distribution Company)
By
----------------------------------
Xxxxxxx X. Xxxxxxx - Executive Vice President
Date________________________________
Address:
0 Xxxx Xxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Fax #: 000-000-0000
"BROKER DEALER"
-------------------------------------
(Broker Firm)
By
-----------------------------------
Print Name & Title
Date_________________________________
Address:
_____________________________________
_____________________________________
_____________________________________
Fax #: _______________________________
Enterprise Selling Agreement 11-07
Page 21 of 21
EXHIBIT A
SCHEDULE OF VARIABLE PRODUCT AND COMPENSATION
[TO BE INSERTED]
EXHIBIT B
SCHEDULE OF FIXED PRODUCT AND COMPENSATION
[TO BE INSERTED]
