Exhibit 1.(3)(a)
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DISTRIBUTION AGREEMENT
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AGREEMENT, dated as of June 24, 1999, by and among Liberty Life Distributors LLC
("Distributor"), Liberty Life Assurance Company of Boston ("Liberty Life") and
LLAC Variable Account of Liberty Life ("Variable Account").
W I T N E S S E T H
WHEREAS, the Variable Account is a separate account established and maintained
by Liberty Life pursuant to the laws of the Commonwealth of Massachusetts, under
which income, gains and losses, whether or not realized, from assets allocated
to the Variable Account, are credited to or charged against the Variable Account
without regard to other income, gains or losses of Liberty Life;
WHEREAS, the Variable Account is registered as an investment company under the
Investment Company Act of 1940, as amended ("1940 Act");
WHEREAS, Liberty Life, through the Variable Account, intends to issue certain
variable universal life insurance contracts and may in the future issue
additional forms of variable life insurance contracts, whose net considerations
may be allocated in whole or in part to the Variable Account for investment, and
in the future may issue, through other separate accounts, variable life
insurance and variable annuity contracts, whose net considerations may be
allocated in whole or in part to other separate accounts maintained by Liberty
Life;
WHEREAS, Liberty Life proposes to make the variable life insurance contracts and
variable annuity contracts listed on Exhibit A of this Agreement ("Contracts")
available for sale to suitable purchasers;
WHEREAS, the variable portions of the Contracts are registered under the
Securities Act of 1933 ("1933 Act");
WHEREAS, Distributor, a wholly-owned subsidiary of Liberty Life, is a
broker-dealer registered under the Securities Exchange Act of 1934 ("1934 Act")
and is a member of the National Association of Securities Dealers, Inc.
("NASD");
WHEREAS, the parties hereto desire to have Distributor act as principal
underwriter or distributor for the separate accounts of Liberty Life listed on
Exhibit B of this Agreement ("Separate Accounts") to assume the responsibilities
set forth in this Agreement with respect to the distribution of the Contracts,
and Distributor desires to assume such responsibilities;
NOW, THEREFORE, the parties hereto agree as follows:
1. APPOINTMENT AND AUTHORIZATION
a. Liberty Life authorizes Distributor to act, and Distributor agrees to
serve, as the principal underwriter for the Separate Accounts and as a
distributor of the Contracts in each state or other jurisdiction where the
Contracts may legally be sold. Distributor also is authorized and hereby
agrees to find purchasers for the Contracts, in each case acceptable to
Liberty Life.
b. Distributor is hereby authorized to enter into separate written agreements
("Selling Agreements"), on such terms and conditions as Distributor may
determine not to be inconsistent with this Agreement, with broker-dealers
("Selling Broker-Dealers") that agree to participate in the distribution
of, and to use their best efforts to solicit applications for, the
Contracts. The Selling Agreements shall be substantially in the form of the
Form of Selling Agreement attached as Exhibit C to this Agreement, or such
other form(s) as may be agreed upon by the parties. Each Selling
Broker-Dealer and its registered representatives ("Agents") soliciting
applications for the Contracts shall be duly and appropriately licensed,
appointed by Liberty Life, registered and otherwise qualified for the sale
of the Contracts under the NASD Rules and federal and state securities and
insurance laws applicable to the offer and sale of the Contracts.
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c. Distributor will not publicly offer or seek purchasers for a Contract
unless and until the Registration Statement for that Contract is effective.
In addition, Distributor will not publicly offer or seek purchasers for a
Contract in a state or jurisdiction in which that Contract is not qualified
for sale under all applicable securities and insurance laws. Distributor
will use its best efforts to provide information and marketing assistance
to licensed insurance agents and broker/dealers on a continuing basis.
d. The variable insurance contracts covered by this Agreement are described on
Exhibit A. The Separate Accounts covered by this Agreement are described on
Exhibit B. Liberty Life in its sole discretion may amend Exhibit A from
time to time to add or delete other classes of variable life insurance or
variable annuity contracts issued by Liberty Life and may amend Exhibit B
to add or delete other Separate Accounts. The provisions of this Agreement
shall apply with equal force to such additional Contracts and Separate
Accounts unless the Contract requires otherwise.
e. Anything in this Agreement to the contrary notwithstanding, Liberty Life
shall retain the ultimate right of control over, and the responsibility
for, the issuance, servicing and marketing of the Contracts, including the
right to review and approve all advertising concerning the Contracts, to
suspend sales of the Contracts in any jurisdiction, to appoint and
discharge its agents authorized to sell the Contracts, and to refuse to
sell a Contract to any applicant for any reason whatsoever.
2. LICENSING AND APPOINTMENT OF ASSOCIATED PERSONS AND AGENTS
a. Distributor is authorized to recommend the appointment of its associated
persons ("Associated Persons") and the Selling Broker-Dealers and their
eligible Agents as agents of Liberty Life in connection with the sale of
Contracts. Distributor shall not propose an Associated Person or Agent for
appointment unless such person is an "associated person" of Broker-Dealer
(as defined in Section 3(a)(18) of the 1934 Act), duly registered as a
representative of Distributor or a Selling Broker-Dealer, as appropriate,
and duly licensed as an insurance agent in the state(s) in which it is
proposed that such person engage in activities requiring such appointment.
Distributor shall be responsible for such Associated Persons' continuing
compliance with applicable securities registration requirements and state
insurance agent licensing laws. Each Selling Broker-Dealer shall be
responsible for its Agents' continuing compliance with applicable
securities registration requirements and state insurance agent licensing
laws.
b. Distributor shall assist Liberty Life in the appointment of Agents under
applicable insurance laws. Distributor or the sponsoring Selling
Broker-Dealer, as appropriate, shall comply with Liberty Life's
requirements, as Liberty Life in its sole discretion may establish and
change from time to time, in submitting licensing or appointment
documentation for Associated Persons and Agents. All such documentation
shall be submitted to Liberty Life or its designated agent licensing
administrator. A copy of Liberty Life's current General Letter of
Recommendation, to be used in connection with the appointment of Agents, is
attached hereto as Exhibit D.
c. Liberty Life reserves the right to refuse to appoint any such designated
Associated Person or Agent and, once appointed, to terminate or refuse to
renew such appointment.
d. The parties hereto recognize that any Associated Person or Agent selling
the Contracts as contemplated by this Agreement shall be acting as an
insurance agent of Liberty Life and that the obligations and rights of
Distributor to supervise such persons shall be limited to the extent
specifically described herein or required under applicable federal or state
securities laws or NASD Rules. Such Agents shall not be considered agents
or employees of Distributor, unless any contract between Distributor and
any such person specifically provides otherwise. Further, it is intended by
the parties hereto that such Associated Persons and Agents are and shall
continue to be considered to have a common law independent contractor
relationship with Liberty Life and not to be considered common law
employees of Liberty Life, unless any contract between Liberty Life and any
person selling the Contracts specifically provides otherwise.
3. SUPERVISION OF ASSOCIATED PERSONS
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a. Distributor shall be fully responsible for carrying out all compliance and
supervisory obligations in connection with the distribution of the
Contracts, as required by the NASD Conduct Rules ("NASD Rules") and by
federal and any applicable state securities laws. Distributor shall assume
full responsibility for training and oversight of its Associated Persons
engaged directly or indirectly in the distribution of the Contracts, and
shall have the authority to require that disciplinary action be taken with
respect to the Associated Persons. Distributor agrees to comply with
Liberty Life's statement in support of the concepts in the Principles and
Code of Ethical Market Conduct of the Insurance Marketplace Standards
Association (the "IMSA Principles and Code"), as such statement may be
amended from time to time, and to engage in active and fair competition as
contemplated by the IMSA Principles and Code. A copy of Liberty Life's
current statement in support of the IMSA Principles and Code is attached as
Exhibit E.
b. Distributor is specifically charged with the responsibility of supervising
and reviewing its Associated Persons' use of sales literature and
advertising and all other communications with the public in connection with
the Contracts. No sales solicitation, including the delivery of
supplemental sales literature or other such materials, shall occur, be
delivered to or used with a prospective purchaser unless accompanied or
preceded by the appropriate then current prospectus, the then current
prospectus for the underlying funds funding the Contract, and where
required by state insurance law, the then current statement of additional
information.
c. Distributor shall execute any electronic or telephone orders only in
accordance with the current prospectus applicable to the Contracts and
agrees that Liberty Life will not be liable for any loss incurred as a
result of acting upon electronic or telephone instructions containing
unauthorized, incorrect or incomplete information received from Distributor
or its Associated Persons.
d. Upon request by Liberty Life, Distributor shall furnish appropriate records
or other documentation to evidence its diligent supervision of Associated
Persons.
e. If an Associated Person performs any unauthorized transaction with respect
to a Contract, Distributor shall bear sole responsibility, shall notify
Liberty Life and shall act to terminate such unauthorized activities.
f. If an Associated Person fails to meet Distributor's rules and standards,
Distributor shall notify Liberty Life and shall act to terminate any
violative conduct of such Associated Person relating to the Contracts.
4. SUPERVISION OF SELLING-BROKER DEALERS
a. Each Selling Agreement shall provide as follows, in words or substance with
respect to the training and supervision of Agents and other persons
associated with such Selling-Broker Dealer who are involved directly or
indirectly in the offer or sale of Contracts:
(1) All such Agents and other persons shall be subject to the control
of such Selling-Broker Dealer with respect to such persons'
activities in connection with the sale of Contracts. Such
Selling-Broker Dealer shall be responsible for training and
supervision of all such persons. Distributor and Liberty Life
shall not have responsibility for the training and supervision of
any Agent or other person associated with such Selling-Broker
Dealer. Distributor shall provide such Selling Broker-Dealer with
a copy of Liberty Life's statement in support of the concepts in
the IMSA Principles and Code, as such statement may be amended
from time to time, and shall require such Selling Broker-Dealer to
agree to comply with that statement and to engage in active and
fair competition as contemplated by the IMSA Principles and Code.
(2) Such Selling Broker-Dealer shall be required to assume full
responsibility for continued compliance by itself and its
associated persons (as defined in Section 3(a)(18) of the 0000
Xxx) with the NASD Rules and applicable federal and state
securities and insurance laws. Such Selling-Broker Dealer shall be
specifically charged with the responsibility of supervising its
Agents' compliance with all applicable suitability requirements
under federal or state law or the regulations of the NASD. Such
Selling Broker-Dealer shall be specifically charged with providing
or arranging for adequate training to ensure
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that Agents have thorough knowledge of each Contract and the
ability to make appropriate product presentations and suitability
determinations in compliance with applicable law. Such Selling
Broker-Dealer and its Agents shall not recommend the purchase of a
Contract to a prospective purchaser unless they have reasonable
grounds to believe that such purchase is suitable for the
prospective purchaser and is in accordance with applicable
regulations of any regulatory authority, including the SEC and the
NASD. While not limited to the following, a determination of
suitability shall be based on information concerning the
prospective purchaser's insurance and investment objectives, risk
tolerance, need for liquidity, and financial and insurance
situation and needs.
b. Any supervision of the Selling Broker-Dealer required by applicable law
shall be performed by Distributor, and Distributor shall assume any legal
responsibilities of Liberty Life for the acts or omissions of any Selling
Broker-Dealer or its Agents.
5. SALES PROMOTION MATERIAL AND ADVERTISING
a. During the term of this Agreement, subject to the approval of Liberty Life,
Distributor will be responsible for providing certain and approving all
promotional, sales and advertising material to be used by Distributor and
Selling Broker-Dealers in connection with the offer and sale of Contracts.
Distributor will file such materials or will cause such materials to be
filed with the SEC and the NASD, and with any state securities regulatory
authorities, as required. Liberty Life reserves the right to require the
recall of any material approved by it at any time for any reason, and
Distributor shall promptly comply, and cause all Selling Broker-Dealers to
promptly comply, with any such request for the return of material and shall
not use such material thereafter.
b. Distributor will require that the Associated Persons and Agents use only
the effective current prospectuses, statements of additional information
("SAIs") and other materials authorized by Liberty Life for use in
soliciting the sale of the Contracts. Distributor is not authorized, and
may not authorize anyone else, to give any information or to make any
representation concerning Liberty Life, the Contracts, the Separate
Accounts or the funding media for the Contracts other than those contained
in the current materials authorized for use by Liberty Life. Distributor
and its Associated Persons may not modify or represent that they are
authorized to modify any such prospectus, SAI or other materials authorized
by Liberty Life for use in soliciting the sale of the Contracts.
6. OBLIGATIONS OF DISTRIBUTOR
a. All solicitations for the sale of Contracts will be made only by Associated
Persons and Agents who are registered representatives of Distributor or a
Selling Broker-Dealer and duly licensed insurance agents and appointed by
Liberty Life. Continued solicitation for the Contracts shall be contingent
upon the continuing qualification of such Associated Persons and Agents by
possession of the required licenses, appointments, and registrations.
Solicitation may only occur in those states in which Liberty Life is
admitted to do business and in which the Contracts have been approved for
sale by the appropriate regulatory authority.
b. All applications for the Contracts shall be made on application forms
supplied by Liberty Life or in a form otherwise satisfactory to Liberty
Life. All applications forwarded to Liberty Life shall first be approved as
to suitability by an appropriate principal of the submitting Selling-Broker
Dealer or, if originated by Distributor, by an appropriate principal of
Distributor. All applications for Contracts shall be subject to acceptance
or rejection by Liberty Life in its sole discretion. If Liberty Life
rejects an application, it will return any premium paid by that applicant
to such applicant and promptly notify Distributor of such action. If a
purchaser exercises his or her free look right under a Contract, any amount
to be refunded as provided in such Contract will be so refunded to the
purchaser by or on behalf of Liberty Life and the relevant Separate
Accounts(s) and Liberty Life will promptly notify Distributor of such
action.
c. All money payable in connection with the Contracts, whether as purchase
payments or otherwise, and whether paid by, or on behalf of any applicant
or Contract owner, is the property of Liberty Life. Distributor shall
promptly transmit to Liberty Life any such payment received by it in
accordance with Liberty Life's administrative procedures without any
deduction or offset for any reason, unless there has been mutual
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arrangement for net wire transmissions between Distributor and Liberty
Life. No cash payments shall be accepted by Distributor in connection with
the Contracts.
d. Before transmitting to Liberty Life applications or other documents
relating to Contracts sold by Associated Persons, Distributor shall review
such documents for completeness and correctness, as well as compliance with
applicable suitability standards. Distributor promptly, but in no case
later than the end of the next business day following receipt by
Distributor or an Associated Person, shall forward completed applications
to Liberty Life in accordance with Liberty Life's administrative
procedures. An appropriate principal of Distributor shall approve each such
application as to suitability before forwarding such application to Liberty
Life. Applications and payments shall be sent to Liberty Life at the
address shown on the application or such other address as Liberty Life may
specify from time to time. Checks, money orders or electronic transmissions
of funds in payment on any Contract shall be drawn to the order of "Liberty
Life Assurance Company of Boston".
e. Contracts issued on accepted applications shall be delivered to the
Contract owner according to procedures established by Liberty Life. If
Liberty Life forwards a Contract to Distributor for delivery, such Contract
shall be delivered to the Contract owner within four days of receipt.
f. Distributor agrees to comply with the established rules and regulations of
Liberty Life now in effect or which may be established hereafter.
g. Distributor agrees to carry out its sales and administrative activities and
obligations under this Agreement in continuous compliance with the federal
and state laws and regulations, including those governing securities and
insurance related activities or transactions, as applicable. Distributor
shall notify Liberty Life immediately in writing if Distributor fails to
comply with any applicable law or regulation.
h. The costs of printing the prospectuses, SAIs and sales material used in
connection with the solicitation of applications for the Contracts shall be
borne by Liberty Life. Liberty Life shall provide Distributor with a
reasonable supply of such materials. Liberty Life shall make available to
Distributor copies of all financial statements and other documents that
Distributor shall reasonably request for use in connection with the
distribution of the Contracts.
i. Distributor periodically shall furnish reports to Liberty Life as to the
sale of Contracts made pursuant to this Agreement.
7. BOOKS AND RECORDS
a. Distributor and Liberty Life shall each maintain and preserve, or cause to
be maintained and preserved such books and records concerning the offer and
sale of the Contracts as may be required by the SEC, the NASD and other
agencies having jurisdiction and that may be reasonably required to reflect
adequately the Contracts business conducted by each party. Each party shall
make such books and records reasonably available to the other party. The
parties shall promptly furnish each other with any reports and information
the other party may reasonably request for the purpose of meeting its
reporting and recordkeeping requirements under the insurance laws of any
state, under any applicable federal or state securities laws, rules or
regulations, or under the rules of the NASD.
b. Distributor and Liberty Life shall each submit to all regulators and
administrative bodies having jurisdiction over the sales of the Contracts,
present or future, any information, reports or other material that any such
body by reason of this Agreement may request or require pursuant to
applicable laws or regulations. In particular, without limiting the
foregoing, Liberty Life agrees that any books and records which it
maintains which are required to be maintained by Distributor under Rule
17a-3 or 17a-4 of the 1934 Act shall be subject to inspection by the SEC in
accordance with Section 17(a) of the 1934 Act.
c. Distributor and Liberty Life each agree and understand that all documents,
reports, records, books, files and other materials required under
applicable NASD regulations and federal and state securities laws relative
to the sale of Contracts shall be the property of Distributor, except that:
(a) any books and records maintained by
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Liberty Life that relate to sales compensation shall be the joint property
of Liberty Life and Distributor, and (b) all such documents, reports,
records, books, files and other materials that are also required by
applicable regulation or law to be maintained by Liberty Life shall be the
joint property of Distributor and Liberty Life. All other documents,
reports, records, books, files and other materials maintained relative to
this Agreement shall be the property of Liberty Life. Upon the termination
of this Agreement, all such material shall be returned to the applicable
party.
d. Subject to applicable SEC or NASD restrictions, Liberty Life, as agent for
Distributor, will send confirmations of Contract transactions to Contract
owners. Liberty Life will make such confirmations and records of
transactions available to Distributor upon request. Liberty Life also will
maintain Contract owner records on behalf of Distributor to the extent
permitted by applicable securities laws. Distributor and Liberty Life from
time to time during the term of this Agreement shall allocate among
themselves, subject to a right of further delegation, the administrative
responsibility for maintaining and preserving the books, records and
accounts kept in connection with the Contracts.
8. REPRESENTATIONS
a. Liberty Life represents and warrants to Distributor that:
(1) Liberty Life has filed a Registration Statement with the Commission for
each of the Contracts. Liberty Life has delivered to Distributor a copy of
each such Registration Statement. Liberty Life will deliver to Distributor
a copy of each amendment to any such Registration Statement promptly after
such amendment is filed with the SEC.
(2) The Registration Statements for the Contracts and any further
amendments or supplements thereto will, when they become effective, conform
in all material respects to the requirements of the 1933 Act and the 1940
Act, and the rules and regulations of the Commission under such Acts, and
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statement or omission
made in reliance upon and in conformity with information furnished in
writing to Liberty Life by Distributor expressly for use therein.
(3) Liberty Life is validly existing as a stock life insurance company in
good standing under the laws of the Commonwealth of Massachusetts, with
power to own its properties and conduct its business as described in the
Prospectus. Liberty Life has been duly qualified for the transaction of
business and is in good standing under the laws of each other jurisdiction
in which it owns or leases properties or conducts any business.
(4) The Contracts have been duly and validly authorized and when issued and
delivered with payment therefor as provided herein, will be duly and
validly issued and will conform to the description of such Contracts
contained in the Prospectuses relating thereto.
(5) The performance of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result in a violation
of any of the provisions of or default under any statute, indenture,
mortgage, deed of trust, note agreement or other agreement or instrument to
which Liberty Life is a party or by which Liberty Life is bound (including
Articles of Incorporation, By-Laws, or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over Liberty Life
or any of its properties).
(6) There are no material legal or governmental proceedings pending to
which Liberty Life or the Separate Accounts are a party or of which any
property of the Separate Accounts is the subject (other than as set forth
in the Prospectus relating to the Contracts), or litigation incident to the
kind of business conducted by Liberty Life which, if determined adversely
to Liberty Life would individually or in the aggregate have a material
adverse effect on the financial position, surplus or operations of Liberty
Life.
b. Distributor represents and warrants to Liberty Life that:
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(1) Distributor is a broker/dealer duly registered with the SEC pursuant to
the 1934 Act, is a member in good standing of the NASD, and is in
compliance with the securities laws in those states in which it conducts
business as a broker/dealer.
(2) The performance of this Agreement and the consummation of the
transactions herein contemplated will not result in a breach or violation
of any of the terms or provisions of or constitute a default under any
statute, indenture, mortgage, deed of trust, note agreement or other
agreement or instrument to which Distributor is a party or by which it is
bound (including the Articles of Incorporation or Bylaws of Distributor or
any order, rule or regulation of any court or governmental agency or body
having jurisdiction over either Distributor or its property).
(3) To the extent that any statements made in the Registration Statement or
any amendment or supplement thereto are made in reliance upon and in
conformity with written information furnished to Liberty Life by
Distributor expressly for use therein, such statements will, when they
become effective or are filed with the Commission, as the case may be,
conform in all material respects to the requirements of the 1933 Act and
the rules and regulations of the Commission thereunder, and will not
contain any untrue statement of material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading.
9. INDEPENDENT CONTRACTOR
Distributor shall at all times function as and be deemed to be an independent
contractor and not as an employee of Liberty Life. Distributor will be under no
obligation to effectuate any particular number or dollar volume of sales of
Contracts, except to the extent Distributor deems advisable.
10. COMPENSATION AND EXPENSES
a. Liberty Life shall compensate Distributor for its services under this
Agreement in accordance with the terms of Exhibit C hereto, as it may be
amended from time to time. Distributor shall be fully responsible for
compensating the Associated Persons (as defined in Paragraph 2.a) for their
sales of the Contracts. At Distributor's request, Liberty Life will pay all
or a portion of the compensation due hereunder directly to the relevant
Associated Person in satisfaction of Distributor's obligation to compensate
such Associated Person.
b. Distributor shall be fully responsible for compensating the Selling
Broker-Dealers for their sales of the Contracts as provided in the Selling
Agreements. Distributor shall not be obligated to pay such compensation
with respect to a Contract until Distributor has received its compensation
with respect to such Contract from Liberty Life. At Distributor's request,
Liberty Life will pay all or a portion of the compensation due hereunder
directly to the relevant Selling Broker-Dealer in satisfaction of
Distributor's obligation to compensate such Selling Broker-Dealer. If after
reasonable efforts Distributor is unable to recover a commission chargeback
from a Selling Broker-Dealer, Distributor shall not be liable to Liberty
Life for such chargeback and, in addition, Liberty Life shall compensate
Distributor for its expenses associated with such chargeback.
c. Unless otherwise agreed in writing by Liberty Life, neither Distributor nor
any agent of Liberty Life nor any Selling Broker-Dealer shall have an
interest in any surrender charges, deductions or other fees payable to
Liberty Life.
11. NOTIFICATION OF CUSTOMER COMPLAINTS OR REGULATORY MATTER
a. Each party will promptly notify the other of any customer complaint or
notice of any regulatory investigation or proceeding received by such party
or their respective affiliates relating to the Contracts or any or
threatened or filed arbitration action or civil litigation arising out of
the offer or sale of the Contracts.
b. The parties shall cooperate fully in investigating and responding to any
such complaint, regulatory investigation or proceeding, arbitration, or
civil litigation, and in any settlement or trial of any actions arising out
of the conduct of business under this Agreement.
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c. Any response by Distributor or Liberty Life to an individual customer
complaint will be sent to the other for approval at least five (5) business
days before it is sent to the customer, except that if a more prompt
response is required, the proposed response may be communicated by
telephone, facsimile or in person.
d. Distributor will include in each Selling Agreement a notification provision
comparable to this Paragraph 10 requiring the Selling Broker-Dealer (a) to
notify Distributor and Liberty Life promptly of any customer complaint or
notice of any regulatory investigation or proceeding received by the
Selling-Broker Dealer or its affiliates with respect to Distributor, any
Selling Broker-Dealer, or any agent or representative in connection with
any Contract and (b) to assist Liberty Life and Distributor in resolving
any complaint to the satisfaction of all parties.
e. Liberty Life shall promptly notify Distributor of:
(1) Any request by the SEC for any amendments or supplements to a
Contract's current prospectus or statement of additional information, other
than requests in the ordinary course of SEC review or registration
statements and amendments thereto prior to their effective date;
(2) Any request by the SEC for information that must be provided by
Distributor or any Selling Broker-Dealer, or any affiliated person of
Distributor or any Selling Broker-Dealer;
(3) The issuance by the SEC of any stop order with respect to a Contract's
Registration Statement or the initiation of any proceedings for that
purposes or for any other purpose relating to the registration and/or
offering of the Contracts; and
(4) Any event as a result of which the prospectuses or any sales literature
for a Contract would include any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein not
misleading.
12. INDEMNIFICATION
a. Distributor shall indemnify and hold harmless Liberty Life, its affiliates,
officers, directors, employees and agents against any and all loss, claim,
damage, liability or expense (including reasonable attorneys' fees), joint
or several, insofar as such loss, claim, damage, liability or expense
arises out of or is based upon (i) any breach of this Agreement, any
applicable law or regulation, or any applicable rule of any self-regulatory
organization, by Distributor and/or any of its Associated Persons; or (ii)
any claim by any Associated Person of Distributor for commissions, service
fees, expense allowances or other compensation or remuneration of any type.
This indemnification will be in addition to any liability which Distributor
may otherwise have. This indemnity agreement will be in addition to any
liability which Distributor may otherwise have.
b. Liberty Life shall indemnify and hold harmless Distributor and its
affiliates, officers, directors, employees and agents against any and all
loss, claim, damage, liability or expense (including reasonable attorneys'
fees), joint or several, insofar as such loss, claim, damage, liability or
expense arises out of or is based upon any breach of this Agreement, any
applicable law or regulation, or any applicable rule of any self-regulatory
organization, by Liberty Life. This indemnification will be in addition to
any liability which the Liberty Life may otherwise have.
13. TERM OF AGREEMENT
a. This Agreement shall terminate automatically upon its assignment.
b. This Agreement may be terminated by any party hereto on not less than 60
days' prior written notice to the other parties or by an agreement in
writing signed by all of the parties hereto.
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c. This Agreement shall terminate at the option of Liberty Life upon
institution of formal proceedings against Distributor by the NASD or the
SEC, or if Distributor or any of its Associated Persons:
(1) employs any device, scheme, artifice, statement or omission to defraud
any person; or
(2) violates the provisions of this Agreement.
d. Upon termination of this Agreement, all authorizations, rights, and
obligations shall cease except the obligations to settle accounts
hereunder, including the settlement of monies due in connection with
Contracts in effect at the time of termination or issued pursuant to
applications received by Liberty Life prior to termination, and the
agreements contained in Paragraphs 5, 7, 11, and 12.
14. MISCELLANEOUS
a. None of the parties hereto shall be liable to the other for any action
taken or omitted by it, or any of its officers, agents or employees, in
performing their respective responsibilities under this Agreement in good
faith and without negligence, willful misfeasance or reckless disregard of
such responsibilities.
b. Distributor will execute such papers and do such acts and things as shall
from time to time be reasonably requested by Liberty Life for the purpose
of (a) maintaining the registration of the interests under the Contracts
under the 1933 Act and the Separate Accounts under the 1940 Act, and (b)
qualifying and maintaining qualification of the Contracts for sale under
the applicable laws of any state.
15. NOTICE
All notices under this Agreement shall be given in writing and addressed as
follows:
if to Distributor, to:
Liberty Life Distributors LLC
000 Xxxxxxx Xxx
Xxxxx, Xxx Xxxxxxxxx 00000
Attention: President
if to Liberty Life or the Separate Accounts, to:
Liberty Life Assurance Company of Boston
000 Xxxxxxx Xxx
Xxxxx, Xxx Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Executive Vice President
copy to:
Liberty Life Assurance Company
of Boston
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. X'Xxxxxxx, Vice President
and Assistant General Counsel
or to such other address as such party may hereafter specify in writing.
Each such notice shall be either hand delivered or transmitted by certified
United States mail, return receipt requested, and shall be effective upon
delivery.
16. SEVERABILITY
Page 9 of 26
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby.
17. ENTIRE AGREEMENT AND AMENDMENTS
This Agreement constitutes the entire agreement between the parties hereto and
may not be modified except in a written instrument executed by all parties
hereto.
18. CONSTRUCTION
This Agreement shall be subject to the provisions of the 1934 Act and, to the
extent applicable, the 1940 Act and the rules, regulations and rulings
thereunder and of the NASD, from time to time in effect, including such
exemptions from the 1940 Act as the SEC may grant, and the terms hereof shall be
interpreted and construed in accordance therewith.
19. GOVERNING LAW
This Agreement shall be interpreted in accordance with the laws of the
Commonwealth of Massachusetts, except to the extent those laws are inconsistent
with the federal securities laws.
Page 10 of 26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officials hereunto duly authorized, as of the day and
year first above written.
LIBERTY LIFE DISTRIBUTORS LLC
By: /s/ Xxxx X Xxxxxx
LIBERTY LIFE ASSURANCE COMPANY OF BOSTON
By: /s/ Xxxx X Xxxxxxxx
LLAC VARIABLE ACCOUNT
By: LIBERTY LIFE ASSURANCE COMPANY OF BOSTON as depositor
By: /s/ Xxxx X Xxxxxxxx
60133v1
Page 11 of 26
EXHIBIT A
---------
Contracts
Contract Name Policy Form No.
Flexible Premium Variable Life Insurance Contract FPV- 98150
Modified Single Payment Variable Life Insurance Contract SPV- 9890
Last Survivor Death Benefit Agreement SPV- 9891
Included are State variations of these policy forms which will have the 2-digit
State Code following the Policy Form #.
Page 12 of 26
EXHIBIT B
---------
Separate Accounts
LLAC Variable Account
Page 13 of 26
EXHIBIT C
---------
Form of Selling Agreement (9 Pages)
================================================================================
BROKER-DEALER AND GENERAL AGENT
SELLING AGREEMENT
================================================================================
AGREEMENT, dated as of __________ __, 1998, by and among Liberty Life Assurance
Company of Boston ("Liberty Life"), Liberty Life Distributors LLC
("Distributor"), ("Broker-Dealer") and ______________________("General Agent").
WHEREAS, Liberty Life, through certain of its separate accounts, issues certain
insurance products and group and individual insurance contracts/policies and
certificates participating therein, some of which may be deemed securities under
the Securities Act of 1933 ("1933 Act"); and
WHEREAS, Distributor and Broker-Dealer are both broker-dealers registered with
the Securities and Exchange Commission ("SEC") under the Securities Exchange Act
of 1934, as amended ("1934 Act"), and members of the National Association of
Securities Dealers, Inc. ("NASD");
WHEREAS, Liberty Life, on behalf of certain of its separate accounts, has
appointed Distributor as the principal underwriter and distributor of the
variable life insurance and annuity contracts (the "Contracts") specified in
Exhibit C;
WHEREAS Broker-Dealer is a broker/dealer engaged in the sale of securities and
other investment products; and
WHEREAS General Agent is an insurance agency licensed to sell variable life
insurance, and variable annuity contracts; and
WHEREAS, if General Agent and Broker-Dealer are the same person, the duties,
responsibilities, and privileges of General Agent under this Agreement shall be
undertaken by Broker-Dealer; and
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and promises herein contained, the parties hereto agree as follows:
1. PURPOSE
Broker-Dealer and General Agent desire to enter into an agreement with Liberty
Life and Distributor so as to have General Agent's sub-agents who are also
registered representatives of Broker-Dealer (the "Agents") appointed as agents
of Liberty Life for the purpose of selling the Contracts.
2. APPOINTMENT AND AUTHORIZATION
Distributor hereby authorizes Broker-Dealer to solicit sales of the Contracts.
Liberty Life hereby appoints and authorizes General Agent to solicit sales of
the Contracts. Broker-Dealer and General Agent accept such appointment and
authorization, and each agrees to use its best efforts to find purchasers of the
Contracts acceptable to Liberty Life. This appointment and authorization is
non-exclusive. Neither Broker-Dealer nor General Agent shall possess or exercise
any authority on behalf of the Distributor or Liberty Life other than the
authority expressly conferred by this Agreement.
3. LICENSING AND APPOINTMENT OF AGENTS
a. Broker-Dealer and General Agent are specifically authorized to designate
Agents proposed to be appointed as agents of Liberty Life to solicit
applications for the Contracts, to deliver the Contracts, and to collect
the first premium thereon in conformance with applicable state laws and
Liberty Life' rules and procedures. Broker-
Page 14 of 26
Dealer and General Agent shall not propose an Agent for appointment unless
such Agent is an "associated person" of Broker-Dealer (as defined in
Section 3(a)(8) of the 1934 Act), duly registered as a representative of
Broker-Dealer and duly licensed as an insurance agent in the state(s) in
which it is proposed that such Agent engage in solicitation of sales of the
Contracts. Broker-Dealer and General Agent together shall be responsible
for such Agents' continuing compliance with applicable securities
registration requirements and state insurance agent licensing laws.
b. Broker-Dealer and General Agent shall assist Liberty Life and Distributor
in the appointment of Agents under applicable insurance laws to sell the
Contracts. Broker-Dealer and General Agent shall comply with Liberty Life's
requirements, as Liberty Life in its sole discretion may establish and
change from time to time, in submitting licensing or appointment
documentation for Agents. All such documentation shall be submitted by
Broker-Dealer or General Agent to Liberty Life or its designated agent
licensing administrator. A copy of Liberty Life's current General Letter of
Recommendation, to be used in connection with the appointment of Agents, is
attached hereto as Exhibit A.
c. Liberty Life agrees to pay the initial appointment fee required under
relevant state insurance laws to appoint Agents as agents of Liberty Life
for the sale of Contracts. General Agent will be responsible for paying all
other state insurance licensing fees with respect to the Agents, including
transfer fees and termination fees. Broker-Dealer shall be responsible for
all fees, including registration and examination fees, necessary to
maintain the Agents' continuing compliance with applicable securities
registration requirements.
d. Liberty Life reserves the right to refuse to appoint any such designated
Agent or, once appointed, to terminate or refuse to renew such Agent's
appointment.
4. SUPERVISION OF REPRESENTATIVES AND AGENTS
a. Broker-Dealer shall be responsible for training and supervision of all
Agents and other persons associated with Broker-Dealer who are involved
directly or indirectly in the offer or sale of the Contracts and all such
persons shall be subject to the control of Broker-Dealer with respect to
such person's activities in connection with the sale of Contracts. General
Agent shall be responsible for training and supervision of all Agents who
are involved directly or indirectly in the offer or sale of the Contracts
and for such Agents' compliance with applicable state insurance laws. LLD
and Liberty Life shall not have responsibility for the training and
supervision of any Agent. Broker-Dealer and General Agent each agree to
comply with Liberty Life's statement in support of the concepts in the
Principles and Code of Ethical Market Conduct of the Insurance Marketplace
Standards Association (the "IMSA Principles and Code"), as such statement
may be amended from time to time, and to engage in active and fair
competition as contemplated by the IMSA Principles and Code. A copy of
Liberty Life's current statement in support of the IMSA Principles and Code
is attached as Exhibit C.
b. Broker-Dealer is specifically charged with the responsibility of
supervising and reviewing its Agents' use of sales literature and
advertising and all other communications with the public in connection with
the Contracts. No sales solicitation, including the delivery of
supplemental sales literature or other such materials, shall occur, be
delivered to or used with a prospective purchaser unless accompanied or
preceded by the appropriate then current prospectus, the then current
prospectus for the underlying funds funding the Contract, and where
required by state insurance law, the then current statement of additional
information.
c. Broker-Dealer is specifically charged with the responsibility of
supervising its Agents' compliance with all applicable suitability
requirements under federal or state law or the regulations of the NASD.
Broker-Dealer is specifically charged with providing or arranging for
adequate training to ensure that Agents have thorough knowledge of each
Contract and the ability to make appropriate product presentations and
suitability determinations in compliance with applicable law.
Broker-Dealer, General Agent the Agents shall not recommend the purchase of
a Contract to a prospective purchaser unless they have reasonable grounds
to believe that such purchase is suitable for the prospective purchaser and
is in accordance with applicable regulations of any regulatory authority,
including the SEC and the NASD. While not limited to the following, a
determination of suitability shall be based on information concerning the
prospective purchaser's insurance and investment objectives, risk
tolerance, need for liquidity, and financial and insurance situation and
needs.
Page 15 of 26
d. Broker-Dealer shall execute any electronic or telephone orders only in
accordance with the current prospectus applicable to the Contracts and
agrees, that in consideration for the telephone transfer privileges,
Liberty Life will not be liable for any loss incurred as a result of acting
upon electronic or telephone instructions containing unauthorized,
incorrect or incomplete information received from Broker-Dealer or its
representatives.
e. Upon request by Liberty Life, Broker-Dealer and General Agent shall furnish
appropriate records or other documentation to evidence Broker-Dealer's and
General Agent's diligent supervision.
f. If an Agent performs any unauthorized transaction with respect to a
Contract, Broker-Dealer and General Agent shall bear sole responsibility,
shall notify Liberty Life, and shall act to terminate the sales activities
of such Agent relating to the Contracts.
g. If an Agent fails to meet Broker-Dealer's or General Agent's rules and
standards, Broker-Dealer or General Agent, as the case may be, shall notify
Liberty Life, and shall act to terminate the sales activities of such Agent
relating to the Contracts.
5. SALES PROMOTION MATERIAL AND ADVERTISING
a. During the term of this Agreement, Distributor will be responsible for
providing and approving promotional, sales and advertising material to be
used by Broker-Dealer and General Agent in connection with the offer and
sale of Contracts. Distributor will file such materials or will cause such
materials to be filed with the SEC and the NASD, and with any state
securities regulatory authorities, as required. Liberty Life and
Distributor reserve the right to require the recall of any material
approved by it at any time for any reason, and Broker-Dealer and General
Agent shall promptly comply with any such request and shall not use such
material thereafter.
b. Broker-Dealer, General Agent and Agents authorized to sell the Contracts
shall use only the effective current prospectuses, statements of additional
information ("SAIs") and other materials authorized by Liberty Life for use
in soliciting the sale of the Contracts. Distributor will provide the
Broker-Dealer and the General Agent, without charge, with as many copies of
the prospectuses for the Contract and the underlying investment funds as
may be reasonably requested. Upon receipt of updated documentation, the
Broker-Dealer and the General Agent will promptly discard or destroy all
copies of such material previously provided to them, except as needed to
maintain proper records. Liberty Life and Distributor reserve the right to
require the recall of any such material at any time for any reason, and
Broker-Dealer and General Agent shall promptly comply with any such request
and shall not use such material thereafter.
c. Broker-Dealer and General Agent are not authorized, and may not authorize
anyone else, to give any information or to make any representation
concerning Liberty Life, the Contracts, the Variable Account or the funding
media for the Contracts other than those contained in the current materials
authorized for use by Liberty Life. Broker-Dealer, General Agent, and their
Agents may not modify or represent that they are authorized to modify any
such prospectus, SAI or other materials authorized by Liberty Life for use
in soliciting the sale of the Contracts.
6. OBLIGATIONS OF BROKER-DEALER AND GENERAL AGENT
a. All solicitations for the Contracts will be made only by Agents who are
registered representatives of Broker-Dealer and duly licensed insurance
agents and appointed by Liberty Life. Continued solicitation for the
Contracts shall be contingent upon the continuing qualification of such
Agents by possession of the required licenses, appointments, and
registrations. Broker-Dealer and General Agent shall notify Distributor
immediately in writing if any Agent appointed by Liberty Life ceases to be
a registered representative of Broker-Dealer or ceases to be properly
licensed in any state. Solicitation may occur only in those states in which
Liberty Life is admitted to do business and in which the Contracts have
been approved for sale by the appropriate regulatory authority.
Page 16 of 26
b. All applications for Contracts will be made on application forms supplied
by Liberty Life. Broker-Dealer and General Agent shall review all
applications for completeness and correctness, as well as compliance with
applicable suitability standards, including those specified above.
Broker-Dealer will promptly, but in no case later than the end of the next
business day following receipt by Broker-Dealer or an Agent, forward
completed applications to Liberty Life in accordance with Liberty Life's
administrative procedures. An appropriate principal of Broker-Dealer shall
approve each such application as to suitability before forwarding such
application to Liberty Life. Such applications shall be accompanied by any
premium payment received with such applications, without deduction for any
compensation, unless there has been mutual arrangement for net wire
transmissions between Distributor, Liberty Life, and Broker-Dealer.
Applications shall be sent to Liberty Life at the address shown on the
application or such other address as Liberty Life may specify from time to
time. Checks or money orders for the payment of premiums shall be drawn to
the order of "Liberty Life Assurance Company of Boston". Neither
Broker-Dealer nor General Agent has authority to deposit or endorse checks
payable to Liberty Life without the prior written approval of Liberty Life.
Liberty Life has the right to reject any application for a Contract and
return any premium payment made in connection with the sale of the
Contracts.
d. Contracts issued on accepted applications shall be delivered to the
Contract Owner according to procedures established by Liberty Life. If
Liberty Life forwards a Contract to Broker-Dealer for delivery,
Broker-Dealer shall cause each such Contract to be delivered to the
Contract Owner within four days of receipt. Broker-Dealer shall be liable
to Liberty Life for any loss incurred by Liberty Life (including
consequential damages and regulatory penalties) as a result of any delay by
Broker-Dealer or a Representative in delivering a Contract.
e. Broker-Dealer shall promptly pay any and all commissions and other
compensation due to its registered representatives in connection with the
sale of the Contracts.
f. Broker-Dealer and General Agent agree to comply with the established rules
and regulations of Liberty Life now in effect or which may be established
hereafter. Broker-Dealer and General Agent shall be responsible to
Distributor and Liberty Life for their and the Agents' acts and omissions.
g. Broker-Dealer and General Agent each agree to carry out their respective
sales and administrative activities and obligations under this Agreement in
continuous compliance with federal and state laws and regulations,
including those governing securities and insurance-related activities or
transactions, as applicable. Broker-Dealer and General Agent shall notify
Distributor and Liberty Life immediately in writing if Broker-Dealer and/or
General Agent fail to comply with any of the laws and regulations
applicable to either of them.
7. INDEPENDENT CONTRACTOR
Broker-Dealer, General Agent, and the Agents are performing the acts covered by
this Agreement in the capacity of independent contractors and not as an employee
of Liberty Life or Distributor. Broker-Dealer and General Agent shall be free
and independent to exercise their own judgment as to the persons from whom
insurance will be solicited as well as the time, place and manner of such
solicitation.
8. REPRESENTATIONS
a. Liberty Life, Distributor, Broker-Dealer and General Agent each represents
to one another that it and the officers signing below have full power and
authority to enter into this Agreement, and that this Agreement has been
duly and validly executed by it and constitutes a legal, valid and binding
agreement.
b. Distributor represents to Broker-Dealer that Distributor is registered as a
broker-dealer with the SEC under the 1934 Act and under the state
securities laws of each jurisdiction in which such registration is required
for underwriting the Contracts, and that it is a member of the NASD.
c. Broker-Dealer represents to Distributor that Broker-Dealer is, and at all
times when performing its functions and fulfilling its obligations under
this Agreement will be, registered with the SEC as a broker-dealer under
the 1934 Act and under the state securities laws of each jurisdiction in
which such registration is required for the sale of
Page 17 of 26
the Contracts, and a member of the NASD. Broker-Dealer will notify
Distributor in writing if any such registration is terminated or suspended.
d. General Agent represents to Distributor and Liberty Life that General Agent
is, and at all times when performing its functions and fulfilling its
obligations under this Agreement, will be, a properly licensed insurance
agency in each jurisdiction in which such licensing is required for the
sale of the Contracts.
e. Liberty Life represents to Broker-Dealer that the Contracts, including any
variable account(s) supporting such Contracts, shall comply in all material
respects with the registration and other applicable requirements of the
1933 Act and the Investment Company Act of 1940, and the rules and
regulations thereunder, including the terms of any order of the SEC with
respect thereto.
f. Liberty Life represents to Broker-Dealer that the prospectuses included in
Liberty Life's Registration Statement for the Contracts, and in
post-effective amendments thereto, and any supplements thereto, as filed or
to be filed with the SEC, as of their respective effective dates, contain
or will contain in all material respects all statements and information
which are required to be contained therein by the 1933 Act and conform or
will conform in all material respects to the requirements thereof.
9. COMPENSATION
a. Broker-Dealer shall be paid compensation for the sale of Contracts as set
forth in the Contracts and Compensation Schedule attached as Exhibit C
hereto. Distributor may change such compensation prospectively as of a
specified date, provided such date is at least ten days after the date the
change is mailed to Broker-Dealer's last known address. Any such change
will apply only to Contracts issued pursuant to applications taken on or
after the effective date of the change. Distributor shall not be obligated
to pay such compensation with respect to a Contract until Distributor has
received its compensation with respect to such Contract from Liberty Life.
b. Compensation to the Agents for Contracts that they solicit and that are
issued by Liberty Life shall be governed by agreements between
Broker-Dealer and the Agents and payment thereof will be the
Broker-Dealer's exclusive responsibility. General Agent shall have no
interest in any compensation paid by Liberty Life to Distributor, now or
hereafter, in connection with the sale of any Contracts under this
Agreement.
c. Neither Broker-Dealer nor General Agent shall, directly or indirectly,
expend or contract for the expenditure of any funds of the Distributor or
Liberty Life. Broker-Dealer and General Agent shall each pay all expenses
incurred by each of them in the performance of this Agreement, unless
otherwise specifically provided for in this Agreement or Distributor shall
have agreed in advance in writing to share the cost of certain expenses.
10. NOTIFICATION OF CUSTOMER COMPLAINTS OR DISCIPLINARY PROCEEDINGS
a. Broker-Dealer and General Agent will promptly notify Distributor and
Liberty Life of any customer complaint or notice of any regulatory
investigation or proceeding received by Broker-Dealer, General Agent, or
their respective affiliates relating to the Distributor, Liberty Life, any
associated person of Distributor or Liberty Life, or the Contracts, or any
or threatened or filed arbitration action or civil litigation arising out
of solicitation of the Contracts.
b. Broker-Dealer and General Agent shall cooperate with Distributor and
Liberty Life in investigating and responding to any such complaint,
regulatory investigation or proceeding, arbitration, or civil litigation,
and in any settlement or trial of any actions arising out of the conduct of
business under this Agreement.
c. Any response by Broker-Dealer or General Agent to an individual customer
complaint will be sent to Liberty Life and Distributor for approval not
less than five (5) business days prior to it being sent to the customer,
except that if a more prompt response is required, the proposed response
may be communicated by telephone, facsimile or in person.
Page 18 of 26
11. INDEMNIFICATION
a. Broker-Dealer and General Agent, jointly and severally, shall indemnify and
hold harmless Liberty Life, Distributor, and their respective affiliates,
officers, directors, employees and agents against any and all loss, claim,
damage, liability or expense (including reasonable attorneys' fees), joint
or several, insofar as such loss, claim, damage, liability or expense
arises out of or is based upon any breach of this Agreement, any applicable
law or regulation, or any applicable rule of any self-regulatory
organization, by Broker-Dealer, General Agent, and/or any of the Agents.
This indemnification will be in addition to any liability which the
Broker-Dealer and General Agent may otherwise have.
b. Liberty Life and Distributor, jointly and severally, shall indemnify and
hold harmless Broker-Dealer, General Agent, and their respective
affiliates, officers, directors, employees and agents against any and all
loss, claim, damage, liability or expense (including reasonable attorneys'
fees), joint or several, insofar as such loss, claim, damage, liability or
expense arises out of or is based upon any breach of this Agreement, by
Liberty Life or the Distributor. This indemnification will be in addition
to any liability which Liberty Life and the Distributor may otherwise have.
12. ASSOCIATED INSURANCE AGENCY
Broker-Dealer and General Agent represent that they are in compliance with the
terms and conditions of no-action letters issued by the staff of the SEC with
respect to non-registration as a broker-dealer of an insurance agency associated
with a registered broker-dealer. Broker-Dealer and General Agent shall notify
Distributor immediately in writing if Broker-Dealer and/or such Agency fail to
comply with any such terms and conditions and shall take such measures as may be
necessary to comply with any such terms and conditions. If General Agent is the
same person as Broker-Dealer, this Paragraph 12 does not apply, and
Broker-Dealer shall undertake all the duties, responsibilities and privileges
under this Agreement.
13. FIDELITY BOND COVERAGE
Broker-Dealer represents that it and its directors, officers, employees, and
registered representatives are and shall be covered by a blanket fidelity bond,
issued by a reputable bonding company. This bond shall be maintained by
Broker-Dealer at Broker-Dealer's expense. Such bond shall be, at least, of the
form, type and amount required under the NASD Conduct Rules. Distributor may
require evidence, satisfactory to it, that such coverage is in force, and
Broker-Dealer shall give prompt written notice to Distributor of any
cancellation or change of coverage. Broker-Dealer assigns any proceeds received
from the fidelity bonding company to Liberty Life to the extent of its loss due
to activities covered by the bond, and to Distributor to the extent of its loss
due to activities covered by the bond. Failure to secure and maintain same shall
be grounds for immediate termination of this Agreement for cause.
14. CONFIDENTIALITY
Each party to this Agreement shall maintain the confidentiality of any client
list or any other proprietary information that it may acquire in the performance
of this Agreement and shall not use such information for any purpose unrelated
to the administration of the Contracts without the prior written consent of the
other parties.
15. TERMINATION
a. Any party may terminate this Agreement without cause upon thirty days
written notice to the other party at its last known business address.
b. This Agreement will terminate automatically if Broker-Dealer or General
Agent cease to have the requisite regulatory licenses.
c. This Agreement may be terminated by Liberty Life or Distributor for cause.
Termination for cause will become effective upon the mailing of a notice of
termination to Broker-Dealer's or General Agent's last known address, if
the reasons for the termination include conversion, fraud, embezzlement or
similar activity. Otherwise, a
Page 19 of 26
reasonable opportunity for cure will be provided, and the termination will
be effective at the end of the cure period unless the grounds for
termination have been corrected to Liberty Life's and Distributor's
satisfaction.
d. This Agreement may be terminated immediately for cause upon an event of
default. Such termination shall be deemed to occur as of the date
immediately preceding the event of default. An "event of default" shall
occur when (i) the first of Broker-Dealer or General Agent files for
bankruptcy, or financial or corporate reorganization under federal or state
insolvency law, resulting in an impairment of such person's ability to
perform the services contemplated herein; or (ii) applicable laws or
regulations prohibit Broker-Dealer or General Agent from continued
marketing of the Contracts.
e. Failure of Liberty Life and/or Distributor to terminate this Agreement upon
knowledge of a cause shall not constitute a waiver of the right to
terminate at a later time for such cause. If this Agreement is terminated
for cause with no opportunity to cure as described above, all rights to
compensation which might otherwise be payable under this Agreement shall
cease and Broker-Dealer's right, title and interest in and to such
commissions and compensation shall be forever barred. If the parties
litigate this provision of the Agreement, the unsuccessful litigant shall
pay to the successful litigant all costs and expenses, including attorneys'
fees and court costs, incurred by the successful litigant at trial and on
appeal.
f. No provision of this Agreement shall continue in force after any
termination, other than Paragraphs 5, 10, 11, 14, 16, and 18.
16. ASSIGNMENT
This Agreement, or any compensation due hereunder, may not be assigned by any
party except by mutual consent of all other parties.
17. AMENDMENTS
Except as stated in Paragraph 9.a., no amendment to this Agreement will be
effective unless it is in writing and signed by all the parties hereto.
18. BOOKS AND RECORDS
a. General Agent shall maintain such books and records concerning the
activities of the Agents as may be required by the appropriate insurance
regulatory agencies that have jurisdiction and that may be reasonably
required by Distributor to reflect adequately the Contracts business
processed through General Agent. Broker-Dealer represents that it maintains
and shall maintain appropriate books and records concerning the activities
of the Agents as are required by the SEC, the NASD and other agencies
having jurisdiction and that may be reasonably required by Distributor to
reflect adequately the Contracts business processed through Broker-Dealer.
General Agent and Broker-Dealer shall make such books and records available
to Distributor and/or Liberty Life at any reasonable time upon written
request by Distributor or Liberty Life.
b. The parties shall promptly furnish each other any reports and information
that another party may reasonably request for the purpose of meeting its
reporting and recordkeeping requirements under the insurance laws of any
state, under any applicable federal or state securities laws, rules or
regulations, or under the rules of the NASD.
19. NOTICE
a. In the event of sale, transfer or assignment or a controlling interest in
Broker-Dealer or General Agent, notice shall be provided in writing to
Distributor no less than thirty days prior to the closing date.
Page 20 of 26
b. All notices to Liberty Life and Distributor under this Agreement shall be
given in writing and addressed as follows:
Liberty Life Distributors LLC Liberty Life Assurance Company of Boston
000 Xxxxxxx Xxx 000 Xxxxxxxx Xxxxxx
Xxxxx, Xxx Xxxxxxxxx 00000 Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: President Attention: Xxxxxx X. Xxxxxxx, Executive Vice President
Copy to:
Liberty Life Assurance Company of Boston
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. X'Xxxxxxx, Vice President and Assistant General Counsel
All notices to Broker-Dealer and General Agent shall be mailed to their
respective address shown on the signature page or to such other person as
they may designate in writing. All notices shall be either hand delivered
or transmitted by certified United States mail, return receipt requested,
and shall be effective upon delivery.
20. SEVERABILITY
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby.
21. CONSTRUCTION
This Agreement shall be subject to the provisions of the 1934 Act and, to the
extent applicable, the 1940 Act and the rules, regulations and rulings
thereunder and of the NASD, from time to time in effect, including such
exemptions from the 1940 Act as the SEC may grant, and the terms hereof shall be
interpreted and construed in accordance therewith.
Page 21 of 26
22. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BROKER-DEALER MASTER GENERAL AGENT
____________________________ ______________________________
Name Name
____________________________ ______________________________
Xxxxxx Xxxxxxx Xxxxxx Xxxxxxx
____________________________ ______________________________
City, State & Zip City, State & Zip
By: ________________________ By: __________________________
Title: _____________________ Title: _______________________
LIBERTY LIFE ASSURANCE COMPANY LIBERTY LIFE DISTRIBUTORS LLC
OF BOSTON
By: ________________________ By: __________________________
Title: _____________________ By: __________________________
Page 22 of 26
EXHIBIT D
---------
General Letter of Recommendation
Distributor hereby certifies to Liberty Life that all the following requirements
will be fulfilled in conjunction with the submission by Distributor of
appointment papers for all applicants to become agents of Liberty Life
("Applicants"). Distributor will, upon request, forward proof of compliance with
same to Liberty Life in a timely manner.
1. We have on file a Form U-4 which was completed by each Applicant. We
have fulfilled all the necessary investigative requirements for the registration
of each Applicant as a registered representative, and each Applicant is
presently registered as an NASD registered representative. The above information
in our files indicates no fact or condition which would disqualify the Applicant
from receiving a license, and all the findings of all investigative information
is favorable.
2. We have made a thorough and diligent inquiry and investigation relative
to each Applicant's identity, residence, business reputation, and experience and
declare that each Applicant is personally known to us, has been examined by us,
is known to be of good moral character, has a good business reputation, is
reliable, is financially responsible and is worthy of appointment as a variable
contract agent of Liberty Life. This inquiry and background investigation has
included a credit and criminal check on each Applicant. Based upon our
investigation, we vouch for each Applicant and certify that each individual is
trustworthy, competent and qualified to act as an agent for Liberty Life and
hold himself out in good faith to the general public.
3. We certify that all educational requirements have been met for the
specific state in which each Applicant is requesting a license and that all such
persons have fulfilled the appropriate examination, education and training
requirements.
4. We hereby warrant that the Applicant is not applying for a license with
Liberty Life in order to place insurance chiefly or solely on his or her life or
property or on the lives, property or liability of relatives or associates.
5. We certify that each Applicant will receive close and adequate
supervision, and that we will make inspection when needed of any or all risks
written by these Applicants, to the end that the insurance interest of the
public will be properly protected.
6. We will not permit any Applicant to transact insurance as an agent until
duly licensed and appointed by Liberty Life. No Applicants have been given an
insurance contract or furnished supplies, nor have any Applicants been permitted
to write, solicit business or act as an agent in any capacity, and they will not
be so permitted until the certificate of authority or license applied for is
received.
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EXHIBIT E
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Liberty Life's Statement in Support of the
Principles and Code of Ethical Market Conduct
of the Insurance Marketplace Standards Association
Each life insurance company subscribing to these principles commits itself
in all matters affecting the sale of individually sold life and annuity
products:
1. To conduct business according to high standards of honesty and fairness
and to render that service to its customers which, in the same
circumstances, it would apply to or demand of itself.
2. To provide competent and customer-focused sales and service.
3. To engage in active and fair competition.
4. To provide advertising and sales materials that are clear as to purpose
and honest and fair as to content.
5. To provide for fair and expeditious handling of customer complaints and
disputes.
6. To maintain a system of supervision and review that is reasonably
designed to achieve compliance with these Principles of Ethical Market
Conduct.
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EXHIBIT F
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Compensation
This schedule is attached to and made a part of the most current executed
Distribution Agreement (the "Agreement") between and among Liberty Life
Assurance Company of Boston ("Liberty Life"), for itself and on behalf of its
LLC Variable Account, and Liberty Life Distributors LLC ("Distributor").
The compensation for the variable life insurance and annuity products (the
"Contracts") referred to in the Agreement is as follows:
FOR SINGLE PAYMENT VARIABLE UNIVERSAL LIFE INSURANCE CONTRACTS, written on Form
SPV-9890 and SPV-9891, and any variations of these forms as may be required by
insurance regulatory authorities:
1. New Business Commission and Expense Reimbursement Allocation:
a. On Contracts originated by Distributor, Distributor shall receive
commissions equal to 7% of the initial Payment .
b. On Contracts originated by a Selling Broker-Dealer, Distributor shall
receive commissions equal in amount to the commissions payable to the
Selling-Broker-Dealer of record pursuant to the Selling Agreement
with such Selling Broker-Dealer. Such commissions shall not exceed 7%
of the initial Payment on each such Contract. Distributor may
negotiate commissions with a lower commission rate on initial
Payments and an expense reimbursement allowance rate, based on the
unloaned Account Value of each Contract for which such Selling
Broker-Dealer is the broker-of-record. However, the annual expense
reimbursement rate shall not exceed 0.15% of unloaned Account Value
for each 1% by which the commission rate on initial Payments is less
than 7%.
However, no compensation shall be paid on Payment received from a Contract owner
when an existing life insurance or annuity contract issued by Liberty Life on
the same life has lapsed, been terminated or surrendered, been continued on a
nonforfeiture option, or been changed, modified or converted in any manner
within six months of the date of the application for the new Contract or twelve
months after the issue date of the new Contract, except to the extent that the
first year's annualized premium for the new Contract exceeds the first year's
annualized premium from the existing contract.
2. Return of Compensation in Specified Circumstances
The following rules regarding "chargebacks" shall apply in connection with
the offer and sale of Contracts under this Agreement:
a. In the event that:
i. a Payment is returned because Liberty Life rejects the
application for the Contract under which such Payment has been paid or
because the Payment, or the related application, is not timely received by
Liberty Life as required herein, or a refund is made because a purchaser
exercises his or her free look right under a Contract; or
ii. within the first twelve months after the date on which a
Contract was issued, the purchaser surrenders the Contract, or otherwise
rescinds the Contract, or the Contract lapses;
then, in any such event, Distributor shall not be entitled to any compensation
with respect to such Contract, and any and all compensation previously received
by Distributor based on all Payments paid into the Contract shall be repaid to
Liberty Life, and Distributor shall pay any loss incurred as a result of a
Payment being returned which was not timely received or for which an application
was not timely received by Liberty Life.
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b. If and to the extent that any loans or partial withdrawals are made
with respect to any Contract during the first year after issuance, the
compensation due to Distributor shall be recomputed as though the amount of the
loan or partial withdrawal had never been paid as a Payment.
c. If and to the extent that a Contract is exchanged for another
contract during the first policy year of the Contract, the compensation due to
Distributor shall be recomputed as though the Contract had never been issued.
Liberty Life shall have the right to collect from Distributor or to withhold
from future payments of compensation due to Distributor under this Agreement an
amount equal to any reduction in compensation effected by this Exhibit F, to the
extent permitted by applicable law; provided, however, that: (1) this option on
the part of Liberty Life shall not prevent Liberty Life from pursuing any other
means or remedies available to it to recover such compensation; and (2) if after
reasonable efforts Distributor is unable to recover a commission chargeback from
a Selling Broker-Dealer, Distributor shall not be liable to Liberty Life for
such chargeback and, in addition, Liberty Life shall compensate Distributor for
its expenses associated with such chargeback. Liberty Life will notify
Distributor promptly of any premium refund or commission chargeback. For
purposes of this Exhibit F, the payment of a death benefit pursuant to the terms
of a Contract shall not be deemed a surrender or rescission by a purchaser.
60133.1
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