GENERAL AMERICAN DISTRIBUTORS
SALES AGREEMENT
TABLE OF CONTENTS
I. DEFINITIONS ..................................................... 3
II. COMPLIANCE WITH APPLICABLE LAWS ................................. 4
III. AGREEMENTS, REPRESENTATIONS, AND COVENANTS ...................... 6
A. AGREEMENTS AND COVENANTS OF GAD ............................. 6
B. REPRESENTATIONS AND COVENANTS OF BROKER ..................... 6
IV. PRINCIPLES OF ETHICAL MARKET CONDUCT ............................ 14
V. COMPENSATION .................................................... 15
VI. COMPLAINTS AND INVESTIGATIONS ................................... 17
VII. RECORDS AND ADMINISTRATION ...................................... 18
VIII. PRIVACY INFORMATION ............................................. 19
A. PROPRIETARY INFORMATION ..................................... 19
B. RECEIPT OF CUSTOMER NONPUBLIC PERSONAL INFORMATION
FROM BROKER BY GAD .......................................... 19
C. TREATMENT OF NONPUBLIC PERSONAL INFORMATION DISCLOSED
TO BROKER BY GAD ............................................ 20
D. CONFIDENTIAL INFORMATION .................................... 20
E. PROTECTED HEALTH INFORMATION ................................ 22
IX. INDEMNIFICATION ................................................. 23
X. GENERAL PROVISIONS .............................................. 26
A. TERM AND TERMINATION ........................................ 26
B. ASSIGNABILITY ............................................... 26
C. AMENDMENTS .................................................. 27
D. NOTICES ..................................................... 27
E. ARBITRATION ................................................. 27
F. GOVERNING LAW ............................................... 28
G. ENTIRE UNDERSTANDING ........................................ 28
H. NO THIRD PARTY BENEFICIARIES ................................ 29
I. NON-EXCLUSIVITY ............................................. 29
J. WAIVER ...................................................... 29
K. COUNTERPARTS ................................................ 29
L. SEVERABILITY ................................................ 29
Enterprise Selling Agreement
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GENERAL AMERICAN FINANCIAL SALES AGREEMENT
This Agreement, including the Exhibits attached hereto (collectively, the
"Agreement") dated June 29th, 2002 ("Effective Date") by and among General
American Distributors, a Missouri corporation, ("GAD") and Linsco/Private Ledger
Corp., a California corporation that, for the distribution of traditional fixed
rate insurance products only, is a validly licensed insurance agency, or for the
distribution of registered products, 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 National Association of
Securities Dealers ("NASD") and is also either licensed as or is affiliated with
a validly licensed insurance agency (collectively "Broker").
WITNESSETH:
WHEREAS, GAD and its Affiliates issue or provide access to certain
insurance and financial products, including but not limited to, fixed rate
annuities, variable annuities, variable life insurance policies, fixed rate life
insurance policies, variable riders on such fixed rate products, and other
insurance products as identified on Exhibits A and B hereto (together, the
"Contracts"); and
WHEREAS, GAD, on behalf of itself and each Affiliate that issues or
provides access to the Contracts identified on Exhibits A and B hereto, is
authorized to enter into selling agreements with unaffiliated broker-dealers or
selling groups, as the case may be, to distribute the Contracts;
WHEREAS, GAD, subject to the terms and conditions of the Agreement, hereby
appoints Broker to solicit sales of and provide service with respect to the
Contracts which are set forth on the applicable Exhibits A and B on a
non-exclusive basis;
WHEREAS, Broker accepts such appointment and agrees to use its best efforts
to find purchasers for the Contracts; and
WHEREAS, GAD proposes to compensate Broker for the sale and servicing of
Contracts in accordance with the Compensation Schedules set forth in Exhibits A
and B.
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NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties hereto agree as follows:
I. DEFINITIONS
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1) Affiliate - Any entity that directly or indirectly controls, is
controlled by or is under common control with GAD, 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.
2) Agency - An associated insurance agency of Broker, identified on
Exhibit D hereto, which is properly licensed to participate in
the business of insurance.
3) Applicable Laws - Shall have the meaning given to such term as
in accordance with Section II of this Agreement.
4) Confidential Information - Shall have the meaning given to such
term as described in Section VII(D) of this Agreement.
5) Fixed Contracts - Contracts that are not variable and include,
without limitation, fixed rate annuities, fixed rate life
insurance and other fixed insurance contracts, issued by GAD, or
its Affiliates, as more fully described in Exhibit B, which may
be amended by GAD in its sole discretion from time to time.
6) General Agent - Shall have the meaning given to such term as
described in Section III(A)(2O) of this Agreement.
7) 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.
8) 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.
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9) 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.
10) Variable Contracts - Variable life insurance policies, variable
annuity contracts, variable insurance riders and other variable
insurance contracts, issued by GAD, or its Affiliates, as more
fully described in Exhibit A, which may be amended by GAD in its
sole discretion from time to time.
11) Representatives - those individuals, accepted by GAD to solicit
and sell Contracts under the terms of this Agreement, who are
duly licensed and appointed as a life insurance agent of GAD, and
with respect to registered products, are also duly registered,
individually, with the NASD in compliance with 1934 Act.
12) Protected Health Information or PHI -- 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 lo
the individual. PHI includes demographic information about
individuals, including names; addresses; dates directly related
to an individual, including but not limited to birth xxxx;
telephone numbers; fax numbers; E-mail addresses; Social Security
numbers; policy numbers; medical record numbers; account numbers;
and any other unique identifying number, characteristic, or
code. PHI includes, but is not limited to, information provided
by an individual on an application for a long term care insurance
policy or other health care plan issued by GAD or an affiliate of
GAD; information related to the declination or issuance of, or
claim under, a long term care insurance policy issued by GAD or
an affiliate; or information derived therefrom.
II. COMPLIANCE WITH APPLICABLE LAWS
-------------------------------
1) GAD and Broker agree to comply with all applicable state and
federal statutes, laws, rules, and regulations including with out
limitation, state insurance laws, rules and regulations, and
federal and state securities laws, rules and regulations.
Applicable stale and federal statutes, laws, rules and
regulations may also include, applicable rulings of federal and
state regulatory organizations, agencies and self regulatory
agencies, including without limitation state insurance
departments, the SEC and the NASD, 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
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or may hereafter become applicable to the parties hereto and the
transactions that are the subject of this Agreement ("Applicable
Laws").
2) Notwithstanding the foregoing, GAD and Broker agree to 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 verify customer identity, to conduct
customer due diligence, and to implement anti-money laundering
compliance programs. 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 employees; and an independent audit function.
3) Further, Broker agrees to comply with the economic sanctions
programs administered by the U.S. Treasury Department's Office of
Foreign Assets Control ("OFAC"). Broker certifies that it has an
OFAC compliance program in place which includes procedures for
checking customer names and persons with signature authority over
accounts against the OFAC lists of sanctioned governments and
specially-designated nationals, terrorists and traffickers; the
screening of wire transfers and other payments against the OFAC
lists; a designated compliance officer; an internal communication
network; training of appropriate personnel; and an independent
audit function.
4) GAD and Broker agree to promptly notify the other whenever
questionable activity or potential indications of suspicious
activity or OFAC matches are detected. GAD and Broker agree to
investigate any potentially suspicious activity and to take
appropriate action, including the blocking of accounts, the
filing of Suspicious Activity Reports and the reporting of
matches to OFAC, in connection with the Contracts.
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III. AUTHORIZATIONS, REPRESENTATIONS, AND COVENANTS
----------------------------------------------
A. AUTHORIZATIONS, REPRESENTATIONS, AND COVENANTS OF GAD
-----------------------------------------------------
1) GAD represents that it is duly authorized, on behalf of itself
and each Affiliate that issues or provides access to the
Contracts identified on Exhibits A and B hereto, to enter into
this Agreement with Broker to distribute such Contracts.
2) GAD authorizes Broker through its Representatives to solicit
applications for the Fixed Contracts listed in Exhibit B,
provided that (a) Broker shall not solicit applications for Fixed
Contracts except in those states where it and its Representatives
are appropriately licensed and, in which, the Fixed Contracts are
qualified for sale under Applicable Laws; and (b) Broker
complies in all other respects with the published policies and
procedures of GAD or its Affiliates, and with the terms of this
Agreement.
3) GAD authorizes Broker through its Representatives to offer and
sell the Variable Contracts listed in Exhibit A, provided that
(a) Broker shall not solicit applications for Variable Contracts
except in those states where it and its Representatives are
appropriately licensed; (b) there is an effective Registration
Statement relating to such Variable Contracts; (c) such Variable
Contracts are qualified for sale under Applicable Laws in such
state in which the sale or solicitation is to take place; and (d)
Broker complies in all other respects with the published policies
and procedures of GAD and its Affiliates, and with the terms of
the Agreement. GAD shall notify Broker or its designee of the
issuance by Ihe 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 GAD or its Affiliates to offer or issue
Variable Contracts listed in Exhibit A. GAD shall advise Broker
of any revision of or supplement to any prospectus related to the
Variable Contracts or underlying investments of such Variable
Contracts.
4) 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 by its own Board of Directors.
Pursuanttlo the foregoing, GAD shall specifically retain ultimate
authority, including but not limited to:
a) to refuse for any reason to appoint a Representative and
cancel any existing appointment at any time;
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b) to direct the marketing of its insurance products and
services;
c) to review and approve all advertising concerning, its
insurance products and services;
d) to underwrite all insurance policies issued by it;
e) to cancel risks;
f) to handle all matters involving claims adjusting and
payment;
g) to prepare all policy forms and amendments; and
h) to maintain custody of, responsibility for and control of
all investments.
B. REPRESENTATIONS AND COVENANTS OF BROKER
---------------------------------------
1) Broker represents and warrants that it will only offer Fixed
Contracts in those states where it or its Agency is appropriately
licensed and that it 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. Broker further represents that its Representatives who
will be soliciting applications for Fixed Contracts will at all
times be appropriately licensed under Applicable Laws.
2) 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 NASD, 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
will be soliciting applications for Variable Contracts, whether
alone or jointly with representatives of GAD or its designee,
will at all times as required by Applicable Laws be appropriately
registered and/or licensed under such laws and shall comply with
all requirements of the NASD, the 1934 Act and all other federal
and/or state laws applicable to the solicitation and service of
the Variable Contracts including without limitation the NASD
Rules of Fair Practice, and all insurance replacement regulations
and regulations prohibiting the rebating of commission.
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3) Broker represents that neither it nor any of its Representatives
are currently under investigation by any insurance regulator, the
NASD or SEC, any other self-regulatory organization or other
governmental authority (except for any investigations of which it
has notified GAD in writing). Broker further agrees that, if a
formal or informal investigation of Broker or any of its agents
is commenced by any insurance regulator, the NASD or SEC, any
other self regulatory organization or other governmental
authority, whether or not in connection with the sale of the
Contracts, Broker will notify GAD of the existence and subject
matter of such investigation. The Agency further agrees that no
subagent shall be appointed to solicit and procure Contracts of
GAD if the subagent has been convicted of any felony prohibited
by the federal Violent Crime Control and Law Enforcement Act of
1994.
4) Commencing at such time as GAD and Broker shall agree upon.
Broker shall find suitable purchasers for the Contracts for which
Representatives are licensed and authorized under Applicable
Laws. In meeting its obligation to solicit applications for the
Contracts, Broker shall engage in the following activities:
a) Broker shall use only those training, sales, advertising,
and promotional materials with respect to the Contracts that
have been pre-approved in writing by GAD for use at that
time;
b) Broker shall establish and implement reasonable procedures
for periodic inspection and supervision of sales practices
of its Representatives, and will, upon a reasonable written
request from GAD, provide a report to GAD on the results of
such inspections and the compliance with such procedures;
provided, however, that Broker shall retain sole
responsibility for the supervision, inspection and control
of its Representatives;
c) Broker shall take reasonable steps to ensure that its
Representatives shall not make recommendations to an
applicant to purchase a Contract in the absence of
reasonable grounds to believe that the purchase of a
Contract is suitable for such applicant as required by
Applicable Laws. Broker shall be solely responsible for
determining the suitability of recommendations to purchase a
Contract made by its agents or other representatives; and
notwithstanding the foregoing. Broker may offer the
Contracts in addition to offering other life insurance and
annuity products to customers of Broker. Furthermore, Broker
understands that no territory is exclusively assigned to
Broker hereunder. Broker acknowledges and agrees that GAD
may distribute the Contracts through its own employee's
agent and Representatives,
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including those of its Affiliates, or through any other
distribution method or system including (but not limited to)
agreements with other insurance agencies regarding the sale
of such Contracts in the territories, markets or
distribution channels covered by this Agreement.
d) 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 assure that applications submitted
to GAD are accurate, complete, compliant with the conditions
herein, and approved by a qualified registered principal.
With respect to variable Contracts distributed jointly by
Broker and representatives of GAD or its designee, Broker
shall ensure that all applications relating thereto have
been provided to Broker for its review and approval by a
qualified registered principal of Broker.
5) To the extent permitted by Applicable Laws. 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, together with any related application,
forms and any other required documentation to GAD. The Broker
shall make such remittances in accordance with any and all
policies and procedures described in the contract, insurance
policy, prospectus, if appropriate, and any collateral documents
associated with such Contracts.
6) Broker acknowledges that GAD, 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 GAD rejects
an application, GAD will immediately return any purchase payments
received directly to the Broker, and Broker will 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 Laws shall
specify, will be returned by GAD to the Broker, and the Broker
will be will be responsible for promptly returning such payments
to the purchaser. If a purchase payment is either refunded or
returned to the purchaser, no commission will be payable to
Broker hereunder, and any commission received by Broker will be
returned promptly to GAD. GAD may, at its option, offset any such
amounts against any amounts payable to Broker.
7) Broker is not a principal, underwriter or agent of GAD, or its
Affiliates, or any separate account of GAD or its Affiliates.
Broker shall act as an independent contractor, and nothing herein
contained
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shall constitute Broker, nor its agents or other representatives,
including Representatives as employees of GAD or its Affiliates
in connection with the solicitation of applications for Contracts
or other dealings with the public. Broker, its agents and its
other representatives, shall not hold themselves out to be
employees of GAD or its Affiliates in this connection or in any
dealings with the public.
8) Broker agrees that any material it develops, approves or uses for
sales, training, explanatory or other purposes in connection with
the solicitation of applications for the Contracts hereunder,
other than generic advertising material which does not make
specific reference to GAD, its Affiliates or the Contracts, will
not be used without the prior written consent of GAD.
9) Broker shall ensure that solicitation and other activities
undertaken by Broker or its Representatives shall be undertaken
only in accordance with Applicable Laws. Broker represents no
commissions, or portions thereof, or other compensation for the
sale of the Contracts will be paid to any person or entity that
is not duly licensed and appointed by GAD in the appropriate
states as required by Applicable Laws. Broker shall ensure that
Representatives fulfill any training requirements necessary to be
licensed or otherwise qualified to sell the Contracts. Broker
understands and acknowledges that neither it, nor any of its
Representatives, is authorized by GAD 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, policy, prospectus, or solicitation material authorized
for use in writing by GAD or its Affiliates. Broker shall not
make any representations or give information that is not
contained in the contract, policy, prospectus or solicitation
material of the Contracts.
10) Neither Broker nor its agents, designees or other
representatives shall have authority on behalf of GAD or its
Affiliates to alter or amend any Contract or any form related to
a Contract to adjust or settle any claim or commit GAD or its
Affiliates with respect thereto, or bind GAD or its Affiliates in
any way; or enter into legal proceedings in connection with any
matter pertaining to GAD's business without its prior written
consent. Broker shall not expend, nor contract for the
expenditure of, funds of GAD nor shall Broker possess or exercise
any authority on behalf of GAD other than that expressly
conferred on Broker by this Agreement.
11) Broker shall prepare any forms necessary to comply with
Applicable Laws or otherwise required in connection with the sale
of the Contracts, either as an initial transaction or as a
replacement for
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other insurance or annuity products, and Broker shall send such
forms to GAD. In the alternative, if such forms are not required,
but information with respect to a transaction or replacement is
required, Broker will transmit such information in writing to
GAD. Broker further shall notify GAD when sales of the Contracts
are replacement contracts. Such notification shall not be later
than the time that Broker submits applications for such Contracts
to GAD.
12) Broker shall furnish GAD and any appropriate regulatory authority
with any information, documentation, or reports prepared in
connection with or related to this Agreement which may be
requested by GAD or an appropriate regulatory authority in order
to ascertain whether the operations of GAD or Broker related to
the Contracts are being conducted in a manner consistent with
Applicable Laws.
13) Broker will adhere to all Applicable laws, including but not
limited to, state insurance replacement regulations, before it
receives or solicits any applications for Contracts.
14) Broker represents that it has full authority to enter into this
Agreement and that by entering into this Agreement it will not
impair any other of its contractual obligations with respect to
sales of any Contract.
15) Insurance Coverage.
------------------
a) Fidelity Bond. Broker shall secure and maintain a fidelity
-------------
bond (including coverage for larceny and embezzlement),
issued by a reputable bonding company, covering all of its
directors, officers, agents, Representatives, associated
persons and employees who have access to funds of GAD or its
Affiliates. This bond shall be maintained at Broker's
expense in at least the amount prescribed under Rule 3020 of
the NASD Conduct Rules or future amendments thereto. Broker
shall provide GAD with satisfactory evidence of said bond
upon GAD's reasonable request. Broker hereby assigns any
proceeds received from a fidelity bonding company, or other
liability coverage, to GAD, 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.
b) Plan of Insurance Agents. 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, which
shall provide coverage for errors and omissions of the
Broker, its Agency, representatives and agents,
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including Representatives. If such insurance plan terminates
for any reason during the term of the Agreement, Broker
shall immediately notify GAD of such termination. If
requested by GAD, Broker shall provide satisfactory evidence
of coverage under such insurance policy satisfactory to GAD
showing the amount and scope of coverage provided.
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 as referenced herein.
d) Broker represents that all of its directors, officers and
representatives are and shall be covered by blanket fidelity
bonds, including coverage for larceny and embezzlement,
issued by a reputable bonding company. These bonds shall be
maintained at Broker's expense and shall be at least, of the
form type and amount required under the NASD Rules of Fair
Practice. Upon request. Broker shall give evidence
satisfactory to GAD that such coverage is in force.
Furthermore, Broker shall give prompt written notice to GAD
of any notice of cancellation or change of such coverage.
Broker hereby assigns any proceeds received from a fidelity
bonding company, or other liability coverage, to GAD, for
itself or its Affiliates, as their interest may appear, to
the extent of their loss due to activities covered by the
bond, policy or other liability coverage.
16) In such cases where Broker intends to distribute the Variable
Contracts through an Agency, Broker further represents that:
a) Broker will operate and be responsible for all
securities-related services provided by Agency arising from
the offer, sale and/or servicing by its registered
Representatives of the Variable Contracts;
b) Agency will engage in the offer or sale of Variable
Contracts only through persons who are registered
Representatives of the Broker. Unregistered employees will
not engage in any securities activities, nor receive any
compensation based on transactions in securities or the
provision of securities advice;
c) Broker will be responsible for the training, supervision,
and control of its registered Representatives as required
under the 1934 Act and other applicable laws, including, but
not
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limited to, principal review and approval of all sales
literature and advertisements, periodic compliance audits,
and maintaining ability to appoint and terminate registered
persons.
d) Registered Representatives will be licensed under the
insurance laws of the states in which they do business and
will be appointed agents by Agency for which the
representatives may solicit applications in connection with
the offer and sale of insurance securities;
e) Broker and Agency, as applicable, will maintain the books
and records relating to the sale of Variable Contracts and
the receipt and disbursement of insurance commissions and
fees thereon. Such books and records will be maintained and
preserved in conformity with Ihe requirements of Section
17(a) of the 1934 Act and the Rules thereunder, to the
extent applicable, and will at all times be compiled and
maintained in a manner that permits inspection by
supervisory personnel of the Broker, the SEC, the NASD, and
other appropriate regulatory authorities; and
f) All premiums derived from the sale of the Variable Contracts
will be made payable to and sent directly to GAD or will be
sent by customers to the Broker for forwarding to GAD.
Agency will not receive, accumulate, or maintain custody of
customer funds.
17) In such cases where Broker intends to distribute Fixed Contracts
through an Agency. Broker agrees that before an agent is
permitted to solicit Contracts, Broker or its Agency shall have
entered into a written agreement pursuant to which the subagent;
(a) is authorized to deliver policies only upon the payment to it
of the premiums due thereon and upon compliance with the terms,
conditions and provisions of such policies; (a) shall promptly
remit to the Agency all funds collected on GAD's or its
Affiliates' behalf; (c) shall otherwise act only pursuant to the
limited authority granted to the Agency hereunder and shall
comply with all of the duties and obligations of the Broker
hereunder and the rules of GAD or its Affiliates; and (d) agrees
to GAD's right to offset from any compensation due the subagent
any indebtedness due from the subagent to GAD or its Affiliates
and to chargeback compensation under GAD's or its Affiliates'
rules. The Broker further agrees that it shall promptly remit to
GAD all funds collected on the behalf of GAD or its Affiliates.
18) Broker agrees to comply with the policies and procedures of GAD
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
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and procedures, as those policies and procedures may be provided
lo Broker by GAD from time to time.
19) For a period of 12 months after termination of the Agreement,
the Agency shall not, directly or indirectly, on a systematic
basis, contact the policyholders of GAD or its Affiliates or
condone such contact for the purpose of inducing any such
policyholders to lapse, cancel, and fail to renew or replace any
Contract. If the Agency, in the judgment of GAD is determined to
have engaged in such prohibited activity, then GAD shall have the
right to declare the Agency's claims for compensation or any
other benefit under the Agreement shall be forfeited and void.
GAD, on behalf of itself and its Affiliates, may also pursue all
remedies, including injunction, to assure compliance with the
covenants in this section and shall, if successful, be entitled
to recover from the Agency all costs and expenses incurred in
pursuing such remedies, including reasonable attorneys' fees.
20) In such cases where Broker shall distribute Contracts with the
assistance of the general agency distribution system of GAD
("General Agent"), the following additional terms shall apply:
a) Broker hereby acknowledges and consents to in advance the
participation of every General Agent, designated by GAD, as
a participating general agency under this Agreement.
b) Broker agrees that both it and its Representatives shall
work cooperatively with the General Agent(s) located in the
particular territory where a Contract is sold and through
which the sale is processed on behalf of GAD or its
Affiliates. Broker further agrees that with respect to each
such Contract, it will rely solely upon the General Agent(s)
for Contract issuance, servicing, the forwarding of
commissions, and other related matters. Notwithstanding the
foregoing, the Broker agrees that it shall look solely to
GAD and not to General Agent(s) for payment of any
commissions or other compensation payable pursuant to the
terms of this Agreement.
IV. PRINCIPLES OF ETHICAL MARKET CONDUCT
------------------------------------
As a member of the American Council of Life Insurance's Insurance
Marketplace Standards Association (IMSA), GAD expects that the Agency
and its subagents will 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
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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.
V. COMPENSATION
------------
1) GAD shall pay Broker compensation for the sale of each Contract
sold by Representative of Broker as set forth in the Compensation
Schedule(s) attached between GAD and either Broker or Agency, as
the case may be. GAD 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 will be
responsible for issuing checks, statements or forms for tax
purposes and other administrative duties connected with
compensation of such Representatives.
2) GAD may at any time offset against any compensation payable to
(a) the Agency or its successors or assigns, any indebtedness due
from the Agency to GAD or its Affiliates, and (b) the subagents
or their successors or assigns any indebtedness due from the
subagent to GAD or its Affiliates. Nothing contained herein shall
be construed as giving Agency or representative the right to
incur any indebtedness on behalf of GAD or its Affiliates. Any
remaining indebtedness of Broker to GAD 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 GAD to offset such
compensation against any such indebtedness of the Broker to GAD
or its Affiliates.
3) Neither Broker nor any of its Representatives shall have any
right to withhold or deduct any part of any purchase payment it
shall receive with respect to the Contracts covered by this
Agreement for purposes of payment of commission or otherwise.
4) No compensation shall be payable, and any compensation already
paid shall be returned to GAD on request, under each of the
following conditions:
a) if GAD or its Affiliates, in their sole discretion,
determine not to issue the Contract applied for.
Enterprise Selling Agreement
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b) if GAD or its Affiliates refund the premium paid by the
applicant, upon the exercise of applicant's right of
withdrawal pursuant to any "free-look" privilege,
c) if GAD or its Affiliates refund the premium paid by
applicant as a result of the resolution of a consumer
complaint, recognizing that GAD and its Affiliates have sole
discretion to refund premiums paid by applicants, or
d) if GAD 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.
5) GAD shall pay the compensation to Agency for Contracts credited
prior to the termination date of this Agreement, to the Agency
under the Agreement, as set forth in Compensation Schedule,
attached, while it is in effect. Such Compensation shall be
payable when the premium is due and paid to GAD subject to the
provisions of this Agreement and of the Compensation Schedule.
6) The compensation to be paid by GAD to Agency for the services
provided by Broker and Agency in connection with the joint
distribution of Contracts, if any, hereunder shall be set forth
on the credit line of the completed application form for the
product sold.
7) Agency and Broker hereby agree and acknowledge that compensation
attributable to the sale of any Contract issued by an Affiliate
shall be payable directly by GAD to Agency, and not by the
Affiliate. Agency and Broker further agree and acknowledge that
such payment of compensation by GAD 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 V(2) and
V(4) of this Agreement, or other compensation rules as may be set
forth in this Agreement, Compensation Schedules(s), or rules of
GAD or its Affiliates.
Enterprise Selling Agreement
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8) GAD shall not be obligated to pay any compensation, which would
violate the applicable laws of any jurisdictions, anything in
this Agreement notwithstanding.
9) Broker, either directly or by reimbursing GAD on request, shall
pay for expenses incurred by such Broker in connection with the
solicitation, offer and sale of the Contracts.
10) In addition to the conditions and limitations elsewhere contained
in the Agreement and the Compensation Schedule(s), no first year
commission shall be payable on replacements or switches of any
Contract with another Contract, which are undisclosed, and which
otherwise requires disclosure by either state regulation or GAD's
or its Affiliates' rules on replacement transactions; the
replacement or switching rules of each applicable Affiliate are
described on Exhibit C attached hereto.
11) With respect to compensation under this Agreement, in the event
that anything contained in this Section V conflicts with the
terms of the compensation described in the attached product
schedules, the terms contained in such schedules attached will
prevail.
VI. COMPLAINTS AND INVESTIGATIONS
-----------------------------
1) Broker and GAD jointly agree to cooperate fully in any regulatory
investigation or proceeding or judicial proceeding arising in
connection with the offer, sale, and/or servicing of the
Contracts.
2) Both the Broker and GAD jointly agree to investigate any customer
complaint in connection with the Contracts. The term customer
complaint shall mean an oral or written communication either
directly from the purchaser of or applicant for 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.
3) Such cooperation referred to in Sections VI(1) and VI(2) of this
Agreement shall include, but is not limited to, each party
promptly notifying the other of the receipt of notice of any such
investigation or proceeding, forwarding to the other party a copy
of any written materials in connection with the matter and such
additional information as may be necessary to furnish a complete
understanding of same. In the case of a customer complaint,
promptly refer such complaint to the other party for handling
where appropriate and provide the other party with customer
complaint information and documentation upon request. A complaint
is defined as a
Enterprise Selling Agreement
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written or documented verbal communication received by a company
or its distributors, which primarily expresses a grievance.
4) GAD 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,
policyholders 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 GAD and GAD, on behalf of
itself, settles the matter, Broker shall indemnify and hold
harmless GAD from any and all claims, complaints or grievances
made by Broker or any applicant, policyholder or other made in
connection with such matter.
VII. RECORDS AND ADMINISTRATION
--------------------------
1) Once a Contract has been issued, it will be delivered after
review by Broker to the applicant, accompanied by any applicable
Notice of Withdrawal Right and any additional appropriate
documents. GAD will confirm or cause to be confirmed to customers
all Contract transactions, as to the extent legally required, and
will administer the Contracts after they have been delivered, but
may from time to time require assistance from Broker. Broker
hereby undertakes to render such assistance to GAD.
2) Broker will maintain all books and records as required by Rules
17a-3 and l7a-4 under the 1934 Act, except to the extent that GAD
may agree to maintain any such records on Broker's behalf.
Records subject to any such agreement shall be maintained by GAD
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 GAD's or its Affiliates' right to ownership and control of
all pertinent records and documents pertaining to its business
operations including, without limitation, its operations relating
to the Contracts, which right is hereby recognized and affirmed.
GAD and Broker agree that each shall 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 or
regulation, as Confidential Information as described in Section
VIII(B) of this Agreement, and neither party shall reveal or
disclose such Confidential Information to any third party unless
such disclosure is authorized by the party affected thereby or
unless such disclosure is expressly required by applicable
federal or state regulatory authorities. However, nothing
contained herein
Enterprise Selling Agreement
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shall be deemed to interfere with any document, record or other
information, which by law, is a matter of public record.
VIII. PRIVACY INFORMATION
-------------------
A. PROPRIETARY INFORMATION
-----------------------
Any and all account records developed by GAD or its Affiliates, or
provided to GAD or its Affiliates by Broker or Broker's affiliates,
including but not limited to customer files, sales aides, computer
software, customer names, addresses, telephone numbers and related
paperwork, literature, authorizations, manuals and supplies of every
kind and nature relating to the Contracts and the servicing of the
Contracts are and shall remain the property of GAD or its Affiliates.
Such proprietary information and materials shall be treated as
nonpublic personal information and/or confidential information, as
appropriate pursuant to Sections VIII(A), (B), (C), and (D) of this
Agreement.
Any and all proprietary information and material developed and
provided by GAD and its Affiliates shall be returned to GAD (including
all copies made by the Broker or its affiliates) upon termination of
this Agreement. Any materials developed by the Broker or its
affiliates in support of the marketing, sales, advertising or training
related to GAD or its Contracts shall be destroyed upon the
termination of the Agreement.
B. RECEIPT OF CUSTOMER NONPUBLIC PERSONAL INFORMATION FROM BROKER BY GAD
---------------------------------------------------------------------
1) GAD will treat Nonpublic Personal Information regarding Broker's
customers provided to it by Broker under this Agreement as
Confidential Infomation under Section VIII(B) of this Agreement,
except that such provisions shall not apply to such information
regarding customers of Broker who were, are or become
policyholders or customers of GAD or its Affiliates other than by
reason of the services provided by Broker under this Agreement.
2) Notwithstanding the foregoing, GAD and its Affiliates shall have
the right to use or disclose such nonpublic personal infomation:
(a) to the full extent required to comply with Applicable Laws
or requests of regulators; (b) as necessary in connection with
any of GAD's audit, legal, compliance or accounting procedures;
(c) as necessary or permitted by Applicable Laws in the ordinary
course of business, for example to administer Contracts and
provide customer service to purchasers of
Enterprise Selling Agreement
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Contracts under this Agreement; (d) as authorized by such
customer; and (e) to protect against or prevent fraud.
3) GAD 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 customers, and such
marketing, offering, selling or distributing by GAD 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.
C. TREATMENT OF NONPUBLIC PERSONAL INFORMATION DISCLOSED TO BROKER BY GAD
----------------------------------------------------------------------
Broker will treat Nonpublic Personal Information regarding Broker's
customers provided to it by GAD under this Agreement as Confidential
Information and shall use such information only to solicit sales of
and to provide service with respect to Contracts sold pursuant to this
Agreement. Notwithstanding the foregoing, Broker shall have the right
to use or disclose Nonpublic Personal Information provided to it by
GAD to the extent permitted by Applicable Laws and GAD's or its
Affiliate's privacy policy, for example, to comply with Applicable
Laws or requests of regulators, in connection with Broker's audit
procedures, as authorized by such customers, and to protect against or
prevent fraud.
D. CONFIDENTIAL INFORMATION
------------------------
1) GAD and Broker will maintain the confidentiality of Confidential
Information disclosed by either party to the other party under
the terms of this Agreement. Except as otherwise provided in
Sections VIII(A) and VIII(B), neither GAD nor Broker shall
disclose any Confidential Information that is covered by this
Agreement, and shall only disclose such infomation if authorized
in writing by the affected party or if expressly required under
the terms of a valid subpoena or order issued by a court of
competent jurisdiction or regulatory body or applicable laws and
regulations. "Confidential Information" means: (a) any
information that this Agreement specifies will be treated as
"Confidential Information" under this Section VIII(D); (b) any
information of Broker and its affiliates disclosed by Broker to
GAD through the course of business during the term of this
Agreement, or any information of GAD and its Affiliates that is
disclosed by GAD to Broker through the course of business during
the term of this Agreement, in each such case if such information
is clearly identified as and marked "confidential" by the
disclosing party, such
Enterprise Selling Agreement
Page 20 of 43
information includes, but is not limited to, new products,
marketing strategies and materials, development plans, customer
information, client lists, pricing information, rates and values,
financial information and computer systems; (c) Nonpublic
Personal Information; and (d) information required to be treated
as confidential under Applicable Laws.
2) "Confidential Information" does not include (i) information which
is now generally available in the public domain or which in the
future enters the public domain through no fault of the receiving
party; (ii) information that is disclosed to the receiving party
by a third party without violation by such third party of an
independent obligation of confidentiality of which the receiving
party is aware; or (iii) information that the disclosing party
consents in writing that the receiving party may disclose.
3) The disclosing party warrants that it has the right to provide
access to, disclose and use, the Confidential Information to be
provided hereunder. The receiving party shall not be liable to
the other for:
a) inadvertent use, publication, or dissemination of the
Confidential Information received hereunder provided that:
(i) it uses the same degree of care in safeguarding such
information as it used for its own information of like
importance; (ii) it has complied with Applicable Laws; and
(iii) upon discovery of such, it shall take steps to prevent
any further inadvertent use, publication, or dissemination;
and/or
b) unauthorized use, publication or dissemination of the
Confidential Information received hereunder by persons who
are or have been in its employ unless it fails to safeguard
such information with the same degree of care as it uses for
its own proprietary information of like importance and
provided that the receiving party uses such Confidential
Information in accordance with Applicable Laws.
4) Any similarity between the Confidential Information and any other
information, regardless of medium, whether verbal or written, as
well as contracts and/or services acquired from third parties or
developed by the receiving party, or Affiliates independently
through its or their own efforts, thought, labor and ingenuity
shall not constitute any violation of this Agreement and shall
not subject the receiving party to any liability whatsoever.
Enterprise Selling Agreement
Page 21 of 43
5) The receiving party shall use the Confidential Information solely
for purposes contemplated by this Agreement and shall not
disclose the Confidential Information except as expressly
provided herein.
6) The receiving party understands that neither the disclosing party
nor any of its representatives or designees have made or make any
representation or warranty as to the accuracy or completeness of
the Confidential Information.
E. PROTECTED HEALTH INFORMATION
----------------------------
To the extent that Broker and its Representatives receive, create, has
access to or uses PHI, as that term is defined in Section I of the
Agreement, regarding individuals who are applicants for, owners of or
eligible for benefits under certain health insurance products and
optional riders offered by or through GAD or any of its Affiliates, in
accordance with the requirements of the federal Health Insurance
Portability and Accountability Act of 1996 and related regulations
("HIPAA"), as may be amended from time to time, Broker agrees:
1) Not to use or disclose PHI except (i.) to perform functions,
activities, or services for, or on behalf of, GAD or its
Affiliates as specified in the Agreement and consistent with
applicable laws, or (ii.) to the extent that such use or
disclosure is required by law. Any such use or disclosure shall
be limited to that required to perform such services or to that
required by relevant law.
2) To use appropriate safeguards to prevent use or disclosure of PHI
other than as permitted by this Agreement.
3) To promptly report to GAD any use or disclosure of PHI not
permitted by this Agreement of which Broker becomes aware and to
mitigate any harmful effect of any use or disclosure that is made
by Broker or its Representatives in violation of the requirements
of this Agreement.
4) To ensure that any third party with whom Broker contracts or is
hired under that arrangement, receives or has access to PHI
agrees to the same restrictions and conditions that apply to
Broker with respect to PHI under this Agreement.
5) To, within 15 days of GAD's request, provide GAD with any PHI or
information relating to PHI as deemed necessary by GAD to provide
individuals with access to, amendment of, and an accounting of
disclosures of their PHI.
6) To make Broker's records relating to 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 GAD's,
or one of its Affiliate's, compliance with HIPAA.
7) To, upon termination of this Agreement, in accordance with GAD's
wishes either return or destroy all PHI Broker maintains in any
form and retain no copies. If GAD agrees that such return or
Enterprise Selling Agreement
Page 22 of 43
destruction is not feasible. Broker shall extend these
protections to the PHI beyond the termination of the Agreement,
in which case any further use or disclosure of the PHI will be
solely for the purposes that make return or destruction
infeasible. Destruction without retention of copies is deemed
"infeasible" if prohibited by the terms of the Agreement or by
applicable law, including record retention requirements of
various state insurance laws.
IX. INDEMNIFICATION
---------------
1) Except with respect to matters relating to the joint distribution
of Contracts, the following indemnification provisions shall
apply:
a) GAD will indemnify and hold harmless Broker and Agency from
any and all losses, claims, damages or liabilities (or
actions in respect thereof), to which Broker may become
subject, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Prospectus,
Registration Statements or any other sales or offering
materials furnished or approved in writing by GAD for any of
the Contracts or any relevant funding vehicle or any
amendments or supplements thereto, or arise out of or are
based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary
to make the statements therein not misleading; and will
reimburse Broker for any legal or other expenses reasonably
incurred by it in connection with investigating or defending
against such loss, claim, damage, liability or action in
respect thereof; provided, however, that GAD shall not be
liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of or is based
upon an untrue statement or alleged untrue statement or
omission or alleged omission made by Broker when referring
to or explaining such Prospectus, amendment. Registration
Statement or any other sales or offering materials. GAD
shall not indemnify Broker for any action where an applicant
for any of the Contracts was not furnished or sent or given,
at or prior to written confirmation of the sale of a
Contract, a copy of the appropriate Prospectus (es), any
Statement of Additional Information, if required or
requested, and any supplements or amendments to either
furnished to Broker by GAD. The forgoing indemnities shall,
upon the same terms and conditions, extend to and inure to
the benefit of each director, trustee and officer of Broker
and any person controlling it.
b) Broker will indemnify and hold harmless GAD and its
Affiliates against any losses, claims, damages or
liabilities (or actions in respect thereof), to which GAD or
its Affiliates may become subject, insofar as such losses,
claims, damages, or liabilities (or actions in respect
Enterprise Selling Agreement
Page 23 of 43
thereof) arise out of or are based upon any negligent,
improper, fraudulent or unauthorized acts or omissions by
Broker, its employees, agents, representatives, officers or
directors, including but not limited to improper or unlawful
sales practices, any statement or alleged untrue
statement of any material fact, any omission or alleged
omission, any unauthorized use of sales materials or
advertisements, and any oral or written misrepresentations;
and will reimburse GAD or its Affiliates for any legal or
other expenses reasonably incurred by them in connection
with investigating or defending against any such loss,
claim, damage, liability or action. The foregoing
indemnities shall, upon the same terms and conditions,
extend to and inure to the benefit of each director, trustee
and officer of GAD and its Affiliates, and any person
controlling either GAD or its Affiliates.
c) Broker shall indemnify and hold harmless GAD and its
Affiliates from any and all losses, claims, damages or
liabilities (or actions in respect thereof) to which GAD or
its Affiliates may be subject, insofar as such losses,
claims, damages or liabilities (or actions in respect
thereof) arise out of or result from any breach of any
representation or warranty, covenant, agreement, obligation
or undertaking in this Agreement by Broker or its directors,
officers, employees or other representatives or by any other
person or entity acting on behalf of or under control of
Broker; and will reimburse GAD or its Affiliates for any
legal or other expenses reasonably incurred by them in
connection with investigating or defending against any such
loss, claim, damage, liability or action. The foregoing
indemnities shall, upon the same terms and conditions,
extend to and inure to the benefit of each director, trustee
and officer of GAD and its Affiliates, and any person
controlling either GAD or its Affiliates.
d) Broker shall indemnify and hold GAD and its Affiliates
harmless for any penalties, losses or liabilities resulting
from GAD improperly paying any compensation under this
Agreement, unless such improper payment was caused by GAD's
or its Affiliates' negligence or willful misconduct; and
will reimburse GAD or its Affiliates for any legal or other
expenses reasonably incurred by them in connection with
investigating or defending against any such loss, claim,
damage, liability or action. The foregoing indemnities
shall, upon the same terms and conditions, extend to and
inure to the benefit of each director, trustee and officer
of GAD, its Affiliates, and any person controlling either
GAD or its Affiliates.
2) With respect to matters relating to the joint distribution of
Contracts, the following indemnification provision shall apply:
Enterprise Selling Agreement
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a) GAD, and General Agent, where applicable, jointly and
severally, agree to indemnify Broker and Agency against and
hold them harmless from any and all claims, damages,
lawsuits, administrative proceedings, liabilities and
expenses (including reasonable attorneys' fees) against
Broker or Agency arising or resulting directly or indirectly
from acts or omissions of GAD or General Agents), including,
but not limited to, breach of any representation, warranty,
covenant or obligation of GAD or General Agent(s) under the
Agreement, or of any of their officers or employees in
connection with performance under the Agreement. For
purposes of this Section only, Broker shall be deemed to
include its "controlling persons" as defined in Section 15
of the 1933 Act and Section 20(a) of the 1934 Act.
b) Broker and Agency, where applicable, jointly and severally,
agree to indemnify GAD, its Affiliates and General Agent(s)
against and hold them harmless from any and all claims,
damages, lawsuits, administrative proceedings, liabilities
and expenses (including reasonable attorneys, fees) against
GAD, its Affiliates or General Agent(s) arising or resulting
directly or indirectly from acts or omissions of Broker or
Agency, including, but not limited to, breach of any
representation, warranty, covenant or obligation of Broker
or Agency under the Agreement, or of any of their officers
or employees in connection with performance under the
Agreement. For purposes of this Section only, GAD shall be
deemed to include its "controlling persons" as defined in
Section 15 of the 1933 Act and Section 2O(a) of the 0000
Xxx.
3) Promptly after receipt by an indemnified party of notice of the
commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying
party, notify the indemnifying party in writing of the
commencement thereof; but the omission to notify the indemnifying
party shall not relieve it from any liability which it may
otherwise have to any indemnified party. In case any such action
shall be brought against any indemnified party, it shall notify
the indemnifying party of the commencement thereof. The
indemnifying party shall be entitled to participate in, and, to
the extent that it shall wish, jointly with any other
indemnifying party, similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party.
After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other
than reasonable costs of investigation.
Enterprise Selling Agreement
Page 25 of 43
X. GENERAL PROVISIONS
------------------
A. TERM AND TERMINATION
--------------------
1) This Agreement shall continue in force for one year from its
Effective Date and thereafter shall automatically be renewed
every year for a further one year period; provided that either
party may unilaterally terminate this Agreement with or without
cause upon sixty (60) days' written notice to the other party of
its intention to do so.
2) Change in Status.
----------------
a) Broker-Dealer Status. The Agreement shall terminate
--------------------
immediately upon GAD or Broker ceasing to be a registered
broker-dealer or a member of the NASD.
b) Legal Status. The Agreement shall terminate immediately upon
------------
the termination of the legal existence of Broker or the
Agency, or the merger, consolidation, reorganization,
dissolution, receivership or bankruptcy of either, or
whenever the Broker or 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.
3) Upon termination of this Agreement, all authorizations, rights
and obligations shall cease except (a) the agreements contained
in Sections, VI, VIII, IX, X(E), X(F), and X(J) hereof; and (b)
the obligation to settle accounts hereunder. Except with respect
to records required to be maintained by Broker pursuant to Rules
I7a-3 and 17a-4 under the 1934 Act. Broker shall return to GAD,
within 30 days after the Effective Date of termination, any and
all records in its possession which have been specifically
maintained in connection with GAD's operations related to the
Contracts.
B. ASSIGNABILITY
-------------
This Agreement shall not be assigned by either party without the
written consent of the other; provided, however, that GAD may assign
this Agreement to its Affiliates at any time. Any purported assignment
in violation of this Section shall be void.
Enterprise Selling Agreement
Page 26 of 43
C. 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.
D. NOTICES
-------
Notices to be given hereunder shall be addressed to:
General American Distributors, Inc. Linsco/Private Ledger Corp.
000 Xxxxxx Xxxxxx Xxx Xxxxxx Xxxxxx, 00xx XX.
Xx. Xxxxx, XX 00000 Xxxxxx, XX 00000-0000
Attn: Law Department 617-423-3644
Attn: Xxxxxxxxx X. Xxxxx
Managing Director
General Counsel
E. ARBITRATION
-----------
1) All disputes and differences between the parties, other than
those arising with respect to the use of nonpublic personal
information under Section VIII must be decided by arbitration,
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.
2) 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.
3) 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.
4) Each party shall select an arbitrator within thirty-days (30)
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 will 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,
Enterprise Selling Agreement
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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.
5) The arbitrators shall interpret this Agreement as an honorable
engagement rather than merely as a legal obligation and shall
consider practical business and equitable principles as well as
industry custom and practice regarding the applicable insurance
and securities business. The arbitrators are released from
judicial formalities and shall not be bound by strict rules of
procedure and evidence.
6) The arbitrators shall determine all arbitration schedules and
procedural rules. Organizational and other meetings will be held
in Missouri, unless the arbitrators select another location. The
arbitrators shall decide all matters by majority vote.
7) 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.
8) Unless the arbitrators shall provide otherwise, each party will
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) one-half (1/2) of the
expenses of the arbitration, including the fees and expenses of
the arbitrators
F. GOVERNING LAW
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Missouri without regard to Missouri choice of
law provisions.
G. 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 representatives shall be binding.
Enterprise Selling Agreement
Page 28 of 43
H. NO THIRD PARTY BENEFICIARIES
----------------------------
GAD'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. Except as otherwise provided in the preceding
sentence, nothing in the Agreement shall convey any rights upon any
person or entity, which is not a party to the Agreement.
I. NON-EXCLUSIVITY
---------------
Broker and Agency agree that no territory or product is assigned
exclusively hereunder and that GAD 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.
J. 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.
K. COUNTERPARTS
------------
This Agreement may be executed in counterparts, with the same force
and effect as if executed in one complete document.
L. 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.
Enterprise Selling Agreement
Page 29 of 43
In reliance on the representations set forth and in consideration of the
undertakings described, the parties represented below do hereby contract and
agree.
GENERAL AMERICAN DISTRIBUTORS
(BROKER-DEALER)
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxx President
----------------------------------------
Print Name & Title
Date 4/24/03
LINSCO/PRIVATE LEDGER CORP.
(SELLING BROKER-DEALER)
By: /s/ Xxxxxxxxx X. Xxxxx
-------------------------------------
Managing Director
Xxxxxxxxx X. Xxxxx General Counsel
----------------------------------------
Print Name & Title
Date 3-31-03
Enterprise Selling Agreement
Page 30 of 43
