Exhibit (c)(iii)
GENERAL AMERICAN DISTRIBUTORS
SALES AGREEMENT
TABLE OF CONTENTS
I. DEFINITIONS IX. INDEMNIFICATION
II. AGREEMENTS, REPRESENTATIONS, X. GENERAL PROVISIONS
AND COVENANTS
A. TERM AND TERMINATION
A. AGREEMENTS AND COVENANTS
OF GAD B. ASSIGNABILITY
B. REPRESENTATIONS AND C. AMENDMENTS
COVENANTS OF BROKER
D. NOTICES
III. COMPLIANCE WITH APPLICABLE
LAWS E. ARBITRATION
IV. PRINCIPLES OF ETHICAL MARKET F. GOVERNING LAW
CONDUCT
G. ENTIRE UNDERSTANDING
V. COMPENSATION
H. NO THIRD PARTY BENEFICIARIES
VI. COMPLAINTS AND INVESTIGATIONS
I. NON-EXCLUSIVITY
VII. RECORDS AND ADMINISTRATION
J. WAIVER
VIII. PRIVACY INFORMATION
K. COUNTERPARTS
A. PROPRIETARY INFORMATION
L. SEVERABILITY
B. RECEIPT OF CUSTOMER
NONPUBLIC PERSONAL
INFORMATION FROM BROKER
BY GAD
C. TREATMENT OF
NONPUBLIC PERSONAL
INFORMATION
DISCLOSED TO
BROKER BY GAD
D. CONFIDENTIAL INFORMATION
E. PROTECTED HEALTH INFORMATION
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GENERAL AMERICAN FINANCIAL
SALES AGREEMENT
This Agreement, including the Exhibits attached hereto (collectively, the
"Agreement") dated ______________________________, 2003, ("Effective Date") by
and among General American Distributors, a Missouri corporation, ("GAD") and
Equitas America, LLC, a ________________ corporation that, for the distribution
of traditional fixed rate insurance products only, is or is affiliated with one
or more 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 one or more
validly licensed insurance agencies (collectively with its affiliated insurance
agency(s) "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; 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.
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties hereto agree as follows:
I. Definitions
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.
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2) Agency- One or more associated insurance agencies of Broker,
identified on Exhibit D hereto, which are 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 VIII(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(B)(20) 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.
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.
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11) Representatives - those individuals, accepted by GAD or its
Affiliates to solicit and sell Contracts under the terms of this
Agreement, who are duly licensed and appointed as a life
insurance agent of GAD or its Affiliates, 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 to
the individual. PHI includes demographic information about
individuals, including names; addresses; dates directly related
to an individual, including but not limited to birth date;
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. 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, subject to the terms and conditions of the Agreement, hereby
appoints Broker, on behalf of itself and each Affiliate, to
solicit, sell and provide service to the Contracts which are set
forth on the applicable Exhibits A and B on a non-exclusive
basis.
3) 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
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respects with the published policies and procedures of GAD or its
Affiliates, and with the terms of this Agreement.
4) 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 the SEC of any stop order with respect to a
Registration Statement or the initiation of any proceeding by the
SEC relating to the registration and/or offering of Variable
Contracts and of any other action or circumstances that makes it
no longer lawful for 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.
5) 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.
Pursuant to the foregoing, GAD and its Affiliates 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;
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;
h) to maintain custody of, responsibility for and control of
all investments; and
i) to withdraw a Contract from sale or to change or amend a
Contract for any reason.
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6) Exhibits A and B may be amended by GAD in its sole discretion
from time to time to include additional Contracts, including
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 issued by
GAD or its Affiliates. The provisions of this Agreement shall
apply with equal force to such additional Contracts unless the
context otherwise requires. Exhibits A and B may be amended by
GAD in its sole discretion from time to time to delete one or
more of the Contracts.
7) During the term of this Agreement, GAD will provide Broker,
without charge, with as many copies of the Contract
prospectus(es), current underlying mutual fund prospectus(es),
statements of additional information and applications for the
Contracts, as Broker may reasonably request. Upon receipt from
GAD of updated copies of the Contract prospectus(es), current
underlying mutual fund prospectus(es), statements of additional
information and applications for the Contracts, Broker will
promptly discard or destroy all copies of such documents
previously provided to them, except such copies as are needed for
purposes of maintaining proper records. Upon termination of this
Agreement, Broker will promptly return to GAD all Contract
prospectus(es), current underlying mutual fund prospectus(es),
statements of additional information and applications for the
Contracts and other materials and supplies furnished by GAD to
Broker or to its Representatives, except for copies required for
maintenance of records.
8) During the term of this Agreement, GAD or its Affiliates will be
responsible for providing and approving all promotional, sales
and advertising material to be used by Broker. GAD will file such
materials or will cause such materials to be filed with the SEC,
NASD, and any state securities regulatory authorities, as
appropriate.
B. Representations and Covenants of Broker
1) Broker represents and warrants that it will only offer 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 Contracts will at all times be
appropriately licensed under Applicable Laws and such
solicitation is in accordance with Applicable Law, including
without limitation the
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NASD Rules of Fair Practice, and all insurance replacement
regulations and regulations prohibiting the rebating of
commission.
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.
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, 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 agrees as follows:
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;
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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 to the extent
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, 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 for Variable Contracts, 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, (and in no event later than the time
permitted under Applicable Law or the rules of the NASD),
together with any related application, forms and any other
required documentation to GAD or the appropriate Affiliate. The
Broker shall make such remittances in accordance with any
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and all policies and procedures described in the Contract,
insurance policy, prospectus, if appropriate, or as otherwise
adopted by GAD and its Affiliates.
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 or its Affiliate 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 or its
Affiliates to the Broker, and the Broker will be responsible for
promptly returning such payments to the purchaser. Except as
otherwise may be provided in Exhibit A, B or the Compensation
Schedules, 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) Except as otherwise required by Applicable Laws, 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 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 or its Affiliates in
the appropriate states as required by Applicable Laws. Broker
shall ensure that Representatives fulfill any training
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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 or
its Affiliates nor shall Broker possess or exercise any authority
on behalf of GAD other than that expressly conferred on Broker by
this Agreement.
11) Broker and Agency shall be solely responsible for the accuracy
and propriety of any instruction given or action taken by a
Representative on behalf of an owner or prospective owner of a
Contract. GAD shall have no responsibility or liability for any
action taken or omitted by it in good faith in reliance on or by
acceptance of such an instruction or action.
12) 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 other insurance or annuity products, and Broker
shall send such forms to GAD or the appropriate Affiliate. 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 or the appropriate
Affiliate. Broker further shall notify GAD or the appropriate
Affiliate 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 or the appropriate
Affiliate.
13) 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
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operations of GAD or Broker related to the Contracts are being
conducted in a manner consistent with Applicable Laws.
14) Broker will adhere to state insurance replacement regulations,
before it receives or solicits any applications for Contracts.
15) 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.
16) 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. 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, including
Representatives in an amount reasonably acceptable to GAD.
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.
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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 in an amount
reasonably acceptable to GAD. 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 education, training,
supervision, and control of its registered Representatives
as required under the 1934 Act and other applicable laws,
including, but not 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
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thereon. Such books and records will be maintained and
preserved in conformity with the 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 the
appropriate Affiliate or will be sent by customers to the
Broker for forwarding to GAD or the appropriate Affiliate.
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 a subagent is permitted
to solicit Contracts, Broker or its Agency shall have entered into a
written agreement with the subagent 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; (b) shall promptly remit
to the Broker or 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 and procedures, as those policies and
procedures may be provided to Broker by GAD from time to time.
19) For a period of 12 months after termination of the Agreement, the
Broker and 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
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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.
III. Compliance With Applicable Laws
1) GAD and Broker agree to comply with all applicable state and federal
statutes, laws, rules, and regulations including without limitation,
state insurance laws, rules and regulations, and federal and state
securities laws, rules and regulations. Applicable state 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 or may hereafter become applicable to the parties hereto and the
transactions that are the subject of this Agreement ("Applicable
Laws").
2) Broker agrees 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
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Financial Anti-Terrorism Act of 2002, Title III of the USA PATRIOT Act
("the Act"), its implementing regulations, and related SEC and SRO
rules. These requirements include requirements to identify and report
currency transactions and suspicious activity, to implement a customer
identification program to verify the identity of customers, and to
implement an anti-money laundering compliance program. As required by
the Act, Broker certifies that it has a comprehensive anti-money
laundering compliance program that includes, policies, procedures and
internal controls for complying with the BSA; policies, procedures and
internal controls for identifying, evaluating and reporting suspicious
activity; a designated compliance officer or officers; training for
appropriate employees; and an independent audit function.
Further Broker certifies, and will certify to GAD annually hereafter,
that it has established and implemented a Customer Identification
Program, in compliance with applicable regulations, as part of its
anti-money laundering compliance program that, at a minimum, requires
(i) the verification of the identity of any customer seeking to open
an account; (ii) the retention of a record of the information used to
verify each customer's identity; and (iii) the determination, within a
reasonable time before or after the account is opened, as to whether
the customer appears on any lists of known or suspected terrorists or
terrorist organizations as provided to it by any government agency.
Broker hereby agrees that it will verify the identity of each customer
that it introduces GAD, whether through documentary or non-documentary
means, and that GAD will rely upon such verification, as prescribed by
the regulations promulgated under Section 326 of the Act in accordance
with the safe-harbor provided in Section 103.122(b)(6) of the
regulations under the Act.
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
circumstances, it would apply to or demand for itself; (b) to provide
competent and customer focused sales and service; (c) to engage in
active and fair competition; (d) to provide advertising and sales
material that are clear as to purpose and honest and fair as to
content; (e) to provide fair and expeditious handling of customer
complaints and disputes; and (f) to maintain a system of supervision
and review that is reasonably designed to achieve compliance with
these principles of ethical market conduct. Broker shall furnish
information, documentation and reports to GAD as it
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may reasonably request in order to permit GAD to ascertain whether
Broker is conducting its operations in accordance with the 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 Exhibits A, B and 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. Unless otherwise agreed upon by the parties, GAD
shall have no obligation to any of the employees, agents or
Representatives of Broker or Agency for the payment of any
compensation. Unless otherwise provided in Exhibits A, B or the
Compensation Schedules, Exhibits A, B and the Compensation Schedules,
including the commissions and fees therein, may be amended by GAD at
any time, in any manner, and without prior notice. Any amendment to
Exhibits A, B or in the Compensation Schedules will be applicable to
any Contract for which any application or premium is received by GAD
on or after the effective date of such amendment. However, GAD
reserves the right to amend such Exhibits and Schedules with respect
to subsequent premiums and renewal commissions and the right to amend
such Exhibits and Schedules pursuant to this subsection even after
termination of this Agreement.
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 premium or other purchase payment
it shall receive with respect to the Contracts covered by this
Agreement for purposes of payment of commission or otherwise.
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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,
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 Exhibit A, B or any Compensation
Schedule(s), 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 Schedule(s).
6) Agency and Broker hereby agree and acknowledge that compensation
attributable to the sale of any Contract issued by an Affiliate may be
payable directly by GAD, in its discretion, to Agency or Broker where
permitted, 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.
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7) GAD shall not be obligated to pay any compensation, which would
violate the applicable laws of any jurisdictions, anything in
this Agreement notwithstanding.
8) Unless otherwise agreed to by GAD, 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.
9) 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.
10) 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 Exhibits A, B
or Compensation Schedule(s), 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
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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 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) To the extent requested by Broker and agreed to by GAD, 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. Consistent with
its administrative procedures, GAD will assume that a Contract
issued by it or its Affiliate will be promptly delivered by
Broker to the purchaser of such Contract. As a result, if a
purchaser exercises the free look rights under a Contract, Broker
shall indemnify GAD for any loss incurred by GAD that results
from Broker's failure to promptly deliver such Contract to its
purchaser.
2) Broker will maintain all books and records as required by Rules
17a-3 and 17a-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.
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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(D) 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 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 and its Affiliates will treat Nonpublic Personal Information
regarding Broker's customers provided to it by Broker under this
Agreement as Confidential Information under Section VIII(D) 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.
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2) Notwithstanding the foregoing, GAD and its Affiliates shall have the
right to use or disclose such nonpublic personal information: (a) to
the full extent required to comply with Applicable Laws or requests of
regulators; (b) as necessary in connection with any of GAD and its
Affiliates' 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 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 or its Affiliates 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 or its Affiliates to the extent permitted by
Applicable Laws and GAD 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 its Affiliates 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 and its Affiliates nor
Broker shall disclose any Confidential Information that is covered by
this Agreement, and shall only disclose such information 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
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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 or
its Affiliates through the course of business during the term of this
Agreement, or any information of GAD and its Affiliates that is
disclosed by GAD or its Affiliates 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 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.
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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.
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.
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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 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
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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 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
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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:
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 Agent(s), 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 20(a) of the 1934 Act.
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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.
X. General Provisions
A. Term and Termination
1) This Agreement shall continue in force for a term of one year from the
Effective Date and thereafter shall automatically be renewed each year
for a further one-year period, provided that any party may
unilaterally terminate this Agreement with or without cause upon
thirty (30) days prior written notice of termination to the other
parties.
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.
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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
17a-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.
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. Equitas America, LLC
Attn: Law Department __________________________
00000 Xxxxxx Xxxxx Xxxx __________________________
Xx. Xxxxx, XX 00000 __________________________
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.
Enterprise Selling Agreement
GAD Version - September 2003 Page 28 of 59
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 (30) days
from the date of the demand. If either party shall refuse or fail
to appoint an arbitrator within the time allowed, the party that
has appointed an arbitrator may notify the other party that, if
it has not appointed its arbitrator within the following ten (10)
days, an arbitrator 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, 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
Enterprise Selling Agreement
GAD Version - September 2003 Page 29 of 59
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 representations shall be binding.
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. Severablity
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
Enterprise Selling Agreement
GAD Version - September 2003 Page 30 of 59
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.
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
-------------------------------------
----------------------------------------
Print Name & Title
Date
------------------------------------
EQUITAS AMERICA, LLC
(SELLING BROKER-DEALER)
By
--------------------------------------
----------------------------------------
Print Name & Title
Date
------------------------------------
Enterprise Selling Agreement
GAD Version - September 2003 Page 31 of 59
EXHIBIT A
Schedule of Variable Product and Compensation
The following General American Variable Contracts are governed by this
Agreement:
VUL (00)
VUL 2002 **
*Offers may be made without restriction by the Broker when the non-chargeback
compensation schedule is utilized. If the chargeback compensation is desired,
pre-approval is required by General American's Executive Benefits Advisors
department
** This product is available as it is approved in individual states.
COMMISSION SCHEDULE
1. Broker shall be paid a commission for products listed in Schedule A
accepted by General American under an issued Contract for which Broker
solicited the business, in accordance with the schedule listed below.
2. In the event a Contract for which a commission has been paid lapses or is
surrendered by the Contract owner during the first policy year, or is
returned to General American or GAD for refund of premium within the later
of ten (10) days after the purchaser receives it or forty-five (45) days
after the application for the policy is completed, or a premium for which
commission has been paid is refunded by General American, GAD will require
reimbursement from Broker, as follows:
a. 100% if the triggering event occurs within six months of the policy
issue date;
b. 50% if the triggering event occurs during the seventh through twelfth
month of the policy issue date. If the amount to be deducted exceeds
compensation due, BD shall promptly pay back the amount of excess
following a written demand by General American or GAD.
AGENT LEVEL
VUL (00) and VUL 2002 % of 1st Year Premium % of Renewal Premium
Years 2-10 Years 11+
--------------------------------------------------------------------------------
Target 90% 2% 1%
--------------------------------------------------------------------------------
Excess 3% 2% 1%
--------------------------------------------------------------------------------
% of Assets all years .10%
Enterprise Selling Agreement
GAD Version - September 2003 Page 32 of 59
The following New England Life Insurance Company Variable Contracts are governed
by this Agreement:
Variable Universal Life (VUL)
Variable Ordinary Life (VOL)
New England Life Insurance Company Commissions
For policies credited to the Agency under the Agreement while this Part is in
effect, commissions payable to Agency shall be payable when the premium is due
and paid to the Company subject to the provisions of the Agreement.
Single Life First Year Renewal Years 2-10
- Variable Universal Life (VUL)
- Band 0 50 (3% over Target) 2.50 (1.5% over Target)
- Band 1 50 (3% over Target) 2.50 (1.5% over Target)
- Band 2 50 (3% over Target) 2.25 (1.5% over Target)
- Variable Ordinary Life (VOL)
- Band 1 50 (3% over Target) 2.50 (1.5% over Target)
- Band 2 50 (3% over Target) 2.50 (1.5% over Target)
Joint Life
- Variable Universal Survivorship Life (VUSL)
- Band 1 50 (3% over Target) 2.00 (1.5% over Target)
- Band 2 50 (3% over Target) 2.00 (1.5% over Target)
(a) Reductions in FYC for High Issue Ages:
FYC decreases by the following percentage points for each year the issue
age is over 70 (joint equal age for survivorship policies):
VOL: 2%
(b) Commission Chargebacks:
All commissions paid on premiums which are refunded shall be charged back
to the Agency. For variable life-type plans (VUSL, VUL, VOL), 50% of any
FYC paid, net of chargebacks premiums refunded, shall be charged back to
the Broker Dealer for any coverage which is terminated in or prior to the
13th month.
(c) Policy Bands:
VUL: Band 0 - less than $250,000 face amounts
Band 1 - less than $500,000 and at least $250,000 face amounts
Band 2 - face amounts of $500,000 and above
VOL: Band 1 - less than $250,000 face amounts
Band 2 - face amounts of $250,000 and above
VUSL: Band 1 - Less than $1,000,000 face amounts
Band 2 - Face amounts of $1,000,000 and above
(d) Target Premiums:
Are as published by the Company
Enterprise Selling Agreement
GAD Version - September 2003 Page 33 of 59
Expense Reimbursement Allowances and Service Fees to the Agency
Expense Reimbursement Allowance
For policies credited to the Agency while this part is in effect, an ERA amount
shall be paid to the Broker Dealer in a given month equal to a percentage of FYC
earned in the preceding month as follows:
50% up to target on the following policies VUL Band 0, 1 & 2; VOL Band
1 & 2 VSUL Bands 1 & 2
25% on "over the Target Premium" for all flexible premium products
(except VUL Band 2)
18% on "over the Target Premium" for VUL Band 2
Service Fees
No service fees are payable on target premium or excess premium.
Enterprise Selling Agreement
GAD Version - September 2003 Page 34 of 59
The following Metropolitan Life Insurance Company Variable Contracts are
governed by this Agreement:
Universal Life 2001 ( UL (01) )
Universal Life Base Policy (UL1)
Life Paid up at 98 (L98) Variable Rider and Premium Option
METROPOLITAN LIFE INSURANCE COMPANY
UL (01) and UL 1 % of 1st Year Premium % of Renewal Premium
Years 2-10
-------------------------------------------------------------------------------
Target 50% 3%
-------------------------------------------------------------------------------
Excess 3% 3%
-------------------------------------------------------------------------------
Expense Reimbursement Allowances
For policies credited to the Agency while this part is in effect, an ERA amount
shall be paid to the Agency in a given month equal to a percentage of Premium:
25% on XX 00 xxx XX0
Xxxxxxxxxx Xxxxxxx Agreement
GAD Version - September 2003 Page 35 of 59
The following Enterprise COLI Variable Contract is governed by this Agreement:
Enterprise Executive Advantage
Variable Universal Survivorship Life (VUSL)
ENTERPRISE COMMISSIONS
Enterprise Executive Advantage
Target Premium = 7Pay
--------------------------------------------------------------------------
ChargeBack Version
--------------------------------------------------------------------------
Street Level GDC
--------------------------------------------------------------------------
% of Premium
--------------------------------------------------------------------------
Year 1 target 20.00%
--------------------------------------------------------------------------
Year 1 excess 1.25%
--------------------------------------------------------------------------
Year 2-6 target 8.00%
--------------------------------------------------------------------------
Year 2-6 excess 1.00%
--------------------------------------------------------------------------
Year 7-10 target 6.00%
--------------------------------------------------------------------------
Year 7-10 excess 1.00%
--------------------------------------------------------------------------
Year 11+ -
-------------------------------------------------------------------------
Trail Commission as a % of Assets (service fees)
--------------------------------------------------------------------------
Years 6-15 0.20%
--------------------------------------------------------------------------
Years 16-20 0.10%
--------------------------------------------------------------------------
Years 21+ 0.05%
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Non-ChargeBack Version
--------------------------------------------------------------------------
Street Level GDC
--------------------------------------------------------------------------
% of Premium
--------------------------------------------------------------------------
Year 1 target 9.00%
--------------------------------------------------------------------------
Year 1 excess 1.25%
--------------------------------------------------------------------------
Year 2-5 target 12.00%
--------------------------------------------------------------------------
Year 2-5 excess 1.00%
--------------------------------------------------------------------------
Year 6-10 target 5.00%
--------------------------------------------------------------------------
Year 6-10 excess 1.00%
--------------------------------------------------------------------------
Year 11+ -
--------------------------------------------------------------------------
-------------------------------------------------------------------------
Trail Commission as a % of Assets (service fees)
--------------------------------------------------------------------------
Years 6-15 0.20%
--------------------------------------------------------------------------
Years 16-20 0.10%
--------------------------------------------------------------------------
Years 21+ 0.05%
--------------------------------------------------------------------------
Enterprise Selling Agreement
GAD Version - September 2003 Page 36 of 59
--------------------------------------------------------------------------
ESV Rider Version
--------------------------------------------------------------------------
Street Level Broker
--------------------------------------------------------------------------
% of Premium
--------------------------------------------------------------------------
Year 1 target 11.80%
--------------------------------------------------------------------------
Year 1 excess 1.25%
--------------------------------------------------------------------------
Year 2-6 target 9.83%
--------------------------------------------------------------------------
Year 2-6 excess 1.00%
--------------------------------------------------------------------------
Year 7+ -
--------------------------------------------------------------------------
-------------------------------------------------------------------------
Trail Commission as a % of Assets (service fees)
--------------------------------------------------------------------------
Years 7-20 0.27%
--------------------------------------------------------------------------
Years 21+ -
--------------------------------------------------------------------------
Enterprise Selling Agreement
GAD Version - September 2003 Page 37 of 59
Variable Universal Survivorship Life (VUSL)
Commission Chargeback
If for any reason the policy lapses anytime prior to the 13th month, all
unearned commissions (up to the Target Premium) already received by the agent
are charged back as well as one-half of the earned commissions. Commissions
received on dump-in amounts above the Target Premium are not charged back.
Partial surrenders prior to the 13th month will result in partial chargebacks.
-----------------------------------------------------------------------------------------------
% of Target Premium by Policy Year Year 1 Years 2-5 Years 6-10 Years 11+
-----------------------------------------------------------------------------------------------
Commission 50% 9% 4% 1%
------------------------------------------------------------------------------------------------
ERA 20% 0% 0% 0%
------------------------------------------------------------------------------------------------
Total to BD 70% 9% 4% 1%
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
% of Excess Premium by Policy Year Year 1 Years 2-5 Years 6-10 Years 11+
------------------------------------------------------------------------------------------------
Commission 2% 2% 2% 1%
------------------------------------------------------------------------------------------------
ERA 2% 2% 2% 0%
------------------------------------------------------------------------------------------------
Total to BD 4% 4% 4% 1%
------------------------------------------------------------------------------------------------
Enterprise Selling Agreement
GAD Version - September 2003 Page 38 of 59
EXHIBIT B
Schedule of Fixed Product and Compensation
N/A
Enterprise Selling Agreement
GAD Version - September 2003 Page 39 of 00
XXXXXXX X
Xxxxxxxxx Xxxxxxxx (XXX) Commission Rules
(formerly, Replacement Commission Rules)
Effective June 1, 2002
Revised May 9, 2003
GUIDING PRINCIPLES FOR REWRITTEN BUSINESS
The objective of this document is to provide information on MetLife's
enterprise-wide Rewritten Business (RWB) Rules. These rules were designed based
the following guiding principles:
1. Support suitable change that is driven by the best interest and needs of
the customer.
2. Enterprise Consistency - Apply the same rules for all business done by all
producers in the MetLife family of distribution franchises.
3. Generally pay full compensation for increase in premium and reduced
compensation for replaced premium, regardless of source.
4. Fairness - Provide fair compensation for internal, Enterprise-wide
replacement transactions that are done with the best interest and needs of
the client in mind and in accordance with industry practices and regulatory
requirements.
These rules were designed to provide for all known situations that an agent
might encounter with suitability and fairness for the client in mind. At the
time of the writing of this document, they are believed to cover all situations,
BUT it is recognized that our business is not static and a situation may arise
where these Rewritten Business Rules will not clearly address the issue.
These new rules apply to payment of First Year Compensation. In general, Asset
Trail, TLP and renewal commissions will not be affected.
SUITABILITY, FIRST & FOREMOST
The rules for Rewritten Business are in place to support suitable transactions
that are in the best interest of the customer. Simply stated, all Rewritten
Business must be suitable for the customer. A product replacement or switch can
only be recommended if it is in the customer's best interest. In general, when
you and your customer are considering rewriting a product to better serve the
customer's financial goals, the following guidelines should be followed. For a
detailed review of MetLife's suitability guidelines, please refer to the
Suitability Tutorial and Replacement Tutorial in the Ethics & Compliance section
of the LearnNow website, or the Suitability document posted in the Reference
Works section of the Ask Me/Tell Me/Read Me database.
. The recommendation should be supported by a thorough fact-find and
needs analysis.
. The new product should clearly meet the customer's financial and
personal goals, and this should be readily evident to the customer.
. The benefits of the new product should clearly outweigh the costs and
consequences of replacing or switching the existing product.
Enterprise Selling Agreement
GAD Version - September 2003 Page 40 of 59
. The pros and cons of the proposed transaction should be discussed
completely with the customer.
. Proper disclosure of the replacement or switch must be made to the
customer and ALL Company and state requirements must be strictly
adhered to with regard to Rewritten Business.
WHEN DO THE REWRITTEN BUSINESS RULES APPLY?
When a client gives up all or part of the benefit provided by an Existing
Product (either by ceasing to pay required premiums or deposits on the product
or by appropriating the product's cash value) to fund the purchase of a New
Product or the rollover into an Existing Product, these Rewritten Business rules
will apply. These rules govern the commissions paid on the sale of the second
product.
These rules apply in the following circumstances as defined by key terms and
definitions presented in the following section of this document:
. When an Existing Product is rewritten by New Product; or
. When funds from an Existing Product are used to fund a deposit into
another Existing Product; or
. When an Existing Product is rewritten by a non-enterprise New Product
sponsored by, or sold through the enterprise (e.g., products available
through the MetLife General Agency.)
For Protection Products, and Investment Products, any transaction identified as
occurring within the respective Rewritten Business Window (see definition in
next section of this document), may trigger the application of these Rewritten
Business Rules.
Enterprise Selling Agreement
GAD Version - September 2003 Page 41 of 59
KEY TERMS & DEFINITIONS AS APPLIED TO REWRITTEN BUSINESS RULES
Existing Product or Product Being Rewritten is any "existing" enterprise
protection or investment product used to fund the purchase of a new enterprise
protection or investment product or to fund a deposit into an Existing
Enterprise protection or investment Product.
New Product is any protection or investment product, policy or contract, which
rewrites, in whole or part, an Existing Product.
New Premium or New Deposit is the amount of first-year premium or the initial
deposit paid on a New Product. With respect to flexible premium life products,
any amount paid in excess of the (base commissionable) premium amount -
sometimes referred to as "excess premium" - is excluded.
Old Premium Level is an amount equal to the first-year premium on an Existing
Product. With respect to flexible premium life products, "Old Premium Level"
does not include any amount previously paid in excess of the (base
commissionable) premium amount - sometimes referred to as "excess premium."
Old Money is the net cash value released (excluding dividend accumulations) from
an Existing Product, either as cash build up, accumulation, or policy values,
and subsequently appropriated or used to pay any part of a New Premium or
Deposit. Appropriation or use of Old Money to pay any part of a New Premium or
Deposit may be implied if the use or appropriation occurs within the Rewritten
Business Window and the criteria for deeming the money to have been used for
that purpose have been met. This will apply whether that cash value is
explicitly rolled into the new policy or not. In addition, a full or partial
surrender of PUAR/VABR values (or of a paid-up or non-forfeiture policy) on the
same life is considered rollover money if it falls within the RWB window, even
if the old policy is not otherwise changed or "rewritten."
New Money is any amount used to pay premium or deposits on a New or Existing
Product that is not Old Money. In essence, New Money is any money paid by the
client that has not come from an existing enterprise product within the
Rewritten Business Window as defined in this document.
Rewritten Business Window is the time frame in which transactions on an Existing
Product will trigger the application of these Rewritten Business rules with
regard to the issue of a New Product or deposit into an Existing Product. If
within this time frame, an Existing Product lapses, is fully or partially
surrendered for the cash value, or the annualized premium is reduced by a policy
change, these Rewritten Business rules will apply to the commissions on the New
Product.
1) For Protection Products, the Rewritten Business Window is 6 months
prior to and 12 months after the Date of Part A of a New Product.
2) For Investment Products, the Rewritten Business Window is 3 months
prior to and 3 months after the issue date of a New Product or a
deposit into an Existing contract.
Enterprise Selling Agreement
GAD Version - September 2003 Page 42 of 59
RULES FOR MONEY COMING INTO A NEW LIFE POLICY
Permanent to Permanent / Term to Term / Permanent to Term Life
Full First-Year Commissions will be paid on the part of the New premium in the
New Product that exceeds the premium level of the Old Product.
.. Partial First-Year Commissions will be paid on premium dollars in the New
Product up to the premium level of the Old Product. The partial commission
payable will be determined based on the age of the old policy being
rewritten. This applies to "roll-overs" directly into the Cash Value and
Paid-Up Riders. Please refer to the table below.
--------------------------------------------------------------------------
Percent of Normal FYC
--------------------------------------------------------------------------
Years Up to Old Premium Above Old Premium
Old Policy Has Level/1/ Level
Been In-force
--------------------------------------------------------------------------
Less Than 5 0% 100%
--------------------------------------------------------------------------
5 but less than 6 25% 100%
--------------------------------------------------------------------------
6 but less than 7 30% 100%
--------------------------------------------------------------------------
7 but less than 8 35% 100%
--------------------------------------------------------------------------
8 but less than 9 40% 100%
--------------------------------------------------------------------------
9 but less than 10 45% 100%
--------------------------------------------------------------------------
10 or more 50% 100%
--------------------------------------------------------------------------
(1) Also applies to old money rolled over into an accumulation fund (e.g,
Excess Premium), or whole life riders (e.g, VABR).
.. For Existing Term insurance sold after 01/01/2001. When existing term
insurance that was sold after 01/01/2001 is replaced by a new term policy,
the "Up to Old Premium Level" percentages in the table above would be
doubled.
.. Premium Doubling Rule. Should the New Policy base premium at least double
that of the Old Policy base premium AND the Old Policy is at least 5 years
old, full commission will be paid on all premium dollars related to the
base premium of the New Policy. Any Old Money rolled over into an
accumulation fund (e.g, Excess Premium), or whole life riders (e.g, VABR)
will be commissioned based on the above table.
.. Normal Renewals will be paid based on published schedules of renewals for
the New Policy being written.
.. A Persistency Adjustment will apply to offset the "lapse" of the Old
Product that is being rewritten under the Traditional Life Persistency
(TLP) arrangement. This adjustment will apply if the Old Product being
rewritten is a traditional life policy, has been in force for 5 years or
more, and the commissions on the New Product are adjusted under the
Rewritten Business Rules.
.. No Commissions are paid for "Saving" cases.
Enterprise Selling Agreement
GAD Version - September 2003 Page 43 of 59
.. Term Insurance receives the "Percent of Normal FYC" scale if rewritten,
unless it is in the last 2 years of the level premium guarantee period, in
which case 100% of normal FYC is payable.
Term to Permanent
.. Term-to-permanent commission payments are determined by the conversion
rules of the Old Product. For a replacement of a term policy by a permanent
policy, where no term conversion is available, full commissions will be
paid on the permanent policy.
Annuities/Mutual Fund/WRAP Account to Life
Full first-year commissions will be paid when money is coming from an Old
Investment Product and going towards a New Protection Product, except for
Annuities with surrender/withdrawal charges.
Enterprise Selling Agreement
GAD Version - September 2003 Page 44 of 59
RULES FOR MONEY COMING INTO AN NEW ANNUITY
Fixed to Fixed Annuity / Fixed to Variable Annuity / Variable to Fixed Annuity
.. Full commissions will be paid on New Money included within the New Deposit.
.. One-half of the normal first-year commission will be paid on the Old Money
included within the New Deposit. The commission is only payable if the old
annuity contract is beyond the surrender/withdrawal charge period.
.. No Commissions will be paid on the Old Money included within the New
Deposit if a surrender/withdrawal charge was assessed on the old contract.
Variable Annuity to Variable Annuity
.. Full commissions will be paid on New Money included within the New Deposit.
.. No Commissions will be paid on any Old Money included within the New
Deposit.
Mutual Fund or WRAP Account to Fixed or Variable Annuity
.. Full commissions will be paid on all money being deposited.
Permanent Life Insurance to Fixed or Variable Annuity
.. Full commissions will be paid on New Money included within the New Deposit.
.. Full first-year commission will be paid on Old Money included within the
New Deposit if the life insurance policy has been in force at least 10
years.
.. No first year commission paid on Old Money included in the New Deposit if
the life insurance policy has been in force for less than 10 years.
Special Rules Applicable to Annuities
.. No commissions will be payable on company-sponsored exchanges or similar
exchanges sponsored by MetLife affiliates.
.. Stretch/ Decedent XXX. If the annuity is an XXX contract and the
beneficiary elects a stretch/decedent XXX, no commissions will be paid or
credited.
.. Annuitization. One-half (50%) of the normal commissions/GDC will be
credited on an annuitization from a deferred annuity which has been in
place for at least two contract years AND on an annuitization using life
insurance accumulation amounts or death benefit proceeds under the terms of
the policy.
.. Spousal Transfers. If the spouse is the primary beneficiary of the annuity
death claim, and he/she elects to retain the proceeds in his/her name and
become the annuitant/owner of the existing contract, no commission will be
paid or credited. If the annuity death proceeds are moved to a new annuity,
instead of using the spousal assumption/continuation provisions, the same
RWB Rules for Old Money coming into a new Annuity will apply. Full
first-year commission will be paid on New Money.
Enterprise Selling Agreement
GAD Version - September 2003 Page 45 of 59
RULES FOR MONEY COMING INTO A NEW MUTUAL FUND/WRAP
--------------------------------------------------
One Mutual Fund Family/WRAP to Another Mutual Fund Family/WRAP
--------------------------------------------------------------
.. Full first-year commissions will be paid, provided a properly executed
"Mutual Fund Switch Letter," signed by the client, the Financial Services
Representative and his or her manager, is submitted as part of the
transaction.
Exchanges Within the Same Mutual Fund Family
--------------------------------------------
.. Full first-year commission will be paid on any amount of New Money.
.. No first-year commission will be paid when Old Money from a mutual fund
family is used to fund a mutual fund from the same family of funds. There
is generally no sales charge to the client for this exchange, and as such,
there is no commission payable.
Annuity To Mutual Fund/Wrap Account
-----------------------------------
.. Full commission will be paid on New Money.
.. Full first-year commission will be paid when a mutual fund or WRAP account
rewrites an annuity that is out of the surrender charge period.
.. No commission will be paid on the Old Money if the annuity is subject to a
surrender/withdrawal charge.
Permanent Life Insurance to Mutual Funds/WRAP Accounts
------------------------------------------------------
.. Full commissions will be paid on New Money included within the New Deposit.
.. Full first-year commission will be paid on Old Money included within the
New Deposit if the life insurance policy has been in force at least 10
years.
.. No first year commission paid on Old Money included in the New Deposit if
the life insurance policy has been in force for less than 10 years.
Enterprise Selling Agreement
GAD Version - September 2003 Page 46 of 59
ADDITIONAL RULES THAT APPLY
---------------------------
The Company reserves the right to apply the rewritten business rules in special
situations. Listed here is information regarding several special situations, and
the names of individuals you should contact if you encounter a situation where
it is unclear how these rules apply.
Policy Loans. It is against company rules to recommend policy loans to help fund
a New or Existing Products. The date of a policy loan check may be used as the
"date of lapse" in determining whether a new policy will be considered a
"rewritten policy," if, within the Rewritten Business Window:
1) a loan is taken out on an Existing Policy resulting in the total
outstanding loan on that policy to be equal to 80% or more of the
total loan value on that policy, and
2) the existing policy lapses, is surrendered for the cash value, or the
annualized premium is reduced by policy change, with three or less
months additional premiums having been paid 31 days after the date of
the policy loan check.
Remember that it is against Company policy to recommend policy loans to help
fund the purchase of an equity product.
Ownership Changes. When a change in ownership occurs involving a corporation, a
qualified retirement plan or an irrevocable trust, the New Policy will not be
considered Rewritten Business for RWB commission rule purposes, even though the
insured is the same. Neither will an individually-owned policy sold after a
corporate-owned policy is terminated because of business failure or bankruptcy.
Matured Endowments. If the funds of an endowment policy, which has matured or is
within 3 years of maturity, are deposited into a new or existing life insurance
policy, annuity, or mutual fund, all the funds will be considered New Money for
commission purposes, and full FYCs will be paid.
Juvenile Policies. Full commissions will be credited when a juvenile policy
owned by parents, guardians or a trust is rewritten by a New Policy on the same
life that also owns the New Policy and the owner of the New Policy is an adult
(age 18 or older).
Qualified Domestic Relations Order. When a life policy is cancelled because of a
court ordered settlement and is rewritten by another life policy on the same
life, full commissions will be credited.
Enterprise Selling Agreement
GAD Version - September 2003 Page 47 of 59
When the assets of an annuity are required to be split because of a Domestic
Relations Order or Qualified Domestic Relations Order, no commissions will be
paid or credited.
Product Exchanges. The company sometimes sponsors special exchange programs
(known as a "company-sponsored exchange") designed to encourage clients to
replace an older product with a newer one, typically because the newer product
has features the older one lacks that are considered advantageous to the client.
The company often provides some incentive to the client to make the sponsored
exchange. Special commission provision may also apply. If they do, these special
commission provisions will supersede the rules published here.
Term Conversions. On a term conversion in the first policy year, the term
writer's first-year commissions are protected. The writer of the permanent
policy will receive first-year commissions on the new policy less the FYC paid
on the term policy, and will receive full renewal commissions. A term policy in
its second or later policy year may be converted, and full commissions will be
credited to the writer effecting the term conversion.
Enterprise Selling Agreement
GAD Version - September 2003 Page 48 of 59
EXAMPLES
--------
It's important to note at this point that the examples below show the net FYC
you would receive given the assumptions shown. Remember, AS CURRENTLY IS THE
BUSINESS PROCESS, Full FYC may well be paid out in one pay cycle AND the
relative Rewritten Business Rule adjustments, may come 1 or more pay cycles
later.
Example of How The Table Works:
-------------------------------
-----------------------------------------------------------------
Percent of Normal FYC
-----------------------------------------------------------------
Years
Old Policy Has Up to Old Premium Above Old Premium
Been In-force Level (1) Level
----------------------------------------------------------------
Less Than 5 0% 100%
----------------------------------------------------------------
5 but less than 6 25% 100%
----------------------------------------------------------------
6 but less than 7 30% 100%
----------------------------------------------------------------
7 but less than 8 35% 100%
----------------------------------------------------------------
8 but less than 9 40% 100%
----------------------------------------------------------------
9 but less than 10 45% 100%
----------------------------------------------------------------
10 or more 50% 100%
----------------------------------------------------------------
(1) Also applies to old money rolled over into an accumulation fund (e.g,
Excess Premium), or whole life riders (e.g, VABR).
Assumptions:
.. New Policy FYC Rate is 50%
.. Old Policy in-force for 71/2years (cross table at "7 but less than 8" years
in-force row)
Results:
.. FYC Rate on New Premium up to the Old Premium level = 17.5% (which is
normal FYC Rate 50% x 35% - the % from the chart above)
.. FYC Rate for New Premium above Old Premium level = 50% (New Money, gets
full FYC)
Enterprise Selling Agreement
GAD Version - September 2003 Page 49 of 59
Examples of a Life to Life Rewritten Policy
Example 1: Old policy and New Policy have same premium.
Old Policy New Policy
---------- ----------
.. In-force for 9 years . New Premium of $1,000
.. Premium of $1,000 . Normal FYC rate of 50%
.. $0 net cash value
Results:
.. FYC on New Premium up to Old Premium level = 50% x 45% x $1000 = $225.00
.. FYC on New Premium above Old Premium level = 50% x ($1,000 - $1,000) = $ 0.00
--------
TOTAL FYC = $225.00
How did we get there?
.. Look Up applicable FYC adjustment rate from table (9 years inforce) = 45%
.. Multiply as shown above for New Premium up to Old Premium level ($1,000)
.. No FYC on New Premium above Old Premium level because New Premium minus Old
Premium is $0.
--------------------------------------------------------------------------------
Example 2: New Policy has $500 more premium than old policy.
Old Policy New Policy
---------- ----------
.. In-force for 9 years . New Premium of $1,500
.. Premium of $1,000 . Normal FYC rate of 50%
.. $0 net cash value
Results:
.. FYC on New Premium up to Old Premium level = 50% x 45% x $1000 = $225.00
.. FYC on New Premium above Old Premium level = 50% x ($1,500 - $1,000) = $250.00
-------
TOTAL FYC = $475.00
How did we get there?
.. Look Up applicable FYC adjustment rate from table (9 years inforce) = 45%
.. Multiply as shown above for New Premium up to Old Premium level ($1,000)
.. FYC on New Premium above Old Premium calculated as above because New
Premium minus Old Premium is $500.
Enterprise Selling Agreement
GAD Version - September 2003 Page 50 of 59
Example 3: New Policy has $500 more premium than old policy, and additional
$10,000 of Old Policy Cash Value also being rolled over into new policy.
Old Policy New Policy
---------- ----------
.. In-force for 9 years . New Premium of $1,500
.. Premium of $1,000 . Normal FYC rate of 50%
.. $10,000 net cash value (Rolled Over to New Policy)
Results:
.. FYC on New Premium up to Old Premium level = 50% x 45% x $1000 = $225.00
.. FYC on New Premium above Old Premium level = 50% x ($1,500 - $1,000) = $250.00
.. FYC on net Cash Value from Old Policy = 2% x 45% x $10,000 = $ 90.00
-------
TOTAL FYC = $565.00
How did we get there?
.. Look Up applicable FYC adjustment rate from table (9 years inforce) = 45%
.. Multiply as shown above for New Premium up to Old Premium level ($1,000)
.. FYC on New Premium above Old Premium calculated as above because New
Premium minus Old Premium is $500.
.. Multiply as shown above for Old Money ($10,000) rolled over to new policy.
--------------------------------------------------------------------------------
Example 4: Same as example 3, BUT assume $10,000 of Old Policy Cash Value is
surrendered by owner (i.e., not rolled over into the new policy.)
Old Policy New Policy
---------- ----------
.. In-force for 9 years . New Premium of $1,500
.. Premium of $1,000 . Normal FYC rate of 50%
.. $10,000 net cash value (NOT rolled over)
Results:
.. FYC on New Premium up to Old Premium level = 50% x 45% x $1,000 = $ 225.00
.. FYC on New Premium above Old Premium level = 50% x ($1,500 - $1,000) = $ 250.00
.. FYC on net Cash Value from Old Policy ("Old Money") = $ 0.00
--------
TOTAL FYC = $ 475.00
How did we get there?
.. Look Up applicable FYC adjustment rate from table ( 9 years inforce) = 45%
.. Multiply as shown above for New Premium up to Old Premium level ($1,000)
.. FYC on New Premium above Old Premium calculated as above because New
Premium minus Old Premium is $500.
.. Since the owner of the contract surrendered the policy, no premium dollars
came into the new Policy from "Old Money." Hence, No FYC would be paid on
Old Money.
Enterprise Selling Agreement
GAD Version - September 2003 Page 51 of 59
Example 5: Same as example 3, BUT $2,500 New Policy Premium. This would cause
the Premium Doubling Rule to take effect.
Old Policy New Policy
---------- ----------
.. In-force for 9 years . New Premium of $2,500
.. Premium of $1,000 . Normal FYC rate of 50%
.. $10,000 net cash value (Rolled over into
New Policy)
Results:
.. FYC on All New Premium = 50% x $2,500 = $1,250.00
.. FYC on net Cash Value from Old Policy ("Old Money") = 2% x 45% x $10,000 = $ 90.00
-----------
TOTAL FYC = $1,340.00
How did we get there?
.. The New base premium is at least double that of the Old base premium,
therefore the Premium Doubling Rule applies and Full FYC will be paid on
the New Policy base premium.
.. The Old Money rolled into the New Policy will receive FYC based on the
Table.
--------------------------------------------------------------------------------
Example 6 - Annuity/Mutual Fund/WRAP to Life: $20,000 from an annuity is rolled
over into the PUAR of a new life policy, which has a premium of $500.
Old Contract New Policy
------------ ----------
.. $20,000 in Old Contract (Rolled into PUAR) . $500 New Premium
.. No Surrender Charges . FYC is 50%
Results:
.. FYC Rate of new premium is 50% (50% x 500 = $250) = $250.00
.. FYC on PUAR is 3% ($20,000 x 3% = $600) = $600.00
-------
TOTAL FYC = $850.00
How did we get there?
.. Full FYC is paid when money is coming from an "old" Investment & Income
product into a "new" Protection product.
.. Old contract was out of the surrender charge period.
Enterprise Selling Agreement
GAD Version - September 2003 Page 52 of 59
Examples of an Annuity to Rewritten Annuity Contract
Example 7: Old annuity is out of the surrender charge period.
Old Contract New Contract
------------ ------------
.. $100,000 Old Contract Surrender . $100,000 New Contract Deposit
.. No Surrender Charges . GDC Rate of 6%
. FYC is 35% of GDC
Results:
.. GDC is 6% of New Deposit ($100,000 x 6% = $6,000)
.. FYC Rate of GDC is 35% of $6,000 = $2,100
.. 1/2 FYC on entire deposit = 50% x $2,100 = $1,050.00
-----------
TOTAL FYC = $1,050.00
How did we get there?
.. Since there were no surrender charges and no New Money deposited, half the
FYC is paid on the deposit.
--------------------------------------------------------------------------------
Example 8: Same as Example 7, but assume additional $10,000 new deposit.
Old Contract New Contact
------------ -----------
.. $100,000 Old Contract Surrender . $110,000 New Contract Deposit
.. No Surrender Charges . GDC Rate of 6%
. FYC is 35% of GDC
Results:
.. GDC is 6% of New Deposit
.. FYC Rate of GDC is 35%
.. Full FYC on "New Money" ($10,000 x 6% x 35% = $210) = $ 210.00
.. 1/2 FYC on rollover deposit ($100,000 x 6% x 35% x 50% = $1,050) = $1,050.00
-----------
TOTAL FYC = $1,260.00
How did we get there?
.. Since there were no surrender charges and there was New Money deposited
along with the deposit rolled over from the old annuity, full FYC (35% of
the GDC) is paid on the "New Money" and half the FYC (50% of the 35% of the
GDC) is paid on the deposit rolled over. The amount will be paid in the
current year and
Enterprise Selling Agreement
GAD Version - September 2003 Page 53 of 59
Example 9: Same as Example 7, but old contract is still in the surrender charge
period.
Old Contract New Contact
------------ -----------
.. $100,000 Old Contract Surrender . $100,000 New Contract Deposit
.. Surrender Charges . GDC Rate of 6%
. FYC is 35% of GDC
Results:
.. GDC is 6% of New Deposit
.. FYC Rate of GDC is 35%
.. FYC on rollover deposit ($100,000 x 6% x 35% x 0% = $0) = $ 0.00
--------
TOTAL FYC = $ 0.00
How did we get there?
.. Since the old contract was still in the surrender charges no FYC will be paid.
--------------------------------------------------------------------------------
Example 10: Same as Example 8, but old contract is still in the surrender charge
period.
Old Contract New Contact
------------ -----------
.. $100,000 Old Contract Surrender . $110,000 New Contract Deposit
.. Surrender Charges . GDC Rate of 6%
. FYC is 35% of GDC
Results:
.. GDC is 6% of New Deposit
.. FYC Rate of GDC is 35%
.. Full FYC on "New Money" ($10,000 x 6% x 35% = $210) = $ 210.00
.. FYC on rollover deposit ($100,000 x 6% x 35% x 0% = $0) = $ 0.00
----------
TOTAL FYC = $ 210.00
How did we get there?
.. Since the old contract was still in the surrender charge period, no FYC
will be paid on the "Old Money" included in the deposit to the new
contract. Full FYC (35% of the GDC) is paid on the "New Money."
Enterprise Selling Agreement
GAD Version - September 2003 Page 54 of 59
Examples of a Mutual Fund/WRAP to a Rewritten Mutual Fund/Wrap
Example 11: Old fund is from ABC Family. New fund is from XYZ Family, and a
properly executed "Mutual Fund Switch Letter" signed by the client, the FSR and
his/her manager, has been submitted as part of the transaction.
Old Fund New Fund
-------- --------
.. $3,000 in Old Fund . $3,000 New Fund Deposit
. GDC Rate of 6%
. FYC is 35% of GDC
Results:
.. GDC is 6% of New Deposit ($3,000 x 6% = $180)
.. FYC Rate of GDC is 35%
.. Full FYC on fund family change $3,000 x6% x35% = $63.00
How did we get there?
.. Since the old and new funds were from different fund families, full FYC is
paid.
U. IMPORTANT NOTE
--------------
.. If, in this example, the new fund family was the same as the old family, NO
FYC would be payable.
--------------------------------------------------------------------------------
Example 12: Same as Example 11, but additional $1,000 "New Money," where new
fund is from the same fund family as old fund.
Old Fund New Fund
-------- --------
.. $3,000 in Old Fund . $4,000 New Contract Deposit
. GDC Rate of 6%
. FYC is 35% of GDC
Results:
.. GDC is 6% of New Deposit
.. FYC Rate of GDC is 35%
.. No FYC on "Old Money"
.. Full FYC on "New Money" ($4,000 - $3,000) x 6% x 35% = $21.00
How did we get there?
.. Full FYC is paid on "New Money" only.
Enterprise Selling Agreement
GAD Version - September 2003 Page 55 of 59
Examples of a Life to Annuity, Mutual Fund, or WRAP
Example 13: Life policy in-force 10 or more years, no New Money. Full FYC is
paid on "Old Money."
Old Policy New Contract/Fund
---------- -----------------
.. $2,000 cash surrender value in . $2,000 New Contract/Fund Deposit
Old Policy . GDC Rate of 6%
.. Policy in-force 12 years . FYC is 35% of GDC
Results:
.. GDC is 6% of New Deposit
.. FYC Rate of GDC is 35%
.. Full FYC on deposit into new fund/contract ($2,000 x 6% x 35% = $42)
--------------------------------------------------------------------------------
Example 14: Life policy in-force less than 10 years, no New Money. No FYC is
paid on Old Money.
Old Policy New Contract/Fund
---------- -----------------
.. $2,000 cash surrender value in Old Policy . $2,000 New Contract Deposit
.. Policy In-force 8 years . GDC Rate of 6%
. FYC is 35% of GDC
Results:
.. GDC is 6% of New Deposit
.. FYC Rate of GDC is 35%
.. No FYC on "Old Money" ($2,000 - $2,000) x 6% x 35% x 0% = $0.00
Enterprise Selling Agreement
GAD Version - September 2003 Page 56 of 59
Example 15: Life policy in-force less than 10 years, $1,000 New Money deposited
into contract/fund. Full FYC is paid on "New Money" only.
Old Policy New Contract/Fund
---------- -----------------
.. $2,000 cash surrender value in Old Policy . $3,000 New Contract Deposit
.. Policy In-force 8 years . GDC Rate of 6%
. FYC is 35% of GDC
Results:
.. GDC is 6% of New Deposit
.. FYC Rate of GDC is 35%
.. Full FYC on "New Money" ($3,000 - $2,000) x 6% x 35% = $21.00
.. $0 GDC on old policy cash surrender value.
--------------------------------------------------------------------------------
Example 16: Life policy in-force 10 or more years, $1,000 of New Money deposited
into contract/fund. Full FYC is paid on the "Old Money" AND "New Money."
Old Policy New Contract/Fund
---------- -----------------
.. $2,000 cash surrender value in Old Policy . $3,000 New Contract Deposit
.. Policy In-force 12 years . GDC Rate of 6%
. FYC is 35% of GDC
Results:
.. GDC is 6% of New Deposit
.. FYC Rate of GDC is 35%
.. Full FYC on deposit into new contract/fund $3,000 x 6% x 35% = $63.00
Enterprise Selling Agreement
GAD Version - September 2003 Page 57 of 59
EXHIBIT D
ASSOCIATED INSURANCE AGENCY
The Broker/Dealer named below ("Broker"), having executed a Sales Agreement
(the "Agreement") by and among Broker and General American Distributors ("GAD")
dated _____________ that, among other things, provides for sales of Variable
Contracts and Fixed Contracts through a designated associated insurance agency
or agencies, hereby designates the associated insurance agency (the "Associated
Insurance Agency") named below as its Agency (as that term is defined in the
Agreement) pursuant to Section III(B) thereof. By signing this Exhibit D, each
of Broker and the Associated Insurance Agency hereby represent and warrant that
the Associated Insurance Agency is and will remain qualified to serve as an
Agency in accordance with the terms of the Agreement, and the Associated
Insurance Agency hereby agrees to be bound by and subject to the terms of the
Agreement.
---------------------------------------
Broker/Dealer
By:
------------------------------------
---------------------------------------
Print Name & Title
---------------------------------------
(Tax Identification Number)
---------------------------------------
Associated Insurance Agency Name
By:
-------------------------------------
---------------------------------------
Print Name & Title
---------------------------------------
(Tax Identification Number)
Enterprise Selling Agreement
GAD Version - September 2003 Page 58 of 59
GENERAL AMERICAN FINANCIAL
WHOLESALE SALES AGREEMENT
TABLE OF CONTENTS
I. DEFINITIONS IX. INDEMNIFICATION
II. COMPLIANCE WITH APPLICABLE X. GENERAL PROVISIONS
LAWS
A. TERM AND TERMINATION
III. AGREEMENTS, REPRESENTATIONS,
AND COVENANTS B. ASSIGNABILITY
A. AGREEMENTS AND COVENANTS C. AMENDMENTS
OF GAD
D. NOTICES
B. REPRESENTATIONS AND
COVENANTS OF WHOLESALER E. ARBITRATION
IV. PRINCIPLES OF ETHICAL MARKET F. GOVERNING LAW
CONDUCT
G. ENTIRE UNDERSTANDING
V. COMPENSATION
H. NO THIRD PARTY BENEFICIARIES
VI. COMPLAINTS AND INVESTIGATIONS
I. NON-EXCLUSIVITY
VII. RECORDS AND ADMINISTRATION
J. WAIVER
VIII. PRIVACY INFORMATION
K. COUNTERPARTS
A. PROPRIETARY INFORMATION
L. SEVERABILITY
B. RECEIPT OF CUSTOMER
NONPUBLIC PERSONAL
INFORMATION FROM
WHOLESALER BY GAD
C. TREATMENT OF
NONPUBLIC PERSONAL
INFORMATION
DISCLOSED TO
WHOLESALER BY GAD
D. CONFIDENTIAL INFORMATION
E. PROTECTED HEALTH INFORMATION
Enterprise Selling Agreement Page 1 of 34
GENERAL AMERICAN FINANCIAL
SALES AGREEMENT
This Broker-Dealer Wholesale Agreement (the "Agreement") dated
__________________, 2003, ("Effective Date") by and between General American
Distributors, a Missouri corporation, ("GAD") and _________________, a
_______________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 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 "Wholesaler").
WITNESSETH:
WHEREAS, GAD issues or provides 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 attached hereto, which is incorporated herein by
reference (together, the "Contracts"); and
WHEREAS, GAD, on behalf of itself and each Affiliate that issues or
provides access to the Contracts identified in Exhibit A hereto, is authorized
to enter into selling agreements with unaffiliated broker-dealers or selling
groups, as the case may be, to distribute the Contracts; and
WHEREAS, GAD is the distributor and principal underwriter of the Contracts,
and is authorized to enter into agreements, with registered broker-dealers and
insurance agencies for the distribution of the Contracts; and
WHEREAS, Wholesaler is a registered broker-dealer desiring to participate
in the promotion of sales and distribution of the Contracts, which are deemed to
be securities under the Securities Act of 1933; and
WHEREAS, Wholesaler has relationships with certain third party retailing
selling groups ("Retailers"), which have qualified and licensed
agents/registered representatives who will solicit and sell the Contracts.
WHEREAS, GAD, subject to the terms and conditions of the Agreement, hereby
appoints Wholesaler to support the 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; and
Enterprise Selling Agreement Page 2 of 34
WHEREAS, Wholesaler accepts such appointment and agrees to use its best
efforts to find purchasers for the Contracts; and
WHEREAS, GAD proposes to compensate Wholesaler for the sale and servicing
of Contracts in accordance with Exhibits A and B.
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties hereto agree as follows:
I. Definitions
1) Affiliate - Any entity that controls, is controlled by or is under
common control with including, without limitation, any entity that
owns 25% or more of the voting stock of any GAD company and any entity
that is a subsidiary of that company.
2) Agency- an associated insurance agency of Wholesaler, which is
properly licensed to participate in the business of insurance.
3) Applicable Laws - Shall have meaning given to such term as in
accordance with Section II of this Agreement.
4) Confidential Information - Shall have meaning given to such term as
described in Section VIII(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, 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)(20) 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
Enterprise Selling Agreement Page 3 of 34
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.
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, as more fully described in Exhibit
A at the time of this Agreement or as may be amended by GAD in its
sole discretion from time to time.
11) 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 to the
individual. PHI includes demographic information about individuals,
including names; addresses; dates directly related to an individual,
including but not limited to birth date; 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 Wholesaler 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 state and
federal statutes, laws, rules and regulations may also include,
applicable guidelines, policies, and rulings of federal and state
Enterprise Selling Agreement Page 4 of 34
regulatory organizations and agencies, including without limitation
state insurance departments, the SEC and the National Association of
Securities Dealers, Inc. ("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 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 Wholesaler 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,
Wholesaler 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, Wholesaler agrees to comply with the economic sanctions
programs administered by the U.S. Treasury Department's Office of
Foreign Assets Control ("OFAC"). Wholesaler 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 Wholesaler agree to promptly notify the other whenever
questionable activity or potential indications of suspicious activity
or OFAC matches are detected. GAD and Wholesaler 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.
Enterprise Selling Agreement Page 5 of 34
III. Agreements, Representations, and Covenants
A. Agreements 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 in Exhibit A hereto, to enter into this Agreement with
Wholesaler to wholesale such Contracts.
2) GAD shall advise Wholesaler of any revision of or supplement to any
Prospectus related to the Variable Contracts or underlying investments
of such Variable Contracts.
3) 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.
Pursuant to 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;
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 Wholesaler
1) Wholesaler represents and warrants that it will only support 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.
2) Wholesaler represents and warrants that it is a registered
broker-dealer under the Securities Exchange act of 1934 ("1934 Act"),
has all necessary broker-dealer licenses, is a member in good standing
with the NASD, and is licensed as an insurance Wholesaler and has
obtained any other
Enterprise Selling Agreement Page 6 of 34
approvals, licenses, authorizations, orders or consents which are
necessary to enter into this Agreement and to perform its duties
hereunder.
3) Wholesaler represents that neither it is not 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).
Wholesaler further agrees that, if a formal or informal investigation
of Wholesaler 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, Wholesaler 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) Wholesaler acknowledges that GAD 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 Wholesaler and Wholesaler 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 Wholesaler and the Wholesaler 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 Wholesaler hereunder, and any commission
received by Wholesaler will be returned promptly to GAD. GAD may, at
its option, offset any such amounts against any amounts payable to
Wholesaler.
5) Wholesaler is not a principal, underwriter or agent of GAD, any
Affiliate of GAD, or any GAD separate account. Wholesaler shall act as
an independent contractor, and nothing herein contained shall
constitute Wholesaler, nor its agents or other representatives as
employees of GAD in connection with the solicitation or support of
applications for Contracts or other dealings with the public.
Wholesaler, its agents and its other representatives, shall not hold
themselves out to be employees of GAD in this connection or in any
dealings with the public.
Enterprise Selling Agreement Page 7 of 34
6) Wholesaler 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 or the Contracts, will not be used without the prior written
consent of GAD.
7) Authorized activities by Wholesaler shall be undertaken only in
accordance with Applicable Laws. Wholesaler represents no commissions,
or portions thereof, or other compensation for the sale of the
Contracts will be paid to any person or entity which is not duly
licensed and appointed by GAD in the appropriate states as required by
Applicable Laws.
8) Neither Wholesaler nor its agents, designees or other representatives
shall have authority on behalf of GAD to alter or amend any Contract
or any form related to a Contract to adjust or settle any claim or
commit GAD with respect thereto, or bind GAD or any of 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.
Wholesaler shall not expend, nor contract for the expenditure of,
funds of GAD nor shall Wholesaler possess or exercise any authority on
behalf of GAD other than that expressly conferred on Wholesaler by
this Agreement.
9) Wholesaler shall prepare any forms necessary to comply with Applicable
Laws; and received from GAD in connection with the sale of the
Contracts as replacement for other insurance or annuity products and
to send such forms to GAD. In the alternative, if such forms are not
required but information with respect to replacement is required,
Wholesaler will transmit such information in writing to GAD.
Wholesaler further shall notify GAD when sales of the Contracts are
replacement contracts. Such notification shall not be later than the
time that Wholesaler submits applications for such Contracts to GAD.
10) Wholesaler shall furnish GAD or 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 Wholesaler related to the Contracts are being
conducted in a manner consistent with Applicable Laws.
11) Wholesaler will adhere to all Applicable laws, including but not
limited to, state insurance replacement regulations, before it
receives or supports any applications for Contracts.
Enterprise Selling Agreement Page 8 of 34
12) Wholesaler 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.
13) Wholesaler shall promote the Contracts only to registered
representatives licensed through broker-dealers which have or will
enter into active selling agreements with GAD and who are or will be
variable licensed and appointed with GAD for the sale of the
Contracts.
14) Any solicitation by Wholesaler of broker-dealers who do not have an
active selling agreement with GAD shall only be done in such manner
and using materials as are prescribed by GAD.
15) Wholesaler agrees that it shall, at all times, when performing its
functions under this Agreement, be registered as a securities
broker-dealer with the SEC and will maintain its membership with the
NASD, and shall be licensed or registered as a securities broker-
dealer in the states that require such licensing or registration in
connection with the services to be provided under this Agreement.
16) Marketing and Administrative Duties of Wholesaler.
a) Wholesaler will use its relationships with Retailers and
Retailers' broker dealers and registered representatives to
promote the Contracts. GAD, in their discretion, may accept or
reject the services of any broker dealer or registered
representatives, and are under no duty to contract with or
appoint any particular broker dealer or registered
representative. Wholesaler is not authorized to provide marketing
services related to the Contracts to registered representatives
of broker-dealers which do not have selling agreements with GAD,
or to registered representatives who are not properly licensed
and appointed with GAD.
b) Wholesaler will provide certain marketing and administrative
services to promote the sale of the Contracts. Such services
shall include, but are not limited to, assistance in the
appointment and contracting of agents; distribution of training
and recruiting materials, and sales materials, newsletters, and
field service bulletins (provided that all such materials shall
be approved by GAD prior to use); assistance with sales
promotional activities; training of sales staff and registered
representatives with respect to the features of the Contracts,
and providing technical
Enterprise Selling Agreement Page 9 of 34
assistance to registered representatives and sales staff in the
ongoing servicing of owners of the Contracts.
c) Wholesaler shall have no direct contact with any member of the public,
including any client of the designated broker-dealers or registered
representatives, or owner of a Contract or their representatives
except in circumstances where a duly licensed and appointed registered
representative of the broker dealer is present.
d) The responsibilities of Wholesaler also shall include:
(i.) the establishment and implementation of appropriate procedures to
ensure the prompt distribution of prospectuses, training, and
marketing materials, and any amendments or supplements thereto,
to authorized retail broker-dealer representatives, and the
prompt collection from such representatives and disposal of such
materials when recalled or replaced by GAD by more current
materials;
(ii.) an initial review of applications, forms, and other required
documentation for Contracts to the extent requested by GAD. The
purpose of such review is to assist retail broker-dealers in
ensuring that applications, forms, and other documentation comply
with the standards and procedures provided from time to time by
GAD. Wholesaler shall perform such initial review, if requested,
in an expeditious manner, and shall forward the materials so
reviewed to GAD promptly after completing the initial review.
Wholesaler has no authority to, and shall not, accept or endorse
any checks or money orders intended to be applied as premium or
purchase payments to the Contracts.
e) Wholesaler shall perform its activities under this Agreement in full
compliance with the requirements of the 1934 Act and all other
applicable federal or state laws, and with the rules of the NASD.
Wholesaler agrees that it is responsible for maintaining its own
appropriate books, records, and other items that may be required by
the SEC, NASD, or other regulatory agencies having jurisdiction over
such activities.
f) In conjunction with marketing and sales promotion efforts, GAD will be
responsible for the costs of producing and printing all policy forms,
related prospectuses, and the basic sales literature that they deem
appropriate.
Enterprise Selling Agreement Page 10 of 34
g) GAD is responsible for maintaining in effect the registration
statement for the Contracts. GAD shall immediately notify Wholesaler
of the issuance of any stop order, any federal or state proceeding, or
any other action that would prevent the sale of the Contracts in any
state or jurisdiction.
h) Wholesaler shall immediately notify GAD with respect to: (i.) the
initiation and disposition of any form of disciplinary action against
Wholesaler or any of its employees by the NASD, or any other
regulatory agency or instrumentality having jurisdiction with respect
to the subject matter hereof; (ii.) the issuance of any form of
deficiency notice made part of the public record by the NASD or any
such agency regarding Wholesaler's practices; (iii.) the execution of
any consensual order with respect thereto; and/or (iv.) any change,
termination, or suspension of its status as a broker-dealer or NASD
member.
i) Wholesaler will have responsibility for its marketing and sales
promotional costs including, but not limited to:
(i.) all travel of Wholesaler and its agents;
(ii.) any meetings with broker-dealers or their affiliates.
(iii.) hiring any staff, maintaining office space, and meeting its
expenses.
17) Insurance Coverage.
a) Fidelity Bond. Wholesaler 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. This bond shall be maintained at Wholesaler's
expense in at least the amount prescribed under Rule 3020 of the NASD
Conduct Rules or future amendments thereto. Wholesaler shall provide
GAD with satisfactory evidence of said bond upon GAD's reasonable
request. Wholesaler hereby assigns any proceeds received from a
fidelity bonding company, or other liability coverage, to GAD 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. Wholesaler 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 Wholesaler, its Agency, representatives
and agents. If such insurance plan terminates for any reason during
the term of the Agreement, Wholesaler
Enterprise Selling Agreement Page 11 of 34
shall immediately notify GAD of such termination. If requested by GAD,
Wholesaler shall provide satisfactory evidence of coverage under such
insurance policy satisfactory to GAD showing the amount and scope of
coverage provided.
c) Wholesaler 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 Wholesaler's
expense and shall be at least, of the form type and amount required
under the NASD Rules of Fair Practice. Upon request, Wholesaler shall
give evidence satisfactory to GAD that such coverage is in force.
Furthermore, Wholesaler shall give prompt written notice to GAD of any
notice of cancellation or change of such coverage. Wholesaler hereby
assigns any proceeds received from a fidelity banding company, or
other liability coverage, to GAD as their interest may appear, to the
extent of their loss due to activities covered by the bond, policy or
other liability coverage.
18) Wholesaler 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 the
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 Wholesaler, the SEC, the NASD, and other
appropriate regulatory authorities.
19) 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 and procedures, as those policies and
procedures may be provided to Broker by GAD from time to time.
20) 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 the Company 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 may also pursue all remedies, including
injunction, to assure compliance with the covenants in this section
Enterprise Selling Agreement Page 12 of 34
and shall, if successful, be entitled to recover from the Agency all
costs and expenses incurred in pursuing such remedies, including
reasonable attorneys' fees.
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
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 compensation to Wholesaler as set forth in the attached
Compensation Schedule (Exhibit A), while it is in effect.
2) GAD may at any time offset against any compensation payable to (a)
Agency or its successors or assigns, any indebtedness due from the
Agency to GAD, and (b) the subagents or their successors or assigns
any indebtedness due from the subagent to GAD. Nothing contained
herein shall be construed as giving Agency the right to incur any
indebtedness on behalf of GAD. Any remaining indebtedness of
Wholesaler to GAD arising under this Agreement shall be a first lien
against any monies payable hereunder. The right of Wholesaler, or any
person claiming through Wholesaler 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
Wholesaler to GAD.
3) 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, in its sole discretion, determines not to issue the
Contract applied for,
Enterprise Selling Agreement Page 13 of 34
b) if GAD refunds the premium paid by the applicant, upon the
exercise of applicant's right of withdrawal pursuant to any
"free-look" privilege,
c) if GAD refunds the premium paid by applicant as a result of the
resolution of a consumer complaint, recognizing that GAD has sole
discretion to refund premiums paid by applicants, or
d) if GAD determines 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.
4) GAD shall pay the compensation to Agency for Contracts credited 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.
5) GAD shall not be obligated to pay any compensation, which would
violate the applicable laws of any jurisdictions, anything in this
Agreement notwithstanding.
6) 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 an
Affiliate Contract with another Affiliate Contract, which are
undisclosed, and which otherwise require disclosure by either state
regulation or GAD rules on replacement transactions; specific GAD
rules for such Affiliate replacements are hereby incorporated by
reference in Exhibit C.
7) 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) Wholesaler 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.
Enterprise Selling Agreement Page 14 of 34
2) Both the Wholesaler 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 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
Wholesaler 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 Wholesaler. Wholesaler hereby undertakes
to render such assistance to GAD.
Enterprise Selling Agreement Page 15 of 34
2) Wholesaler will maintain all books and records as required by Rules
17a-3 and 17a-4 under the 1934 Act, except to the extent that GAD may
agree to maintain any such records on Wholesaler's behalf. Records
subject to any such agreement shall be maintained by GAD as agent for
Wholesaler in compliance with said rules, and such records shall be
and remain the property of Wholesaler 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 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 Wholesaler 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 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 provided to GAD by
Wholesaler or its 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. 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 shall be returned to GAD (including all copies made by
the Wholesaler or its Affiliates) upon termination of this Agreement.
Any materials developed by the Wholesaler 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.
Enterprise Selling Agreement Page 16 of 34
B. Receipt of Customer Nonpublic Personal Information From Wholesaler by
GAD
1) GAD will treat nonpublic personal information regarding Wholesaler's
customers provided to it by Wholesaler under this Agreement as
Confidential Information under Section VIII(B) of this Agreement,
except that such provisions shall not apply to such information
regarding customers of Wholesaler who were, are or become
policyholders or customers of GAD or any of its Affiliates other than
by reason of the services provided by Wholesaler under this Agreement.
2) Notwithstanding the foregoing, GAD and its Affiliates shall have the
right to use or disclose such nonpublic personal information: (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 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 Wholesaler provided they do not use nonpublic personal
information regarding Wholesaler's customers provided by Wholesaler 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 Wholesaler by
GAD
Wholesaler will treat nonpublic personal information regarding
Wholesaler'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, Wholesaler
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 privacy policy, for example, to comply with Applicable Laws or
requests of regulators, in connection with Wholesaler's audit
procedures, as authorized by such customers, and to protect against or
prevent fraud.
Enterprise Selling Agreement Page 17 of 34
D. Confidential Information
1) GAD and Wholesaler 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 Wholesaler shall disclose any
Confidential Information that is covered by this Agreement, and shall
only disclose such information 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(B); (b) any information of Wholesaler and their Affiliates
disclosed by Wholesaler 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 Wholesaler 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 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
Enterprise Selling Agreement Page 18 of 34
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.
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.
Enterprise Selling Agreement Page 19 of 34
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 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 Wholesaler from any and all
losses, claims, damages or liabilities (or actions in respect
thereof), to which Wholesaler 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
Enterprise Selling Agreement Page 20 of 34
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading; and will reimburse Wholesaler 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 Wholesaler when referring to
or explaining such Prospectus, amendment, Registration Statement
or any other sales or offering materials. GAD shall not indemnify
Wholesaler 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 Wholesaler 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
Wholesaler and any person controlling it.
b) Wholesaler will indemnify and hold harmless GAD against any
losses, claims, damages or liabilities (or actions in respect
thereof), to which GAD may become subject, insofar as such
losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any negligent, improper,
fraudulent or unauthorized acts or omissions by Wholesaler, 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 for any legal or other
expenses reasonably incurred by it 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 any person
controlling it.
c) Wholesaler shall indemnify and hold harmless GAD from any and all
losses, claims, damages or liabilities (or actions in respect
thereof) to which GAD 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 Wholesaler or its directors, officers, employees or
other representatives or by any other person or entity acting on
behalf of or under control of Wholesaler; and will
Enterprise Selling Agreement Page 21 of 34
reimburse GAD for any legal or other expenses reasonably incurred
by it 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 any person controlling it.
d) Wholesaler shall indemnify and hold GAD 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 negligence or willful
misconduct; and will reimburse GAD for any legal or other
expenses reasonably incurred by it 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 any person
controlling it.
2) 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.
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.
Enterprise Selling Agreement Page 22 of 34
2) Change in Status.
a) Broker-Dealer Status. The Agreement shall terminate immediately
upon GAD or Wholesaler 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 Selling Broker-Dealer or
the Agency, or the merger, consolidation, reorganization,
dissolution, receivership or bankruptcy of either, or whenever
the Agency is no longer licensed under law to solicit and procure
applications for Contracts, unless the Agency notifies the other
parties in writing at least thirty (30) days' prior to the
occurrence of any of the above events and obtains written
permission to continue on a basis approved by the other parties.
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 maintained by or on behalf of Wholesaler pursuant to Rules
17a-3 and 17a-4 under the 1934 Act, Wholesaler 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.
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. _____________
Attn: Law Department _____________
00000 Xxxxxx Xxxxx Xxxx _____________
Xx. Xxxxx, XX 00000 _____________
Enterprise Selling Agreement Page 23 of 34
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, 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.
Enterprise Selling Agreement Page 24 of 34
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.
H. No Third Party Beneficiaries
Nothing in the Agreement shall convey any rights upon any person or
entity, which is not a party to the Agreement.
I. Non-exclusivity
Wholesaler 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 Wholesaler 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.
Enterprise Selling Agreement Page 25 of 34
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
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
--------------------------------------
----------------------------------------
Print Name & Title
Date
------------------------------------
(WHOLESALER)
By
--------------------------------------
----------------------------------------
Print Name & Title
Date
------------------------------------
Enterprise Selling Agreement Page 26 of 34
Exhibit A
WHOLESALING ALLOWANCE
GEN AMERICA LIFE INSURANCE COMPANY
In addition to the compensation to the retail BD, General American Distributors
(GAD) agrees to pay to the Wholesaler an additional allowance equal to 24% of
target premium and 1% of excess premium in the first year on VUL (00), and VUL
(2002).
In addition, 1% of renewal premiums will be payable on VUL(00) and VUL 2002.
================================================================================
NEW ENGLAND LIFE INSURANCE COMPANY
For policies credited to the Agency under the Agreement while this part is in
effect, marketing allowance payable to the Agency shall be the following
percentages of recurring premiums (up to Target Premiums) and shall be payable
when the premium is due and paid to the Company, subject to the provisions of
the Agreement.
First Year Wholesaling Allowance
24% of target premium for VUSL Bands 1 & 2, VUL Bands 0, 1 & 2 , VOL
Bands 1 & 2
Renewal Year Wholesaling Allowance - Years 2-10
2.50% for; VUL Bands 0 & 1
2.25% for VUL Band 2;
2.00% for VUSL Band 1 & 2
Excess Premiums (Years 1-10)
0.5% premiums over the Target Premium on VUL , VUSL, VOL
Service Fees: No service fees are payable on target premium or excess
premium.
================================================================================
Enterprise Executive Advantage - (EEA - COLI)
-----------------------------------------
Year 1 Target 3.00%
-----------------------------------------
Year 1 Excess 0%
-----------------------------------------
Year 2+ Target 0%
-----------------------------------------
Year 2+ Excess 0%
-----------------------------------------
================================================================================
Variable Universal Survivorship Life (VUSL)
Commission Chargeback
If for any reason the policy lapses anytime prior to the 13th month, all
unearned Wholesale allowances (up to the Target Premium) already received by the
agent are charged back as well as one-half of the earned Wholesale allowances.
Wholesale allowances received on dump-in amounts above the Target Premium are
not charged back. Partial surrenders prior to the 13th month will result in
partial chargebacks
Enterprise Selling Agreement Page 27 of 34
------------------------------------- ------------ ------------- --------------- -------------
% of Target Premium by Policy Year Year 1 Years 2-5 Years 6-10 Years 11+
------------------------------------- ------------ ------------- --------------- -------------
Wholesale allowance 20% 1% 1% 1%
------------------------------------- ------------ ------------- --------------- -------------
Total on Target to Wholesale BD 20% 1% 1% 1%
------------------------------------- ------------ ------------- --------------- -------------
------------------------------------- ------------ ------------- --------------- -------------
% of Excess Premium by Policy Year Year 1 Years 2-5 Years 6-10 Years 11+
------------------------------------- ------------ ------------- --------------- -------------
Wholesale allowance 1% 1% 1% 1%
------------------------------------- ------------ ------------- --------------- -------------
Total on Excess to Wholesale BD 1% 1% 1% 1%
------------------------------------- ------------ ------------- --------------- -------------
================================================================================
METLIFE
In addition to the compensation to the retail BD, MetLife agrees to pay to the
Wholesaler an additional allowance equal to 22.5% of target premium in the FIRST
Year
Renewal Allowance
UL (01) and UL1 % of Renewal Premium
Years 2-4 Years 5-10
-------------------------------- -------------- ---------------
Target $0 - $499,999 3% 2.25%
-------------------------------- -------------- ---------------
Target $500,000 - $2.0 Mil 3.75% 2.25%
-------------------------------- -------------- ---------------
Target $ >2.0 Mil 4.5% 2.25%
-------------------------------- -------------- ---------------
Enterprise Selling Agreement Page 28 of 34
EXHIBIT B
Schedule of Fixed Product and Compensation
Enterprise Selling Agreement Page 29 of 34
EXHIBIT C
Rewritten Business (RWB) Commission Rules
(formerly, Replacement Commission Rules)
Effective June 1, 2002
Note: Notwithstanding the rules below, no FYC will be payable on internal
replacements or switches that are undisclosed, which includes all internal
replacements or switches for which disclosure is required by either state
regulation or GAD rules.
A. Definitions
For most states and for the GAD enterprise, a replacement can be broadly defined
as purchasing a new policy in connection with discontinuing or changing another
policy. Such a definition applies for disclosure purposes and when replacement
forms must be completed. However, for purposes of Rewritten Business (RWB)
commission rules, the definition is more limited.
Application of RWB Commission Rules: A new individual life insurance policy
issued within the Enterprise will be subject to RWB commission rules if a
premium-paying life insurance policy (the "old policy") previously issued within
the Enterprise on the same life meets one of the following criteria within six
months before or 12 months after the Home Office Receipt Date (XXXX) of a new
life policy (the "RWB window"; for a new annuity, the RWB window is three months
before and after the issue date):
.. Is fully or partially lapsed, including lapse to extended term or reduced
paid-up;
.. Is fully or partially surrendered;
.. Has a reduction in annualized premium through a policy change;
.. Has a loan taken out that results in the total outstanding loan exceeding
80% of the total loan value of the policy, and the policy subsequently
lapses, is surrendered or has a reduction in annualized premium, with less
than four months of additional premiums being paid after the policy loan.
However, the new policy will not be considered rewritten business for RWB
commission rule purposes, even though the insured is the same, if (a) a change
in ownership occurs involving a corporation, a qualified retirement plan or an
irrevocable trust; (b) a corporate-owned policy is terminated because of
business failure or bankruptcy; (c) a life policy is cancelled because of a
court-ordered settlement; or (d) a juvenile policy owned by parents, guardians
or a trust is rewritten by a new policy on the same life that also owns the new
policy and is an adult (age 18 or older).
For survivorship policies, a survivorship policy "rewrites" a single life policy
(or vice versa) if one of the insureds on the survivorship policy is the insured
on the single life policy. However, one survivorship policy rewrites another
only if both insureds are the same.
The RWB commission rules will be applied, assuming the above definitions are
satisfied, even though
.. No funds are moved from the old policy to the new policy; or
.. The agent is not told and does not know of the rewritten business; or
.. The policy ownership or policy payor changes, except for changes in
ownership involving a corporation, a qualified retirement plan or an
irrevocable trust.
Old Money: The net cash value released (excluding dividend accumulations) from
the old policy during the RWB Window, whether that cash value is explicitly
rolled into the new policy or not. In addition, a full or partial
Enterprise Selling Agreement Page 30 of 34
surrender of paid-up additions (or of a paid-up policy) on the same life is
considered rollover money if it falls within the RWB window, even if the old
policy is not otherwise changed or "rewritten".
New Money: The excess, if any, of the amount applied to the new policy over the
Old Money, on or within 12 months after the issue date of the new policy.
Old Premium: The amount of first year premium paid (up to the target premium for
flexible premium policies) on the old policy.
New Premium: The amount of first year premium paid (up to the target premium for
flexible premium policies) on the new policy. This amount may be paid by either
Old Money or New Money.
B. Life-to-Life (Permanent or Term)
FYC on Old Money:
No FYC will be payable.
FYC on New Money
FYC will then be payable as follows.
a. For the amount of New Money up to the Old Premium level,
If the New Premium is at least double the Old Premium and the old policy is
at least five years old, then full first commissions are payable.
If the New Premium is less than double the Old Premium or the old policy is
less than five years old, then first commission are payable as follows:
--------------------------------------------------------------------------------------------------------------------
Years Existing % of Normal FYC if % of Normal FYC if Existing Policy
Policy In Force Existing Policy Replaced Replaced by New Agent (not a
by Original Writing Agent "Business Successor")
(or "Business Successor")
--------------------------------------------------------------------------------------------------------------------
Less than 5 Years 0% 0%
--------------------------------------------------------------------------------------------------------------------
5 Years less than 6 Years 25% 25%
--------------------------------------------------------------------------------------------------------------------
6 Years less than 7 Years 30% 25%
--------------------------------------------------------------------------------------------------------------------
7 Years less than 8 Years 35% 25%
--------------------------------------------------------------------------------------------------------------------
8 Years less than 9 Years 40% 25%
--------------------------------------------------------------------------------------------------------------------
9 Years less than 10 Years 45% 25%
--------------------------------------------------------------------------------------------------------------------
10+ Years 50% 25%
--------------------------------------------------------------------------------------------------------------------
Exceptions:
Term insurance sold after 1/1/01 will receive double the above rates
if later rewritten.
If a level term policy is rewritten to another term policy in the last
two years of its level premium period, full normal first year
commissions will be paid
Enterprise Selling Agreement Page 31 of 34
If a term policy is converted as of attained age to a permanent
policy, the commission rules applicable to attained-age term
conversions will be applied, whether or not a term conversion was
available and whether or not a term conversion was actually performed.
b. For the amount of New Money in excess of the Old Premium level, up to the
New Premium level.
Full normal first commissions are payable.
c. For the balance of any New Money, applied as excess, lump-sum, or dump-in.
Full normal excess, single premium or paid up additions commissions will be
paid.
Other Considerations
1. In applying these rules, the Company may estimate the amount of premium to
be paid in the first year after the replacement and determine a single
percentage of normal commission to be paid on future first year premium
payments, combining the reduced rate in (a) above with the full rate in (b)
above. A review may be made at or before the first anniversary and an
adjustment made if the actual premiums paid differ from those that had been
expected.
2. Full renewal commissions will be payable on the new policy.
3. Rewritten premium will not count as a chargeable termination in any bonus
calculation if the old policy is at least five years old when it is
rewritten. However, any other rewritten premium, including any excess of
the Old Premium over the New Premium (i.e., premium that is not rewritten)
will count as a chargeable termination.
4. All commissions on the new policy will be payable to the writing agent of
the new policy.
5. There are no longer separate rules for pension policies.
C. Life-to-Annuity, Mutual Fund, or Wrap Account
Rewrites of a life policy to an annuity, mutual fund or wrap account will now be
subject to RWB commission rules. The RWB window will be three months before to
three months after the issue date of the new contract. The net cash released
from the life policy will be considered Old Money.
.. If the life policy if less than 10 years old, no first-year commission will
be paid on Old Money;
.. If the life policy is more than 10 years old, full normal commission will
be paid on Old Money;
.. Full normal commission will be paid on New Money.
D. Annuity-to-Life
Annuity-to-life rewrites are not subject to RWB commission rules; full
normal commissions are payable.
Enterprise Selling Agreement Page 32 of 34
E. Annuity-to-Annuity
Annuity-to-annuity rewrites are subject to RWB commission rules. The RWB window
will be three months before to three months after the issue date of the new
annuity. The net cash released by the old annuity will be considered Old Money.
If a variable annuity is rewritten by another variable annuity, no commissions
will be payable unless the initial deposit on the new annuity exceeds the
terminated value in the old annuity. In that case, a normal commission will be
paid on the increase.
For a fixed-to-fixed, fixed-to-variable or variable-to-fixed rewritten annuity,
no first year commissions will be payable unless (1) the initial deposit on the
new annuity exceeds the terminated value in the old annuity; or (2) the old
annuity is beyond its surrender charge period; or (3) the old fixed annuity is
within 30 days of the end of a rate guarantee window. In these cases, a full
normal FYC will be paid on any increased deposit and 50% of a normal FYC will be
paid on the balance.
If, under a Spousal Transfer Provision, the spousal beneficiary of an annuity
death claim elects to retain the proceeds in and to become the annuitant of the
existing contract, no commission will be paid on the amount transferred. If,
instead, the death proceeds are moved to a new annuity but not through a Spousal
Transfer Provision, no FYC will be paid. In either case, full normal commissions
will be paid on any New Money
F. Annuity-to-Mutual Fund or Wrap Account
No commission will be paid on Old Money if a mutual fund or wrap account
replaces an annuity that is subject to a surrender charge. The Old Money will be
considered the cash released by the annuity, and the RWB window will be three
months before and three months after the effective date of the fund or wrap
account.
G. Disability-to-Disability
For disability-to-disability rewrites, there is no change from previous
replacement commission rules. If there is an increase in annual premium on the
new policy, a full first-year commission will be paid on the increased premium.
No first-year commission will be paid on the balance of premium. A full new
scale of renewal commissions will be paid only on the increased premium. The old
renewal scale, measured from the original issue date, will be continued on the
balance of the premium. If there is no increase in annual premium on the new
policy, no first-year commission will be paid and the old renewal scale will be
continued, measured from the original issue date.
H. Exchange Programs
A policy that qualifies for a special exchange offer will be subject to special
exchange commission rules that may differ from normal RWB commission rules. A
policy that would qualify for an exchange offer will be treated according to
exchange commission rules even if a rewriting occurs instead.
Enterprise Selling Agreement Page 33 of 34
EXHIBIT D
AFFILIATED INSURANCE AGENCY
The Wholesaler/Dealer named below ("Wholesaler"), having executed a
Sales Agreement ("Agreement") with General American Distributors ("GAD") dated
_____________ which, provides for sales of GAD's Variable Contracts through a
designated affiliated insurance agency or agencies ("Agency"), hereby designates
the Agency named below pursuant to Section III(B) of the Agreement. Wholesaler
and Agency hereby represent and warrant that the Agency named below is and will
be maintained in compliance with this Agreement.
----------------------------------
Affiliated Insurance Agency Name
By:
-------------------------------------
----------------------------------------
Print Name & Title
----------------------------------------
(Tax Identification Number)
----------------------------------------
Affiliated Insurance Agency Name
By:
-------------------------------------
----------------------------------------
Print Name & Title
----------------------------------------
(Tax Identification Number)
