WHOLESALING AGREEMENT
AGREEMENT dated as of February 7, 1992 by and between SMA LIFE
ASSURANCE COMPANY, a Delaware insurance company ("SMA"), SMA EQUITIES, INC., a
Massachusetts corporation ("EQUITIES"), DELAWARE DISTRIBUTORS, INC., a Delaware
corporation (hereinafter referred to as "DELAWARE"), and the insurance agency
affiliates of DELAWARE listed on Schedule 1 to this Agreement (hereinafter
referred to as "DELAWARE AGENCY AFFILIATES").
WITNESSETH:
WHEREAS, SMA proposes to register with the Securities and Exchange
Commission interests in certain variable annuity contracts and variable life
insurance contracts under the Securities Act of 1933 and to issue and sell such
contracts through EQUITIES acting as the principal underwriter for such
contracts; and
WHEREAS, SMA, EQUITIES and DELAWARE desire to establish an
arrangement whereby DELAWARE will act as a wholesaler for such variable annuity
contracts and variable life insurance contracts and, as such, will recruit
business firms to distribute such contracts;
NOW, THEREFORE, in consideration of their mutual promises, SMA,
EQUITIES and DELAWARE hereby agree as follows:
1. Definitions
a. Account -- Each and any separate account established by SMA and
listed on Schedule 2 to this Agreement, as amended from time to time in
accordance with Section 2.e of this
Agreement. The phrase "Account supporting the Contracts" or "Account supporting
a class of Contracts" shall mean the separate account identified in such
Contracts as the separate account to which the Purchase Payments made under such
Contracts are allocated and as to which income, gains and losses, whether or not
realized, from assets allocated to such separate account, are, in accordance
with such Contracts, credited to or charged against such separate account
without regard to other income, gains, or losses of SMA or any other separate
account established by SMA.
b. Contracts -- The variable annuity contracts or variable life
insurance contracts described more specifically on Schedule 3 to this Agreement,
as amended from time to time. The term "Contracts" shall include any riders to
such contracts and any other contracts offered in connection therewith or any
contracts for which such Contracts may be exchanged or converted. The phrase "a
class of Contracts" shall mean those variable annuity contracts or variable life
insurance contracts, as the case may be, issued on the same policy form or forms
and covered by the same Registration Statement, as shown on Schedule 3 to this
Agreement.
c. Registration Statement -- At any time while this Agreement is in
effect, the currently effective registration statement filed with the SEC under
the 1933 Act, or currently effective post-effective amendment thereto, relating
to a class of Contracts, including financial statements included in, and all
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exhibits to, such registration statement or post-effective amendment. (For
purposes of Sections 5.a and 11 of this Agreement, however, the term
"Registration Statement" means any document that is or at any time was a
Registration Statement within the meaning of this Section 1.c.)
d. Prospectus -- The prospectus and any statement of additional
information included within a Registration Statement, except that, if the
prospectus and statement of additional information most recently filed with the
SEC pursuant to Rule 497 under the 1933 Act after the date on which the
Registration Statement became effective differs from the prospectus and
statement of additional information included within the Registration Statement
at the time it became effective, the term "Prospectus" shall refer to the most
recently filed prospectus and statement of additional information filed under
Rule 497 under the 1933 Act from and after the date on which they each shall
have been filed. (For purposes of Sections 5.a and 11 of this Agreement,
however, the term "any Prospectus" means any document that is or at any time was
a Prospectus within the meaning of this Section 1.d.)
e. Fund -- Delaware Group Premium Fund, Inc.
f. Fund Registration Statement -- At any time while this Agreement
is in effect, the currently effective registration statement filed with the SEC
under the 1933 Act, or currently effective post-effective amendment thereto, for
shares of the Fund. (For purposes of Section 11 of this Agreement, however,
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the term "Fund Registration Statement" means any document that is or at any time
was a Fund Registration Statement within the meaning of this Section l.f.)
g. Fund Prospectus -- At any time while this Agreement is in effect,
the prospectus and statement of additional information for the Fund most
recently filed with the SEC pursuant to Rule 497 under the 1933 Act. (For
purposes of Section 11 of this Agreement, however, the term "Fund Prospectus"
means any document that is or at any time was a Fund Prospectus within the
meaning of this Section 1.g.)
h. 1933 Act -- The Securities Act of 1933, as amended.
i. 1934 Act -- The Securities Exchange Act of 1934, as amended.
j. 1940 Act -- The Investment Company Act of 1940, as amended.
k. SEC -- The Securities and Exchange Commission.
l. NASD -- The National Association of Securities Dealers, Inc.
m. Regulations -- The rules and regulations promulgated by the SEC
under the 1933 Act, the 1934 Act and the 1940 Act as in effect at the time this
Agreement is executed or thereafter promulgated, and as they may be amended from
time to time.
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n. Territory -- The fifty states of the United States, the District
of Columbia, and all other territories of the United States.
o. State -- any state or commonwealth of the United States, the
District of Columbia or any other territory of the United States.
p. Broker -- An entity registered as a broker-dealer and licensed as
a life insurance agent or affiliated with an entity so licensed, and recruited
by DELAWARE and subsequently authorized by SMA and EQUITIES to distribute the
Contracts pursuant to a sales agreement with SMA and EQUITIES entered into in
accordance with Section 3 of this Agreement.
q. Associated Person -- This term as used in this Agreement shall
have the meaning assigned to it in the 1934 Act.
r. Representative -- An Associated Person of DELAWARE or a Broker
registered with the NASD as a registered representative or principal of DELAWARE
or Broker, as the case may be.
s. Purchase Payment -- A payment made under a Contract by an
applicant or purchaser to purchase benefits under the Contract.
t. Procedures -- The administrative procedures prepared and
distributed by SMA, as such may be amended or supplemented from time to time,
relating to the solicitation, sale and delivery of the Contracts.
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u. Participation Agreement -- The agreement dated as of December 23,
1991 among SMA, DELAWARE and the Fund relating to the investment of assets of
SMA separate accounts in the Fund.
2. Appointment and Wholesaling Rights
a. SMA hereby appoints DELAWARE as an agent under relevant state
insurance laws to represent SMA in the wholesaling activities contemplated by
this Agreement. In those states where DELAWARE is not licensed as an insurance
agent, SMA hereby appoints the appropriate entity or individual ("DELAWARE
AGENCY AFFILIATE") affiliated with DELAWARE (as set forth on Schedule 1 to this
Agreement, as such Schedule may be amended from time to time by DELAWARE to
reflect changes in the licensing status of DELAWARE or DELAWARE AGENCY
AFFILIATES) as its agent under the insurance laws to engage in such wholesaling
activities. EQUITIES hereby authorizes DELAWARE under applicable securities laws
to engage in the activities contemplated in this Agreement relating to the
wholesaling of the Contracts for which EQUITIES acts or may act as principal
underwriter.
b. DELAWARE (both on its own behalf and on behalf of DELAWARE AGENCY
AFFILIATES) undertakes to use its best efforts to recruit Brokers in accordance
with Section 3 of this Agreement, consistent with market conditions and
compliance with its responsibilities under the federal securities laws and NASD
rules and regulations. The obligations of DELAWARE and DELAWARE AGENCY
AFFILIATES hereunder are further subject to the accuracy of the representations
and warranties of SMA and EQUITIES contained in
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this Agreement and to the performance by SMA of its obligations hereunder.
c. The appointment and authorization of DELAWARE and DELAWARE AGENCY
AFFILIATES to engage in wholesaling activities pursuant to this Agreement is
exclusive as to the Contracts listed on Schedule 3, as amended from time to time
in accordance with Section 2.e of this Agreement. Neither SMA nor EQUITIES shall
authorize any other person (as principal underwriter or otherwise) to engage in
wholesaling or distribution activities with respect to the Contracts or to
recruit business firms to engage in wholesaling or distribution activities with
respect to the Contracts (other than business firms recommended by DELAWARE
pursuant to Section 3 of this Agreement) without DELAWARE's prior written
consent, nor shall SMA or EQUITIES separately engage in wholesaling or
distribution activities relating to the Contracts.
SMA shall design the Contracts, subject to consultation with
DELAWARE and subject to DELAWARE's right to refuse to engage in wholesaling
activities with respect to a class of Contracts that DELAWARE reasonably
determines to be unattractive from a marketing or business perspective. The
Contracts shall be issued by SMA and the variable portion thereof shall be
supported by the Accounts. SMA alone shall be responsible for filing the initial
Registration Statement and any amendments thereto with the SEC in accordance
with the 1933 Act, 1934 Act and 1940 Act and the Regulations to register
interests in each class of Contracts. To the extent that any Contract
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offers a general account option, SMA shall either register that option under the
1933 Act or provide an opinion of counsel, satisfactory to DELAWARE's counsel,
that such option need not be registered under the 1933 Act. SMA will not make
any amendment or rider to the Contracts or a class of Contracts, or file a
Registration Statement, or make an amendment to a Registration Statement or
supplement to a Prospectus, without DELAWARE having been given the opportunity
to review and having consented in writing to any such filing, amendment, rider
or supplement. However, such opportunity to review and consent shall not make
DELAWARE responsible for the content of any such filing, amendment, rider or
supplement; SMA alone shall be responsible for such content.
SMA shall register each Account with the SEC. The subaccounts
of each Account available under the Contracts or a class of Contracts are listed
on Schedule 3 to this Agreement, as amended from time to time in accordance with
Section 2.e of this Agreement. All amounts available under the Contracts shall
be invested only in the Fund (through the Account(s) supporting the Contracts)
and/or allocated to SMA's general account, provided that such amounts may also
be invested in an investment company or investment vehicle other than the Fund
if: (1) such other investment company is advised by the Fund's investment
adviser; (2) the Fund and/or DELAWARE, in their sole discretion, consents to the
use of such other investment company or investment vehicle; (3) there is a
substitution of the Fund made in
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accordance with Section 10.1(e) of the Participation Agreement; or (4) the
Participation Agreement is terminated pursuant to Article X of the Participation
Agreement. SMA will not take action to operate any Account, or any subaccount(s)
of an Account listed on Schedule 3 to this Agreement, as amended from time to
time in accordance with Section 2.e of this Agreement, as a management
investment company under the 1940 Act without the Fund's and DELAWARE's prior
written consent.
d. SMA shall obtain appropriate authorizations, to the extent
necessary, whether by registration, qualification, approval or otherwise, for
the issuance and sale of the Contracts in each State in the Territory (provided,
however, that it shall be within SMA's discretion whether to obtain such
authorization in Hawaii and Guam). From time to time, SMA shall notify DELAWARE
in writing of all States in the Territory in which each class of Contracts can
then lawfully be offered. To the extent that SMA is not authorized to issue the
Contracts or any class of Contracts in any State in the Territory, SMA shall
employ all reasonable efforts to obtain such authorization in such State
(provided, however, that it shall be within SMA's discretion whether to obtain
such authorization in Hawaii or Guam).
e. DELAWARE may unilaterally amend Schedule 1 from time to time
pursuant to Section 2.a of this Agreement. The parties to this Agreement may
amend Schedules 2 and 3 to this Agreement from time to time by mutual agreement
to reflect changes in or relating to the Contracts and the Accounts and to
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add new classes of variable annuity contracts and variable life insurance
contracts to be issued by SMA for which DELAWARE will act as wholesaler. The
provisions of this Agreement shall be equally applicable to each such class of
Contracts, unless the context otherwise requires. Schedule 4 to this Agreement
may be amended only by mutual agreement of the parties to this Agreement
pursuant to Section 9 of this Agreement.
3. Recruitment of Brokers and Related Responsibilities
a. SMA and EQUITIES hereby authorize DELAWARE and any DELAWARE
AGENCY AFFILIATES to contact and recommend business firms to act as Brokers for
the sale of the Contracts. SMA shall have the right to reject any such
recommendation, but shall not do so arbitrarily or unreasonably.
b. SMA and EQUITIES shall have the responsibility for and bear the
cost of: (i) executing appropriate sales agreements with the business firms
recommended by DELAWARE or DELAWARE AGENCY AFFILIATES and (ii) except as limited
in Section 9.c of this Agreement, appointing such business firms, and/or
Associated Persons of such firms, as insurance agents of SMA in those States
where such business firms and/or Associated Persons possess insurance agent
licenses. None of DELAWARE, DELAWARE AGENCY AFFILIATES, SMA or EQUITIES shall
have responsibility for, or bear the cost of, any registration or licensing of
Brokers or any of their Associated Persons with the SEC, NASD or any state
insurance governmental or regulatory agency. The costs of appointment shall be
borne as provided in Section 9.c hereof.
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SMA shall maintain the appointment records of all agents appointed by SMA to
distribute the Contracts or to engage in the wholesaling activities contemplated
by this Agreement.
c. Any sales agreement entered into by SMA and/or EQUITIES with a
Broker shall provide that:
(1) The Broker (or an affiliated person duly registered as a
broker-dealer with the SEC) shall train, supervise, and be solely responsible
for the conduct of, all of its Associated Persons in the proper method of
solicitation, sale and delivery of the Contracts for the purpose of complying on
a continuous basis with the NASD Rules of Fair Practice and with federal and
state securities and insurance law requirements applicable in connection with
the offering and sale of the Contracts;
(2) Purchase Payments shall be made payable to SMA and
shall be delivered together with all applications and related information
in accordance with the Procedures;
(3) The Broker shall be solely responsible for all
compensation paid to its Representatives and all related tax reporting
that may be required under applicable law;
(4) The Broker and its Representatives shall not use,
develop or distribute any promotional, sales or advertising material that
has not been approved in writing by SMA, EQUITIES and DELAWARE and filed
with the appropriate governmental or regulatory agencies; and
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(5) The Broker shall not have authority, on behalf of
SMA, EQUITIES, DELAWARE or DELAWARE AGENCY AFFILIATES: to make, alter or
discharge any Contract or other contract entered into pursuant to a
Contract; to waive any Contract forfeiture provision; to extend the time
of paying any Purchase Payment; to receive any monies or Purchase Payments
(except for the sole purpose of forwarding monies or Purchase Payments to
SMA); or to expend, or contract for the expenditure of, funds of SMA,
EQUITIES, DELAWARE or DELAWARE AGENCY AFFILIATES.
d. DELAWARE and DELAWARE AGENCY AFFILIATES shall provide assistance
to SMA in the appointment procedure applicable to Brokers and their
Representatives as may be reasonably acceptable to SMA.
e. DELAWARE shall train, supervise, and be solely responsible for
the conduct of, all of its Associated Persons (including DELAWARE AGENCY
AFFILIATES, but not Brokers or their Representatives unaffiliated with DELAWARE
or DELAWARE AGENCY AFFILIATES), for the purpose of complying on a continuous
basis with the NASD Rules of Fair Practice and with federal and state securities
and insurance laws applicable to the wholesaling activities contemplated in this
Agreement. DELAWARE and DELAWARE AGENCY AFFILIATES shall be responsible for the
maintenance of licenses, certifications or permits that they determine to be
necessary for themselves and/or their Associated Persons pursuant to any federal
or state securities law or state insurance law.
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f. None of DELAWARE, DELAWARE AGENCY AFFILIATES, SMA or EQUITIES
will have any supervisory responsibility (as such supervision is contemplated by
the 1934 Act or the NASD's Rules of Fair Practice) with respect to Brokers or
their Representatives. Under no circumstances will DELAWARE or DELAWARE AGENCY
AFFILIATES be responsible for Brokers' or their Representatives' failure to
comply with applicable law or the Procedures.
g. DELAWARE shall not have authority on behalf of SMA: to make,
alter or discharge any Contract or other contract entered into pursuant to a
Contract; to waive any Contract forfeiture provision; to extend the time of
paying any Purchase Payment; or to receive any monies or Purchase Payments.
DELAWARE shall not expend, nor contract for the expenditure of, funds of SMA;
nor shall DELAWARE possess or exercise any authority on behalf of SMA other than
that expressly conferred on DELAWARE by this Agreement.
h. DELAWARE and DELAWARE AGENCY AFFILIATES shall act as independent
contractors in the performance of their duties and obligations under this
Agreement and nothing contained in this Agreement shall constitute DELAWARE or
any DELAWARE AGENCY AFFILIATE or their respective Associated Persons as
employees of SMA or EQUITIES in connection with the wholesaling activities
contemplated by this Agreement or otherwise.
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4. Marketing and Sales Material
a. SMA shall be responsible for the design of initial promotional,
sales and advertising material relating to the Contracts. Once $100,000,000 of
Purchase Payments are accepted by SMA and at each $100,000,000 increment
thereafter, SMA, at the request of DELAWARE, shall redesign the material then
being used; each such redesign shall be at SMA's expense, but shall not be
substantially different from the design of the material then being used.
Prior to use with any member of the public, SMA shall provide
to DELAWARE copies of all promotional, sales and advertising material developed
by SMA for DELAWARE's review and written approval. Upon receipt of such material
from SMA, DELAWARE shall be given a reasonable amount of time to complete its
review. DELAWARE will respond on a prompt and timely basis in approving any such
material. Failure to respond shall not relieve SMA of the obligation to obtain
the prior written approval of DELAWARE.
In the event that DELAWARE shall design any promotional,
sales or advertising material relating to the Contracts, DELAWARE shall provide
to SMA copies of such material for SMA's review and written approval. Upon
receipt of such material from DELAWARE, SMA shall be given a reasonable amount
of time to complete its review. SMA will respond on a prompt and timely basis in
approving any such material. Failure to respond
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shall not relieve DELAWARE of the obligation to obtain the prior written
approval of SMA.
If SMA has provided an opinion of counsel pursuant to Section
2.c of this Agreement to the effect that the general account option offered
under the Contracts or class of Contracts need not be registered under the 1933
Act in reliance on Section 3(a)(8) of the 1933 Act or Rule 151 thereunder, SMA
shall be solely responsible for ensuring, and hereby agrees to ensure, that any
promotional, sales or advertising material is consistent with Section 3(a)(8) or
Rule 151, as applicable, with respect to such general account option; provided,
however, that SMA will not be responsible under this provision for marketing
materials used by Brokers or their Representatives which have not been
authorized by SMA under Section 4 of this Agreement.
EQUITIES shall be responsible for filing, as required, all
promotional, sales or advertising material, whether developed by SMA, EQUITIES
or DELAWARE, with the NASD and any federal and state securities governmental or
regulatory agencies. SMA shall be responsible for filing, as required, such
material, whether developed by SMA, EQUITIES or DELAWARE, with any state
insurance governmental or regulatory agencies. Neither DELAWARE nor DELAWARE
AGENCY AFFILIATES shall have any responsibility for any of the filings referred
to in this paragraph.
If any such promotional, sales or advertising material names
the Fund or the Fund's investment adviser, SMA shall furnish such material to
the Fund or the Fund's distributor
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(if other than DELAWARE) prior to its use. Such material shall not be used
unless written approval has been obtained from the Fund or the Fund's
distributor. Failure of the Fund or the Fund's distributor to respond shall not
relieve SMA or EQUITIES of the obligation to obtain the prior written approval
of the Fund or the Fund's distributor.
b. DELAWARE acknowledges that SMA shall have the unconditional right
to reject, in whole or in part, any application for a Contract. In the event an
application is rejected, any Purchase Payment submitted will be returned by or
on behalf of SMA to the applicant. SMA will notify DELAWARE and the Broker who
submitted the Purchase Payment of such action. In the event that a purchaser
exercises his free look right under his Contract, any amount to be refunded as
provided in such Contract will be so refunded to the purchaser by or on behalf
of SMA. SMA will notify DELAWARE and the Broker who solicited the sale of the
Contract of such action.
c. SMA and DELAWARE shall equally share the costs (other than those
borne by the Fund pursuant to the Participation Agreement) for printing any
preliminary and all definitive Prospectuses for the Contracts and Fund
Prospectuses and any supplements thereto.
d. DELAWARE will pay the following expenses related to its
wholesaling activities contemplated by this Agreement: (i) the compensation, if
any, of its Associated Persons; (ii) expenses associated with the initial
licensing and training of
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its Associated Persons involved in the wholesaling activities; (iii) the
printing and mailing of any promotional, sales or advertising material for use
in connection with the distribution of the Contracts; (iv) expenses associated
with telecommunications with SMA at the sites of DELAWARE or its Associated
Persons, including site installations and purchases, leases or rentals of
modems, terminals and other hardware, and lease line telephone charges; and (v)
any other expenses incurred by DELAWARE or its Associated Persons for the
purpose of carrying out the obligations of DELAWARE hereunder. Except for such
expenses and the expenses described in Section 4.c of this Agreement, DELAWARE
shall not be responsible for any expenses relating to the Contracts or
distribution of the Contracts or the processing of Contracts or applications,
including without limitation any expenses incurred in connection with the return
of Purchase Payments solicited by Brokers for applications rejected or not
timely received by SMA, or relating to any of the matters or acts contemplated
by this Agreement.
e. SMA will pay all expenses in connection with: (i) the preparation
and filing with appropriate governmental or regulatory agencies of the
Registration Statement and each preliminary Prospectus and definitive
Prospectus; (ii) the preparation and issuance of the Contracts; (iii) any
authorization, registration, qualification or approval of the Contracts required
under the securities, blue-sky laws or insurance laws of the States in the
Territory; (iv) registration
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fees for the Contracts payable to the SEC, the NASD or any other governmental or
regulatory agency; (v) the mailing of Prospectuses for the Contracts and Fund
Prospectuses and any supplements thereto, as required by federal securities
laws, and proxy soliciting materials and periodic reports relating to the Fund
or the Accounts to Contract owners; (vi) the printing of applications, the
Procedures and any other administrative forms utilized in connection with the
distribution of the Contracts; (vii) compensation as provided in Section 9
hereof; and (viii) any other expenses related to the distribution of the
Contracts except those set forth in Section 4.d of this Agreement and except as
provided in Section 4.c of this Agreement.
f. SMA alone shall be responsible for and bear the cost of
administration of the Contracts following their issuance including all
Contractowner service and communication activities, but DELAWARE shall be
responsible for answering inquiries from Brokers or Representatives regarding
the investment performance of the Contracts as permitted by applicable law.
g. SMA, as agent for EQUITIES, will confirm to each applicant for
and owner of a Contract in accordance with Rule 10b-10 under the 1934 Act its
acceptance of Purchase Payments and such other transactions as are required by
Rule 10b-10 or administrative interpretations thereunder and in accordance with
Release 8389 under the 1934 Act.
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5. Representations and Warranties
a. SMA and EQUITIES each represent and warrant to DELAWARE and each
DELAWARE AGENCY AFFILIATE, on the effective date of each Registration Statement
for the Contracts (or class of Contracts) and at each time that a Contract is
sold and, with respect to Clauses (7), (8), (11) and (12) below, also on the
date of this Agreement, as follows:
(1) The Registration Statement has been declared effective by
the SEC or has become effective in accordance with the Regulations.
(2) The Registration Statement and the Prospectus each comply
in all material respects with the provisions of the 1933 Act and the 1940
Act and the Regulations, and neither the Registration Statement nor the
Prospectus contains an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading, in light of the circumstances in
which they were made; provided, however, that none of the representations
and warranties in this Section 5.a(2) shall apply to statements in or
omissions from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to SMA in writing by
DELAWARE expressly for use in the Registration Statement.
(3) Neither SMA nor EQUITIES has received any notice from the
SEC with respect to the Registration
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Statement or the Account supporting the Contracts described in the Registration
Statement pursuant to Section 8(e) of the 1940 Act and no stop order under the
1933 Act has been issued and no proceeding therefor has been instituted or
threatened by the SEC.
(4) The accountants who certified the financial statements
included in the Registration Statement and Prospectus are independent
public accountants as required by the 1933 Act and the Regulations.
(5) The financial statements included in the Registration
Statement present fairly the respective financial positions of SMA and the
Account supporting the Contracts described in the Registration Statement
as of the dates indicated; and such financial statements have been
prepared in conformity with generally accepted accounting principles in
the United States applied on a consistent basis.
(6) Subsequent to the respective dates as of which information
is given in the Registration Statement or the Prospectus, there has not
been any material adverse change in the condition, financial or otherwise,
of SMA, EQUITIES or the Account supporting the Contracts described in the
Registration Statement that would cause such information to be materially
misleading.
(7) SMA has been duly organized and is validly existing as a
corporation in good standing under the laws of
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the State of Delaware with full power and authority to own, lease and
operate its properties and conduct its business in the manner described in
the Prospectus; is duly qualified to transact the business of a life,
health and accident insurance company; and is in good standing, in each
State in the Territory in which the Contracts are or will be offered.
(8) EQUITIES has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of Delaware
with full power and authority to own, lease and operate its properties and
conduct its business in the manner described in the Prospectus; is duly
registered as a broker-dealer with the SEC and with the securities
commission of every state in the Territory with which such registration is
required; and is a member in good standing with the NASD.
(9) The Account supporting the Contracts described in the
Registration Statement has been duly authorized and established and is
validly existing as a separate account under Title 18, Section 2392, of
the Delaware Insurance Code under the laws of the State of Delaware and is
duly registered with the SEC as a unit investment trust under the 1940
Act.
(10) The form of the Contracts has been approved to the extent
required by the Delaware Insurance Commissioner and by the governmental
agency responsible for
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regulating insurance companies in each other State in the Territory in
which the Contracts are offered.
(11) The execution and delivery of this Agreement and the
consummation of the transactions contemplated in this Agreement have been
duly authorized by all necessary corporate action by SMA and EQUITIES and
when so executed and delivered this Agreement will be the valid and
binding obligation of SMA and EQUITIES enforceable in accordance with its
terms.
(12) The consummation of the transactions contemplated by this
Agreement, and the fulfillment of the terms of this Agreement, will not
conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time) a default under,
the charter or bylaws of SMA or EQUITIES, or any indenture, agreement,
mortgage, deed of trust, or other instrument to which SMA or EQUITIES is a
party or by which either is bound, or violate any law, or, to the best of
SMA's or EQUITIES's knowledge, any order, rule or regulation applicable to
SMA or EQUITIES of any court or of any federal or state regulatory body,
administrative agency or any other governmental instrumentality having
jurisdiction over SMA or EQUITIES or any of their respective properties.
(13) No consent, approval, authorization or order of any court
or governmental authority or agency is required for the issuance or sale
of the Contracts or for the
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consummation of the transactions contemplated by this Agreement, that has
not been obtained.
(14) SMA has filed with the SEC all statements and other
documents required for registration under the provisions of the 1940 Act
and the Regulations thereunder of the Account supporting the Contracts
described in the Registration Statement, and such registration has been
effected; there are no agreements or documents required by the 1933 Act,
the 1940 Act or the Regulations to be filed with the SEC as exhibits to
the Registration Statement, that have not been so filed; and SMA has
obtained all exemptive or other orders of the SEC necessary to make the
public offering and consummate the sale of the Contracts pursuant to this
Agreement and to permit the operation of the Account supporting the
Contracts described in the Registration Statement, as contemplated in the
Prospectus.
(15) The Contracts have been duly authorized by SMA and
conform to the descriptions thereof in the Registration Statement and the
Prospectus and, when issued as contemplated by the Registration Statement,
will constitute legal, validly issued and binding obligations of SMA in
accordance with their terms.
b. DELAWARE represents and warrants to SMA on the date hereof as
follows:
(1) DELAWARE has taken all action including, without
limitation, those necessary under its articles of
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incorporation, by-laws and applicable state corporate law, necessary to
authorize the execution, delivery and performance of this Agreement and
all transactions contemplated hereunder.
(2) DELAWARE is and during the term of this Agreement shall
remain duly registered as a broker-dealer under the 1934 Act, a member in
good standing with the NASD, and duly registered as a broker-dealer under
applicable state securities laws.
6. Additional Responsibilities of SMA
a. SMA shall use its best efforts:
(1) to maintain the registration of the Contracts with the SEC
and any state securities commissions of any State in the Territory where
the securities or blue-sky laws of such State require registration of the
Contracts, including without limitation using its best efforts to prevent
a stop order from being issued or if a stop order has been issued to cause
such stop order to be withdrawn;
(2) to gain approval or other authorization of the Contract
forms where required under the insurance laws and regulations of each
State in the Territory (provided, however, that it shall be within SMA's
discretion whether to obtain such approval or authorization in Hawaii and
Guam); and
- 24 -
(3) to keep such registration, approval and authorization in
effect thereafter so long as the Contracts are outstanding.
b. During the term of this Agreement SMA shall take all action
required to cause each class of Contracts to comply, and to continue to comply,
as annuity contracts or life insurance contracts, as the case may be, and to
cause the Registration Statement and the Prospectus for each class of Contracts
to comply, and to continue to comply, with: all applicable federal laws and
regulations and all applicable laws and regulations of each State in the
Territory.
c. SMA, during the term of this Agreement, shall notify DELAWARE
immediately:
(1) When each Registration Statement has become effective or
any post-effective amendment with respect to the Registration Statement
thereafter becomes effective;
(2) Of any request by the SEC for any amendment to a
Registration Statement or supplement to a Prospectus or for additional
information;
(3) Of any event that makes any material statement made in a
Registration Statement or a Prospectus untrue in any material respect or
results in a material omission in a Registration Statement or a
Prospectus;
(4) Of the issuance by the SEC of any stop order with respect
to a Registration Statement or any amendment thereto or the initiation of
any proceedings for that
- 25 -
purpose or for any other purpose relating to the registration and/or
offering of the Contracts (or class of Contracts);
(5) In which States in the Territory registration of the
Contracts (or class of Contracts) is required under the securities or
blue-sky laws, and when such registrations have become effective.
d. SMA shall furnish to DELAWARE without charge promptly after
filing five (5) copies of each Registration Statement as originally filed and
any pre-effective or post-effective amendment thereto, including financial
statements and all exhibits, including exhibits incorporated therein by
reference.
e. SMA shall timely file all reports, statements and amendments
required to be filed by or for each Account or class of Contracts under the 1933
Act and/or the 1940 Act or the Regulations.
f. SMA shall deliver to DELAWARE, as soon as practicable after it
becomes available, the Annual Statement for SMA and for each Account in the form
filed with the State of Delaware, and shall deliver any quarterly reports upon
DELAWARE's request.
g. SMA and EQUITIES will provide DELAWARE access to such records,
officers and employees of SMA, EQUITIES and each Account at reasonable times as
is necessary to enable DELAWARE to fulfill its obligations under the federal
securities laws and
- 26 -
NASD rules. DELAWARE will provide SMA and EQUITIES access to such of its
records, officers and employees at reasonable times as is necessary to enable
SMA and EQUITIES to fulfill their obligations under the federal securities laws
and NASD rules.
7. Confidentiality and Trademark Rights
a. SMA and EQUITIES acknowledge that the names and addresses of all
customers and prospective customers (for purposes of this Section 7.a, the terms
"customers" and "prospective customers" shall not mean Brokers) of DELAWARE, of
its parent company and of any affiliated person of DELAWARE, DELAWARE AGENCY
AFFILIATES or of any Broker that may come to the attention of SMA, EQUITIES or
any person affiliated with SMA or EQUITIES as a result of their relationship
with DELAWARE, its parent company or any affiliated person of DELAWARE, DELAWARE
AGENCY AFFILIATES or any Broker and not from any independent source, are
confidential and shall not be used by SMA or EQUITIES or any person affiliated
with SMA or EQUITIES for any purpose whatsoever except as may be necessary in
connection with the administration of the Contracts sold by the Brokers,
including responses to specific requests made to SMA for service by Contract
owners or efforts to prevent the replacement of such Contracts or to encourage
the exercise of options under the terms of the Contracts. The restrictions set
forth in the previous sentence do not apply if and to the extent a Broker
knowingly discloses the names and addresses of its customers or prospective
customers to SMA or EQUITIES outside the operation of this
- 27 -
Agreement. In no event shall the names and addresses of such customers and
prospective customers be furnished by SMA, EQUITIES or any of their affiliated
persons to any other person. The intent of this paragraph is that neither SMA
nor EQUITIES, nor persons affiliated with SMA or EQUITIES, shall utilize, or
permit to be utilized, their knowledge of DELAWARE, of its parent company or of
any affiliated person of DELAWARE, DELAWARE AGENCY AFFILIATES or any Broker,
derived as a result of the relationship created through the funding and sale of
the Contracts or the solicitation of sales of any product or service. This
paragraph shall remain operative and in full force and effect regardless of the
termination of this Agreement, and shall survive any such termination.
b. Delaware Management Holdings, Inc. owns all right, title and
interest, including the good will associated therewith, in and to the marks
DELAWARE, DELAWARE GROUP and DELAWARE GROUP PREMIUM FUND, used in connection
with the underlying investment medium for the Contracts, and in and to the name
DELAWARE in whatever manner used in connection with the performance of this
Agreement. In addition, SMA agrees that Delaware Management Holdings, Inc. owns
all right, title and interest, including the goodwill associated therewith, in
and to the xxxx MEDALLION (and all variations thereof) used in connection with
the Contracts (such marks and the marks identified in the preceding sentence are
hereinafter referred to as "Delaware licensed marks"). Delaware Management
Holdings, Inc. has granted to DELAWARE the
- 28 -
right and license to use the Delaware licensed marks and the right to
sub-license others. DELAWARE hereby grants to SMA a non-exclusive right and
license to use the Delaware licensed marks in connection with the Contracts and
SMA's performance of the services as set forth under this Agreement.
(1) Term. The grant of license as specified in this Section
7.b shall terminate on the earlier of the following events: (A) a change of name
of the Fund to a name that does not include the term DELAWARE in accordance with
the provisions of the Investment Advisory Agreement between the Fund and
Delaware Management Company, Inc.; (B) whenever the Contracts shall cease to be
invested in the Fund; (C) solely at the option of DELAWARE, upon a termination
of this Agreement; or (D) 30 days after receipt by SMA of written notice of
termination, based on any or no reason, of the license from DELAWARE. Subject to
the preceding sentence, the grant of license as specified in this Section 7.b
shall survive the termination of the Agreement. Upon termination of the grant of
license, SMA shall immediately cease to issue new annuity contracts or life
insurance contracts or to use or disseminate any promotional, sales or
advertising material relating to the Contracts or service existing Contracts
under any of the Delaware licensed marks and shall likewise cease any activity
that suggests that it has any right under any of the Delaware licensed marks or
that it has any association with DELAWARE in connection with any such contracts.
- 29 -
(2) Pre-Release Approval of Trademark-Bearing Materials. SMA
agrees that it will display the Delaware licensed marks only in such form and
manner as are specifically approved by DELAWARE and that it will cause them to
appear on all promotional, sales or advertising material used in connection with
the Contracts or related services with such legends, markings and notices as
DELAWARE may request in order to give appropriate notice of service xxxx
registration when effected. SMA shall obtain the prior written approval of
DELAWARE for the public release of any material bearing the Delaware licensed
marks. Such material shall include, but not be limited to, samples of each
proposed standard Contract form and application, form correspondence with
Contractowners, standard reports to Contractowners and any other standard
operating material that bear any of the Delaware licensed marks.
During the term of this grant of license, DELAWARE may request
that SMA submit samples of any material bearing any of the Delaware licensed
marks that were previously approved by DELAWARE but, due to changed
circumstances, DELAWARE may wish to reconsider, or that were not previously
approved in the manner set forth above. If, on reconsideration or on initial
review, respectively, any such sample fails to meet with the written approval of
DELAWARE, then SMA shall immediately cease using or disseminating such
disapproved material. SMA shall obtain the prior written approval of DELAWARE
for the use of any new
- 30 -
material developed to replace the disapproved material, in the manner set forth
above.
(3) Acknowledgement of Ownership. SMA: (1) acknowledges and
stipulates that the Delaware licensed marks are valid and enforceable marks
owned exclusively by Delaware Management Holdings, Inc. and that, pursuant to
such ownership, Delaware Management Holdings, Inc. has the exclusive right to
use, and license others to use, the Delaware licensed marks as indications of
source, origin, sponsorship, affiliation or endorsement; (2) agrees never to
contend otherwise in legal proceedings or in other circumstances and agrees that
it will not, during the term of this license or thereafter, attack the validity
of the license; and (3) acknowledges and agrees that the use of the Delaware
licensed marks pursuant to this grant of license shall inure to the benefit of
Delaware Management Holdings, Inc. and shall not create any right of ownership
in the Delaware licensed marks for SMA.
(4) Assignment. This license is personal to SMA and may not be
assigned without the prior written consent of DELAWARE.
(5) Breach. If SMA shall violate or fail to perform any of its
obligations under this license, DELAWARE shall have the right to terminate this
license upon 30 days written notice, and such notice of termination shall become
effective unless SMA shall completely remedy the default within such 30-day
period. Termination of the license under the provisions of this
- 31 -
paragraph shall be without prejudice to any other rights that DELAWARE may have
against SMA.
(6) Quality of Services. The quality of all services performed
by SMA in connection with the license hereunder shall be of a standard that is
equally as high as that of DELAWARE's own in respect of the Delaware licensed
marks. DELAWARE also shall have the right, upon reasonable advance notice to
SMA, to inspect the process of performing any and all such services, at whatever
place or places the same may be conducted.
(7) DELAWARE's Rights. All rights in the Delaware licensed
marks other than those specifically granted herein are reserved by DELAWARE for
its own use and benefit. Upon the termination of this license, for any reason
whatsoever, all rights in the Delaware licensed marks and any service xxxx
registrations pertaining thereto shall automatically revert to DELAWARE. SMA
shall at any time, whether during or after the term of this license, execute any
documents reasonably required by DELAWARE to confirm DELAWARE's ownership of all
such rights.
8. Records. SMA, EQUITIES, DELAWARE and DELAWARE AGENCY AFFILIATES each
shall maintain such accounts, books and other documents as are required to be
maintained by each of them by applicable laws and regulations and shall preserve
such accounts, books and other documents for the periods prescribed by such laws
and regulations. The accounts, books and records of SMA,
- 32 -
EQUITIES, the Account, DELAWARE and DELAWARE AGENCY AFFILIATES as to all
transactions hereunder shall be maintained so as to clearly and accurately
disclose the nature and details of the transactions, including such accounting
information as necessary to support the reasonableness of the amounts paid by
SMA hereunder. Each party shall have the right to inspect and audit such
accounts, books and records of the other party during normal business hours upon
reasonable written notice to the other party. Each party shall keep confidential
all information obtained pursuant to such an inspection or audit, and shall
disclose such information to third parties only upon receipt of written
authorization from the other party, except as required by law.
9. Compensation
a. Commissions. SMA shall compensate DELAWARE or DELAWARE AGENCY
AFFILIATES for sales of the Contracts by the Brokers pursuant to Schedule 4 to
this Agreement, as such Schedule may be amended from time to time upon mutual
agreement of the parties to this Agreement. Such compensation shall be based on
Purchase Payments received and accepted by SMA for all Contracts issued on
applications obtained by the Brokers or any of their respective Representatives.
SMA will pay compensation due DELAWARE or DELAWARE AGENCY AFFILIATES in
accordance with the procedures set forth on Schedule 4. The compensation
provided for in this Section 9 shall be payable to DELAWARE for so long as the
Contracts are outstanding regardless of whether this Agreement is still in
effect. Compensation payable after the
- 33 -
termination of this Agreement shall be paid in accordance with Schedule 4 as in
effect at the time of termination.
If any State in the Territory by insurance rule, regulation or
statute, prohibits any payment of compensation to a class of business entities
including DELAWARE, DELAWARE shall designate in writing a business entity or
natural person, including DELAWARE AGENCY AFFILIATES, meeting the requirements
of such State to receive any amounts that may otherwise be payable to DELAWARE
hereunder. DELAWARE may change such designation from time to time upon written
notice to SMA. Any payments made by SMA to any person or entity so designated by
DELAWARE shall discharge SMA's liability to DELAWARE hereunder.
If a purchaser rescinds a Contract or exercises a right to
surrender a contract for return of all Purchase Payments, DELAWARE will pay on
demand the amount of any commissions it received on the Purchase Payments
returned.
b. Indebtedness. Nothing in this Agreement shall be construed as
giving DELAWARE the right to incur any indebtedness on behalf of SMA.
c. Appointment Fees. SMA will pay the initial and renewal fees for
agent appointment by SMA of duly licensed DELAWARE, DELAWARE AGENCY AFFILIATES
and Brokers and their respective Associated Persons; provided, however, that if
total sales of the Contracts do not exceed $20 million during any calendar year,
DELAWARE will reimburse SMA for the total amount
- 34 -
of initial or renewal fees paid by SMA during such calendar year(s).
d. Reporting. DELAWARE shall be responsible for all tax reporting
information that DELAWARE is required to provide under applicable tax law to its
Associated Persons with respect to the Contracts. Nothing contained in this
Agreement or any sales agreement with a Broker is to be construed to require
DELAWARE to provide any tax reporting information directly or indirectly to any
Broker or its Representatives.
e. Survival. This Section 9 shall remain operative and in full force
and effect regardless of the termination of this Agreement, and shall survive
any such termination.
10. Investigation and Proceedings
a. SMA, EQUITIES and DELAWARE will cooperate fully in any securities
or insurance governmental or regulatory investigation or proceeding or judicial
proceeding arising in connection with the offering, sale or distribution of the
Contracts for which DELAWARE acts as wholesaler pursuant to this Agreement.
Without limiting the foregoing, SMA, EQUITIES and DELAWARE agree to notify one
another promptly of any customer complaint or notice of any governmental or
regulatory investigation or proceeding or judicial proceeding received by any of
them with respect to SMA, EQUITIES, DELAWARE or any of their respective
Associated Persons or that may affect SMA's issuance of any Contract for which
DELAWARE acts as wholesaler pursuant to this Agreement.
- 35 -
b. In the case of a substantive customer complaint, SMA, EQUITIES,
DELAWARE and DELAWARE AGENCY AFFILIATES will cooperate in investigating such
complaint and any response by SMA or EQUITIES, as one party, or DELAWARE or
DELAWARE AGENCY AFFILIATES, as another party, to such complaint will be sent to
the other party for approval not less than five business days prior to its being
sent to the customer or any governmental or regulatory agency, except that if a
more prompt response is required, the proposed response shall be communicated by
telephone, telegraph or facsimile. Neither such party will release any such
response without the other party's prior written approval, unless otherwise
required by applicable law.
11. Indemnification
a. SMA and EQUITIES, jointly and severally, shall indemnify and hold
harmless DELAWARE and DELAWARE AGENCY AFFILIATES and each person who controls or
is associated with DELAWARE or DELAWARE AGENCY AFFILIATES within the meaning of
such terms under the federal securities laws, and any officer, director,
employee or agent of the foregoing, against any and all losses, claims, damages
or liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
DELAWARE, DELAWARE AGENCY AFFILIATES and/or such person may become subject,
under any statute or regulation, at common law or
- 36 -
otherwise, insofar as such losses, claims, damages or liabilities:
(1) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement, Prospectus, blue-sky application or other document executed by
SMA specifically for the purpose of qualifying any or all of the Contracts
for sale under the securities laws of any State, promotional, sales or
advertising material for the Contracts, or the Contracts themselves (or
any amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances in which
they were made; provided that this obligation to indemnify shall not apply
if such untrue statement or omission or such alleged untrue statement or
alleged omission was made in reliance upon and in conformity with
information furnished in writing to SMA or EQUITIES by DELAWARE
specifically for use in the preparation of any such Registration
Statement, Prospectus or blue-sky application or other document, material
or Contract (or any such amendment or supplement thereto); or
(2) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any Fund
Registration Statement, Fund Prospectus, blue-sky application or other
document executed by the Fund specifically for the purpose of qualifying
any or all of the shares of the Fund for sale under the securities law of
any State, or in any promotional, sales or advertising material or written
information relating to the shares of the Fund authorized by the Fund (or
any amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances in which
they were made, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with information
furnished in writing to DELAWARE or the Fund by SMA specifically for use
in the preparation of any such Fund Registration Statement, Fund
Prospectus, blue-sky application or other document (or any such amendment
or supplement thereto); or
(3) arise out of or are based upon any untrue statement or
alleged untrue statement or omission or alleged omission of a material
fact by or on behalf of SMA or
- 37 -
EQUITIES (other than statements or representations contained in the Fund
Registration Statement, Fund Prospectus or promotional, sales or
advertising material of the Fund that were not supplied by SMA, EQUITIES
or persons under their control) or wrongful conduct of SMA or EQUITIES or
persons under their control with respect to the sale or distribution of
the Contracts; or
(4) result because of the terms of any Contract or because of
any material breach by SMA or EQUITIES of any terms of this Agreement or
of any Contract or that proximately result from any activities of SMA's or
EQUITIES' officers, directors, employees or agents or their failure to
take action in connection with the sale of a Contract, to the extent of
SMA's or EQUITIES' obligations under this Agreement or otherwise, or the
processing or administration of the Contracts.
This indemnification obligation will be in addition to any liability that SMA or
EQUITIES may otherwise have; provided, however, that no person shall be entitled
to indemnification pursuant to this Section 11.a if such loss, claim, damage or
liability is due to the willful misfeasance, bad faith, gross negligence or
reckless disregard of duty by the person seeking indemnification.
b. DELAWARE shall indemnify and hold harmless SMA and EQUITIES and
each person who controls or is associated with SMA or EQUITIES within the
meaning of such terms under the federal securities laws and any officer,
director, employee or agent of the foregoing, against any and all losses,
claims, damages or liabilities, joint or several (including any investigative,
legal and other expenses reasonably incurred in connection with, and any amounts
paid in settlement of, any action, suit or proceeding or any claim asserted), to
which SMA and/or any such person may become subject under any statute or
regulation, at common law or
- 38 -
otherwise, insofar as such losses, claims, damages or liabilities arise out of
or are based upon:
(1) any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus or
blue-sky application or other document executed by SMA specifically for
the purposes of qualifying any or all of the Contracts for sale under the
securities law of any State (or any amendment or supplement to the
foregoing), or omission or alleged omission to state therein a material
fact required to be stated therein or necessary in order to make the
statements therein not misleading, in light of the circumstances in which
they were made, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with information
furnished in writing to SMA or EQUITIES by DELAWARE specifically for use
in the preparation of any such Registration Statement, Prospectus, such
blue-sky application or other document (or any such amendment or
supplement thereto); or
(2) any use of promotional, sales or advertising material for
the Contracts not authorized by SMA or any verbal or written
misrepresentations or any unlawful sales practices concerning the
Contracts by DELAWARE or DELAWARE AGENCY AFFILIATES under federal
securities laws or NASD regulations (but not including state insurance
laws compliance with which is a responsibility of SMA or EQUITIES under
this Agreement or otherwise); or
(3) claims by agents, representatives or employees of DELAWARE
for commissions or other compensation or remuneration of any type; or
(4) any material breach by DELAWARE or DELAWARE AGENCY
AFFILIATES of any provision of this Agreement.
This indemnification obligation will be in addition to any liability that
DELAWARE may otherwise have; provided, however, that no person shall be entitled
to indemnification pursuant to this Section 11.b if such loss, claim, damage or
liability is due to the willful misfeasance, bad faith, gross negligence or
reckless disregard of duty by the person seeking indemnification.
- 39 -
c. After receipt by a party entitled to indemnification
("indemnified party") under this Section 11 of notice of the commencement of any
action, if a claim in respect thereof is to be made by the indemnified party
against any person obligated to provide indemnification under this Section 11
("indemnifying party"), such indemnified party will notify the indemnifying
party in writing of the commencement thereof as soon as practicable thereafter,
provided that the omission to so notify the indemnifying party will not relieve
it from any liability under this Section 11, except to the extent that the
omission results in a failure of actual notice to the indemnifying party and
such indemnifying party is damaged solely as a result of the failure to give
such notice. The indemnifying party, upon the request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be
- 40 -
inappropriate due to actual or potential differing interests between them. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party shall
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment.
d. The indemnification provisions contained in this Section 11 shall
remain operative in full force and effect, regardless of (i) any investigation
made by or on behalf of SMA or by or on behalf of any controlling person
thereof, (ii) delivery of any Contracts and Purchase Payments therefor, or (iii)
any termination of this Agreement. A successor by law of DELAWARE or SMA, as the
case may be, shall be entitled to the benefits of the indemnification provisions
contained in this Section 11.
12. Termination
a. This Agreement may be terminated at the option of any party upon
six months advance written notice to the other parties, such termination to be
effective no earlier than one year following the date on which the first
Contract is issued to the public.
b. This Agreement shall terminate automatically if it is assigned.
This Agreement may be terminated at the option of SMA and EQUITIES, as one
party, or DELAWARE and DELAWARE AGENCY
- 41 -
AFFILIATES, as one party, upon the other party's material breach of any
provision of this Agreement.
c. Upon termination of this Agreement all authorizations, rights and
obligations shall cease except: (i) the obligation to settle accounts hereunder,
including commissions on Purchase Payments subsequently received for Contracts
in effect at the time of termination or issued pursuant to applications received
by SMA prior to termination; (ii) the provisions contained in Sections 7, 9 and
11 of this Agreement; and (iii) the indemnification provisions set forth in
Section 11 of this Agreement, or as otherwise specifically noted in this
Agreement.
13. Rights, Remedies, etc. are Cumulative. The rights, remedies and
obligations contained in this Agreement are cumulative and are in addition to
any and all rights, remedies and obligations, at law or in equity, which the
parties to this Agreement are entitled to under state and federal laws. Failure
of DELAWARE or DELAWARE AGENCY AFFILIATES, as one party, or SMA or EQUITIES, as
another party, to insist upon strict compliance by the other party with any of
the conditions of this Agreement shall not be construed as a waiver of any of
the conditions, but the same shall remain in full force and effect. No waiver of
any of the provisions of this Agreement shall be deemed, or shall constitute, a
waiver of any other provisions, whether or not similar, nor shall any waiver
constitute a continuing waiver.
- 42 -
14. Notices. All notices hereunder are to be made in writing and shall be
given:
if to SMA, to:
Xxxxxxx X. Xxxxxx XX
Vice President, Individual Insurance Marketing
SMA Life Assurance Company
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
if to EQUITIES:
Xxxxxxx X. Xxxxxx
President
SMA Equities, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
if to DELAWARE or DELAWARE AGENCY AFFILIATES, to:
Xxxxxx X. X'Xxxxx
Delaware Distributors, Inc.
Xxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
or such other address as such party may hereafter specify in writing. Each such
notice to a party shall be either hand delivered or transmitted by registered or
certified United States mail with return receipt requested, and shall be
effective upon delivery.
15. Interpretation, Jurisdiction, Etc. This Agreement constitutes the
whole agreement between the parties to this Agreement relating to the
wholesaling activities contemplated in this Agreement, and supersedes all prior
oral or written negotiations between the parties to this Agreement with respect
to the subject matter of this Agreement. The parties acknowledge that SMA,
DELAWARE and the Fund have entered into the Participation Agreement in
contemplation of entering into this
- 43 -
Agreement. This Agreement shall be construed and the provisions of this
Agreement interpreted under and in accordance with the internal laws of the
State of Delaware without giving effect to principles of conflict of laws.
16. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach of this Agreement, shall be settled by arbitration
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.
17. Headings. The headings in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions of
this Agreement or otherwise affect their construction or effect.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
19. Severability. This is a severable agreement and in the event that any
part or parts of this Agreement shall be held to be unenforceable to its or
their full extent, then it is the intention of the parties to this Agreement
that such part or parts shall be enforced to the extent permitted under the law,
and, in any event, that all other parts of this Agreement shall remain valid and
duly enforceable as if the unenforceable part or parts had never been a part of
this Agreement.
- 44 -
20. Regulation. This Agreement shall be subject to the provisions of the
1933 Act, 1934 Act and 1940 Act and the Regulations and the rules and
regulations of the NASD, from time to time in effect, including such exemptions
from the 1940 Act as the SEC may grant, and the terms of this Agreement shall be
interpreted and construed in accordance therewith. Without limiting the
generality of the foregoing, the term "assigned" shall not include any
transaction exempted from Section 15(b)(2) of the 1940 Act.
- 45 -
IN WITNESS WHEREOF, each party hereto represents that the officer signing
this Agreement on the party's behalf is duly authorized to execute this
Agreement; and each party has caused this Agreement to be duly executed by such
authorized officer on the date specified below.
SMA LIFE ASSURANCE COMPANY
Date: By: /s/ Xxxxxxx X. Xxxxxx XX
---------------------------------------
Name: Xxxxxxx X. Xxxxxx XX
Title: Vice President
SMA EQUITIES, INC.
Date: By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
DELAWARE DISTRIBUTORS, INC.
(On its own behalf and on behalf of
the DELAWARE AGENCY AFFILIATES)
Date: By: /s/ X. Xxxxxxx
---------------------------------------
Name: X. Xxxxxxx
Title: Vice President
- 46 -
Schedule 1
DELAWARE AGENCY AFFILIATES
Effective February 7, 1992
Name of State(s) In
DELAWARE AGENCY AFFILIATE Which Licensed
------------------------- --------------
Xxxxxx X. X'Xxxxx Pennsylvania
Schedule 2
Separate Account Subaccounts
Available under the Contracts
Effective February 7, 1992
Name of Separate Account Subaccounts Fund Portfolios
------------------------ ----------- ---------------
Separate Account VA-K of 201 Equity Income
SMA Life Assurance Company 000 Xxxx Xxxxx
000 Xxxxxxx Xxxxxxx
204 Money Market
205 Growth
206 Multiple Strategy
Schedule 3
Contracts Subject to Wholesaling Agreement
Effective February 7, 1992
SEC
Marketing Policy Registration Name of
Name of Contract Form No. No. Separate Account
---------------- -------- --- ----------------
Delaware Medallion
Variable Annuity A3019-92 33-44830 Separate Account VA-K
of SMA Life Assurance Company
SCHEDULE 4
COMPENSATION SCHEDULE
EFFECTIVE FEBRUARY 18, 1993
Net Commissions Payable by SMA to DELAWARE on Sale of Contracts
First $100 million of initial 1.80%*
and subsequent Purchase Payments
received and accepted by SMA
All initial and subsequent 1.55%*
Purchase Payments received
and accepted by SMA after
first $100 million
*The above percentages are reduced to 1.30% and 1.05%, respectively, for
Policies issued in Pennsylvania and to 1.675% and 1.425%, respectively, for
Policies issued in New Jersey. In any calendar year, if more than 1% of all
purchase payments made by Policy Owners during the first Policy Year are
withdrawn under the 10% Free Withdrawal privilege of the Policies, then Delaware
will pay on demand any commissions paid to Delaware and the Broker-Dealer firms
attributable to such excess purchase payments redeemed.
Actual commissions paid will be net of a charge to DELAWARE in the amount of $30
for each policy anniversary and surrender of any Contract issued to a trustee of
a 401(k) plan where the Accumulated Value was $50,000 or less. This charge will
apply only to the extent that SMA waives its policy fee for such 401(k) plans.
Commissions will be paid to DELAWARE according to then current SMA practice, but
no less frequently than twice each month.
3
