METLIFE INVESTORS DISTRIBUTION COMPANY
RETAIL SALES AGREEMENT
TABLE OF CONTENTS
I. DEFINITIONS X. GENERAL PROVISIONS
II. REPRESENTATIONS, WARRANTIES, A. TERM AND TERMINATION
COVENANTS AND AGREEMENTS
B. ASSIGNABILITY
A. REPRESENTATIONS,
WARRANTIES, COVENANTS AND C. AMENDMENTS
AGREEMENTS OF COMPANY
D. NOTICES
B. REPRESENTATIONS,
WARRANTIES, COVENANTS AND E. ARBITRATION
AGREEMENTS OF BROKER
F. GOVERNING LAW; VENUE;
III. PRINCIPLES OF ETHICAL MARKET JURISDICTION
CONDUCT
G. ENTIRE UNDERSTANDING
IV. COMPLIANCE WITH APPLICABLE
LAWS H. NO THIRD PARTY
BENEFICIARIES
V. COMPENSATION
I. NON-EXCLUSIVITY
VI. COMPLAINTS AND INVESTIGATIONS
J. NO HIRE
VII. RECORDS AND ADMINISTRATION
K. WAIVER
VIII. PRIVACY INFORMATION
L. COUNTERPARTS; FACSIMILE
A. PROPRIETARY INFORMATION SIGNATURES
B. RECEIPT OF CUSTOMER M. SEVERABILITY
NONPUBLIC PERSONAL
INFORMATION BY COMPANY N. HEADINGS
FROM BROKER
O. FURTHER ASSURANCES
C. TREATMENT OF NONPUBLIC
PERSONAL INFORMATION P. CONSTRUCTION
DISCLOSED BY COMPANY
Q. RECITALS
D. CONFIDENTIAL INFORMATION
R. REPRESENTATION BY COUNSEL
E. PROTECTED HEALTH
INFORMATION S. TRADEMARKS
IX. INDEMNIFICATION T. LONG TERM CARE CONTRACTS
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METLIFE INVESTORS DISTRIBUTION COMPANY
RETAIL SALES AGREEMENT
This Agreement, including the Exhibits attached hereto (collectively, the
"Agreement") is made, entered into and effective as of Nov. 7, 2005 ("Effective
Date") by and among MetLife Investors Distribution Company, a Missouri
corporation (the "Company") and Xxxxx Fargo Investments LLC, (the "Broker")
that, for the distribution of fixed insurance products only, is or is
affiliated with one or more validly licensed insurance agencies, or for the
distribution of registered products, is registered as a broker-dealer with the
Securities and Exchange Commission ("SEC") under the 1934 Act (as hereafter
defined) and is a member of the National Association of Securities Dealers
("NASD") and is also either licensed as or affiliated with one or more validly
licensed insurance agencies.
RECITALS
A. Company and its Affiliates (as hereafter defined) issue or provide
access to certain Contracts (as hereafter defined).
B. Company, on behalf of itself and each Affiliate that issues or
provides access to the Contracts, is authorized to enter into this Agreement
with Broker and other unaffiliated broker-dealers or selling groups, as the
case may be, to distribute the Contracts.
C. Company proposes to compensate Broker for the sale and servicing of
Contracts in accordance with the Compensation Schedules set forth in Exhibits A
and B, which by this reference are hereby incorporated in, and made a part of
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and other good and valuable consideration, the parties hereto
agree as follows:
I. Definitions. All capitalized terms used in this Agreement shall have
the meanings defined below, or if not defined in this section, as set forth
elsewhere in this Agreement:
Affiliate - Any entity that directly or indirectly controls, is
controlled by or is under common control with Company or Broker, as
applicable, including, without limitation, any entity that owns 25% or
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more of the voting securities of any of the foregoing and any entity
that is a subsidiary of any of the foregoing.
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, for the distribution of the
Contracts.
Applicable Laws - Shall have the meaning given to such term in
Section IV of this Agreement.
Confidential Information - Shall have the meaning given to such term
in Section VIII(D) of this Agreement.
Contracts - Those Fixed Contracts, Variable Contracts and other
products that are identified on Exhibits A and B attached hereto.
Fixed Contracts - Contracts that are not Variable Contracts and
include, without limitation, fixed rate annuities, fixed life
insurance and other fixed insurance contracts, issued or offered by
Company or its Affiliates, as more fully described in Exhibit B.
HIPAA - The Health Insurance Portability and Accountability Act of
1996, as now in force or hereafter amended, and all related
regulations.
Nonpublic Personal Information - 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 that Act.
Prospectus - The prospectuses, supplements to prospectus(es), and
statements of additional information included within the Registration
Statements referred to herein or filed pursuant to the 1933 Act and
the Investment Company Act of 1940, as amended.
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 also includes demographic information about
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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 further
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 or offered by Company or an Affiliate of
Company; information related to the declination or issuance of, or
claim under, a long term care insurance policy issued or offered by
Company or an Affiliate; or information derived therefrom.
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.
Representatives - Those individuals, accepted by Company or its
Affiliates to solicit and sell Contracts under the terms of this
Agreement, who are duly contracted and appointed as life insurance
agents of Company or its Affiliates and, with respect to registered
products, are also duly registered, individually, with the NASD in
compliance with the 1934 Act.
Variable Contracts - Contracts that are not Fixed Contracts and
include, without limitation, variable life insurance policies,
variable annuity contracts, variable insurance riders and other
variable insurance contracts, any of which may or may not have a fixed
component, issued or offered by Company or its Affiliates, as more
fully described in Exhibit A.
1933 Act - The Securities Act of 1933, as amended.
1934 Act - The Securities Exchange Act of 1934, as amended.
II. Representations, Warranties, Covenants and Agreements
A. Representations, Warranties, Covenants and Agreements of Company
1) Authorization. Company represents that it is duly authorized, on
behalf of itself and each Affiliate that issues or provides access
to the Contracts, to enter into this Agreement with Broker to
distribute such Contracts.
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2) Appointment. Company, subject to the terms and conditions of this
Agreement, hereby appoints Broker, on behalf of itself and its
Affiliates, to solicit, sell and provide services to the Contracts
on a non-exclusive basis.
3) Solicit Applications - Fixed Contracts. Company authorizes Broker,
through its Representatives, to solicit applications for the Fixed
Contracts listed in Exhibit B, provided that: (a) Broker shall
solicit applications for Fixed Contracts only in those states where
it and its Representatives are appropriately licensed, and in which
the Fixed Contracts are qualified for sale under Applicable Laws;
and (b) Broker complies in all other respects with the published
policies and procedures of Company and/or its Affiliates, as
applicable, and with the terms of this Agreement.
4) Solicit Applications - Variable Contracts. Company authorizes
Broker, through its Representatives, to offer and sell the Variable
Contracts listed in Exhibit A, provided that: (a) Broker shall
solicit applications for Variable Contracts only in those states
where it and its Representatives are appropriately licensed;
(b) there is an effective Registration Statement relating to each
such Variable Contract; (c) each such Variable Contract is
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
Company and/or its Affiliates, as applicable, and with the terms of
the Agreement. Company 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 actions or circumstances that makes it
no longer lawful for Company or its Affiliates to offer or issue
one or more of the Variable Contracts listed in Exhibit A. Company
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) Rights of Company. Company and its Affiliates may, in their
respective discretion:
a) refuse for any reason to appoint a Representative and cancel any
existing appointment at any time;
b) direct the marketing of its insurance products and services;
c) review and approve all advertising referring to its insurance
products and services;
d) underwrite all insurance policies issued by it;
e) cancel risks;
f) handle all matters involving claims and payment;
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g) prepare all policy forms and amendments;
h) maintain custody of, responsibility for and control of all
investments; and
i) withdraw a form of Contract from sale or change or amend a form
of Contract for any reason.
6) Amendments to Exhibits. Exhibits A and B may be amended by Company
in its sole discretion from time to time, without prior notice, to
delete or add Contracts. The provisions of this Agreement shall
apply to such Exhibits, as they may from time to time be amended,
unless the context otherwise requires. In addition, the
Compensation Schedules that are part of Exhibits A and B may be
amended, modified and/or replaced by Company in its sole
discretion, from time to time, without prior notice.
7) Broker's Access to Copies of Documents. During the term of this
Agreement, Company shall provide Broker, as applicable and 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 Company of updated copies of
the Contract Prospectus(es), current underlying mutual fund
prospectus(es), statements of additional information and
applications for the Contracts, Broker shall promptly discard or
destroy all copies of such documents previously provided to it,
except such copies as are needed for purposes of maintaining proper
records. Upon termination of this Agreement, Broker shall promptly
return to Company 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 Company to Broker or to its Representatives, except
for copies required for maintenance of records.
8) Advertising Material. Subject to the provisions of Section
VIII(D)(4), during the term of this Agreement, Company or its
Affiliates shall be responsible for approving all promotional,
sales and advertising material to be used by Broker. Company or its
Affiliates shall file such materials or shall cause such materials
to be filed with the SEC, NASD, and any applicable state insurance
and securities regulatory authorities, as required.
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B. Representations, Warranties, Covenants and Agreements of Broker
1) Appointment of Broker. Broker, subject to the terms and conditions
of this Agreement, hereby accepts appointment to solicit, sell and
provide services to the Contracts and agrees to use its best
efforts to find suitable purchasers for the Contracts. Broker
represents and warrants that it shall offer Contracts only in those
states where it or an Agency is appropriately licensed and that it
has obtained any other appointments, approvals, licenses,
authorizations, orders or consents that are necessary to enter into
this Agreement and to perform its duties hereunder. Broker further
represents that its Representatives who shall be soliciting
applications for Contracts shall at all times be appropriately
licensed under Applicable Laws and such solicitations shall be in
accordance with Applicable Laws including, without limitation, the
NASD Conduct Rules and all insurance replacement regulations and
regulations prohibiting the rebating of commissions.
2) Licenses and Approvals. For the sale of Variable Contracts, 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 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
shall be soliciting applications for Variable Contracts, shall at
all times as required by Applicable Laws be appropriately
registered and/or licensed under such laws and shall comply with
Applicable Laws, including without limitation, the NASD Conduct
Rules and all insurance replacement regulations and regulations
prohibiting the rebating of commissions.
3) Investigations of Broker or Representative. Broker represents that
neither it nor any of its Representatives is 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 Company in
writing). Broker further agrees that, if a formal or informal
investigation of Broker or any of its Representatives is commenced
by any insurance regulator, the NASD or SEC, any other self
regulatory organization or other governmental authority, whether or
not in connection with the sale of the Contracts, Broker shall
notify Company of the existence and subject matter of such
investigation. Broker shall further take all steps necessary to
assure that no subagent of an Agency shall be appointed to solicit
and procure Contracts if that subagent is prohibited by 18 U.S.C.
(S) 1033(e) from engaging in the business of insurance. Broker
further represents that it shall immediately notify Company in
writing if it or any of its Representatives have any of their
respective licenses, which are required under this Agreement for
the solicitation,
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sale or provision of services to the Contracts, surrendered,
removed, revoked, cancelled or suspended, whether voluntarily or
involuntarily.
4) Requirements to Solicit Applications. Commencing at such time as
Company and Broker shall agree, Broker shall find suitable
purchasers for the Contracts that Representatives are licensed and
authorized to solicit and sell under Applicable Laws. In meeting
its obligation to solicit applications for the Contracts:
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 Company for use at that time;
b) Broker shall establish and implement reasonable procedures for
periodic inspection and supervision of sales practices of its
Representatives, and shall, upon a reasonable written request
from Company, provide a report to Company 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 including those reasonable steps and reasonable
grounds required by Applicable Laws. Broker shall be solely
responsible for determining the suitability of recommendations
to purchase a Contract made by its Representatives.
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 under this
Agreement are accurate, complete, compliant with the conditions
herein and, in addition, for Variable Contracts are approved by
a qualified registered principal of Broker as required by
Applicable Laws. 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 as
required by Applicable Laws.
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(c)Broker shall train, supervise and be solely responsible for the
conduct of its Representatives in their solicitation activities
in connection with the Contracts, and shall supervise
Representatives' strict compliance with applicable laws, rules
and regulations of any governmental or other insurance
authorities that have jurisdiction over insurance contract
activities, as well as the rules and procedures of Company
pertaining to the solicitation, sale and submission of
applications for the Contracts and the provision of services
relating to the Contracts. Broker shall conduct and be solely
responsible for background investigations of its current and
proposed new Representatives to determine their qualifications,
good character and moral fitness to sell the Contracts and will
provide the Company with copies of such investigations upon its
request. Likewise, Broker hereby acknowledges and agrees that it
shall be solely liable for the acts and omissions of its
Representatives in the course of conducting its business.
5) Collection of Payments. To the extent permitted by Applicable Laws,
only the initial purchase payments for the Contracts may be
collected by Representatives of Broker. All such initial purchase
payments shall be remitted promptly in full (and in no event later
than the time permitted under Applicable Laws or the rules of the
NASD), together with any related application, forms and any other
required documentation to Company or the appropriate Affiliate. The
Broker shall make such remittances in accordance with any and all
policies and procedures described in the Contract, insurance
policy, Prospectus, if appropriate, any collateral documents
associated with such Contracts or as otherwise directed by Company
or its Affiliates.
6) Rejection and Return of Contracts. Company and/or its Affiliates
shall have the unconditional right to reject, in whole or in part,
any application for a Contract. If Company and/or its Affiliates
reject an application, Company or its Affiliate, as applicable,
shall promptly return any purchase payments received directly to
the purchaser or to the Broker, and, in the latter case, Broker
shall 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, shall be returned by Company or its Affiliate
to the purchaser or to the Broker, and, in the latter case, the
Broker shall be responsible for promptly returning such payments to
the purchaser. Except as may otherwise be provided in Exhibits A
and/or B, if a purchase payment is either refunded or returned to
the purchaser, no commission shall be payable to Broker hereunder,
and any commission received by Broker shall be returned promptly to
Company or its Affiliates where applicable. Company and its
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Affiliates, where applicable, may, at their option, offset any such
amounts against any other amounts due to Broker as referenced in
V(B).
7) Independent Contractor. With respect to the Contracts, neither
Broker nor its agents, designees or Representatives is a principal,
underwriter or agent of Company or its Affiliates, or any separate
account of Company or its Affiliates, provided that Broker's
designees, or agent's representatives may be appointed by Company
and its Affiliates for the sale of the Contracts. Nothing contained
in this Agreement shall be construed (a) to create any
relationship, partnership, employment or joint venture between or
among Company or any Affiliate of Company and Broker or its agents
or Representatives other than that of independent contractors, or
(b) to alter any relationship between or among Company or any
Affiliate of Company and Broker or its agents or Representatives
that may otherwise exist on and as of the Effective Date. Except as
expressly set forth herein, each party shall be solely responsible
for the respective fees, costs and expenses incurred in connection
with the operation of its business and the fulfillment of its
obligations hereunder. With respect to the Contracts, neither
Broker nor its agents, designees or Representatives shall (a) hold
themselves out to be employees of Company in any dealings with the
public, (b) alter or amend any Contract or form related to a
Contract, (c) adjust or settle any claim or commit Company with
respect thereto, (d) expend or contract for the expenditure of
funds on behalf of Company or its Affiliates, or (c) assume or
create any obligation or responsibility, express or implied, on
behalf of Company or bind Company in any manner except as expressly
permitted hereunder.
8) Promotional Materials. Any material Broker 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 Company, its Affiliates or the
Contracts, shall not be used without the prior written consent of
Company.
9) Payment of Commissions. Broker represents and covenants, that to
the extent required by Applicable Laws, that no commissions, or
portions thereof, or other compensation for the sale of the
Contracts, shall be paid to any person or entity that is not duly
licensed and appointed by Company or its Affiliates as required by
Applicable Laws. Broker shall ensure that Representatives fulfill
any training requirements necessary to be licensed or otherwise
qualified to sell the Contracts.
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10)Contract Disclosures. Neither Broker nor any of its
Representatives, are authorized by Company or its Affiliates 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 Company 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.
11)Instructions by Representative. 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. Company 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)Forms. Broker shall use Company forms or prepare any forms
necessary to comply with Applicable Laws or as 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 prepared forms to Company 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 shall transmit or cause to be
transmitted such information in writing to Company or the
appropriate Affiliate. Broker shall further notify Company or the
appropriate Affiliates in writing when sales of the Contracts are
replacement contracts, as defined by the Company. Such notification
shall not be later than the time that Broker submits applications
for such Contracts to Company or the appropriate Affiliate.
13)Furnishing of Information. To the extent permitted by Applicable
Laws, Broker shall furnish Company 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 Company or an appropriate regulatory authority in
order to ascertain whether the operations of Company or Broker
related to the Contracts are being conducted in a manner consistent
with Applicable Laws.
14)Authority. Broker represents that it has full authority to enter
into this Agreement and that by entering into this Agreement it
shall not impair any other of its contractual obligations.
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15)Insurance Coverage.
a) Fidelity Bond. Broker shall secure and maintain a fidelity bond
(including coverage for larceny and embezzlement), issued by a
bonding company acceptable by Company, covering all of its
directors, officers, agents, Representatives, associated persons
and employees who have access to funds of Company 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 and future amendments thereto. Broker shall
provide Company with satisfactory evidence of said bond upon
Company's reasonable request. Broker hereby assigns any proceeds
received from a fidelity bonding company, or other liability
coverage, to Company, for itself or on behalf of its Affiliates,
as their interests 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, an Agency,
representatives and agents, including Representatives, in such
amounts and scope of coverage as are acceptable to Company in
its sole discretion. If such insurance plan terminates for any
reason during the term of this Agreement, Broker shall
immediately notify Company in writing of such termination. If
requested by Company, Broker shall provide evidence of coverage
under an insurance policy satisfactory to Company, in its sole
discretion, 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 referred to in
subsections (a) and (b) above.
d) Company's Interest. All policies of liability insurance
maintained hereunder shall name Company as an additional
insured. All policies of insurance maintained hereunder shall
contain a clause providing that such policies may not be
cancelled, reduced in coverage or otherwise modified without at
least thirty (30) days prior written notice to Company, except
for failure to pay any premium, in which case said policy of
insurance shall provide for at least ten (10) days prior written
notice prior to said policy being cancelled or otherwise
modified.
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Broker shall upon the request of Company at any time furnish to
Company updated certificates or other evidence of insurance
acceptable to Company, in its reasonable discretion.
16)Agency Distribution of Variable Contracts. In such cases in which
Broker intends to distribute the Variable Contracts in association
with an Agency, Broker further makes the following representations
on its behalf and on behalf of that Agency:
a) Broker shall operate and be responsible for all
securities-related services arising from the offer, sale and/or
servicing by Representatives of the Variable Contracts;
b) Agency shall engage in the offer or sale of Variable Contracts
only through persons who are Representatives of the Broker.
Unregistered employees, agents or others shall not engage in any
securities activities or receive any compensation based on
transactions in securities or the provision of securities advice;
c) Broker shall be responsible for the education, training,
supervision and control of its Representatives, as required
under the 1934 Act and other Applicable Laws, including, but not
limited to, principal review, approval of all sales literature
and advertisements, periodic compliance audits and maintaining
the ability to appoint and terminate registered persons;
d) Representatives shall be licensed under the insurance laws of
the states in which they do business and shall be appointed
agents by Agency for which the Representatives may solicit
applications in connection with the offer and sale of Variable
Contracts;
e) Broker and/or Agency, as applicable, shall 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 shall 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 shall 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
shall be made payable to and sent directly to Company or the
appropriate Affiliate, or shall be sent by purchasers to the
Broker for timely forwarding to Company or the appropriate
Affiliate. Agency shall not receive, accumulate or maintain
custody of premium payments.
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17)Agency Distribution of Fixed Contracts. In cases in which Broker
intends to distribute Fixed Contracts through an Agency, before a
subagent is permitted to solicit Contracts, Broker or that 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 Company or the appropriate
Affiliate, or Broker 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 the Agency all
funds collected on Company's or its Affiliates' behalf; (c) shall
otherwise act only pursuant to the limited authority granted to
that Agency hereunder and shall comply with all of the duties and
obligations of the Broker hereunder and the rules of Company or its
Affiliates; and (d) agrees to Company's right to offset from any
compensation due the subagent any indebtedness due from the
subagent to Company or its Affiliates and to chargeback
compensation under Company's or its Affiliates' rules. The Broker
shall promptly remit to Company all funds collected on behalf of
Company or its Affiliates.
18)Policies and Procedures. Broker shall comply with the policies and
procedures of Company and its Affiliates with respect to the
solicitation, sales and administration of the Contracts and
services that Broker and Representatives are authorized to sell and
service under this Agreement, including, but not limited to,
privacy policies and procedures, as set forth in this Agreement, as
they may be amended, modified and/or replaced, and as they may be
provided to Broker by Company or its Affiliates from time to time.
19)Prohibited Solicitation With Policyholders. For a period of 12
months after termination of this Agreement, Broker shall not, and
Broker shall take all steps necessary to ensure that its
Representatives and any Agency shall not, directly or indirectly,
contact the policyholders of Company or its Affiliates for the
purpose of inducing any such policyholders to lapse, cancel, fail
to renew or replace any Contract. If Company, in its sole
discretion, determines that Broker, its Representatives or an
Agency has engaged in such prohibited activity, then Company shall
have the right to declare the Broker's or the Agency's claims for
compensation or any other benefit under this Agreement to be
forfeited and void. Company, on behalf of itself and its
Affiliates, may also pursue all remedies, whether at law or in
equity, including injunctive relief and/or damages, to assure
compliance with the covenants in this section and shall, if
successful, be entitled to recover from Broker or an Agency all
costs and expenses incurred in pursuing such remedies, including
reasonable attorneys' fees, court costs and expenses.
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20)Market Timing. Broker shall not, and Broker shall take all steps
necessary to ensure that its Representatives and any Agency shall
not, (a) solicit, offer or sell Variable Contracts in connection
with or to facilitate any program, plan or arrangement involving
market timing transactions in underlying mutual funds within
Variable Contracts, or (b) take any other actions that would
promote, encourage or facilitate market timing transactions in the
underlying mutual funds within Variable Contracts. Notwithstanding
the foregoing, Broker and its Representatives may provide
incidental services in the form of guidance to applicants and
owners of Variable Contracts regarding the allocation of premium
and Variable Contract value, provided that such services are
(a) solely incidental to Broker's activities in connection with the
sales of the Variable Contracts, (b) subject to the supervision and
control of Broker, (c) furnished in accordance with any rules and
procedures that may be prescribed by Company, and (d) not
promoting, encouraging or facilitating market timing transactions
in the underlying mutual funds within Variable Contracts.
III. Principles of Ethical Market Conduct
As a member of the Insurance Marketplace Standards Association
("IMSA"), Company expects that the Broker, Representatives, Agency
and its subagents shall abide by the principles of ethical market
conduct set forth by IMSA in connection with all Contracts sold
pursuant to this Agreement. Broker shall furnish information,
documentation and reports to Company as Company may reasonably
request to permit Company to ascertain whether Broker is conducting
its operations in accordance with the principles of ethical market
conduct as set forth in this Section III.
IV. Compliance With Applicable Laws
Company and Broker shall 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 Laws").
Applicable Laws include, without limitation, applicable rulings of
federal and state regulatory organizations, agencies and self
regulatory agencies (e.g. state insurance departments, the SEC, 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. The compliance obligations, also includes,
but are not limited to the following:
MLIDC Retail Sales Agreement 7-1-05(LTC)
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A. Anti-Money Laundering. Company and Broker shall comply with all
applicable anti-money laundering laws, regulations, rules and
government guidance, including the reporting, record keeping 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
"Patriot Act"), its implementing regulations, and related SEC and
Self-Regulatory Organization 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 Patriot 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.
B. Customer Identification Program. Broker certifies, and shall
certify to Company or its Affiliates, where applicable, annually
hereafter, that it has established and implemented a customer
identification program, in compliance with Applicable Laws, 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 shall verify the identity of each
customer that it introduces to Company, whether through documentary
or non-documentary means, and hereby acknowledges that Company shall
rely upon such verification, as prescribed by the regulations
promulgated under Section 326 of the Patriot Act in accordance with
the safe-harbor provided in Section 103.122(b)(6) of the regulations
under the Patriot Act.
C. Insurance Replacement. Broker certifies on behalf of itself, its
Representatives and an Agency that it shall adhere to all applicable
SEC, NASD, federal and state statutes, laws, rules and regulations
regarding insurance replacement before it receives or solicits any
applications for Contracts.
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V. Compensation
A. Payment Under Compensation Schedules. Company shall pay Broker or
an Agency, as applicable, compensation for the sale of each Contract
sold by a Representative of Broker as set forth in the then
applicable Compensation Schedules that are part of Exhibits A and B,
as such Compensation Schedules may be from time to time amended,
modified and/or replaced in Company's sole discretion. Company shall
use commercially reasonable efforts to provide prior notice of
changes to the Compensation Schedules. Company shall identify to
Broker or an Agency, as applicable, with each such payment the name
or names of the Representative(s) of Broker who solicited each
Contract covered by the payment. Broker or an Agency, as applicable,
shall 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,
Company shall have no obligation to any of the employees, agents or
Representatives of Broker or an Agency for the payment of any
compensation. Any amendment to Exhibits A or B shall be applicable to
any Contract for which any application or premium is received by
Company on or after the effective date of such amendment. Company,
however, reserves the right to amend (i) Exhibits A and/or B with
respect to subsequent premiums and renewal commissions, and (ii) such
Exhibits pursuant to this subsection even after termination of this
Agreement.
B. Offset. Company may at any time offset against any compensation
payable to (1) Broker, an Agency or their respective successors or
assigns, any indebtedness however or wherever incurred due from the
Broker or an Agency to Company or its Affiliates, and (2) the
subagents of any Agency or their successors or assigns any
indebtedness however or wherever incurred due from Broker, an Agency
or a subagent to Company or its Affiliates. Nothing contained herein
shall be construed as giving Broker, an Agency or Representative the
right to incur any indebtedness on behalf of Company or its
Affiliates. Company shall have, and is hereby granted, a first lien
on any and all compensation payable under this Agreement as security
for the payment of any and all remaining indebtedness of Broker to
Company or its Affiliates arising under this Agreement and not offset
as provided herein. 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 Company to offset such
compensation against any such indebtedness of the Broker, an Agency,
a subagent or a Representative to Company or its Affiliates.
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C. No Withholding of Premiums. Neither Broker nor any of its
Representatives shall 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 compensation or
otherwise.
D. Compensation Not Payable. No compensation shall be payable, and
any compensation already paid shall be returned to Company
immediately on request, under each of the following conditions:
1) if Company or its Affiliates, in their sole discretion,
determine not to issue the Contract applied for;
2) if Company 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;
3) if Company or its Affiliates refund the premium paid by
applicant as a result of the resolution of a consumer
complaint, recognizing that Company and its Affiliates have
sole discretion to refund premiums paid by applicants; or
4) if Company 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.
E. Compensation and Termination of Agreement. Company shall pay the
compensation to Broker or an Agency, as applicable, for Contracts
credited prior to the termination date of this Agreement, as set
forth in the then applicable Compensation Schedules that are part of
Exhibits A and B. Such compensation shall be payable when the premium
is due and paid to Company, subject to the provisions of this
Agreement and the then applicable Compensation Schedule.
F. Company Payment of Compensation; Discharge of Obligation. Broker,
on its behalf and on behalf of each Agency, hereby agrees and
acknowledges that compensation attributable to the sale of any
Contract issued by an Affiliate of Company may be payable directly by
Company, in its discretion, to Broker or an Agency, where permitted,
and not by the Affiliate. Broker, on its behalf and on behalf of each
Agency, further agrees and acknowledges that such payment of
compensation by Company attributable to the sale of such Contracts
shall constitute a complete discharge of the obligation to pay
MLIDC Retail Sales Agreement 7-1-05(LTC)
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compensation by the Affiliate issuer under this Agreement. Such
payment of compensation shall not affect the right of offset or
chargeback as referred to in Sections V(B) and V(D) of this
Agreement, or such other compensation rules as may be set forth in
this Agreement, the Compensation Schedules or the rules of Company or
its Affiliates.
G. Violation of Applicable Laws. Company shall not be obligated to
pay any compensation that would violate any Applicable Laws of any
jurisdiction, anything in this Agreement notwithstanding.
H. Expenses. Unless otherwise agreed to by Company, Broker, either
directly or by reimbursing Company on request, shall pay for expenses
incurred by such Broker in connection with the solicitation, offer
and sale of the Contracts.
I. Replacements. In addition to the conditions and limitations
elsewhere contained in this Agreement and the Compensation Schedules,
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 Applicable Laws or Company's
or its Affiliates' rules on replacement transactions. Specific
replacement or switching rules of each applicable Affiliate are
described on Exhibit C which is attached hereto and incorporated
herein by reference, which Exhibit may be from time to time amended,
modified and/or replaced in Company's sole discretion.
J. Conflict. In the event that anything contained in this Section V
conflicts with the terms of the compensation described in the
Compensation Schedules, the terms contained in the applicable
Compensation Schedules shall prevail.
VI. Complaints and Investigations
A. Customer Complaints. Both the Broker and Company shall 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 a Contract
covered by this Agreement or his legal representative, or indirectly
from a regulatory agency to which he or his legal representative has
expressed a grievance.
B. Cooperation. Broker and Company shall cooperate fully in any
regulatory investigation or proceeding or judicial proceeding arising
in connection with the offer, sale and/or servicing of the
MLIDC Retail Sales Agreement 7-1-05(LTC)
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Contracts. This cooperation shall include, but is not limited to,
each party promptly to the other of the receipt of notice of any such
investigation or proceeding, and forwarding to the other 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, Broker
and Company shall 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.
C. Right to Settle. Company 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 Company and Company, on behalf of itself,
settles the matter, Broker shall indemnify, defend and hold harmless
Company from any and all claims, complaints or grievances made by
Broker or any applicant, policyholder or other person or entity made
in connection with such matter.
VII. Records and Administration
A. Delivery of Contracts. Unless otherwise requested by Broker and
agreed to by Company, once a Contract has been issued, it shall be
delivered to Broker and, after being reviewed by Broker, shall be
timely delivered by Broker to the purchaser, accompanied by any
documents required to be delivered by Applicable Laws and any
additional documents deemed appropriate. Company shall confirm or
cause to be confirmed to customers all Contract transactions, to the
extent required by Applicable Laws, and shall administer the
Contracts after they have been delivered, but may from time to time
require assistance from Broker. Consistent with its administrative
procedures, Company shall assume, and shall rely on the assumption,
that a Contract it, or its Affiliates, issues shall be promptly
delivered by Broker to the purchaser of such Contract. As a result,
if a purchaser exercises a "free look" right under such Contract,
Broker shall indemnify Company for any loss Company incurs resulting
from Broker's failure promptly to deliver such Contract to its
purchaser.
B. Books and Records. Broker shall maintain all books and records as
required by Rules 17a-3 and 17a-4 under the 1934 Act, as such rules
may be amended, succeeded or replaced, except to the extent that
Company may agree to maintain any such records on Broker's behalf.
Records subject to any such agreement shall be maintained by Company
as agent for Broker in compliance with said rules, and such
MLIDC Retail Sales Agreement 7-1-05(LTC)
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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 the 1934 Act. Nothing contained herein shall be
construed to affect Company'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. Company and Broker shall each retain all records related to
this Agreement as required by the 1934 Act, and the rules and
regulations thereunder, and by any other Applicable Laws, 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. Nothing contained herein, however, 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 Company or its Affiliates,
or provided to Company or its Affiliates by Broker or Broker's
Affiliates, including but not limited to customer files, sales aids,
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 Company or its
Affiliates. Such proprietary information and materials shall be
treated as Nonpublic Personal Information and/or Confidential
Information (as hereafter defined in Section VIII(D)), as appropriate,
pursuant to Sections VIII(A), (B), (C) and (D) of this Agreement.
Except as otherwise required by Applicable Laws, any and all
proprietary information and material developed and provided by Company
and its Affiliates shall be returned to Company (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
Company or its Contracts shall be destroyed upon the termination of
this Agreement.
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B. Receipt of Customer Nonpublic Personal Information by Company from
Broker
1) Confidentiality. Company and its Affiliates shall treat all
Nonpublic Personal Information regarding Broker's customers
provided to it by Broker under this Agreement as Confidential
Information, except that such provisions shall not apply to such
information regarding customers of Broker who were, are or become
policyholders or customers of Company or any of its Affiliates
other than by reason of the services provided by Broker under this
Agreement.
2) Right to Disclose. Notwithstanding the foregoing, Company 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 Company's or 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; or (c) to protect against or prevent fraud.
3) Offering Products Outside Agreement. Company 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 those customers, and such marketing, offering, selling or
distributing by Company 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 by Company to
Broker
Broker shall treat Nonpublic Personal Information regarding
Broker's customers provided to it by Company 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
Company or its Affiliates to the extent permitted by Applicable
Laws and Company's or its Affiliates' privacy policy(ies) (for
example, to comply with Applicable Laws or requests of regulators)
in connection with Broker's audit procedures, as authorized by such
customers or to protect against or prevent fraud.
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D. Confidential Information
1) Disclosure of Confidential Information. Company and Broker and
their respective Affiliates shall maintain the confidentiality of
Confidential Information disclosed by either party to the other
party under the terms of this Agreement and shall use such
Confidential Information solely for the purposes contemplated by
this Agreement. Except as otherwise provided in Sections VIII(A),
VIII(B) and VIII(C), neither Company, nor Broker and their
respective Affiliates shall disclose any Confidential Information
that is covered by this Agreement to any person or entity other
than to their respective employees, representatives or agents who
need to know such Confidential Information for the performance of
their work, unless 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. "Confidential Information" means: (a) any
information that this Agreement specifies shall be treated as
"Confidential Information" under this Section VIII; (b) Nonpublic
Personal Information; (c) information required to be treated as
confidential under Applicable Laws; and (d) any information of
Broker and its Affiliates that is disclosed by Broker or its
Affiliates to Company or its Affiliates through the course of
business during the term of this Agreement, or any information of
Company and its Affiliates that is disclosed by Company or its
Affiliates to Broker or its Affiliates through the course of
business during the term of this Agreement, including but 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, in each such case if such information is clearly
identified as and marked "CONFIDENTIAL" by the disclosing party.
Notwithstanding the foregoing, "Confidential Information" does not
include (a) 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; (b) 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 (c) information that the
disclosing party consents in writing that the receiving party may
disclose.
2) Right to Disclose; No Liability. 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 disclosing party 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
MLIDC Retail Sales Agreement 7-1-05(LTC)
Page 23 of 36
it uses 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; 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.
3) Independent Development. Any similarity between the Confidential
Information and any other information, regardless of medium,
whether oral 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, in each case without violating the provisions
hereof, shall not constitute any violation of this Agreement and
shall not subject the receiving party to any liability whatsoever.
4) No Representation. Neither the disclosing party nor any of its
employees, representatives or designees has made or makes any
representation or warranty as to the accuracy or completeness of
the Confidential Information, including but not limited to, any
promotional, sales or advertising material provided or approved by
Company or its Affiliates to be used by Broker.
E. Protected Health Information or PHI
To the extent that Broker or its Affiliates or their respective
Representatives receive, create, have access to or use PHI, regarding
individuals who are applicants for, owners of or eligible for benefits
under certain health insurance products and optional riders offered by
or through Company or any of its Affiliates, in accordance with the
requirements of HIPAA, Broker shall:
1) Not use or disclose PHI except (a) to perform functions, activities
or services for, or on behalf of, Company or its Affiliates as
specified in this Agreement and consistent with Applicable Laws, or
(b) to the extent that such use or disclosure is required by
Applicable Laws. Any such use or disclosure shall be limited to
that required to perform such services or to that required by
relevant law;
MLIDC Retail Sales Agreement 7-1-05(LTC)
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2) Use appropriate safeguards to prevent use or disclosure of PHI
other than as permitted by this Agreement;
3) Promptly report to Company any use or disclosure of PHI not
permitted by this Agreement of which Broker becomes aware and
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) Ensure that any third party with whom Broker contracts or who is
hired by Broker and who may, under that arrangement, receive or
have access to PHI agrees to the same restrictions and conditions
that apply to Broker with respect to PHI under this Agreement;
5) Within 15 days of Company's request, provide Company with any PHI
or information relating to PHI as deemed necessary by Company to
provide individuals with access to, amendment of and an accounting
of disclosures of their PHI;
6) 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 request to determine Company's, or
one of its Affiliate's, compliance with HIPAA; and
7) Upon termination of this Agreement and in accordance with Company's
instructions, either return or destroy all PHI Broker maintains in
any form, and retain no copies. If Company 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 shall be solely
for the purposes that make return or destruction infeasible.
Destruction without retention of copies is deemed not feasible if
prohibited by the terms of the Agreement or by Applicable Laws,
including record retention requirements of the various applicable
state insurance laws.
IX. Indemnification
A. Indemnification Provisions The following indemnification
provisions shall apply:
1) Company Indemnification. Company shall indemnify, defend and
hold harmless Broker from any and all losses, claims, judgments,
fines, penalties, damages, liabilities or amounts paid in a
settlement consented to by the Company (or any actions or
threatened actions in respect of any of the foregoing)
(collectively, the "Claims"), to which Broker may become subject,
insofar as such Claims: (a) 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
Company for any of the Contracts; or (b) arise out of or result
from any breach of any representation or warranty, covenant,
agreement obligation or undertaking in this Agreement by Company or
by any person or entity acting on behalf of or under the control of
Company. Company shall further reimburse Broker for any legal fees
or other
MLIDC Retail Sales Agreement 7-1-05(LTC)
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expenses actually and reasonably incurred by it in connection with
investigating, defending, being a witness in or participating in
(including an appeal) any Claim for which indemnification is
provided hereunder. Notwithstanding anything contained herein to
the contrary, Company shall not indemnify, defend or hold harmless
Broker against any Claim: (a) to the extent that any such Claim
arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made by Broker or
any of its Affiliates or any of their respective agents,
Representatives, officers, directors or employees when referring to
or explaining a Prospectus, Registration Statement or any other
sales or offering materials; (b) 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 Company or its
Affiliates; or (c) if a judgment or other final adjudication
adverse to the Broker establishes that Broker's acts were committed
in bad faith, were the result of active and deliberate dishonesty,
were the result of willful misconduct or gross negligence, or the
Broker gained, in fact, a financial profit or other advantage to
which Broker was not legally entitled. The foregoing indemnities
shall, upon the same terms and conditions, extend to and inure to
the benefit of each director, trustee, officer, agent and employee
of Broker and any of its Affiliates, and the foregoing exclusions
from indemnification shall, upon the same terms and conditions,
extend to and inure to the benefit of each director, trustee,
officer, agent and employee of Company and any of its Affiliates.
2) Broker Indemnification. Broker shall indemnify, defend and hold
harmless Company and its Affiliates against any Claims to which
Company or its Affiliates may become subject, insofar as such
Claims: (a) result from Company improperly paying any compensation
under this Agreement; (b) arise out of or are based upon any
negligent, improper, fraudulent or unauthorized acts or omissions
by Broker, its employees, agents, trustees, Representatives,
officers or directors, including but not limited to improper or
unlawful sales practices, any untrue 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; or (c) arise out of or result
from any breach of any representation or warranty, covenant,
agreement, obligation or undertaking in this Agreement by Broker,
its Representatives, or by any other person or entity acting on
behalf of or under the control of Broker. Broker shall further
reimburse Company and its Affiliates for any legal fees or other
expenses actually and reasonably incurred by them in connection
with investigating, defending, being witness in or participating in
(including an appeal)
MLIDC Retail Sales Agreement 7-1-05(LTC)
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any Claim for which indemnification is provided hereunder.
Notwithstanding anything contained herein to the contrary, Broker
shall not indemnify, defend or hold harmless Company and its
Affiliates if an improper payment of any compensation under this
Agreement or a judgment or other final adjudication adverse to
Company or its Affiliates establishes that Company's or its
Affiliates' acts were committed in bad faith, were the result of
active and deliberate dishonesty, were the result of willful
misconduct or gross negligence, or Company or its Affiliates
gained, in fact, a financial profit or other advantage to which
Company or its Affiliates were not legally entitled. The foregoing
indemnities shall, upon the same terms and conditions, extend to
and inure to the benefit of each director, trustee, officer, agent
and employee of Company and its Affiliates, and the foregoing
exclusions from indemnification shall, upon the same terms and
conditions, extend to and inure to the benefit of each director,
trustee, officer, agent and employee of Broker and its Affiliates.
B. Notice Promptly after receipt by an indemnified party (the
"Indemnitee") of notice of the commencement of any action, such
Indemnitee shall, if a Claim in respect thereof is to be made against
the indemnifying party (the "Indemnitor"), notify the Indemnitor in
writing of the commencement thereof; but the omission to notify the
Indemnitor shall not relieve the Indemnitor from any liability which
the Indemnitor may otherwise have to any Indemnitee.
C. Partial Indemnification In the event a party is entitled to
indemnification under this Agreement for some or a portion of Claims,
but not, however, for all of the total amount thereof (as finally
determined in an action for which indemnification is permitted
hereunder), then the Indemnitor shall indemnify the Indemnitee for
the portion thereof to which the Indemnitee is entitled.
D. Conduct of Defense With respect to any Claim as to which an
Indemnitee notifies an Indemnitor of the commencement thereof:
1) Participation. Indemnitee shall be entitled to participate
therein at the Indemnitee's own expense; and
2) Assumption of Defense. Except as otherwise provided below, to
the extent that the Indemnitor may wish, Indemnitor shall be entitled
to assume the defense thereof, with counsel selected by Indemnitor.
After notice from Indemnitor to Indemnitee of the Indemnitor's
election to assume the defense thereof. Indemnitor shall not be
liable to Indemnitee under this Agreement for any legal or
MLIDC Retail Sales Agreement 7-1-05(LTC)
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other expenses subsequently incurred by Indemnitee in connection with
the defense thereof except as otherwise provided below. Indemnitee
shall have the right to employ Indemnitee's own counsel in matters
giving rise to such Claim, but the fees and expenses of such counsel
incurred after notice from Indemnitee of its assumption of the
defense thereof shall be at the expense of Indemnitee unless (a) the
employment of counsel by Indemnitee has been authorized by Indemnitor
in writing, (b) Indemnitee's counsel shall have reasonably concluded
that there may likely be a conflict of interest between Indemnitor
and Indemnitee in the conduct of the defense of matters giving rise
to such Claim, or (c) Indemnitor shall not in fact have employed
counsel to assume the defense of such Claim, in each of which cases
the fees and expenses of counsel shall be at the expense of
Indemnitor. Indemnitor shall not be entitled to assume the defense of
any Claim brought by or on behalf of Indemnitor; and
3) Settlement. Indemnitor shall not be liable to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of
any Claim effected without Indemnitor's written consent. Indemnitor
shall not settle any Claim in any manner which would impose any
penalty or limitation on Indemnitee without Indemnitee's written
consent. Indemnitee shall not unreasonably delay or withhold its
consent to any proposed settlement.
E. Subrogation In the event of any indemnification payment under this
Agreement, Indemnitor shall be subrogated to the extent of such
payment to all the rights of recovery of Indemnitee, who shall
execute all papers required and shall do everything that may be
necessary to secure such rights, including the execution of such
documents necessary to enable Indemnitor to effectively bring suit to
enforce such rights.
F. Receipt of Payment Anything to the contrary notwithstanding,
Indemnitor shall not be liable under this Agreement to make any
payment in connection with any Claim made against Indemnitee to the
extent Indemnitee has otherwise actually received payment of the
amounts otherwise indemnifiable hereunder.
G. Provisions Not to Control Notwithstanding anything in this Section
IX to the contrary, the terms and provisions of Section VI(C) shall
control in the event of any conflict or alleged conflict with this
Section IX.
MLIDC Retail Sales Agreement 7-1-05(LTC)
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X. General Provisions
A. Term and Termination
1) Term. 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, unless otherwise
terminated pursuant to Section X(A)(2) of this Agreement.
2) Termination. This Agreement shall terminate immediately upon
(a) Company or Broker ceasing to be a registered broker-dealer or a
member of the NASD or, (b) the termination of the legal existence
of Broker or an Agency, or the merger, consolidation,
reorganization, dissolution, receivership or bankruptcy of either,
or whenever the Broker or an Agency is no longer licensed under
Applicable Laws to solicit and procure applications for Contracts,
unless that Broker or Agency notifies the Company 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 Company or, (c) Company or Broker unilaterally
terminating this Agreement with or without cause upon thirty
(30) days' prior notice of termination to the other party.
3) Continuing Obligations. Upon termination of this Agreement, all
agreements, authorizations, rights and obligations shall cease
except (a) those contained in Sections II(B)(19), V(A), VI, VIII,
IX, X(D), X(E), X(F), X(J), X(K), and X(S) 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 or other Applicable Laws, Broker shall
return to Company, within 30 days after the effective date of
termination, any and all records in its possession which have been
specifically maintained in connection with Company'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 Company may
assign this Agreement to any of its Affiliates at any time without
notice or consent. Any purported assignment in violation of this
Section shall be void.
MLIDC Retail Sales Agreement 7-1-05(LTC)
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C. Amendments
No oral promises or representations shall be binding nor shall this
Agreement be modified except by an agreement in writing that expressly
refers to this Agreement and that has been executed on behalf of the
parties by a duly authorized officer of each of them. Notwithstanding
the foregoing, Company has the right to amend, modify and/or replace
Exhibits A and/or B at any time, to be effective as Company may
direct, in its sole discretion and without prior notice.
D. Notices
Any notice or consent required by this Agreement shall be in
writing and either (i) mailed by certified or registered mail,
postage-prepaid, return receipt requested, or (ii) sent by
telefacsimile transmission and followed by delivery via First Class
U.S. mail, to such party at its address and facsimile number set forth
on the signature page below or to such other address and/or facsimile
number as such party may designate by notice given in accordance
herewith. Such notices or consents shall be deemed duly delivered upon
the date earlier of (i) two (2) Business Days after having been
deposited in the United States mail as hereinbefore set forth, or
(ii) upon sender's production of electronic confirmation of
transmission by telefacsimile. As used herein, the term "Business Day"
means each day of the week other than Saturdays, Sundays or federal
legal holidays.
E. Arbitration
1) When Arbitration Required. All disputes and differences between the
parties, other than those seeking injunctive relief or a
restraining order under this Agreement must be decided by
arbitration, in accordance with the rules of arbitration of the
NASD, regardless of the insolvency of either party, unless the
conservator, receiver, liquidator or statutory successor is
specifically exempted from an arbitration proceeding by Applicable
Laws.
2) Initiation of Arbitration. Either party may initiate arbitration by
providing written notification to the other party ("Arbitration
Demand"). Such Arbitration Demand shall set forth (a) a brief
statement of the issue(s), and (b) the failure of the parties to
reach agreement.
3) Arbitration Panel. The arbitration panel shall consist of three
(3) 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.
MLIDC Retail Sales Agreement 7-1-05(LTC)
Page 30 of 36
4) Selection of Arbitrators. Each party shall select an arbitrator
within thirty (30) days from the date of the Arbitration Demand. If
either party shall refuse or fail to appoint an arbitrator within
the time allowed, the party that has timely appointed an arbitrator
may notify the other party that, if it has not appointed its
arbitrator within the following ten (10) days, an arbitrator shall
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 (2) 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 (2) names chosen by drawing lots.
5) Procedure. 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) Rules; Place for Meetings; Majority Vote. To the extent permitted
under the NASD rules of arbitration, the arbitrators shall
determine all arbitration schedules and procedural rules.
Organizational and other meetings will be held in Newport Beach,
California, unless the arbitrators select another location. The
arbitrators shall decide all matters by majority vote.
7) Decision Final. 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) Fees and Expenses. Unless the arbitrators shall provide otherwise,
each party shall 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.
MLIDC Retail Sales Agreement 7-1-05(LTC)
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F. Governing Law; Venue; Jurisdiction
This Agreement shall be governed by and construed in accordance
with the laws of the State of California without regard to California
choice of law provisions.
G. Entire Understanding
This Agreement and the Exhibits and Schedules referenced and
incorporated herein constitute the complete understanding of the
parties and supersede in their entirety any and all prior 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
Company's and Broker's respective Affiliates shall each be third
party beneficiaries of this Agreement, entitled to enforce the
provisions hereof as if they were parties to this Agreement. Except as
otherwise provided in the preceding sentence, nothing in the Agreement
shall convey any rights upon any person or entity who or which is not
a party to this Agreement.
I. Non-exclusivity
Broker, on its behalf and on behalf of each Agency, agrees that no
territory or product is assigned exclusively hereunder and that
Company and its Affiliates reserve the right in their 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. Broker's
relationship with Company is non-exclusive, and Broker is free to sell
or solicit insurance and other products issued or sold by other
companies.
J. No Hire
For purposes of this Sub-section J only, the term "agent" shall
include all appointed agents and Representatives. The parties to this
Agreement acknowledge that each may have access to the names and
identities of agents of each party as a result of performing their
respective obligations under this Agreement, and that each may
establish close working relationships with such persons. Therefore,
Broker for itself and for each Agency on the one hand (for purposes of
this Sub-section J, "Selling Group"), and Company on the other hand,
agree that while an agent maintains his/her affiliation with each and
for twelve (12) months after such agent's termination of the
affiliation for any reason:
MLIDC Retail Sales Agreement 7-1-05(LTC)
Page 32 of 36
1) Selling Group shall not in any way, directly or indirectly, for its
own behalf or on behalf of any other person or entity, solicit,
entice, hire, employ or endeavor to employ or associate with for
business purposes any agent of Company. In addition Selling Group
acknowledges that Company's agents hold important contractual and
business relationships with Company and Selling Group shall not
(a) interfere in any way with the relationships, contractual or
otherwise, between Company and Company's agents, or (b) induce or
encourage, or attempt to induce or encourage, any agent of Company
to terminate or change his/her relationship with Company.
2) Company shall not in any way, directly or indirectly, for its own
behalf or on behalf of any other person or entity, solicit, entice,
hire, employ or endeavor to employ or associate with for business
purposes any agent of Selling Group. In addition Company
acknowledges that Selling Group's agents hold important contractual
and business relationships with Selling Group and Company shall not
(a) interfere in any way with the relationships, contractual or
otherwise, between Selling Group and Selling Group's agents, or
(b) induce or encourage, or attempt to induce or encourage, any
agent of Selling Group to terminate or change his/her relationship
with Selling Group.
K. 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 or any other provision of this
Agreement.
L. Counterparts; Facsimile Signatures
This Agreement may be executed in counterparts, each of which when
so executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute one and the same
instrument. A signature transmitted by facsimile machine or telecopier
shall be deemed to be an original signature hereunder.
M. 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
MLIDC Retail Sales Agreement 7-1-05(LTC)
Page 33 of 36
each case, such declaration shall serve to deprive any of the parties
hereto of the fundamental benefits of this Agreement.
N. Headings
The various section headings used in this Agreement are for
convenience of reference only and are in no way intended to describe,
interpret, define or limit the scope, extent or intent of this
Agreement or any of its provisions.
O. Further Assurances
Each of the parties shall from time to time at the reasonable
request of the other party and without further cost or expense to such
other party, execute and deliver or cause to be executed and delivered
such other instruments and take such other related action, as may be
necessary, to more effectively consummate the terms and provisions of
this Agreement.
P. Construction
Whenever the singular number is used in this Agreement and when
required by the context, the same shall include plural and vice versa,
and the masculine gender shall include the feminine and neuter genders
and vice versa.
Q. Recitals
The Recitals set forth in this Agreement are hereby deemed to be
material provisions of this Agreement and are hereby incorporated into
and made a part of this Agreement.
R. Representation by Counsel
All parties hereto have been represented or have had the
opportunity to be represented by counsel in connection with the
negotiation and preparation of this Agreement. Therefore, this
Agreement shall be construed without regard to any presumption against
the party drafting the same.
MLIDC Retail Sales Agreement 7-1-05(LTC)
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S. Trademarks
Neither party may use the other party's trademarks, service marks,
trade names, logos, or other commercial or product designations
(collectively, "Marks") for any purpose whatsoever without the prior
written consent of the other party.
1) Permission not Implied. Nothing in this Agreement shall be
construed as prior written consent to permit (i) any party to use
the Marks of the other party, or (ii) any other individual or
entity to use the Marks of any party.
2) UFS. Nothing contained in this Agreement shall be construed as
conferring upon Broker or Representatives any right to use or refer
to in advertising, publicity, promotion, marketing or other
activities, any Marks, or any other designation or likeness of any
of the Peanuts(R) characters or any other character licensed by
United Feature Syndicate (including any contraction, abbreviation
or simulation of any kind of the foregoing) without prior express
permission from United Feature Syndicate, which Broker and
Representatives must obtain through Company.
T. Long Term Care
Notwithstanding anything contained in the Agreement to the
contrary, the following shall apply to Contracts that are long term
care insurance products (LTC products):
1) Broker agrees to deliver LTC products to purchasers no later than
30 days after the policy is approved by the issuer.
2) Broker agrees that it will not, nor will it permit its subagents
to, solicit the sale of other products based solely upon a
customer's purchase of an LTC product.
3) LTC products shall not be deemed to be covered by the provisions of
Rewritten Business Rules described in Exhibit C of the Agreement.
MLIDC Retail Sales Agreement 7-1-05(LTC)
Page 35 of 36
In reliance on the representations set forth and in consideration of the
undertakings described, the parties represented below do hereby contract and
agree.
"COMPANY"
METLIFE INVESTORS DISTRIBUTION
COMPANY
By /s/ Xxxxxxx X. Xxxxxxx
---------------------------
Xxxxxxx X. Xxxxxxx - Vice President
Date 11/21/05
---------------------------
Address:
0 Xxxx Xxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Fax #: 000-000-0000
---------------------------
"BROKER"
Xxxxx Fargo Investments LLC
By /s/ Xxxx X. Xxxxx
---------------------------
Xxxx X. Xxxxx, SVP Finance &
Insurance Products
-----------------------------------
Print Name & Title
Date 11/07/05
---------------------------
Address:
000 Xxxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Fax #:
MLIDC Retail Sales Agreement 7-1-05(LTC)
Page 36 of 36
