EXHIBIT 3(a)
DISTRIBUTION AGREEMENT
AGREEMENT dated December 27, 1988, by and between Golden American Life
Insurance Company, ("Golden American") a Minnesota corporation, on its own
behalf and on behalf of the Western Capital Specialty Managers Separate
Account B ("Account") and Directed Services, Inc., ("DSI"), a New York
corporation wholly owned by Golden Financial Group ("GFG"), a Delaware
corporation.
WHEREAS, Golden American and GFG entered into an agreement effective
____________________, 1988 (the "Golden American-GFG Agreement"), pursuant to
which Golden American may market Deferred Variable Annuity and Variable
Annuity Certain Contracts ("Annuity Contracts") designed by GFG; and
WHEREAS, the Account is a separate account established and maintained by
Golden American pursuant to the laws of the State of Minnesota for variable
annuity contracts issued by Golden American under which income, gains, and
losses, whether or not realized, from assets allocated to such Account, are
credited to or charged against such Account without regard to other income,
gains or losses of Golden American; and
WHEREAS, Golden American proposes to issue and sell Annuity Contract
through the Account to suitable purchasers; and
WHEREAS, DSI is duly registered as a broker-dealer under the Securities
Exchange Act of 1934 ("1934 Act") and is a member of the National Association
of Securities Dealers, Inc. ("NASD"); and
WHEREAS, Golden American and DSI desire to enter into an agreement
pursuant to which DSI will act as a principal underwriter for the sale of the
Annuity Contracts and may distribute the Annuity Contracts through one or more
organizations as set forth in Section 2. below.
NOW, THEREFORE, GOLDEN AMERICAN AND DSI HEREBY AGREE AS FOLLOWS:
1. TERM.
This Agreement shall remain in force until it is terminated in accordance
with the provisions of paragraph 13.
2. PRINCIPAL UNDERWRITER.
Golden American hereby appoints DSI and DSI accepts such appointment,
during the term of this Agreement, subject to any registration
requirements of The Securities Act of 1933 ("1933 Act"), The Investment
Company Act of 1940 ("1940 Act"), and the provisions of the 1934 Act, to
be a distributor and principal underwriter of the Annuity Contracts
issued though the Account. DSI shall offer the Annuity Contracts for
sale and distribution at premium rates to be set by Golden American and
GFG. Annuity Contracts may be sold only by persons who are duly licensed
annuity agents appointed by Golden American and NASD registered
representatives as set forth in Section 3 below. Golden American hereby
appoints DSI as its agent for the sale of Annuity Contracts in such
jurisdictions as Golden American is properly licensed to sell Annuity
Contracts.
3. SALE AGREEMENTS.
DSI is hereby authorized to enter into separate written agreements,
("Sales Agreements"), on such terms and conditions as DSI may determine
not to be inconsistent
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with this Agreement, with broker/dealers which
agree to participate in the distribution of and to use their best efforts
to solicit applications for Annuity Contracts. Such broker/dealers and
their agents or representatives soliciting applications for Annuity
Contracts shall be duly and appropriately licensed, registered or
otherwise qualified for the sale of Annuity Contracts under the insurance
laws and any applicable securities laws of each state or other
jurisdiction in which the Annuity Contracts may be lawfully sold and in
which Golden American is licensed to sell Annuity Contracts. Each such
broker/dealer shall be both registered as a broker-dealer under the 1934
Act and a member of the NASD, or if not so registered or not such a
member, then the agents and representatives of such organization
soliciting applications for Annuity Contracts shall be agents and
registered representatives of a registered broker/dealer and NASD member
which is the parent or other affiliate of such organization and which
maintains full responsibility for the training, supervision, and control
of the agents and representatives selling Annuity Contracts.
DSI shall have the responsibility for the supervision of all such
broker/dealers to the extent required by law and shall assume any legal
responsibilities of Golden American for the acts, commissions or
defalcations of any such broker/dealers. Applications materials for
Annuity Contracts solicited by such broker/dealers through their agents
or representatives shall be forwarded to DSI. All payments for Annuity
Contracts shall be remitted promptly by such broker/dealers directly to
Golden American.
If held at any time by DSI or a broker/dealer, such payments shall be
held in a fiduciary capacity as agent for Golden American and shall be
remitted promptly to Golden American. All such payments, whether by
check, money order, or wire order, shall be the property of Golden
American. Anything in this Distribution Agreement to the contrary
notwithstanding, Golden American shall retain the rights to control the
sale of Annuity Contracts and to appoint and discharge annuity agents for
the sale of Annuity Contracts. DSI shall be held to the exercise of
reasonable care in carrying out the provisions of this Distribution
Agreement.
4. ANNUITY AGENTS.
DSI is authorized to appoint the broker/dealer described in paragraph 3.
above as agents of Golden American for the sale of Annuity Contracts.
Golden American will undertake to appoint such agents authorized to
represent Golden American in the appropriate states or jurisdictions;
provided that Golden American reserves the right to refuse to appoint any
proposed agent, or once appointed to terminate the same without notice.
5. SUITABILITY.
Golden American wishes to ensure that the Annuity Contracts distributed
by DSI will be issued to purchasers for whom the Annuity Contracts shall
be suitable. DSI shall take reasonable steps to ensure that the various
agents appointed by it to sell Annuity Contracts shall not make
recommendations to an applicant to purchase Annuity Contracts in the
absence of reasonable grounds to believe that the purchase of Annuity
Contracts is suitable for such applicant. While not limited to the
following, a determination of suitability shall be based on information
furnished to an agent after reasonable inquiry concerning the applicant's
insurance and investment objectives and financial situation and needs.
6. SALES MATERIALS.
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The responsibility of the parties hereto for consulting with respect to
the design and the drafting and legal review and filing of sales
materials, and for the preparation of sales proposals related to the sale
of Annuity Contracts shall be as the parties hereto agree in writing.
DSI shall ensure, in its Sales Agreements, that organizations appointed
by it, and registered representatives of such organizations, shall not
use, develop or distribute any sales materials which have not been
approved by GFG and Golden American.
7. REPORTS.
DSI shall have the responsibility for, with respect to agents appointed
by it, maintaining the records of agents licensed, registered and
otherwise qualified to sell Annuity Contracts, and for furnishing
periodic reports to Golden American as to the sale of Annuity Contracts
made pursuant to this Agreement.
8. RECORDS.
DSI shall maintain and preserve for the periods prescribed by law or
other agreement, such accounts, books, and other documents as are
required of it by applicable laws and regulations. The books, accounts
and records of Golden American, the Account and DSI as to all
transactions hereunder shall be maintained so as to clearly and
accurately disclose the nature and details of the transactions, including
such accounting information as necessary to support the reasonableness of
the amounts to be paid by Golden American hereunder.
9. COMPENSATION.
Golden American shall pay DSI the compensation due it as set forth in the
attached Exhibit, as such Exhibit may from time to time be amended.
10. INDEPENDENT CONTRACTOR.
DSI shall act as an independent contractor and nothing herein contained
shall constitute DSI or its agents or employees as employees of Golden
American in connection with the sale of Annuity Contracts.
11. INVESTIGATION AND PROCEEDINGS.
(a) DSI and Golden American agree to cooperate fully in insurance
regulatory investigations or proceedings or judicial proceedings
arising in connection with the offering, sale or distribution of
Annuity Contracts distributed under this Agreement. DSI and Golden
American further agree to cooperate fully in any securities
regulatory investigation or proceeding or judicial proceeding with
respect to Golden American, DSI, their affiliates and their agents
or representatives to the extent that such investigation or
proceedings is in connection with the Annuity Contracts offered,
sold or distributed under this Agreement. Without limiting the
forgoing:
(i) DSI will be notified promptly of any customer
complaint or notice of any regulatory investigation or
proceeding or judicial proceeding received by Golden
American with respect to DSI or any agent or representative
or which may affect Golden American's issuance of Annuity
Contracts marketed under this Agreement.
(ii) DSI will promptly notify Golden American of any
customer complaint or
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notice of any regulatory investigation
or proceeding received by DSI or its affiliates with respect
to DSI or any agent or representative in connection with any
Annuity Contracts distributed under this Agreement or any
activity in connection with Annuity Contracts.
(b) In the case of a substantive customer complaint, DSI and Golden
American will cooperate in investigating such complaint and any
response to such complaint will be sent to the other party to the
Agreement for approval not less than five business days prior to its
being sent to the customer or regulatory authority, except that if a
more prompt response is required, the proposed response shall be
communicated by telephone or telegraph.
12. INDEMNIFICATION.
(a) Golden American agrees to indemnify and hold harmless DSI and
its affiliates and each officer and director thereof against any
losses, claims, damages or liabilities, joint or several, to which
DSI or its affiliates or such officer or director may become
subject, under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of a material fact, required to be stated therein or
necessary to make the statements therein not misleading, contained
(i) in any prospectus, or any amendment thereof, or
(ii) in any blue-sky application or other document
executed by Golden American specifically for the purpose of
qualifying Annuity Contracts for sale under the securities
laws of any jurisdiction.
Golden American will reimburse DSI and each officer or director,
for any legal or other expenses reasonably incurred by DSI or such
officer or director in connection with investigating or defending
any such loss, claim, damage, liability or action; provided
that Golden American will not be liable in any such case to the
extent that such loss, claim, damage or liability arises out of, or
is based upon, an untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in conformity
with information (including, without limitation, negative responses
to inquiries) furnished to Golden American by or on behalf of DSI
specifically for use in the preparation of any prospectus or ant
amendment thereof or any such blue-sky application or any amendment
thereof or supplement thereto.
(b) DSI agrees to indemnify and hold harmless Golden American and
its directors, each of its officers who has signed the registration
statement and each person, if any, who controls Golden American
within the meaning of the 1933 Act or the 1934 Act, against any
losses, claims, damages or liabilities to which Golden American and
any such director or officer or controlling person may become
subject, under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon:
(i) Any untrue statement or alleged untrue statement
of a material fact or omission or alleged omission to state
a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading,
contained (a) in any prospectus or any amendments thereof,
or, (b) in
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any blue-sky application, in each case to the
extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with information
(including without limitation, negative responses to
inquiries) furnished to Golden American by DSI specifically
for use in the preparation of any prospectus or any
amendments thereof or any such blue-sky application or any
such amendment thereof or supplement thereto; or
(ii) Any unauthorized use of sales materials or any
verbal or written misrepresentations or any unlawful sales
practices concerning Annuity Contracts by DSI; or
(iii) Claims by agents or representatives or employees of DSI for
commissions, service fees, expense allowances or other
compensation or remuneration of any type.
DSI will reimburse Golden American and any
director or officer or controlling person for any legal or
other expenses reasonably incurred by Golden American, such
director or controlling person in connection with
investigating or defending any such loss, claim, damage,
liability or action. This indemnity agreement will be in
addition to any liability which DSI may otherwise have.
(c) Promptly after receipt by a party entitled to indemnification
("indemnified party") under this paragraph 12 of notice of the
commencement of any action, if a claim in respect thereof is to be
made against any person obligated to provide indemnification
under this paragraph 12 ("indemnifying party"), such indemnified
party will notify the indemnifying party in writing of the
commencement thereof, but the omission so to notify the indemnifying
party will not relieve it from any liability under this paragraph
12, except to the extent that the omission results in a failure of
actual notice to the indemnifying party and such indemnifying party
is damaged solely as a result of the failure to give such notice.
In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate therein, and
to the extent that it may wish, to assume the defense thereof, with
separate counsel satisfactory to the indemnified party. Such
participation shall not relieve such indemnifying party of the
obligation to reimburse the indemnified party for reasonable legal
and other expenses incurred by such indemnified party in defending
himself, except for such expenses incurred after the indemnifying
party has deposited funds sufficient to the effect the settlement,
with prejudice, of the claim in respect of which indemnity is
sought. Any such indemnifying party shall not be liable to any such
indemnified party on account of any settlement of any claim or
action effected without the consent of such indemnifying party.
The indemnity agreements contained in this paragraph 12 shall
remain operative and in full force and effect, regardless of:
(i) any investigation made by or on behalf of DSI or
any officer or director thereof or by or on behalf of Golden
American;
(ii) delivery of any Annuity Contracts and payments
therefore; and
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(iii) any termination of this Agreement.
A successor by law of DSI or any of the parties to this
Agreement, as the case may be, shall be entitled to the benefits of
the indemnity agreement contained in this paragraph 12.
13. TERMINATION.
a. This Agreement may be terminated at any time by mutual consent
of the parties.
b. Either party may terminate of the other materially breaches any
of the terms of this Agreement and fails to cure the breach within
sixty days of notification by the other party of such breach.
c. This Agreement shall terminate automatically upon the
termination of the Golden American-GFG Agreement.
d. Upon termination of this Agreement all authorizations, rights
and obligations shall cease except;
(i) the obligation to settle accounts hereunder,
including commissions for Annuity Contracts in effect at the
time of termination;
(ii) the agreements contained in paragraph 11 hereof; and
(iii) the indemnity set for in paragraph 12 hereof.
14. REGULATION.
This Agreement shall be subject to the provisions of the 1940 Act and the
1934 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 thereof shall be interpreted
and construed in accordance therewith.
DSI shall submit to all regulatory and administrative bodies having
jurisdiction over the operations of Golden American or the Account,
present or future, any information, reports or other material which any
such body by reason of this Agreement may request or require pursuant to
applicable laws or regulations.
15. 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.
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16. GENERAL.
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of New York.
A. Force Majeure
Either party may be excused for delay or failure to perform under this
Agreement if such delay or failure is due to the direct or indirect
result of acts of God or government, war or national emergency, or for
any cause beyond the reasonable control of either party.
B. Entire Agreement
This Agreement and any attachments hereto and the material incorporated
herein by reference set forth the entire agreement between the parties,
and supercede all prior representations, agreements and understandings,
written or oral. Changes in the Agreement may be made only in a writing
signed by both the parties hereto.
C. Notices
All notices or other communications under this Agreement shall be in
writing and, unless otherwise specifically provided for herein, shall be
deemed given when addressed
(a) if to Golden American:
Xx. Xxxx X. Xxxxxxxx
Golden American Life Insurance Company
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
(b) if to DSI:
Xx. Xxxxx X. Xxxxxx
Directed Services, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
D. Successors, Assigns
This Agreement shall be binding upon and shall insure to the benefit of
the parties and their respective successors and assigns. Neither this
Agreement nor any right hereunder may be assigned without the written
consent of the other parties.
E. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
F. Severability
If any term or provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of terms
and provisions of this
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Agreement shall remain in full force and effect
and shall not be affected or impaired thereby.
G. Counterparts
This Agreement may be executed in one or more counterparts, each of which
shall constitute an original and all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
Attest: GOLDEN AMERICAN LIFE INSURANCE COMPANY
/s/Xxxxxxx X. Xxxxxxxxxxx /s/Xxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxxxxx Xxxx X. Xxxxxxxx
Secretary President
Attest: DIRECTED SERVICES, INC.
/s/Xxxxxxx X. Xxxxxxxxxxx /s/Xxxxx X. Xxxxxx
------------------------- ----------------------------
Xxxxxxx X. Xxxxxxxxxxx Xxxxx X. Xxxxxx
Secretary President
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