SELLING GROUP AGREEMENT EXHIBIT (c)(2)
AMERICAN GENERAL EQUITY SERVICES CORPORATION AND
AMERICAN GENERAL LIFE INSURANCE COMPANY
This Selling Group Agreement ("Agreement") is made among American General Equity
Services Corporation (formerly known as Franklin Financial Services
Corporation), a registered broker-dealer and the distributor for the variable
life insurance policies and/or annuity contracts set forth in Schedule A
("Distributor"),
________________________________________________________________________________
("Selling Group Member")
________________________________________________________________________________
("Associated Agency")
and, as the fourth party, American General Life Insurance Company ("AGL").
Distributor is an affiliate of AGL. Selling Group Member is registered with the
Securities and Exchange Commission ("SEC") as a broker-dealer under the
Securities Exchange Act of 1934 ("1934 Act") and under any appropriate
regulatory requirements of state law, and is a member in good standing of the
National Association of Securities Dealers, Inc. ("NASD"), unless Selling Group
Member is exempt from the broker-dealer registration requirements of the 1934
Act. Unless exempt, Selling Group Member maintains a level of qualification with
the NASD appropriate to enable it to offer and sell the products set forth in
Schedule A. Selling Group Member is affiliated with one or more Associated
Agencies, which is/are properly licensed under the insurance laws of the
state(s) in which Selling Group Member will act under this Agreement. If Selling
Group Member utilizes more than one Associated Agency in the conduct of its
insurance sales, Selling Group Member shall provide AGL with a written list of
all agencies through which it conducts insurance sales. In this case, AGL will
accept Associated Agency's signature as Primary Insurance Agency on behalf of
all agencies.
This Agreement is for the purpose of providing for the distribution of certain
variable life insurance policies and/or annuity contracts set forth in Schedule
A and any successor or additional SEC registered insurance products (as
discussed in Part (1) "NEW PRODUCTS" of this Agreement) to be issued by AGL and
distributed through Distributor through representatives who are state insurance
licensed and appointed agents of AGL and associated with Associated Agency and
are also NASD registered representatives of Selling Group Member ("Sales
Persons"). The policies and/or annuity contracts set forth in Schedule A, along
with any successor or additional SEC registered insurance products, are referred
to collectively herein as the "Contracts".
In consideration of the mutual promises and covenants contained in this
Agreement, AGL and Distributor appoint Selling Group Member and those persons
associated with Associated Agency who are NASD registered representatives of
Selling Group Member and state insurance licensed agents of AGL to solicit and
procure applications for the Contracts. This appointment is not deemed to be
exclusive in any manner and only extends to those jurisdictions where the
Contracts have been approved for sale. Selling Group Member is authorized to
collect the first purchase payment or
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premium (collectively "Premiums") on the Contracts and, unless Selling Group
Member and AGL have otherwise agreed, must remit such premiums in full dollar
amount to AGL. Unless Selling Group Member and AGL have otherwise agreed,
applications shall be taken only on preprinted application forms supplied by
AGL. All completed applications and supporting documents are the sole property
of AGL and must be promptly delivered to AGL. All applications are subject to
acceptance by AGL at its sole discretion.
(1) NEW PRODUCTS
AGL and Distributor may propose, and AGL may issue additional or successor
products, in which event Selling Group Member will be informed of the product
and its related concession schedule. If Selling Group Member does not agree to
distribute such product(s), it must notify Distributor in writing within 10 days
of receipt of the Concession Schedule for such product(s). If Selling Group
Member does not indicate disapproval of the new product(s) or the terms
contained in the related Concession Schedule, Selling Group Member will be
deemed to have thereby agreed to distribute such product(s) and agreed to the
related Concession Schedule which shall be attached to and made a part of this
Agreement.
(2) SALES PERSONS
Associated Agency is authorized to recommend Sales Persons for appointment by
AGL to solicit sales of the Contracts. Associated Agency warrants that all such
Sales Persons shall not commence solicitation nor aid, directly or indirectly,
in the solicitation of any application for any Contract until that Sales Person
is appropriately licensed for such product under applicable insurance laws and
is a currently NASD registered representative of Selling Group Member.
Associated Agency shall be responsible for all fees required to obtain and/or
maintain any licenses or registrations required by state or federal law, for
Associated Agency and its Sales Persons. From time to time, AGL will provide
Associated Agency and Selling Group Member with information regarding the
jurisdictions in which AGL is authorized to solicit applications for the
Contracts and any limitations on the availability of such Contracts in any
jurisdiction.
(3) SALES MATERIAL
Associated Agency and Selling Group Member shall not utilize in their efforts to
market the Contracts, any written brochure, prospectus, descriptive literature,
printed and published material, audio-visual material or standard letters unless
such material has been provided preprinted by AGL or Distributor or unless AGL
and Distributor have provided written approval for the use of such literature.
In accordance with the requirements of the laws of the several states,
Associated Agency and Selling Group Member shall maintain complete records
indicating the manner and extent of distribution of any such solicitation
material, shall make such records and files available to staff of AGL and/or
Distributor in field inspections and shall make such material available to
personnel of state insurance departments, the NASD or other regulatory agencies,
including the SEC, which have regulatory authority over AGL or Distributor.
Associated Agency and Selling Group Member jointly and severally hold AGL,
Distributor and their affiliates harmless from any liability arising from the
use of any material which either (a) has not been specifically approved in
writing by AGL, or (b) although previously approved, has been disapproved by AGL
or Distributor, in writing for further use.
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(4) PROSPECTUSES
Selling Group Member and Associated Agency warrant that solicitation for the
sale of SEC registered insurance products will be made by use of a currently
effective prospectus, that a prospectus will be delivered concurrently with each
sales presentation and that no statements shall be made to a client superseding
or controverting any statement made in the prospectus. AGL and Distributor shall
furnish Selling Group Member and Associated Agency, at no cost to Selling Group
Member or Associated Agency, reasonable quantities of prospectuses to aid in the
solicitation of Contracts.
(5) SELLING GROUP MEMBER COMPLIANCE
Selling Group Member shall be solely responsible for the approval of suitability
determinations for the purchase of any Contract or the selection of any
investment option thereunder, in compliance with federal and state securities
laws and shall supervise Associated Agency and Sales Persons in determining
client suitability. Selling Group Member shall hold AGL and Distributor harmless
from any financial claim resulting from improper suitability decisions.
Selling Group Member will fully comply with the requirements of the NASD and of
the 1934 Act and such other applicable federal and state laws and will establish
rules, procedures, and supervisory and inspection techniques necessary to
diligently supervise the activities of its NASD registered representatives who
are state insurance licensed agents or solicitors of AGL, in connection with
offers and sales of the Contracts. Such supervision shall include providing, or
arranging for, initial and periodic training in knowledge of the Contracts. Upon
request by Distributor or AGL, Selling Group Member will furnish appropriate
records as are necessary to establish diligent supervision and client
suitability.
Selling Group Member shall fully cooperate in any insurance or securities
regulatory examination, investigation, or proceeding or any judicial proceeding
with respect to AGL, Distributor, Selling Group Member, and Associated Agency
and their respective affiliates, agents and representatives to the extent that
such examination, investigation, or proceeding arises in connection with the
Contracts. Selling Group Member shall immediately notify Distributor if its
broker-dealer registration or the registration of any of its Sales Persons is
revoked, suspended, or terminated.
(6) ASSOCIATED AGENCY AND SALES PERSON COMPLIANCE
Associated Agency will fully comply with the requirements of state insurance
laws and applicable federal laws and will establish rules and procedures
necessary to diligently supervise the activities of the Sales Persons. Upon
request by Distributor or AGL, Selling Group Member will furnish appropriate
records as are necessary to establish such supervision. Associated Agency and
Sales Persons shall be responsible for making suitability determinations for the
purchase of any Contract or the selection of any investment option thereunder,
in compliance with federal and state securities laws.
Associated Agency shall fully cooperate in any insurance or securities
regulatory examination, investigation, or proceeding or any judicial proceeding
with respect to AGL, Distributor, Selling Group Member, and Associated Agency
and their respective affiliates, agents and representatives to the extent that
such examination, investigation, or proceeding arises in connection with the
Contracts. Associated Agency shall immediately notify Distributor if its
insurance license or the license of any of its Sales Persons is revoked,
suspended, or terminated.
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(7) AGL COMPLIANCE
AGL represents that the prospectus(es) and registration statement(s) relating to
the Contracts contain no untrue statements of material fact or omission to state
a material fact, the omission of which makes any statement contained in the
prospectus and registration statement misleading. AGL agrees to indemnify
Associated Agency and Selling Group Member from and against any claims,
liabilities and expenses which may be incurred by any of those parties under the
Securities Act of 1933, the 1934 Act, the Investment Company Act of 1940, common
law, or otherwise, and that arises out of a breach of this paragraph.
(8) COMPENSATION
AGL will remit to Associated Agency compensation as set forth in each Schedule B
hereto.
(9) CUSTOMER SERVICE, COMPLAINTS, AND INDEMNIFICATION
The parties agree that AGL may contact by mail or otherwise, any client, agent,
account executive, or employee of Associated Agency or other individual acting
in a similar capacity if deemed appropriate by AGL, in the course of normal
customer service for existing Contracts, in the investigation of complaints, or
as required by law. The parties agree to cooperate fully in the investigation of
any complaint.
Selling Group Member, Associated Agency, and Sales Persons agree to hold
harmless and indemnify Distributor and AGL against any and all claims,
liabilities and expenses incurred by either Distributor or AGL, and arising out
of or based upon any alleged or untrue statement of Selling Group Member,
Associated Agency or Sales Person other than statements contained in the
approved sales material for any Contract, or in the registration statement or
prospectus for any Contract.
AGL hereby agrees to indemnify and hold harmless Selling Group Member and each
of its employees, controlling persons, officers or directors against any losses,
expenses (including reasonable attorneys' fees and court costs), damages or
liabilities to which Selling Group Member or such affiliates, controlling
persons, officers or directors become subject, under the Securities Act of 1933
or otherwise, insofar as such losses, expenses, damages or liabilities (or
actions in respect thereof) arise out of or are based upon AGL's performance,
non-performance or breach of this Agreement, or are based upon any untrue
statement contained in, or material omission from, the prospectus for any of the
Contracts.
(10) FIDELITY BOND
Associated Agency represents that all directors, officers, employees and Sales
Persons of Associated Agency licensed pursuant to this Agreement or who have
access to funds of AGL are and will continue to be covered by a blanket fidelity
bond including coverage for larceny, embezzlement and other defalcation, issued
by a reputable bonding company. This bond shall be maintained at Associated
Agency's expense. Such bond shall be at least equivalent to the minimal coverage
required under the NASD Conduct Rules, and endorsed to extend coverage to life
insurance and annuity transactions. Associated Agency acknowledges that AGL may
require evidence that such coverage is in force and
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Associated Agency shall promptly give notice to AGL of any notice of
cancellation or change of coverage.
Associated Agency assigns any proceeds received from the fidelity bond company
to AGL to the extent of AGL's loss due to activities covered by the bond. If
there is any deficiency, Associated Agency will promptly pay AGL that amount on
demand. Associated Agency indemnifies and holds harmless AGL from any deficiency
and from the cost of collection.
(11) LIMITATIONS OF AUTHORITY
The Contract forms are the sole property of AGL. No person other than AGL has
the authority to make, alter or discharge any policy, Contract, certificate,
supplemental contract or form issued by AGL. No party has the right to waive any
provision with respect to any Contract or policy; give or offer to give, on
behalf of AGL, any tax or legal advice related to the purchase of a Contract or
policy; or make any settlement of any claim or bind AGL or any of its affiliates
in any way. No person has the authority to enter into any proceeding in a court
of law or before a regulatory agency in the name of or on behalf of AGL.
(12) ARBITRATION
The parties agree that any controversy between or among them arising out of
their business or pursuant to this Agreement that cannot be settled by agreement
shall be taken to arbitration as set forth herein. Such arbitration will be
conducted according to the securities arbitration rules then in effect, of the
American Arbitration Association, NASD, or any registered national securities
exchange. Arbitration may be initiated by serving or mailing a written notice.
The notice must specify which rules will apply to the arbitration. This
specification will be binding on all parties.
The arbitrators shall render a written opinion, specifying the factual and legal
bases for the award, with a view to effecting the intent of this Agreement. The
written opinion shall be signed by a majority of the arbitrators. In rendering
the written opinion, the arbitrators shall determine the rights and obligations
of the parties according the substantive and procedural laws of the State of
Texas. Accordingly, the written opinion of the arbitrators will be determined by
the rule of law and not by equity. The decision of the majority of the
arbitrators shall be final and binding on the parties and shall be enforced by
the courts in Texas.
(13) CONFIDENTIALITY AND PROTECTION OF NONPUBLIC PERSONAL INFORMATION.
(A) Confidentiality.
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"Confidential Information" of a party shall mean all
confidential or proprietary information, including trade
secrets, expressions, ideas and business practices of such
party in any medium, as well as the terms of this Agreement.
For purposes of this Agreement and unless otherwise indicated,
reference to each party shall include their affiliates, agents
and contractors. All Confidential Information relating to a
party shall be held in confidence by the other party to the
same extent and in at least the same manner as such party
protects its own confidential or proprietary information, but
in no case to a lesser extent than reasonable care under the
circumstances requires. No party
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shall disclose, publish, release, transfer or otherwise make
available Confidential Information of any other party in any
form to, or for the use or benefit of, any person or entity
without the other parties' consent. Each party shall, however,
be permitted to disclose relevant aspects of the other
parties' Confidential Information to its officers, agents,
subcontractors and employees to the extent that such
disclosure is reasonably necessary for the performance of its
duties and obligations under this Agreement; provided,
however, that such party shall take all reasonable measures to
ensure that Confidential Information of the other party or
parties is not disclosed or duplicated in contravention of the
provisions of this Agreement by such officers, agents,
subcontractors and employees.
The obligations herein shall not restrict any disclosure by
any party pursuant to any applicable state or federal laws, or
by order of any court or government agency (provided that the
disclosing party shall give prompt notice to the
non-disclosing party or parties of such order) and shall not
apply with respect to Confidential Information which (1) is
developed by the other party independently of the Confidential
Information of the disclosing party without violating the
disclosing party's proprietary rights, (2) is or becomes
publicly known (other than through unauthorized disclosure),
(3) is disclosed by the owner of such information to a third
party free of any obligation of confidentiality, (4) is
already known by such party without an obligation of
confidentiality other than pursuant to this Agreement or any
confidentiality agreements entered into before the effective
date of this Agreement, or (5) is rightfully received by a
party free of any obligation of confidentiality.
(B) Protection of Nonpublic Personal Information.
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(1) Definition of Nonpublic Personal Information.
---------------------------------------------
Nonpublic personal information of customers or
consumers ("NPI") includes, but is not limited to,
names, addresses, account balances, account numbers,
account activity, social security numbers, taxpayer
identification numbers, and sensitive, financial and
health information. NPI includes information on each
party's forms or in a database of any kind,
information created by each party, information
collected by or on behalf of a party, and personally
identifiable information derived from NPI.
There may be instances where each party will have the
same NPI that may be subject to different privacy
policies and procedures according to the notices
provided to the customer or consumer by the
respective parties to the Agreement.
(2) Disclosure and Use of NPI.
--------------------------
All NPI that any party obtains as a result of this
relationship shall not be used, disclosed, reused or
redisclosed to any third party, except to carry out
the purposes for which the information was disclosed.
All NPI of the other parties shall be held in
confidence to the same extent and in at least the
same manner as the holding party protects its own
NPI, but in no case in a lesser manner than a
reasonable degree of care under the circumstances.
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Each party shall be permitted to disclose relevant
aspects of the other parties' NPI to its officers,
agents, subcontractors and employees only to the
extent that such disclosure is reasonably necessary
for the performance of its duties and obligations
under the Agreement; provided that such party shall
take all reasonable measures to ensure that the NPI
of the other party or parties is not disclosed or
reproduced in contravention of the provisions of this
Agreement by such party's officers, agents,
subcontractors and employees.
The obligations of this Agreement shall not restrict
any disclosure by any party pursuant to any
applicable state or federal laws, or by request or
order of any court or government agency (provided
that the disclosing party shall seek appropriate
protections and provide prompt notice to the
non-disclosing party or parties in order that any
other party will have a reasonable opportunity to
oppose the disclosure, request or order).
The obligations of this Agreement shall not apply to
information which, without breach of obligation of
confidentiality: (1) is independently developed by a
party; (2) is or becomes publicly known; (3) is
already known by such party as evidenced by the
written records of such party; or (4) is obtained
from an independent source.
(3) Security of NPI.
----------------
The parties further agree to establish and maintain
policies and procedures designed to ensure the
confidentiality and security of NPI. This shall
include procedures to protect against any anticipated
threats or hazards to the security or integrity of
the information and unauthorized access to or use of
the information. For reasonable cause, each party may
audit the use or disclosure of NPI upon reasonable
written notice to the other party. Each party will
promptly advise the other parties of any breach of
obligations of this Agreement with respect to NPI of
which the breaching party is aware.
(4) Other Provisions.
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The parties agree that they shall abide by the
provisions of the Xxxxx-Xxxxx-Xxxxxx Act and other
applicable privacy laws and regulations and that the
obligations described herein shall continue after
termination of this Agreement. Any provision in this
Agreement or any agreement that is inconsistent with
the obligations herein shall be void.
This Agreement comprises the entire agreement among
the parties concerning NPI. There are no oral or
implied promises or other obligations concerning said
subject matter that have not been set forth herein.
This Agreement may not be modified without a written
agreement executed by all parties.
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(14) ANTI-MONEY LAUNDERING COMPLIANCE.
Selling Group Member has established and implemented policies and procedures
reasonably designed to discharge its obligations pursuant to applicable federal
laws and regulations regarding money laundering, including applicable provisions
of U.S. Public Law 107-56, the USA Patriot Act and specifically the regulations
of the U.S. Department of the Treasury adopted pursuant to Section 352 of the
USA Patriot Act, other applicable regulations of the U.S. Department of the
Treasury, and the Executive Orders related to the U.S. Department of the
Treasury's Office of Foreign Assets Control ("OFAC"). Without limitation, the
policies and procedures assure:
(A) That Selling Group Member reasonably believes and believes in
fact that all evidence of identity of a purchaser of a
Contract furnished in connection with an application for the
purchase of such Contract is genuine.
(B) That Selling Group Member reasonably believes and believes in
fact that no premium funds tendered for the purchase of a
Contract directly or indirectly are derived from activities
that may contravene U.S. federal, state or international laws
or regulations.
(C) That Selling Group Member reasonably believes and believes in
fact that no applicant for a Contract ("Applicant"), nor any
person controlling, controlled by or under common control with
an Applicant, or a person for whom such Applicant is acting as
agent or nominee in connection with the acquisition of such
Contract, or who will have a beneficial interest in such
Contract, is:
(1) a country, territory, organization or person or
entity named on the List of Specially Designated
Nationals and Blocked Persons maintained by OFAC, as
such list may be amended from time to time;
(2) a person or entity that resides or has a place of
business in a country or territory named on an OFAC
list, or that is designated as a Non-Cooperative
Jurisdiction by the Financial Action Task Force on
Money Laundering, or whose premium funds tendered for
the acquisition of such Contract are transferred from
or through any such country or territory;
(3) a "foreign shell bank" as such term is described in
31 U.S.C.ss.5318(j) and U.S. Department of the
Treasury regulations thereunder;
(4) a person or entity that resides in or is organized
under the laws of a jurisdiction designated by the
Secretary of the Treasury pursuant to 31
U.S.C.ss.5318A as a "jurisdiction of primary money
laundering concern;" or,
(5) a "senior foreign political figure," or a "family
member" or "close associate" of such a senior foreign
political figure within the meaning of the Guidance
on Enhanced Scrutiny for Transactions that May
Involve the Proceeds of Foreign Official Corruption
issued by the U.S. Department of the Treasury or, if
Selling Group Member has determined that an applicant
or such other person is a "senior foreign political
figure," or a "family member" or "close associate" of
a senior foreign political figure, the broker dealer
has diligently scrutinized the proposed purchase of
the Contract by or for the benefit of such person.
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(15) GENERAL PROVISIONS
(A) Waiver
Failure of any of the parties to promptly insist upon strict
compliance with any of the obligations of any other party
under this Agreement will not be deemed to constitute a waiver
of the right to enforce strict compliance.
(B) Independent Contractors
Selling Group Member and Associated Agency are independent
contractors and not employees or subsidiaries of AGL.
Distributor is an affiliate of AGL. Selling Group Member and
Associated Agency are not employees or subsidiaries of
Distributor.
(C) Independent Assignment
No assignment of this Agreement or of commissions or other
payments under this Agreement shall be valid without prior
written consent of AGL and Distributor.
(D) Notice
Any notice pursuant to this Agreement may be given
electronically (other than vocally by telephone) or by mail,
postage paid, transmitted to the last address communicated by
the receiving party to the other parties to this Agreement.
(E) Severability
To the extent this Agreement may be in conflict with any
applicable law or regulation, this Agreement shall be
construed in a manner consistent with such law or regulation.
The invalidity or illegality of any provisions of this
Agreement shall not be deemed to affect the validity or
legality of any other provision of this Agreement.
(F) Amendment To Agreement
This Agreement may be amended only in writing and signed by
all parties.
(G) Amendment To Schedule(s)
AGL may amend Schedule A and each Schedule B at any time and
only in writing. AGL shall promptly deliver such amended
Schedules(s) to Selling Group Member. No amendment will impair
the right to receive commissions as accrued with respect to
Contracts issued and applications procured prior to such
amendment.
(H) Termination
This Agreement may be terminated by any party upon 30 days'
prior written notice. It may be terminated, for cause, by any
party immediately. Termination of this Agreement shall not
impair the right to receive commissions accrued with respect
to applications procured prior to the termination except as
otherwise specifically provided in Schedule B.
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(I) TEXAS LAW
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS.
(J) This Agreement replaces and supersedes any other agreement or
understanding related to the Contracts, between or among the
parties to this Agreement.
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By signing below, the undersigned agree to have read and be bound by the terms
and conditions of this Agreement.
Date: ________________________
SELLING GROUP MEMBER:
_________________________________________________________
(BROKER-DEALER) (Tax ID #)
Address: _________________________________________________________
_________________________________________________________
Signature: _________________________________________________________
Name & Title: _________________________________________________________
ASSOCIATED AGENCY: _________________________________________________________
(PRIMARY INSURANCE AGENCY) (Tax ID #)
Address: _________________________________________________________
_________________________________________________________
Signature: _________________________________________________________
Name & Title: _________________________________________________________
American General Equity Services Corporation (formerly known as Franklin
Financial Services Corporation)
#0 Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxx 00000
Signature: _________________________________________________________
Name & Title: _________________________________________________________
American General Life Insurance Company
0000-X Xxxxx Xxxxxxx
Xxxxxxx Xxxxx 00000
Signed By: _________________________________________________________
Name & Title _________________________________________________________
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