EXHIBIT (c)(1)
FORM OF DISTRIBUTION AGREEMENT
THIS AGREEMENT, entered into as of this _____ day of ____________, 2003
is among FARMERS NEW WORLD LIFE INSURANCE COMPANY ("Farmers"), on behalf of
itself and FARMERS VARIABLE LIFE SEPARATE ACCOUNT A (the "Separate Account"), a
separate account established by Farmers, and WM FUNDS DISTRIBUTOR, INC. (the
"Distributor").
WITNESSETH:
WHEREAS, Farmers has established the Separate Account by resolution of
its Board of Directors on its books of account, for the purpose of supporting
variable life insurance contracts; and
WHEREAS, the Separate Account is registered with the Securities and
Exchange Commission ("Commission") as a unit investment trust under the
Investment Company Act of 1940 (the "1940 Act") (File No. 811-09507); and
WHEREAS, certain flexible premium variable life insurance contracts
identified in Attachment A hereto ("Contracts") to be issued by Farmers and
funded through the Separate Account are registered with the Commission under the
Securities Act of 1933 (the "1933 Act") for offer and sale to the public, and
otherwise are in compliance with all applicable laws; and
WHEREAS, the Distributor, a broker-dealer registered under the
Securities Exchange Act of 1934 (the "1934 Act") and a member of the National
Association of Securities Dealers, Inc. (the "NASD"), proposes to act as a
principal underwriter and distributor on a non-exclusive agency basis in the
marketing and distribution of the Contracts; and
WHEREAS, Farmers desires to obtain the services of the Distributor as
distributor of said Contracts issued by Farmers and funded through the Separate
Account;
NOW THEREFORE, in consideration of the foregoing, and of the mutual
covenants and conditions set forth herein, and for other good and valuable
consideration, Farmers, the Separate Account and the Distributor hereby agree as
follows:
1. The Distributor will serve as distributor on a non-exclusive agency
basis for the Contracts, which will be issued by Farmers through the
Separate Account. Farmers shall make the Contracts available to the
Distributor for distribution pursuant to this Agreement. The
Distributor represents that it will actively engage in its duties under
this Agreement on a continuous basis while the registration statements
with respect to the Contracts (the "Registration Statements") (or any
other registration statements filed and declared effective in lieu
thereof) remain effective with respect to the Contracts. It is
understood that the Distributor has no present intention of engaging in
sales of the Contracts on a retail basis and intends to restrict its
distribution activities to wholesaling activities.
2. The Distributor and Farmers agree that Separate Account will invest
amounts attributable to the Contracts solely in shares of the
investment companies set forth under Attachment
F, which may be amended from time to time by mutual consent of the
Distributor and Farmers. Farmers acknowledges that the Distributor will
not ordinarily consent to the addition to Attachment F of investment
companies for which an affiliate of the Distributor does not serve as
investment adviser, absent additional fees to the Distributor.
3. Except in connection with an indemnity obligation under Section 25 of
this Agreement, the Distributor shall not expend, nor contract for the
expenditure of, the funds of Farmers except as expressly provided for
by this Agreement. The Distributor shall not possess or exercise any
authority on behalf of Farmers other than that expressly conferred on
the Distributor by this Agreement.
4. The Distributor will, either directly or through an affiliate approved
by Farmers, provide on a continuing basis information and marketing
assistance to duly authorized, licensed and appointed insurance agents
and broker-dealers who have entered into a selling agreement as
contemplated by Section 5 of this Agreement.
5. The Distributor shall be responsible for its compliance, in connection
with its duties as distributor of the Contracts under this Agreement,
with the requirements of: (a) the 1934 Act; (b) any state securities
laws to the extent broker-dealer registration requirements imposed
thereby are applicable to it in performing such duties; (c) the NASD
filing requirements with respect to any advertisements and sales
literature for the Contracts, regardless of which person prepared such
material (provided that any such material that was not prepared by the
Distributor has been provided to the Distributor for filing) (d) all
applicable state insurance laws and regulations; and (e) any other
applicable federal or state law, rule or regulation. In the event that
the Distributor should determine that compliance with applicable state
insurance laws so requires and so notifies Farmers, Farmers shall
appoint and maintain the appointment of the Distributor as necessary or
appropriate for the Distributor to engage in the offer and sale of the
Contracts during the term of this Agreement, and in that regard shall
appoint any individuals associated with the Distributor and designated
by the Distributor as agents acting on its behalf, provided, however,
that Farmers reserves the right to refuse to appoint any such person or
renew any such appointment or to terminate an appointment, consistent
with its duties and responsibilities under applicable insurance law.
Farmers shall be responsible for the payment of all fees for state
insurance appointments for the Distributor and its associated persons
and the making of all filings required to effect such appointments
during the term of this Agreement. Moreover, the Distributor shall
conduct its affairs in accordance with the rules of the NASD (the "NASD
Rules").
6. The Distributor may recruit selling firms interested in offering the
Contracts ("Retailers"). The Distributor shall not recommend a Retailer
for a selling agreement unless the Distributor first conducts a
background investigation and determines that the Retailer meets the
standards established jointly by Farmers and the Distributor. The
Distributor shall provide Farmers with a written list of Retailers that
meet such standards for appointment. The Distributor and Farmers may
jointly enter into selling agreements with Retailers to sell the
Contracts. Any such selling arrangement is expressly made subject to
this Agreement. Farmers shall take all actions necessary to effect the
appointment of such registered sales representatives of such Retailers
as may from time to time be
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identified to Farmers by the Distributor as qualified to serve as
insurance agents of Farmers, provided, however, that Farmers reserves
the right, in its reasonable discretion, to refuse to appoint any such
person or renew any such appointment or to terminate any appointment,
consistent with its duties and responsibilities under applicable law.
7. Both parties acknowledge their intention that all sales of the
Contracts by Retailers be made in accordance with suitability
standards, including those established by law, rule or regulation, as
well as any standards that may be established by mutual agreement of
the Distributor and Farmers from time to time.
8. Warranties.
(a) Farmers represents and warrants to the Distributor that:
(i) The Registration Statement on Form S-6 for the
Contracts (as converted to Form N-6 as described
below, the "Registration Statement") has been filed
with the Commission in the form previously delivered
to the Distributor. Farmers intends to convert the
Registration Statement to Form N-6 by May 1, 2003, as
required by the Commission. Farmers agrees that it
shall forward to the Distributor copies of any and
all amendments to the Registration Statement,
together with any voting instruction solicitation
material and other documents relating to the Separate
Account or the Contracts, at the time that they are
filed with the Commission;
(ii) The Registration Statement and any further amendments
or supplements thereto will, when they become
effective, and the prospectus and statement of
additional information when and as required,
constituting part of the Registration Statement (the
"Prospectus") will, at all times, conform in all
material respects to the requirements of the 1933 Act
and the 1940 Act, and the rules and regulations of
the Commission under such Acts, and will not contain
an untrue statement of a material fact or omit to
state a material fact required to be stated therein
or necessary to make the statements therein not
misleading; provided, however, that this
representation and warranty shall not apply to any
statement or omission made in reliance upon and in
conformity with information furnished in writing to
Farmers by the Distributor expressly for use therein;
(iii) Farmers is validly existing as a stock life insurance
company in good standing under the laws of the state
of Washington, with power (corporate or otherwise) to
own its properties and conduct its business as
described in the Prospectus, and has been duly
qualified for the transaction of business and is in
good standing under the laws of other jurisdictions
in which it owns any property, or conducts any
business, so as to require such qualification.
Farmers is in compliance in all material respects
with the insurance laws, rules and regulations in
those states in which it conducts business and will
remain in compliance in all material respects with
all applicable laws, rules and regulations,
including, without limitation, all laws, rules and
regulations listed on Attachment D, as it may be
amended
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from time to time by mutual agreement of the parties.
The omission of a reference to a law, rule or
regulation in this Agreement shall not be deemed to
be acknowledgement by any party that such law, rule
or regulation does not apply to Farmers;
(iv) The Contracts to be issued through the Separate
Account and offered for sale by the Distributor on
behalf of Farmers hereunder have been duly and
validly authorized and, when issued and delivered
against payment therefor as provided herein, will be
duly and validly issued and will conform to the
description of such Contracts contained in the
Prospectuses relating thereto and will comply in all
material respects with applicable federal and state
law;
(v) The performance of this Agreement and the
consummation of the transactions contemplated by this
Agreement will not result in a breach or violation of
any of the terms and provisions of, or constitute a
default under any statute, any indenture, mortgage,
deed of trust, note agreement or other agreement or
instrument to which Farmers is a party or by which
Farmers or any of its properties is bound, Farmers'
charter as a stock life insurance company or by-laws,
or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over
Farmers or any of its properties; and no consent,
approval, authorization or order of any court or
governmental agency or body is required for the
consummation by Farmers of the transactions
contemplated by this Agreement, except such as will
not have a materially adverse effect on Farmers'
performance of this Agreement and the consummation by
Farmers of the transactions contemplated herein;
(vi) There are no material legal or governmental
proceedings pending to which Farmers or the Separate
Account is a party or of which any property of
Farmers or the Separate Account is the subject, other
than as set forth in the Prospectus relating to the
Contracts, and other than litigation incident to the
kind of business conducted by Farmers, if determined
adversely to Farmers, would individually or in the
aggregate have a material adverse effect on the
financial position, surplus or operations of Farmers.
(vii) Farmers shall submit to the Distributor or its
designee such reports, materials or data, in such
form and signed by such of its officers as the
Distributor may reasonably request for the purpose of
complying with any applicable federal or state law or
regulation; and
(viii) Farmers is in compliance in all material respects
with all applicable federal, state and
self-regulatory organization laws, rules and
regulations, including, without limitation, all laws,
rules and regulations listed on Attachment D, as it
may be amended from time to time by mutual consent of
Farmers and the Distributor.
(b) The Distributor represents and warrants to Farmers that:
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(i) Distributor is validly existing as a corporation in
good standing under the laws of the State of
Washington, with power (corporate or otherwise) to
own its properties and conduct its business as a
broker-dealer in securities and has been duly
qualified for the transaction of such business and is
in good standing under the laws of each other
jurisdiction in which it owns any property, or
conducts any business, so as to require such
qualification.
(ii) It is a broker-dealer duly registered with the
Commission pursuant to the 1934 Act and a member in
good standing of the NASD, and, where required, is
duly registered under and is in compliance in all
material respects with the securities laws, rules and
regulations in those states in which it conducts
business as a broker-dealer and will remain in
compliance in all material respects with all
applicable federal, state and self-regulatory
organization laws, rules and regulations, including,
without limitation, all laws, rules and regulations
listed on Attachment D, as it may be amended from
time to time by mutual agreement of the parties. The
omission of a reference to a law, rule or regulation
in this Agreement shall not be deemed to be
acknowledgement by any party that such law, rule or
regulation does not apply to the Distributor;
(iii) To the extent that any statements or omissions made
in the Registration Statement, or any amendment or
supplement thereto are made in reliance upon and in
conformity with written information furnished to
Farmers by the Distributor expressly for use therein,
such Registration Statement and any amendments or
supplements thereto will, when they become effective
or are filed with the Commission, as the case may be,
conform in all material respects to the requirements
of the 1933 Act and the rules and regulations of the
Commission thereunder and will not contain any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or
necessary to make the statements therein not
misleading;
(iv) The performance of this Agreement and the
consummation of the transactions contemplated by this
Agreement will not result in a breach or violation of
any of the terms and provisions of, or constitute a
default under any statute, any indenture, mortgage,
deed of trust, note agreement or other agreement or
instrument to which the Distributor is a party or by
which the Distributor or any of its properties is
bound, the Distributor's charter or by-laws, or any
order, rule or regulation of any court or
governmental agency or body having jurisdiction over
the Distributor or any of its properties; and no
consent, approval, authorization or order of any
court or governmental agency or body is required for
the consummation by the Distributor of the
transactions contemplated by this Agreement;
(v) There are no material legal or governmental
proceedings pending to which the Distributor is a
party or of which any property of the Distributor is
the subject, other than as set forth in the
Prospectus relating to the Contracts, and other than
litigation incident to the kind of business conducted
by the
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Distributor, if determined adversely to the
Distributor, would individually or in the aggregate
have a material adverse effect on the financial
position, surplus or operations of the Distributor.
(vi) The Distributor shall submit to Farmers or its
designee such reports, materials or data, in such
form and signed by such of its officers as Farmers
may reasonably request for the purpose of complying
with any applicable federal or state law or
regulation; and
(vii) The Distributor has developed and implemented a
written anti-money laundering program that is in
compliance with the requirements imposed by NASD Rule
3011 with regard to sales of the Contracts.
9. Farmers, as agent for the Distributor, shall keep the books and records
listed in Attachment G in a manner and form prescribed by Distributor.
Farmers acknowledges that such books and records are the property of
Distributor and shall make such books and records available for
inspection by the Distributor and any regulator with jurisdiction over
the Distributor.
10. The Distributor shall use reasonable efforts to provide support to
Retailers to facilitate the offering and selling of the Contracts. Such
support shall include, but not be limited to, the activities set forth
in Attachment B.
11. Farmers, at no cost to the Distributor, shall use best efforts to
provide quality service for the owners of the Contracts, including
providing policyholder support, administering the Contracts and
printing and mailing to existing Contract owners semi-annual and annual
reports of the management investment companies that serve as underlying
funding vehicles for the Contracts, customer statements and other
communications and the Prospectus. Farmers shall be responsible for
issuing the Contracts and for administering the Contracts and the
Separate Account. Farmers' administrative and record-keeping
responsibilities shall include those set forth on Attachment C hereto.
Subject to the Distributor's approval, which shall not be unreasonably
withheld, Farmers reserves the right to delegate the duties set forth
in Attachment C to a third party administrator, provided, however, that
such delegation shall not relieve Farmers of any of its responsibility
for the performance of such duties in accordance with this Agreement
and Farmers shall ensure that the third party administrator has
undertaken in writing to comply with the provisions of Section 29 of
this Agreement. Farmers shall also be responsible for printing and
providing to Distributor all prospectuses (including the prospectuses
for investment companies serving as underlying funding vehicles for the
Contracts). Farmers shall not provide any investment advice to any
owner of the Contract. Farmers and the Distributor will establish
mutually agreeable customer service standards, including, without
limitation, a quarterly review process.
12. Authorized Marketing Materials.
(a) Subsequent to having been notified in writing by Farmers to
commence offers and sales of the Contracts, the Distributor,
in connection with its distribution activities hereunder, will
utilize no Prospectus purporting to meet the requirements of
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Section 10(a) of the 1933 Act other than the one so designated
by Farmers. As to other types of sales material used in
connection with its distribution activities, the Distributor
agrees that it will provide to Retailers only such sales
materials as have been authorized in writing for use by
Farmers, and only for the period so authorized, and which
(except for Registration Statements, Prospectuses, Statements
of Additional Information and other sales materials that the
Distributor has determined are not required to be filed with
the NASD) have been filed by the Distributor with the NASD.
Farmers has the right to recall sales materials from use at
any time by notice to the Distributor. If sales materials are
recalled by Farmers, Distributor will promptly cease to use
such sales materials and will notify Retailers to promptly
cease to use and to destroy any unused materials. The
Distributor shall promptly furnish to Farmers copies of any
letters from the NASD requesting changes in any sales
materials used or to be used in connection with its
distribution activities hereunder, and shall not, after
receipt of such a letter, use such sales materials until
Farmers shall have approved (or re-approved, as applicable)
their use in writing. For purposes of this Agreement, the
phrase "sales material" includes, but is not limited to,
advertisements (such as material published, or designed for
use in, a newspaper, magazine, or other periodical, radio,
television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, telephone directories
(other than routine listings), electronic communications, the
Internet or other public media), sales literature (i.e., any
written communication distributed or made generally available
to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, sales
literature, or published article whether in electronic or
paper form), Registration Statements, Prospectuses, Statements
of Additional Information, shareholder reports, and proxy
materials.
(b) The Distributor will not distribute any Prospectus, sales
material, or any other printed matter or material in the
marketing and distribution of any Contract if, to the
knowledge of the Distributor, any of the foregoing contains
any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they
were made, not misleading.
(c) Farmers, at no cost to the Distributor, shall be responsible
for developing (with the assistance of the Distributor) and
printing all sales materials to be used in connection with the
offer and sale of the Contracts and providing such materials
to Distributor. Farmers shall not give any information or make
any statements about the Distributor or its affiliates in
connection with the sale of Contracts except with the express
written permission of the Distributor. Farmers agrees that it
shall file such sales materials with any insurance regulatory
authorities as required.
13. Expenses of providing sales presentations, mailings, advertising and
any other marketing efforts conducted in connection with the
distribution or sale of the Contracts shall be borne by Farmers.
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14. Farmers, acting as agent for and on the instructions of Distributor,
shall send a written confirmation to the Contract owner for each
transaction for which a written confirmation is required. Such written
confirmation shall be sent on the occasions, within the timeframe, and
in a form and manner that both Farmers and Distributor reasonably
believe complies with the 1934 Act.
15. Compensation for the services performed in accordance with Section 10
and Attachment B hereof will be calculated, pursuant to the terms and
conditions in Attachment E, as a percentage of premiums paid to Farmers
on account of Contracts issued upon applications procured through
Retailers in accordance with this Agreement. After the Initial
Termination Date, all compensation payable to the Distributor hereunder
shall cease, except as provided in Section 23 of this Agreement.
Attachment E may be amended by mutual consent of the parties. Such
amendment shall apply only to applications dated after the effective
date of such amendment, provided, however, that Farmers reserves the
right to apply such amendment with respect to all subsequent premiums
and renewal premiums received after the effective date of such
amendment. In the event the Distributor is disqualified from continued
registration with the NASD, Farmers shall not be obligated to pay
commissions, fees or additional compensation pursuant to this
Agreement, the payment of which would represent a violation of NASD
rules.
16. The Distributor makes no representations or warranties regarding the
number of Contracts to be sold or the amount to be paid thereunder.
17. It is understood and agreed that the Distributor may render similar
services or act as a distributor or dealer in the distribution of other
variable contracts.
18. Farmers will ensure that the Contracts are continuously registered
under the Securities Act of 1933 and, should it ever be required, under
state Blue Sky Laws and will file for approval under state insurance
laws when necessary.
19. Farmers reserves the right at any time to suspend or limit the public
offering of the subject Contracts.
20. Farmers agrees to advise the Distributor immediately of:
(a) any request by the Commission (i) for amendment of the
Registration Statement, or (ii) for additional information
that Farmers determines is material to the Distributor;
(b) the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; and
(c) the happening of any material event, if known, which makes
untrue any material statement made in the Registration
Statement or which requires the making of a change therein in
order to make any material statement made therein not
misleading.
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21. Farmers and the Distributor shall each consult and cooperate fully with
the other in connection with any federal or state regulatory
examination, including any securities regulatory investigation, or
proceeding or judicial proceeding arising in connection with the
Contracts marketed under this Agreement. In the case of a written
customer complaint, Farmers and the Distributor will each consult with
the other in connection with investigating such complaint and any
response by a party to this Agreement to such complaint will be sent to
the other parties to this Agreement for approval not less than two
Business Days prior to its being sent to the customer or regulatory
authority, except that if a more prompt response is required, the
proposed response shall be communicated by telephone or facsimile.
Without limiting the foregoing, each party shall notify the other
parties of any written customer complaint or notice of any regulatory
investigation or proceeding or judicial proceeding received by such
party with respect to any other party, or in connection with any
Contract marketed under this Agreement or any activity in connection
with any such Contract, within five Business Days of receipt of such
complaint or notice.
22. Neither party may assign its obligations under this Agreement without
the prior written consent of the other. The term "assigned" shall not
include any transaction exempted from Section 15(b)(2) of the 1940 Act.
23 This Agreement shall terminate, without the payment of any penalty by
either party:
(a) at the option of Farmers, upon 60 days' advance written notice
to the Distributor; or
(b) at the option of the Distributor upon 60 days' advance written
notice to Farmers; or
(c) at the option of either party upon institution of formal
proceedings against the other party by the NASD, the
Commission or any state securities or insurance regulator; or
(d) at the option of either party, if the other party or any
representative thereof at any time (i) employs any device,
scheme, or artifice to defraud; makes any untrue statement of
a material fact or omits to state a material fact necessary in
order to make the statements made, in light of the
circumstances under which they were made, not misleading; or
engages in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon any
person; or (ii) violates the conditions of this Agreement.
Notwithstanding the foregoing, the Distributor shall continue to serve
as distributor with respect to additional investments made under any
Contracts that are outstanding as of the date of any termination (the
"Initial Termination Date"), although it shall be under no obligation
to serve as distributor with respect to any other Contracts or
investments thereunder. After the Initial Termination Date, the
Distributor shall not be obligated to "actively engage" in distribution
efforts or provide marketing assistance except as may otherwise be
agreed by the parties. This continuation shall extend to the earlier of
the first date on which no Contracts are outstanding or a date mutually
agreed to by the Parties (the "Final Termination Date"). The parties
agree to cooperate and give
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reasonable assistance to each other in establishing a Final Termination
Date following the Initial Termination Date.
24. Each notice required by this Agreement may be given by telephone or
telefax and confirmed in writing. Notices shall be delivered as
follows:
if to Farmers or the Separate Account:
Farmers New World Life Insurance Company
0000 - 00xx Xxxxxx, X.X.
Xxxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: C. Xxxx Xxxxxx, President
Facsimile: (000) 000-0000
with a copy to:
X. Xxxxxxx Close
Vice President and General Counsel
Farmers New World Life Insurance Company
0000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
and
Xxxxx X. Xxxxxxx, Xx.,
Senior Corporate Counsel
Farmers New World Life Insurance Company
0000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
if to the Distributor:
WM Funds Distributor, Inc.
00000 Xxxxxxxxxx Xxxxx, Xxxxx 000
(Mailstop: 9002FDCA)
Xxxx Xxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxxx
Washington Mutual Legal Department
00000 Xxx Xxxxxx Xxx.
0xx Xxxxx, 0000XXXX
Xxxxxx, XX 00000
Facsimile (000) 000-0000
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and, with respect to any consultation or notice required under
Section 21 of this Agreement, to
Alex Xxxxxxxxxx
XX Financial Services
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Mail stop WMT 2220
Xxxxxxx, XX 00000
Facsimile (000) 000-0000
25.
(a) Farmers shall indemnify and hold harmless the Distributor and
each of its officers and directors and each person, if any,
who controls the Distributor within the meaning of the 1933
Act against any losses, claims, damages or liabilities to
which the Distributor or such controlling person may become
subject, under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (1) any untrue
statement or alleged untrue statement of a material fact
contained in the Registration Statement or Prospectus or any
other written sales material prepared by Farmers which is
utilized by the Distributor in connection with the sale of
Contracts or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to
be stated therein (in the case of the Registration Statement,
Prospectus and SAI), or in the case of such other sales
material, necessary to make the statements therein not
misleading in light of the circumstances under which they were
made, or (2) Farmers' negligence, misconduct, failure to
comply with applicable law or other material breach of this
Agreement (including any material breach of Farmers'
representations and warranties hereunder) and will reimburse
the Distributor and each such controlling person for any legal
or other expenses reasonably incurred by the Distributor or
such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action,
provided, however, that Farmers will not be liable in any such
case to the extent that any such untrue statement or alleged
untrue statement or omission or alleged omission was made in
such Registration Statement or Prospectus or any other sales
material in conformity with information furnished by the
Distributor to Farmers specifically for use therein; and
provided, further, that nothing herein shall be so construed
as to protect the Distributor against any liability to Farmers
or the Contract Owners to which the Distributor would
otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of its duties,
or by reason of the reckless disregard by the Distributor of
its obligations and duties under this Agreement.
(b) The Distributor will likewise indemnify and hold harmless
Farmers, each of its directors and officers and each person,
if any, who controls Farmers within the meaning of the 1933
Act to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged
omission was made in conformity with written information
furnished to Farmers by the Distributor
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specifically for use therein or for the Distributor's
negligence, misconduct, failure to comply with applicable law
or other material breach of this Agreement (including any
material breach of the Distributor's representations and
warranties hereunder) and will reimburse Farmers and each such
controlling person for any legal or other expenses reasonably
incurred by Farmers or such controlling person in connection
with investigating or defending any such loss, claim, damage,
liability or action.
Promptly after receipt by a party entitled to indemnification
("indemnified person") under this Section 25 of notice of the
commencement of any action as to which a claim will be made
against any person obligated to provide indemnification under
this Section 25 ("indemnifying party"), such indemnified
person shall notify the indemnifying party in writing of the
commencement thereof as soon as practicable thereafter, but
failure to so notify the indemnifying party shall not relieve
the indemnifying party from any liability which it may have to
the indemnified person otherwise than on account of this
Section 25. The indemnifying party will be entitled to
participate in the defense of the indemnified person but such
participation will not relieve such indemnifying party of the
obligation to reimburse the indemnified person for reasonable
legal and other expenses incurred by such indemnified person
in defending himself or itself.
In no event shall any party under this Agreement be liable for lost
profits or for exemplary, special, punitive or consequential damages
alleged to have been sustained by the other party.
26. During the term of this Agreement and for five (5) years following the
termination of this Agreement, neither Farmers, its affiliates,
directors, officers, employees or agents nor the Distributor, its
affiliates, directors, officers, employees or agents shall induce or
cause, or attempt to induce or cause, directly or indirectly, any
Contract owner (a) to lapse, terminate, surrender, exchange, or cancel
his or her Contract, (b) to cease or discontinue making premium
payments thereunder, or (c) to direct cash value or premium payments
thereunder to any other financial product, unless such act is in
response to an enactment of federal or state legislation, order or
decision of any court or regulatory authority, or a change in
circumstances that makes the Contracts or insurance contacts of that
type (e.g., variable life insurance contracts) an unsuitable investment
for existing Contract owners.
27. This Agreement shall be subject to the laws of the State of Washington
and construed so as to interpret the Contracts as variable life
insurance contracts written within the business operation of Farmers.
28. To the extent not otherwise provided herein, a senior officer of each
party hereto (the "Requesting Party") or his or her designee shall have
the right, upon reasonable notice to any other party hereto (the "Other
Party"), during regular business hours, to audit all the records and
practices of the Other Party relating to the business contemplated
hereunder in order to determine whether such Other Party is complying
with the terms of this Agreement, including the payment of commissions
and fees, but such audits shall, under normal business circumstances,
be conducted no more frequently than once per year.
12
Distributor shall use best efforts to conduct any audit of Farmers'
third party administrator in conjunction with Farmers' scheduled audit
of such third party administrator. The Requesting Party shall have the
right to copy any of such records at its expense. At its option, such
audit may be conducted by the Requesting Party's own personnel or by a
qualified independent auditor selected by it. The Requesting Party
shall use best efforts to conduct each such audit in a manner that
avoids any material disruption of the Other Party's business.
29. "Confidential Information" of a party shall mean all confidential or
proprietary information, including trade secrets of such party and any
documentation of such, the terms of this Agreement and any "non-public
personal information" related to "customers" or "consumers" as those
terms are defined by the Xxxxx-Xxxxx-Xxxxxx Act of 1999 (Public Law
106-102, 113 Stat. 1138), as it may be amended from time to time (the
"GLB Act"), the regulations promulgated thereunder or other applicable
law. All Confidential Information relating to a party shall be held in
confidence by the other party to the same extent and in at least the
same manner as such party protects its own confidential or proprietary
information. Neither party shall disclose, publish, release, transfer
or otherwise make available Confidential Information of the other party
in any form to, or for the use or benefit of, any person or entity
without the other party's prior written consent. Notwithstanding the
foregoing sentence, each party shall, however, be permitted to disclose
relevant aspects of the other party's Confidential Information to its
officers, affiliates, agents, subcontractors and employees solely to
the extent that such disclosure is reasonably necessary for the
performance of its duties and obligations under this Agreement and such
disclosure is not prohibited by the GLB Act, the regulations
promulgated thereunder or other applicable law; provided, however, that
such party shall take all reasonable measures to ensure that
Confidential Information of the other party is not disclosed or
duplicated in contravention of the provisions of this Agreement by such
officers, affiliates, agents, subcontractors and employees. The
obligations in this Section 29 shall not restrict any disclosure by
either party pursuant to any applicable law, or by order of any court,
government agency or self regulatory organization of which a party is a
member (provided that the disclosing party shall give prompt notice to
the non-disclosing party of such order) and shall not apply with
respect to information which (1) is developed by the other party
without violating the disclosing party's proprietary rights, (2) is or
becomes publicly known (other than through unauthorized disclosure),
(3) is disclosed by the owner of such information to a third party free
of any obligation of confidentiality, (4) is already known by such
party without an obligation of confidentiality other than pursuant to
this Agreement or any confidentiality agreements entered into before
the effective date between the parties hereto or (5) is otherwise
rightfully received by a party free of any obligation of
confidentiality. If the GLB Act, the regulations promulgated thereunder
or other applicable law now or hereafter in effect imposes a higher
standard of confidentiality with respect to the Confidential
Information, such standard shall prevail over the provisions of Section
29 of this Agreement. Each party shall implement those safeguards
necessary for the protection of consumers and customer records and
information in accordance with the GLB Act, the regulations promulgated
thereunder, and any applicable interpretive guidance or other
applicable law. In addition, each party shall restrict access to
customer information to those persons who need to
13
know such information to discharge the duties and obligations set forth
in this Agreement or as otherwise permissible by law or regulation.
30. This Agreement, along with any Attachment attached hereto and
incorporated herein by reference, may be amended from time to time by
the mutual agreement and consent of the undersigned parties; provided
that such amendment shall not affect the rights of existing Contract
owners and that such amendment be in writing and duly executed by
officers of the undersigned parties.
31. Any controversy or claim arising out of or relating to this Agreement,
or the breach hereof, shall be settled by arbitration in a forum
mutually agreed to by the Distributor and Farmers in accordance with
the Commerical Arbitration Rules of the American Arbitration
Association and judgment upon the award rendered by the arbitrators may
be entered in any court having jurisdiction thereof.
32. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the
same instrument.
33. This Agreement shall be binding on and shall inure to the benefit of
the respective successors and assigns of the parties hereto provided
that neither party shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other
party.
34. 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 hereto are entitled
to under state and federal laws. Failure of either party to insist upon
strict compliance 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.
35. If the Agreement terminates, the parties agree that Section 25 shall
remain in effect after termination.
36. This Agreement supersedes all prior oral or written understandings,
agreements or negotiations between the parties with respect to such
subject matter. No prior writings by or between the parties with
respect to the subject matter hereof shall be used by either party in
connection with the interpretation of any provision of this Agreement.
37. This is a severable Agreement. In the event that any provision of this
Agreement would require a party to take action prohibited by applicable
federal or state law or prohibit a party from taking action required by
applicable federal or state law, then it is the intention of the
parties hereto that such provision shall be enforced to the extent
permitted under the law, and, in any event, that all other provisions
of this Agreement shall remain valid and duly enforceable as if the
provision at issue had never been a part hereof.
14
38. The headings in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
15
IN WITNESS WHEREOF, the undersigned parties have caused this Agreement
to be duly executed on the date first stated above.
FARMERS NEW WORLD LIFE INSURANCE
COMPANY
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
FARMERS VARIABLE LIFE SEPARATE ACCOUNT A
By: FARMERS NEW WORLD LIFE
INSURANCE COMPANY
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
WM FUNDS DISTRIBUTOR, INC.
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
16
ATTACHMENT A
Insurance Contracts
1. Farmers Accumulator VUL, a Flexible Premium Variable Life Insurance Policy
ATTACHMENT B
WHOLESALING ACTIVITIES OF DISTRIBUTOR
1. Distribution of sales materials, newsletters and full service bulletins
(subject to Section 12, hereof); and
2. Assistance with the sales promotional activities with Retailers.
3. Training of sales staff and registered representatives of Retailers
with respect to the features of the Policies.
4. Pay commissions to Retailers.
2
ATTACHMENT C
ADMINISTRATIVE AND RECORD-KEEPING RESPONSIBILITIES OF FARMERS
1. Contract Maintenance
(a) File and obtain state approvals for the Contracts being
issued, and any amendments thereof.
(b) Notify the Distributor of the effective date for each state in
which the Contracts become available for issue.
(c) Customize and support state specific requirements where
administratively feasible.
2. Contract Servicing
(a) Issue and maintain master records for Contracts applied for
and accepted.
(b) Provide maintenance support for all Contract features:
(i) Purchase Payments (new issues, 1035 Exchanges, EFT,
additions);
(ii) Withdrawals (systematic, partial, full,
cancellations, and death claims);
(iii) Exchanges among subaccounts, change of allocations;
(iv) Title Changes (beneficiary, ownership, name,
assignments);
(v) Dollar-Cost Averaging;
(vi) Automatic Rebalancing.
3. Customer Correspondence
(a) Generate and provide various customer correspondence
documents:
(i) Contract (with appropriate riders and endorsements);
(ii) Confirmations of financial transactions;
(iii) Quarterly statements of account activity and
balances.
4. Customer Service Functions
(a) Provide a telephone staff or other medium to respond to
customer inquiries that do
3
not entail providing investment or broker-dealer advice.
(b) Prepare and update service forms necessary to support the
Contract.
(c) Respond to written inquiries from Contract owners.
(d) Coordinate complaint resolution (formal and informal).
5. Compliance
(a) Coordinate the printing and mailing of the following
documents:
(i) Separate Account semiannual and annual reports, if
any;
(ii) Prospectus.
(b) Coordinate proxy solicitations as outlined in the
Participation Agreements with the funds that serve as
underlying funding vehicles for the Contract.
(c) Prepare updates and regulatory filings as warranted.
(d) Generate tax reporting for Contract owners as warranted by
account activity.
(e) Maintain appropriate books and records with regard to the
Contract and the Separate Account pursuant to the 1940 Act.
6. Financial
(a) Calculate unit values on Business Days of the separate
account.
(b) Place trades with investment companies serving as underlying
funding vehicles for the Contracts and settle such trades as
defined in the Participation Agreement.
(c) Prepare Separate Account semiannual and annual reports, if
any.
7. Licensing/Contracting and Compensation
(a) Establish the initial record and perform ongoing maintenance
for representatives appointed to sell the product.
(b) Arrange for payment of appointment fees.
8. Reporting
(a) Provide sales or other reports as mutually agreed upon by
Farmers and the Distributor.
4
ATTACHMENT D
APPLICABLE LAWS AND REGULATIONS
EFFECTIVE ________________
1. Securities Act of 1933
2. Securities Exchange Act of 1934
3. Investment Company Act of 1940
4. USA PATRIOT Act
5. Federal Violent Crime Control and Law Enforcement Act of 1994
6. Economic sanctions programs administered by the U.S. Treasury Department's
Office of Foreign Asset Control ("OFAC")
ATTACHMENT E
COMMISSION SCHEDULE
EFFECTIVE _____ __, 2003
This Commission Schedule is hereby incorporated in and made a part of the
Distribution Agreement dated as of ___________ ___, 2003 ("Agreement") by and
between Farmers New World Life Insurance Company ("Farmers") and WM Funds
Distributor, Inc. (the "Distributor").
The following commission rates shall apply to Contracts issued by Farmers.
Commissions are paid in respect of the aggregate purchase payments received and
accepted by Farmers with complete application information and documentation as
required by Farmers or as a subsequent purchase payment under a Contract after
the Contract is in force. In addition, if an annual trail commission is
applicable, it will be payable in monthly installments. The trail commission
installment for each calendar month will be calculated based on contract value
as of the end of such month. Trail commissions are not payable on any Contract
that has been surrendered or under which a death benefit has been paid.
Farmers Accumulator (VUL II)
Distributor Allowance
In addition to the gross dealer concession (GDC) described below, an amount
equal to 10% of first-year premium up to target will be paid to distributor at
least annually.
GDC Compensation
-------------------------------------------------------------
PRODUCT YEAR UP TO TARGET ABOVE TARGET
-------------------------------------------------------------
VUL Accumulator 1 80% 3.2%
VUL Accumulator 2-10 4% 4%
* GDC% for Year 11+ is 2% for all plans, all premiums
ATTACHMENT F
FUNDS COMPRISING FARMERS ACCUMULATOR VUL
[ ] DEUTSCHE ASSET MANAGEMENT VIT FUNDS
Equity 500 Index Fund - Class B Shares
[ ] WM VARIABLE TRUST - CLASS 2 SHARES
STRATEGIC ASSET MANAGEMENT PORTFOLIOS
WM XXX Strategic Growth Portfolio
WM XXX Conservative Growth Portfolio
WM XXX Balanced Portfolio
WM XXX Conservative Balanced Portfolio
WM XXX Flexible Income Portfolio
[ ] WM VARIABLE TRUST - CLASS 2 SHARES
EQUITY FUNDS
WM Equity Income Fund
WM Growth & Income Fund
XX Xxxx Coast Equity Fund
WM Growth Fund
WM Mid Cap Stock Fund
WM Small Cap Stock Fund
WM International Growth Fund
[ ] WM VARIABLE TRUST - CLASS 2 SHARES
FIXED-INCOME FUNDS
XX Xxxxx Term Income Fund
WM U.S. Government Securities Fund
WM Income Fund
WM Money Market Fund
ATTACHMENT G
DISTRIBUTOR'S RECORD KEEPING REQUIREMENTS UNDER RULE 17a-3 AND RULE 17a-4
The following list sets forth Distributor's record keeping obligations
under Section 9 of the Agreement.
1. Copies of confirmations of all purchases and sales related to the
Contracts (17a-3(a)(8)).
2. All selling agreements and other agreements entered into by the
Distributor and Farmers related to the Contracts (17a-4(b)(7)).
