THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
MEMORANDUM OF AGREEMENT
Agreement made this _________ day of ____________, 19___ by and between The
Guardian Insurance & Annuity Company, Inc. ("GIAC"), a Delaware corporation and
a wholly-owned subsidiary of The Guardian Life Insurance Company of America
("Guardian Life"), having its Principal office located at 0 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx, 00000 and ________________ ("AGENT").
1. The undersigned Agent is presently a Career Development Manager ("CDM") of
Guardian Life in accordance with a Memorandum of Agreement bearing an
effective date of _______________ ("Guardian Life CDM Agreement").
2. GIAC hereby appoints the Agent CDM of GIAC for the limited purpose of
conducting and overseeing the business relating to GIAC's Variable Whole
Life Insurance Policies with Modified Scheduled Premiums marketed under
the name Park Avenue Life ("PAL") and GIAC's Flexible Premium Variable
Universal Life policy marketed under the name Park Avenue VUL ("VUL").
There may be one or more policies marketed under the PAL name and, where
necessary or appropriate, this Agreement will distinguish between them by
appending the year of introduction. Currently, there are two policies
marketed under this name -- "PAL '95 and PAL '97."
3. The CDM shall at all times be associated with Park Avenue Securities LLC
("PAS"), a Broker-Dealer registered with the Securities and Exchange
Commission ("SEC") and a member of the National Association of Securities
Dealers, Inc. ("NASD") as an NASD Registered Representative or NASD
Registered Principal and, if the particular jurisdiction requires, shall
be licensed or registered as a securities agent of PAS. The CDM must at
all times be validly licensed, registered or appointed by GIAC as a
variable contracts agent in accordance with the requirements of the
jurisdiction where solicitations for PAL and VUL contracts occur. The CDM,
his agents, brokers and Field Representatives may solicit for and sell PAL
and VUL contracts in any jurisdiction where such contracts are filed and
approved for sale by the governmental authorities having jurisdiction,
provided the CDM, his agents, brokers and Field Representatives are all
validly licensed, registered or otherwise qualified as required for the
solicitation and sale of the PAL and VUL contracts in such jurisdictions.
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4. To the extent applicable, the CDM shall comply strictly with: (a) the
laws, rules and regulations of all jurisdictions (state and local) in
which the CDM, his agents, brokers and Field Representatives solicit
applications for and sell PAL and VUL contracts; (b) federal laws and the
rules and regulations of the SEC; (c) the rules of the NASD; (d) the rules
and procedures of PAS, and (e) the rules and procedures of GIAC. The CDM
understands that failure to comply with such laws, rules, regulations and
procedures may result in disciplinary action against the CDM by the SEC, a
state or other local regulatory agency that has jurisdiction, the NASD,
PAS or GIAC. Before any solicitations or sales of PAL and VUL are made,
the CDM shall become familiar with and abide by the laws, rules,
regulations and procedures of all the above mentioned agencies or parties
as are currently in effect and as they may be changed from time to time.
5. The CDM shall have all applications for PAL and VUL accurately completed
or reviewed and signed by the applicant and shall submit the applications
to GIAC through PAS together with all payments received from applicants
without any reductions. The CDM, his agents, brokers and Field
Representatives shall cause all checks or orders for PAL and VUL to be
made payable to GIAC. GIAC shall reject any application that is submitted
by or on behalf of a CDM, his agents, brokers and Field Representatives
not appropriately licensed as required by paragraph 3 of this Agreement.
6. The CDM, his agents, brokers and Field Representatives shall not make any
statements concerning PAL and VUL except those that are contained in the
current prospectuses for PAL and VUL and the prospectuses for their
underlying variable investment options and they shall not solicit for
applications or make sales through the use of mailings, advertisements or
sales literature or any other method of contact unless the material or a
complete description of the method has been filed wit the NASD and
received written approval of PAS from a Registered Principal whose office
is located in a PAS Office of Supervisory Jurisdiction as that term is
defined by NASD rules.
7. In connection with the agent's appointment as a GIAC CDM for the purpose
set forth in paragraph 2 above, the entire Guardian Life CDM Agreement
referred to above and attached hereto as the Exhibit, including all
compensation adjustment provisions, is incorporated herein by reference.
Guardian Life CDM Agreement compensation provisions that do not apply to
PAL and VUL are as noted below. All references to ' "Company" within the
Guardian Life CDM Agreement shall apply with full force and effect to
GIAC. Additionally, the Registered Representative's Agreement between the
CDM and PAS and the Agent's Agreement between the CDM and GIAC are
incorporated herein by reference and attached hereto as Exhibits.
8. The CDM shall be paid additional compensation as outlined in Appendix A of
this Agreement and shall be paid commissions on personally produced
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PAL and VUL business as outlined in Appendix B of this Agreement.
Allocation of VUL premiums and the effect thereof on compensation is
described in Appendix C of this Agreement.
9. The CDM shall be responsible to the Company for any indebtedness that may
have resulted from PAL chargebacks applied to PAL business personally
produced the CDM.
10. This Agreement may be terminated as outlined in Section IV of the Guardian
Life CDM Agreement. In addition, it shall be automatically terminated if
the Guardian Life CDM Agreement, PAS Registered Representative Agreement
or GIAC Agent's Agreement is terminated.
IT SHALL BE EXPRESSLY UNDERSTOOD BY THE AGENT THAT THIS AGREEMENT SHALL NOT BE
EFFECTIVE UNLESS THE AGENT IS VALIDLY LICENSED IN ACCORDANCE WITH THE
REQUIREMENTS OF THE JURISDICTIONS WHERE SOLICITATIONS BY THE CDM AND THE AGENTS,
BROKERS AND FIELD REPRESENTATIVES OF THE CDM FOR PAL AND VUL POLICIES OCCUR.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed
as of the day and year first written above.
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WITNESS Authorized Company Officer
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WITNESS Career Development Manager
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APPENDIX A
A. CDM Additional Compensation (Percentages of First Year Premium)
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Type Rate
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PAL Policy Premiums 20%
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VUL Target Premiums 19%
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PAL Unscheduled Payments & VUL Excess Premiums 1%
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Section IIIB, Paragraph (K) Additional
Compensation 30%
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B. CDM Additional Compensation Chargebacks on PAL '95 Policies
Additional compensation on policy premiums shall be charged back to the CDM on
PAL '95 policies that are surrendered or lapsed prior to the policies having
been in force for at least 18 months in accordance with the following:
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Policy Months of PAL '95 Surrenders or Lapses Chargeback Percentages
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1-3 75%
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4-6 70%
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7-10 65%
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11-13 55%
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14 50%
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15 40%
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16 30%
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17 20%
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18 10%
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APPENDIX B
A. Commission Schedule (Percentages of Premium)
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PAL Unscheduled
Payments & VUL
Policy Years PAL Policy Premiums VUL Target Premiums Excess Premiums
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1 50% 45% 3%
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2 through 10 5% 3% 3%
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The first policy year commission rates of 50% on PAL and 45% on VUL shall be
reduced where policies are issued at ages over 70 with actual rates payable
determined by deducting from the figure 120 ages of applicable insureds as of
policy issue dates on PAL polices and by deducting from the figure 115 ages of
applicable insureds as of policy issue dates on VUL policies.
No compensation shall be payable on PAL policy premiums skipped under the
Premium Skip Option of PAL policies. If unscheduled payments are received when
policies should be on the Premium Skip Option, renewal commissions on such
payments shall be based on renewal rates of PAL policy premiums applied up to
amounts of premium that correspond to renewal PAL policy premiums that would
otherwise have been paid if not for the Premium Skip Option being in effect with
standard renewal rates on unscheduled payments applied to any premiums received
above such PAL policy premium levels.
B. First Policy Year Commission Chargebacks on PAL '95 Policies
First policy year commissions on policy premiums shall be charged back to the
Agent on PAL '95 policies that are surrendered or lapsed prior to the policies
having been in force for at least 18 months in accordance with the following:
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Policy Months of PAL '95 Surrenders or Lapses Chargeback Percentages
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1-3 75%
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4-6 70%
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7-10 65%
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11-13 55%
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14 50%
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15 40%
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16 30%
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17 20%
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18 10%
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APPENDIX C
ALLOCATION OF PREMIUMS AND THEIR EFFECT ON COMPENSATION
A. General
In a first policy year, premiums will first be applied to policy target
premium. These will be compensated at first year rates. Any premiums
received in the first year of a policy exceeding policy target premium
will be considered excess premium to be compensated at excess rates.
In policy years 2 through 10, any premium received up to nine times policy
target premium will be applied as policy target premium and receive
compensation at target premium renewal rates. Any premium exceeding nine
times policy target premium in policy years two through ten will be
considered excess premium to be compensated at excess rates.
In policy years 11 and greater, the compensation on premium received will
be at service fee rates.
B. Increases In Coverage
Coverage increases will be reflected in self-contained segments of
policies that have their own policy effective dates, policy year durations
and policy premiums. Premiums for policies with increases in coverage will
be applied to each coverage and associated target premiums in the order
the coverages were issued (earliest first). When the sum of the premiums
during a given policy year exceeds the sum of all applicable target
premiums, any additional amount will be allocated prorata based on target
premiums for each coverage. The amount thus allocated will be processed as
outlined in the above general description (i.e. it will be processed with
reference to policy years of the coverages and amounts of applicable
target premiums paid).
C. Decreases In Coverage
A coverage decrease will be applied to a last previous coverage increase,
if any, or to the initial coverage should no coverage increase have taken
place. Such decrease will serve to reduce target premium for the full
period so that any regular compensation on subsequent premium received
will be based on lower target premium (i.e. The total of renewal
compensation payable will be based on nine times the lower target
premium). Any premium amount applied over such lower target premium will
be compensated at excess rates for policy years 2 through 10 and at
service fee rates for policy years 11 and greater.
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APPENDIX C (CONTINUED)
First year compensation will be paid on coverage increases only to the
extent such increases should exceed previous coverage decreases.
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