WHOLESALING AGREEMENT
AGREEMENT, effective as of ____________________, 1998, by and between
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY, a Delaware insurance
company ("AFLIAC"), FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY, a
Massachusetts insurance company ("FAFLIC" and, together with AFLIAC,
collectively, the "Companies"), ALLMERICA INVESTMENTS, INC., a Massachusetts
corporation (the "Underwriter") and DELAWARE DISTRIBUTORS, L.P., a Delaware
limited partnership (the "Wholesaler").
WITNESSETH:
WHEREAS, the Companies have registered or propose to register with the
Securities and Exchange Commission interests in certain variable life
insurance contracts under the Securities Act of 1933 and propose to issue and
sell such contracts through the Underwriter acting as the principal
underwriter for such contracts; and
WHEREAS, the Companies, the Underwriter and the Wholesaler desire to
establish an arrangement whereby the Wholesaler will act as the wholesaler
for such variable life insurance contracts and, as such, will recruit
business firms to distribute such contracts;
NOW, THEREFORE, in consideration of their mutual promises, the Companies, the
Underwriter and the Wholesaler hereby agree as follows:
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1. DEFINITIONS
a. ACCOUNT - Each and any separate account established by AFLIAC or
FAFLIC and listed on Schedule 2 to this Agreement, as amended from
time to time. The phrase "Account supporting the Contracts" or
"Account supporting a class of Contracts" shall mean the separate
account identified in such Contracts as the separate account to which
premiums paid under such Contracts are allocated and as to which
income, gains and losses, whether or not realized, from assets
allocated to such separate account, are, in accordance with such
Contracts, credited to or charged against such separate account
without regard to other income, gains, or losses of the Companies or
any other separate account established by the Companies.
b. ASSOCIATED PERSON - This term as used in this Agreement shall have
the meaning assigned to it in the 1934 Act.
c. BROKER-DEALER - An entity registered as a broker-dealer and
licensed as a life insurance agent or affiliated with an entity so
licensed, and recruited by the Wholesaler and subsequently
authorized by AFLIAC and/or FAFLIC and the Underwriter to
distribute the Contracts pursuant to a sales agreement with the
Companies and/or the Underwriter entered into in accordance with
Section 3 of this Agreement.
d. CONTRACTS - The variable life insurance contracts utilizing the
Delaware Group Premium Fund ("DGPF") Portfolios listed on Schedule 3
hereto, described more specifically on Schedule 3 to this
Agreement, as amended from time to time. The term "Contracts"
shall include any riders to such contracts and any other contracts
offered in connection therewith or any contracts for which such
Contracts may be exchanged or converted. The phrase "a class of
Contracts" shall mean those variable life insurance contracts
issued on the same policy form or forms and covered by the same
Registration Statement, as shown on Schedule 3 to this Agreement.
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e. FUND - The term "Fund" shall mean the Delaware Group Premium Fund,
Inc.
f. FUND PROSPECTUS - At any time while this Agreement is in effect,
the prospectus and statement of additional information for the
Fund most recently filed with the SEC pursuant to Rule 497 under
the 1933 Act. (For purposes of Section 11 of this Agreement,
however, the term "Fund Prospectus" means any document that is or
at any time was a Fund Prospectus within the meaning of this
Section 1.g.).
g. FUND REGISTRATION STATEMENT - At any time while this Agreement is
in effect, the currently effective registration statement filed
with the SEC under the 1933 Act, or currently effective
post-effective amendment thereto, for shares of the Fund. (For
purposes of Section 11 of this Agreement, however, the term "Fund
Registration Statement" means any document that is or at any time
was a Fund Registration Statement within the meaning of this
Section 1.f.).
h. NASD - The National Association of Securities Dealers, Inc.
I. 1933 ACT - The Securities Act of 1933, as amended.
j. 1934 ACT - The Securities Exchange Act of 1934, as amended.
k. 1940 ACT - The Investment Company Act of 1940, as amended.
l. PARTICIPATION AGREEMENT - The agreement among AFLIAC or FAFLIC, as
appropriate, the Wholesaler and the Fund relating to the investment
of assets of the separate accounts of the Companies in the Fund.
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m. PROCEDURES - The administrative procedures prepared and distributed
by the Companies, as such may be amended or supplemented from time
to time, relating to the solicitation, sale and delivery of the
Contracts.
n. PROSPECTUS - The prospectus and any statement of additional
information included within a Registration Statement, except that,
if the prospectus and statement of additional information most
recently filed with the SEC pursuant to Rule 497 under the 1933 Act
after the date on which the Registration Statement became effective
differs from the prospectus and statement of additional information
included within the Registration Statement at the time it became
effective, the term "Prospectus" shall refer to the most recently
filed prospectus and statement of additional information filed
under Rule 497 under the 1933 Act from and after the date on which
they each shall have been filed. (For purposes of Sections 5.a.
and 11 of this Agreement, however, the term "any Prospectus" means
any document that is or at any time was a Prospectus within the
meaning of this Section 1.d.).
o. REGISTRATION STATEMENT - At any time while this Agreement is in
effect, the currently effective registration statement filed with
the SEC under the 1933 Act, or currently effective post-effective
amendment thereto, relating to a class of Contracts, including
financial statements included in, and all exhibits to, such
registration statement or post-effective amendment. (For purposes
of Sections 5.a. and 11 of this Agreement, however, the term
"Registration Statement" means any document that is or at any time
was a Registration Statement within the meaning of this
Section 1.c.).
p. REGULATIONS - The rules and regulations promulgated by the SEC under
the 1933 Act, the 1934 Act and the 1940 Act as in effect at the
time this Agreement is executed or thereafter promulgated, and
as they may be amended from time to time.
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q. REPRESENTATIVE - An Associated Person of the Wholesaler or a
Broker-Dealer registered with the NASD as a registered representative
or principal of the Wholesaler or Broker-Dealer, as the case may
be.
r. SEC - The Securities and Exchange Commission.
s. STATE - Any state or commonwealth of the United States, the
District of Columbia or any other territory of the United States.
PROVIDED, HOWEVER, that: (i) AFLIAC Contracts shall be marketed
and offered for sale in all States except New York and Hawaii and
(ii) FAFLIC Contracts shall be marketed and offered for sale only
in New York and Hawaii.
t. TERRITORY - The fifty states of the United States, the District of
Columbia, and all other territories of the United States.
2. APPOINTMENT AND WHOLESALING RIGHTS
a. The Companies hereby authorize the Wholesaler to represent the
Companies in the wholesaling activities contemplated by this
Agreement. Where required by relevant state insurance law, the
Companies hereby appoint the Wholesaler as an agent under such
state insurance laws to represent the Companies, or either of them,
as appropriate, in the wholesaling activities contemplated by this
Agreement. In those states in which the Wholesaler is not licensed
as an insurance agent and the relevant state insurance law requires
that the Wholesaler be licensed as an insurance agent, AFLIAC
and/or FAFLIC, as appropriate, hereby appoints the appropriate
entity or individual ("Wholesaler Agency Affiliate") affiliated
with the Wholesaler (as set forth on Schedule 1 to this Agreement,
as such Schedule may be amended from time to time by the Wholesaler
to reflect changes in the licensing status, if any, as required by
relevant state insurance laws) as its agent under the insurance
laws to engage in such wholesaling activities. The Underwriter
hereby authorizes the Wholesaler under applicable securities laws
to engage in the
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activities contemplated in this Agreement relating to the wholesaling
of the Contracts for which the Underwriter acts or may act as
principal underwriter.
In jurisdictions where neither the Wholesaler nor any Wholesaler
Agency Affiliate is licensed as contemplated by the first
paragraph of this Section 2.a., when requested in writing by the
Wholesaler, AFLIAC or FAFLIC, as appropriate, will perform such
wholesaling activities related to the Contracts contemplated by
this Agreement as are mutually agreed upon by the Companies and the
Wholesaler. Any such wholesaling activities will be performed as
agent and for the benefit of the Wholesaler, until such time as the
Wholesaler notifies the Companies and the Underwriter that the
Wholesaler or its Wholesaler Agency Affiliate is so licensed. The
Companies shall be compensated by the Wholesaler for their
performance of such wholesaling activities on such basis as is
mutually agreed upon by the Companies and the Wholesaler.
b. The Wholesaler (both on its own behalf and on behalf of Wholesaler
Agency Affiliates) undertakes to use its best efforts to recruit
Broker-Dealers in accordance with Section 3 of this Agreement,
consistent with market conditions and in compliance with its
responsibilities under the federal securities laws and NASD rules
and regulations. The obligations of the Wholesaler and Wholesaler
Agency Affiliates hereunder are further subject to the accuracy of
the representations and warranties of the Companies and the
Underwriter contained in this Agreement and to the performance by
the Companies of their obligations hereunder.
c. On and after the effective date hereof, the appointment and
authorization of the Wholesaler and Wholesaler Agency Affiliates to
engage in wholesaling activities pursuant to this Agreement is
exclusive as to the Contracts listed on Schedule 3, as amended from
time to time in accordance with Section 2.e. of this Agreement.
Neither the Companies nor the Underwriter shall authorize any other
person (as principal underwriter or otherwise) to engage in
wholesaling or distribution activities with respect to the Contracts
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or to recruit business firms to engage in wholesaling or
distribution activities with respect to the Contracts (other than
business firms recommended by the Wholesaler pursuant to Section 3
of this Agreement) without the Wholesaler's prior written consent,
nor shall the Companies or the Underwriter, without the
Wholesaler's prior written consent, separately engage in
wholesaling or distribution activities relating to the Contracts.
Notwithstanding the foregoing, the parties understand and agree
that the wholesaling activities contemplated by this Agreement
shall only apply to those variable life insurance Contracts listed
on Schedule 3 that utilize the underlying DGPF Portfolios specified
on Schedule 2. The parties understand that other versions of such
contracts utilize funds other than DGPF Portfolios and that such
contracts are not subject to this Agreement.
The Companies shall design the Contracts, and any amendments or
riders thereto, subject to consultation with the Wholesaler and
subject to the Wholesaler's right to refuse to engage in any future
wholesaling activities with respect to a class of Contracts that
the Wholesaler reasonably determines to be unattractive from a
marketing or business perspective. Throughout the term of this
Agreement, the Contracts shall be issued and offered for sale by
the Companies and the variable portion thereof shall be supported
by the Accounts. The Companies alone shall be responsible for
filing the initial Registration Statements and any amendments
thereto with the SEC in accordance with the 1933 Act, 1934 Act,
1940 Act and the Regulations to register interests in each class of
Contracts. The Companies will not make any amendment or rider to
the Contracts or a class of Contracts, or file or make an amendment
or supplement to a Prospectus, without the Wholesaler having been
given the opportunity to review any such filing, amendment, rider
or supplement. However, such opportunity to review shall not make
the Wholesaler responsible for the content of any such filing,
amendment, rider or supplement; the Companies alone shall be
responsible for such content.
AFLIAC and FAFLIC each shall register its Accounts with the SEC.
All amounts available under the Contracts shall be invested only in
the underlying investment funds
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listed on Schedule 2 hereto and/or allocated to the issuing
insurer's general account, PROVIDED THAT such amounts may also be
invested in an investment company or investment vehicle other than
the underlying funds listed on Schedule 2 if: (1) such other
investment company is advised by the Fund's investment adviser;
(2) the Fund and/or the Wholesaler, in their sole discretion, consent
to the use of such other investment company or investment vehicle;
(3) there is a substitution of the Fund made in accordance with
Section 10.1(e) of the Fund Participation Agreement; or (4) a Fund
Participation Agreement is terminated pursuant to Article X of the
Participation Agreement. The Companies will not take action to
operate any Account or any subaccount(s) of an Account investing in
the Fund, as a management investment company under the 1940 Act
without the Fund's and Wholesaler's prior written consent.
d. Except as provided below, the Companies shall obtain appropriate
authorizations, to the extent necessary, whether by registration,
qualification, approval or otherwise, for the issuance and sale of
the Contracts (including all investment options) in each State in
the Territory. From time to time, the Companies shall notify the
Wholesaler in writing of all States in the Territory in which the
Contracts can then lawfully be offered. To the extent that the
Companies are not authorized to issue the Contracts in any State in
the Territory, the Companies shall employ all reasonable efforts to
obtain such authorization in such State (PROVIDED, HOWEVER,
(i) that it shall be within the Companies' discretion whether to
obtain such authorization in Guam, (ii) AFLIAC Contracts shall not be
marketed and offered for sale in New York and Hawaii and
(iii) FAFLIC Contracts shall be marketed and offered for sale only in
New York and Hawaii).
e. The Wholesaler may unilaterally amend Schedule 1 from time to time
pursuant to Section 2.a. of this Agreement. The parties to this
Agreement may amend Schedules 2 and 3 to this Agreement from time
to time by mutual agreement to reflect changes in or relating to
the Contracts and the Accounts and to add new classes of variable
contracts to be issued by the Companies or for which the Wholesaler
will act as wholesaler. Schedule 2
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to this Agreement will be automatically amended by the Companies
from time to time to reflect the addition and deletion of
subaccounts and Fund portfolios. All provisions of this Agreement
shall be applicable to all classes of Contracts, unless the
context otherwise requires. Schedule 4 to this Agreement may be
amended only by mutual agreement of the parties to this Agreement
pursuant to Section 9 of this Agreement.
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3. RECRUITMENT OF BROKER-DEALERS AND RELATED RESPONSIBILITIES
a. The Companies and the Underwriter hereby authorize the Wholesaler and
any Wholesaler Agency Affiliates to contact and recommend business
firms to act as Broker-Dealers for the sale of the Contracts. The
Companies shall have the right to reject any such recommendation, but
shall not do so arbitrarily or unreasonably.
b. The Companies and the Underwriter shall have the responsibility
for: (i) executing appropriate sales agreements with the business
firms recommended by the Wholesaler or Wholesaler Agency Affiliates
and (ii) appointing such business firms, and/or Associated Persons
of such firms, as insurance agents of the Companies in those States
where such business firms and/or Associated Persons possess
insurance agent licenses. None of the Wholesaler, the Wholesaler
Agency Affiliates, the Companies or the Underwriter shall have
responsibility for, or bear the cost of, any registration or
licensing of Broker-Dealers or any of their Associated Persons with
the SEC or NASD. The costs of state insurance appointments shall
be borne as provided in Section 9.c. hereof. AFLIAC and FAFLIC
each shall maintain the appointment records of all agents appointed
by it to distribute the Contracts or, if required by relevant state
law, to engage in the wholesaling activities contemplated by this
Agreement.
c. Any sales agreement entered into by the Companies and/or the
Underwriter with a Broker-Dealer shall provide that:
(i) The Broker-Dealer (or an affiliated person duly registered as
a broker-dealer with the SEC) shall train, supervise, and be
solely responsible for the conduct of all of its Associated
Persons in the proper method of solicitation, sale and
delivery of the Contracts for the purpose of complying on a
continuous basis with the NASD Rules of Fair Practice and with
federal and state securities and insurance law requirements
applicable in connection with the offering and sale of the
Contracts;
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(ii) Premium payments for the Contracts shall be made payable to
AFLIAC or FAFLIC, as appropriate, and shall be delivered
together with all applications and related information in
accordance with the Procedures;
(iii) The Broker-Dealer and/or its duly licensed insurance agency
affiliates shall be solely responsible for all compensation paid
to its Representatives and all related tax reporting that may be
required under applicable law;
(iv) The Broker-Dealer and its Representatives shall not use, develop
or distribute any promotional, sales or advertising material
that has not been approved in writing by the Companies, the
Underwriter and the Wholesaler and filed with the appropriate
governmental or regulatory agencies; and
(v) The Broker-Dealer shall not have authority, on behalf of the
Companies, the Underwriter, the Wholesaler or the Wholesaler
Agency Affiliates, to make, alter or discharge any Contract or
other contract entered into pursuant to a Contract; to waive any
Contract forfeiture provision; to extend the time of paying any
premium payment; to receive any monies or premium payments
(except for the sole purpose of forwarding monies or premium
payments to the issuing insurer); or to expend, or contract for
the expenditure of, funds of the Companies, the Underwriter,
the Wholesaler or the Wholesaler Agency Affiliates.
d. The Wholesaler and Wholesaler Agency Affiliates shall provide such
assistance to the Companies in the appointment procedure applicable
to Broker-Dealers and their Representatives as may be reasonably
requested by the Company.
e. The Wholesaler shall train, supervise, and be solely responsible for
the conduct of all of its Associated Persons (including Wholesaler
Agency Affiliates, but not Broker-Dealers
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or their Representatives unaffiliated with the Wholesaler or the
Wholesaler Agency Affiliates), for the purpose of complying on a
continuous basis with the NASD Rules of Fair Practice and with
federal and state securities and insurance laws applicable to the
wholesaling activities contemplated in this Agreement. The
Wholesaler and the Wholesaler Agency Affiliates shall be
responsible for the maintenance of licenses, certifications or
permits that they determine to be necessary for themselves and/or
their Associated Persons pursuant to any federal or state
securities law or state insurance law.
f. None of the Wholesaler, the Wholesaler Agency Affiliates, the
Companies or the Underwriter will have any supervisory responsibility
(as such supervision is contemplated by the 1934 Act or the NASD's
Rules of Fair Practice) with respect to Broker-Dealers or their
Representatives. Under no circumstances will the Wholesaler or the
Wholesaler Agency Affiliates be responsible for Broker-Dealers' or
their Representatives' failure to comply with applicable law or the
Procedures.
g. The Wholesaler shall not have authority on behalf of the Companies
to make, alter or discharge any Contract or other contract entered
into pursuant to a Contract; to waive any Contract forfeiture
provision; to extend the time of paying any premium payment; or to
receive any monies or premium payments. The Wholesaler shall not
expend, nor contract for the expenditure of, funds of the
Companies; nor shall the Wholesaler possess or exercise any
authority on behalf of the Companies other than that expressly
conferred on the Wholesaler by this Agreement.
h. The Wholesaler and the Wholesaler Agency Affiliates shall act as
independent contractors in the performance of their duties and
obligations under this Agreement and nothing contained in this
Agreement shall constitute the Wholesaler or any Wholesaler Agency
Affiliate or their respective Associated Persons as employees of
AFLIAC, FAFLIC or the Underwriter in connection with the wholesaling
activities contemplated by this Agreement or otherwise.
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4. MARKETING AND SALES
a. Except as otherwise agreed to by the Companies and the Wholesaler,
the Wholesaler shall be responsible for the design, the cost of the
design work and the printing costs of all promotional, sales and
advertising material relating to the Contracts.
Prior to use with any member of the public, the Wholesaler shall
provide to the Companies copies of all promotional, sales and
advertising material developed by the Wholesaler for the Companies'
review and written approval. Upon receipt of such material from the
Wholesaler, the Companies shall be given a reasonable amount of time
to complete their review. The Companies will respond on a prompt and
timely basis in approving any such material. Failure to respond
shall not relieve the Wholesaler of the obligation to obtain the
prior written approval of the Companies.
In the event that the Companies shall design any promotional, sales
or advertising material relating to the Contracts, the Companies
shall provide to the Wholesaler copies of such material for the
Wholesaler's review and written approval. Upon receipt of such
material from the Companies, the Wholesaler shall be given a
reasonable amount of time to complete its review. The Wholesaler
will respond on a prompt and timely basis in approving any such
material. Failure to respond shall not relieve the Companies of
the obligation to obtain the prior written approval of the
Wholesaler.
The Wholesaler shall be responsible for filing, as required, all
promotional, sales or advertising material, whether developed by the
Wholesaler, the Companies or the Underwriter, with the NASD and any
federal and state securities, governmental or regulatory agencies.
The Companies shall be responsible for filing, as required, such
material, whether developed by the Wholesaler, the Companies or the
Underwriter, with any state insurance department.
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If any such promotional, sales or advertising material names the
Fund or the Fund's investment adviser, the Companies shall furnish
such material to the Fund or the Fund's distributor prior to its
use. Such material shall not be used unless written approval has
been obtained from the Fund or the Fund's distributor. Failure of
the Fund or the Fund's distributor to respond shall not relieve the
Companies or the Underwriter of the obligation to obtain the prior
written approval of the Fund or the Fund's distributor.
b. The Wholesaler acknowledges that the Company shall have the
unconditional right to reject, in whole or in part, any application
for a Contract. In the event an application is rejected, any premium
payments paid will be returned by or on behalf of the issuing insurer
to the applicant. AFLIAC or FAFLIC, as appropriate, will notify the
Wholesaler and the Broker-Dealer who submitted the premium payment of
such action. In the event that a purchaser exercises his/her free
look right under his/her Contract, any amount to be refunded as
provided in such Contract will be so refunded to the purchaser by or
on behalf of the issuing insurer. AFLIAC or FAFLIC, as appropriate,
will notify the Wholesaler and the Broker-Dealer who solicited the
sale of the Contract of such action.
c. The Wholesaler will pay the following expenses related to its
wholesaling activities contemplated by this Agreement:
(i) the compensation, if any, of its Associated Persons;
(ii) expenses associated with the initial licensing, if any, and
training of its Associated Persons involved in the wholesaling
activities;
(iii) expenses for design, development and printing of (1) marketing
kits and prospectus covers in a design which is agreed upon by
the Companies and the Wholesaler, which meet regulatory
requirements as determined by the Companies,
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and which are provided to the Companies in camera-ready format,
and (2) promotional and advertising materials;
(iv) expenses for design, development and printing of Contract and
Fund prospectuses and Contract semi-annual and annual reports;
(v) mailing of any promotional and advertising material and
marketing kits in connection with the distribution of the
Contracts;
(vi) fulfillment of marketing materials and forms to Broker-Dealers;
(vii) any additions, inserts, or packaging enhancements to the
Companies' basic "Welcome Package";
(viii) expenses associated with telecommunications with the Companies
at the sites of the Wholesaler or its Associated Persons,
including site installations and purchases, leases or rentals
of modems, terminals and other hardware, and lease line
telephone charges; and
(ix) any other expenses incurred by the Wholesaler or its Associated
Persons for the purpose of carrying out the obligations of the
Wholesaler hereunder.
Except for such expenses and the expenses described in Section 4.c.
of this Agreement, the Wholesaler shall not be responsible for
any expenses relating to the Contracts or distribution of the
Contracts or the processing of Contracts or applications, including
without limitation any expenses incurred in connection with
the return of premium payments solicited by Broker-Dealers for
applications rejected or not timely received by the Companies.
d. The Companies will pay all expenses in connection with:
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(i) the preparation and filing with appropriate governmental or
regulatory agencies of the Registration Statements and each
preliminary Prospectus and definitive Prospectus;
(ii) the preparation and issuance of the Contracts, including the
Companies' basic "Welcome Package" (any additions, inserts, or
packaging enhancements to the Companies' "Welcome Package" shall
be at the expense of the Wholesaler, as set forth in Section
4.c.vii, above);
(iii) any authorization, registration, qualification or approval of
the Contracts required under the securities, blue-sky laws or
insurance laws of any State;
(iv) registration fees for the Contracts payable to the SEC, the NASD
or any other governmental or regulatory agency;
(v) the mailing of Contract Prospectuses and any supplements
thereto, as required by federal securities laws, and periodic
reports relating to the Accounts to Contract owners;
(vi) the preparation and printing of administrative forms utilized in
connection with the distribution of the Contracts, including but
not limited to the form of application;
(vii) the preparation of Contract owner lists for the purposes of
proxy solicitations;
(viii) commissions and Promotional Allowances, as provided in Section 9
hereof; and
(ix) any other expenses related to the distribution of the Contracts
except those set forth in Section 4.c. and except as provided in
Section 4.e.
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e. The Companies alone shall be responsible for and bear the cost of
administration of the Contracts following their issuance, including
all Contract owner service and communication activities, but the
Wholesaler shall be responsible for answering inquiries from
Broker-Dealers or Representatives regarding the investment
performance of the Contracts, as permitted by applicable law.
f. The Companies, as agent for the Underwriter, will confirm to each
applicant for and owner of a Contract in accordance with Rule l0b-10
under the 1934 Act their acceptance of Purchase Payments and such
other transactions as are required by Rule l0b-10 or administrative
interpretations thereunder and in accordance with Release 8389 under
the 1934 Act.
g. The Wholesaler agrees to reimburse the Companies for Contract
development and implementation costs based upon the reimbursement
formula set forth in Schedule 5.
5. REPRESENTATIONS AND WARRANTIES
a. AFLIAC, FAFLIC and the Underwriter each represent and warrant to
the Wholesaler and each Wholesaler Agency Affiliate, on the
effective date of each Registration Statement for the Contracts (or
class of Contracts) and at each time that a Contract is sold and,
with respect to Clauses (vii), (viii), (xi), and (xii) below, and
also on the effective date of this Agreement, as follows:
(i) Each Registration Statement has been declared effective by the
SEC or has become effective in accordance with the Regulations.
(ii) Each Registration Statement and Prospectus comply in all
material respects with the provisions of the 1933 Act and the
1940 Act and the Regulations, and neither
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the Registration Statement nor the Prospectus contains an
untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading, in light of the
circumstances in which they were made; PROVIDED, HOWEVER, that
none of the representations and warranties in this Clause (ii)
shall apply to statements in or omissions from the
Registration Statements or Prospectuses made in reliance upon
and in conformity with information furnished to the Companies
in writing by the Wholesaler expressly for use in the
Registration Statements.
(iii) Neither the Companies nor the Underwriter have received any
notice from the SEC with respect to the Registration
Statements or the Accounts supporting the Contracts described
in the Registration Statements pursuant to Section 8(e) of the
1940 Act and no stop order under the 1933 Act has been issued
and no proceeding therefor has been instituted or threatened
by the SEC.
(iv) The accountants who certified the financial statements included
in the Registration Statements and Prospectuses are independent
public accountants as required by the 1933 Act and the
Regulations.
(v) The financial statements included in the Registration Statements
present fairly the respective financial positions of the
Companies and the Accounts supporting the Contracts described in
the Registration Statements as of the dates indicated; and such
financial statements have been prepared in conformity with
generally accepted accounting principles in the United States
applied on a consistent basis.
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(vi) Subsequent to the respective dates as of which information is
given in the Registration Statements or the Prospectuses, there
has not been any material adverse change in the condition,
financial or otherwise, of the Companies, the Underwriter or the
Accounts supporting the Contracts described in the Registration
Statements that would cause such information to be materially
misleading.
(vii) AFLIAC has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of
Delaware and FAFLIC has been duly organized and is validly
existing as a corporation in good standing under the laws of
the Commonwealth of Massachusetts. AFLIAC and FAFLIC each has
full power and authority to own, lease and operate its
properties and conduct its business in the manner described in
the Prospectuses; is duly qualified to transact the business
of a life insurance company; and is in good standing, in each
State in which its Contracts are or will be offered.
(viii) The Underwriter has been duly organized and is validly
existing as a corporation in good standing under the laws of
the Commonwealth of Massachusetts with full power and
authority to own, lease and operate its properties and conduct
its business in the manner described in the Prospectuses; is
duly registered as a broker-dealer with the SEC and with the
securities commission of every State with which such
registration is required; and is a member in good standing
with the NASD.
(ix) Each Account supporting the Contracts described in the
Registration Statements has been duly authorized and
established and is validly existing as a separate account
under the insurance code of the State of Delaware (in the case
of AFLIAC) or the Commonwealth of Massachusetts (in the case
of FAFLIC), and is duly registered with the SEC as a unit
investment trust under the 1940 Act.
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(x) The forms of the Contracts have been approved to the extent
required by the Insurance Commissioner of the State of Delaware
(in the case of AFLIAC) or the Commonwealth of Massachusetts (in
the case of FAFLIC), and by the governmental agency responsible
for regulating insurance companies in each other State in which
the Contracts are to be offered.
(xi) The execution and delivery of this Agreement and the
consummation of the transactions contemplated in this
Agreement have been duly authorized by AFLIAC, FAFLIC and the
Underwriter and when so executed and delivered this Agreement
will be the valid and binding obligation of the Companies and
the Underwriter, enforceable in accordance with its terms.
(xii) The consummation of the transactions contemplated by this
Agreement, and the fulfillment of the terms of this Agreement,
will not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice
or lapse of time) a default under, the charter or bylaws of
the Companies or the Underwriter, or any indenture, agreement,
mortgage, deed of trust, or other instrument to which AFLIAC,
FAFLIC or the Underwriter is a party or by which either is
bound, or violate any law, or, to the best of the Companies'
or the Underwriter's knowledge, any order, rule or regulation
applicable to AFLIAC, FAFLIC or the Underwriter of any court
or of any federal or state regulatory body, administrative
agency or any other governmental instrumentality having
jurisdiction over the Companies or the Underwriter or any of
their respective properties.
(xiii) No consent, approval, authorization or order of any court or
governmental authority or agency is required for the issuance or
sale of the Contracts or for the
20
consummation of the transactions contemplated by this Agreement,
that has not been obtained.
(xiv) The Companies have filed with the SEC all statements and other
documents required for registration under the provisions of
the 1940 Act and the Regulations thereunder of the Accounts
supporting the Contracts described in the Registration
Statements, and such registration has been effected; there are
no agreements or documents required by the 1933 Act, the 1940
Act, or the Regulations to be filed with the SEC as exhibits
to the Registration Statements, that have not been so filed;
and the Companies have obtained all exemptive or other orders
of the SEC necessary to make the public offering and
consummate the sale of the Contracts pursuant to this
Agreement and to permit the operation of the Accounts
supporting the Contracts described in the Registration
Statements, as contemplated in the Prospectuses.
(xv) The Contracts have been duly authorized by the Companies and
conform to the descriptions thereof in the Registration
Statements and the Prospectuses and, when issued as contemplated
by the Registration Statements, will constitute legal, validly
issued and binding obligations of the Companies in accordance
with their terms.
b. The Wholesaler represents and warrants to the Companies and the
Underwriter on the effective date of this Agreement as follows:
(i) The Wholesaler has taken all actions including, without
limitation, those necessary under its articles of incorporation,
by-laws and applicable state corporate law, necessary to
authorize the execution, delivery and performance of this
Agreement and transactions contemplated hereunder; and
21
(ii) The Wholesaler is, and during the terms of this Agreement
shall remain, duly registered as a broker-dealer under the
1934 Act, a member in good standing with the NASD, and duly
registered as a broker-dealer under applicable state
securities laws.
6. ADDITIONAL RESPONSIBILITIES OF THE COMPANIES
a. The Companies shall use their best efforts:
(i) to maintain the registration of the Contracts with the SEC and
any state securities commission of any State where the
securities or blue-sky laws of such State require registration
of the Contracts, including without limitation using their
best efforts to prevent a stop order from being issued or if a
stop order has been issued to cause such stop order to be
withdrawn;
(ii) to gain approval or other authorization of the Contract forms
where required under the insurance laws and regulations of
each State (PROVIDED, HOWEVER, that (A) it shall be within the
Companies' discretion whether to obtain such approval or
authorization in Guam, (B) AFLIAC Contracts shall be marketed
and offered for sale in all States except New York and Hawaii
and (C) FAFLIC Contracts shall only be marketed and offered
for sale in New York and Hawaii); and
(iii) to keep such registrations, approvals and authorizations in
effect thereafter so long as the Contracts are outstanding.
b. During the term of this Agreement the Companies shall take all action
required to cause each class of Contracts to comply, and to continue
to comply, as life insurance contracts, and to cause the
Registration Statement and the Prospectus for each class of Contracts
22
to comply, and to continue to comply, with all applicable
federal laws and regulations and all applicable laws and
regulations of each State.
c. The Companies, during the term of this Agreement, shall notify the
Wholesaler immediately:
(i) when each Registration Statement has become effective or any
post-effective amendment with respect to the Registration
Statement thereafter becomes effective;
(ii) of any request by the SEC for any amendment to a Registration
Statement or supplement to a Prospectus or for additional
information;
(iii) of any event that makes any material statement made in a
Registration Statement or a Prospectus untrue in any material
respect or results in a material omission in a Registration
Statement or a Prospectus;
(iv) of the issuance by the SEC of any stop order with respect to a
Registration Statement or any amendment thereto, or the
initiation of any proceedings for that purpose, or for any other
purpose relating to the registration and/or offering of the
Contracts (or a class of Contracts);
(v) of those States where registration of the Contracts (or a class
of Contracts) is required under the securities or blue-sky laws,
and when such registrations have become effective.
d. The Companies shall timely file all reports, statements and
amendments required to be filed by or for each Account or class of
Contracts under the 1933 Act and/or the 1940 Act or the Regulations.
23
e. AFLIAC and FAFLIC, as appropriate, each shall deliver to the
Wholesaler, as soon as practicable after it becomes available, its
Annual Statement and the Annual Statement for each of its Account(s)
in the form filed with its state of domicile, and any quarterly
reports upon the Wholesaler's request.
f. The Companies and the Underwriter will provide the Wholesaler access
to such records, officers and employees of the Companies, the
Underwriter and each Account at reasonable times as is necessary to
enable the Wholesaler to fulfill its obligations under the federal
securities laws and NASD rules. The Wholesaler will provide the
Companies and the Underwriter access to such of its records, officers
and employees at reasonable times as is necessary to enable the
Companies and the Underwriter to fulfill their obligations under the
federal securities laws and NASD rules.
7. CONFIDENTIALITY
a. The Companies and the Underwriter acknowledge that the names and
addresses of all customers and prospective customers (for purposes
of this Section 7.a., the terms "customers" and "prospective
customers" shall not mean Broker-Dealers) of the Wholesaler, and of
any affiliated person of the Wholesaler, the Wholesaler Agency
Affiliates and the names and addresses of all customers and
prospective customers of any Broker-Dealer that may come to the
attention of the Companies, the Underwriter or any person
affiliated with the Companies or the Underwriter solely as a result
of their relationship with the Wholesaler or any affiliated person
of the Wholesaler, the Wholesaler Agency Affiliates or any
Broker-Dealer and not from any independent source, are confidential
and shall not be used by the Companies, the Underwriter or any
person affiliated with the Companies or the Underwriter for any
purpose whatsoever except as may be necessary in connection with
the administration of the Contracts sold by the Broker-Dealers,
including responses to specific requests made to the Companies for
24
service by Contract owners, efforts to prevent the replacement of
such Contracts or communications with customers concerning option
rights available under the terms of the Contracts. The restrictions
set forth in the previous sentence do not apply if and to the
extent a Broker-Dealer knowingly discloses the names and addresses
of its customers or prospective customers to AFLIAC, FAFLIC or the
Underwriter outside the operation of this Agreement. In no event
shall the names and addresses of such customers and prospective
customers, whether disclosed to the Companies or the Underwriter
by the Wholesaler or by any Broker-Dealer, be furnished by AFLIAC,
FAFLIC, the Underwriter or any of their affiliated persons to
any other person. The intent of this paragraph is that neither the
Companies nor the Underwriter, nor persons affiliated with the
Companies or the Underwriter, shall utilize, or permit to be
utilized, for any purpose other than for the sale and
administration of the Contracts, their knowledge of the Wholesaler
or of any affiliated person of the Wholesaler, the Wholesaler
Agency Affiliates or the identity of all customers and prospective
customers, derived solely as a result of the relationship created
through the funding and sale of the Contracts. This paragraph
shall remain operative and in full force and effect regardless of
the termination of this Agreement, and shall survive any such
termination.
8. RECORDS
AFLIAC, FAFLIC, the Underwriter, the Wholesaler and the Wholesaler
Agency Affiliates shall each maintain such accounts, books and other
documents as are required to be maintained by each of them by applicable
laws and regulations and shall preserve such accounts, books and other
documents for the periods prescribed by such laws and regulations. The
accounts, books and records of AFLIAC, FAFLIC, the Underwriter, the
Account, the Wholesaler and the Wholesaler Agency Affiliates 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 is necessary to support the
reasonableness of the amounts paid by the Companies hereunder. Each
party shall have the right to inspect and audit such accounts, books and
25
records of the other party during normal business hours upon reasonable
written notice to the other party. Each party shall keep confidential
all information obtained pursuant to such an inspection or audit, and
shall disclose such information to third parties only upon receipt of
written authorization from the other party, except as required by law.
9. BROKER-DEALER COMPENSATION AND WHOLESALER PROMOTIONAL ALLOWANCES
a. The Company shall compensate Broker-Dealers and/or their duly
licensed insurance affiliates for sales of the Contracts by their
Representatives pursuant to Schedule 4 to this Agreement, as such
Schedule may be amended from time to time upon mutual agreement of
the parties to this Agreement. Such compensation shall be based in
part on premium payments received and accepted by the Companies for
all Contracts issued on applications obtained by the Broker-Dealers
or any of their respective Representatives. Additional "trail"
compensation may be paid, as described in Schedule 4. The
Companies will pay compensation due Broker-Dealers and/or their
insurance affiliates in accordance with the procedures set forth in
Schedule 4. The compensation provided for in this Section 9 shall
be payable to the Broker-Dealer and/or its duly licensed insurance
affiliates in accordance with the sales agreement between the
Companies and/or the Underwriter and the Broker-Dealer for so long
as the Contracts are outstanding, regardless of whether this
Agreement is still in effect. In addition to the compensation
payable to the Broker-Dealers and their insurance affiliates, the
Companies shall pay the Wholesaler a Promotional Allowance as a
reimbursement for its expenses incurred relating to its wholesaling
activities contemplated by this Agreement. Promotional Allowances
shall be payable to the Wholesaler in such amount and in accordance
with the procedures as set forth in Schedule 4, as such Schedule
may be amended from time to time upon mutual agreement of the
parties to this Agreement. Promotional Allowances shall be payable
to the Wholesaler for so long as the Contracts are outstanding and
this Agreement remains in effect and not thereafter.
26
If any State by insurance rule, regulation or statute, prohibits
payment of Promotional Allowances to the Wholesaler, the Wholesaler
shall designate in writing a business entity or natural person,
including Wholesaler Agency Affiliates, meeting the requirements of
such State to receive any amounts that may otherwise be payable to
the Wholesaler hereunder. The Wholesaler may change such
designation from time to time upon written notice to the Company.
Any payments made by the Companies to any person or entity so
designated by the Wholesaler shall discharge the Companies'
liability to the Wholesaler hereunder.
If a purchaser rescinds a Contract or exercises a right to
surrender a Contract for return of all premium payments, the
Wholesaler will pay to the Companies on demand the amount of any
Promotional Allowances it received on the premium payments
returned. Promotional Allowance charge backs will be calculated by
the Companies on the same basis, as described in Schedule 4 hereto,
as was utilized in calculating the Contract Promotional Allowances
received.
b. INDEBTEDNESS. Nothing in this Agreement shall be construed as giving
the Wholesaler the right to incur any indebtedness on behalf of
AFLIAC, FAFLIC or the Underwriter.
c. APPOINTMENT FEES. AFLIAC and FAFLIC, as appropriate, will pay the
initial and renewal fees for agent appointments by the respective
company of duly licensed Wholesaler Agency Affiliates and
Broker-Dealers and their respective Associated Persons; PROVIDED,
HOWEVER, that the Companies reserve the right to refuse to pay
renewal fees for Representatives not meeting such minimal sales
requirements as may be agreed upon from time to time.
d. REPORTING. The Wholesaler shall be responsible for all tax reporting
information, if any, that the Wholesaler is required to provide under
applicable tax law to its Associated Persons with respect to the
Contracts. Nothing contained in this Agreement or any sales
27
agreement with a Broker-Dealer is to be construed to require the
Wholesaler to provide any tax reporting information directly or
indirectly to any Broker-Dealer or its Representatives.
10. INVESTIGATIONS AND PROCEEDINGS
a. AFLIAC, FAFLIC, the Underwriter and the Wholesaler will cooperate
fully in any securities, insurance, governmental or regulatory
investigation or proceeding or judicial proceeding arising out of
or in connection with the offering, sale or distribution of the
Contracts for which the Wholesaler acts as wholesaler pursuant to
this Agreement. Without limiting the foregoing, the Companies,
the Underwriter and the Wholesaler agree to notify one another
promptly of any customer complaint or notice of any governmental,
judicial or regulatory investigation or proceeding described in
this Section 10.
b. In the case of a substantive customer complaint, AFLIAC or FAFLIC,
as appropriate, the Underwriter, the Wholesaler and the Wholesaler
Agency Affiliates will cooperate in investigating such complaint
and any response by the issuing insurer or Underwriter, as one
party, or the Wholesaler or Wholesaler Agency Affiliates, as
another party, to such complaint will be sent to the other party
for approval not less than five business days prior to its being
sent to the customer or to any governmental or regulatory agency,
except that if a more prompt response is required, the proposed
response shall be communicated by telephone, telegraph or
facsimile. Neither such party will release any such response
without the other party's prior written approval, unless otherwise
required by applicable law. Failure of any party to object to a
proposed response within four business days shall be deemed to
constitute approval of a proposed response by the non-objecting
party.
28
11. INDEMNIFICATION
a. AFLIAC, FAFLIC and the Underwriter, jointly and severally, shall
indemnify and hold harmless the Wholesaler and the Wholesaler
Agency Affiliates and each person who controls or is associated
with the Wholesaler or the Wholesaler Agency Affiliates within the
meaning of such terms under the federal securities laws, and any
officer, director, employee or agent of the foregoing, against any
and all losses, claims, damages or liabilities, joint or several
(including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of,
any action, suit or proceeding or any claim asserted), to which the
Wholesaler, the Wholesaler Agency Affiliates and/or such person may
become subject, under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any
Registration Statement, Prospectus, blue sky application or
other document executed by AFLIAC or FAFLIC specifically for
the purpose of qualifying any or all of the Contracts for sale
under the securities laws of any State, promotional, sales or
advertising material for the Contracts prepared by AFLIAC or
FAFLIC, or the Contracts themselves (or any amendment or
supplement to any of the foregoing), or arise out of or are
based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in
light of the circumstances in which they were made; PROVIDED
that this obligation to indemnify shall not apply if such
untrue statement or omission or such alleged untrue statement
or alleged omission was made in reliance upon and in
conformity with information furnished in writing to the
Companies or the Underwriter by the Wholesaler specifically
for use in the preparation of any such Registration Statement,
Prospectus or blue-sky application or other document, material
or Contract (or any such amendment or supplement thereto); or
29
(ii) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any Fund
Registration Statement, Fund Prospectus, blue sky application
or other document executed by the Fund specifically for the
purpose of qualifying any or all of the shares of the Fund for
sale under the securities laws of any State, or in any
promotional, sales or advertising material or written
information relating to the shares of the Fund authorized by
the Fund (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which
they were made, 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 furnished in writing to the
Wholesaler or the Fund by AFLIAC or FAFLIC specifically for
use in the preparation of any such Fund Registration
Statement, Fund Prospectus, blue-sky application or other
document (or any such amendment or supplement thereto); or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement or omission or alleged omission of a material
fact by or on behalf of AFLIAC, FAFLIC or the Underwriter
(other than statements or representations contained in a Fund
Registration Statement, Fund Prospectus or promotional, sales
or advertising material of the Fund that were not supplied by
the Companies, the Underwriter or persons under their control)
or wrongful conduct of the Companies or the Underwriter or
persons under their control with respect to the sale or
distribution of the Contracts; or
(iv) result because of the terms of any Contract or because of any
material breach by AFLIAC, FAFLIC or the Underwriter of any
terms of this Agreement or of any Contract or that proximately
result from any activities of the Companies' or Underwriter's
officers, directors, employees or agents or their failure to
take
30
action in connection with the sale of a Contract, to the
extent of the Companies' or the Underwriter's obligations
under this Agreement or otherwise, or the processing or
administration of the Contracts.
This indemnification obligation will be in addition to any
liability that the Companies or Underwriter may otherwise have;
PROVIDED, HOWEVER, that no person shall be entitled to
indemnification pursuant to this Section 11.a. if such loss, claim,
damage or liability is due to the willful misfeasance, bad faith,
gross negligence or reckless disregard of duty by the person
seeking indemnification.
b. The Wholesaler shall indemnify and hold harmless AFLIAC, FAFLIC and
the Underwriter and each person who controls or is associated with
the Companies or the Underwriter within the meaning of such terms
under the federal securities laws and any officer, director,
employee or agent of the foregoing, against any and all losses,
claims, damages or liabilities, joint or several (including any
investigative, legal and other expenses reasonably incurred in
connection with, and any amounts paid in settlement of, any action,
suit or proceeding or any claim asserted), to which AFLIAC, FAFLIC,
the Underwriter and/or any such person may become subject under any
statute or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities arise out of or are based
upon:
(i) any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement, Prospectus or
blue-sky application or other document executed by AFLIAC or
FAFLIC specifically for the purpose of qualifying any or all
of the Contracts for sale under the securities laws of any
State (or any amendment or supplement to the foregoing), or
omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make
the statements therein not misleading, in light of the
circumstances in which they were made, in each case to the
extent, but only to the extent, that such untrue
31
statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with
information furnished in writing to the Companies or the
Underwriter by the Wholesaler specifically for use in the
preparation of any such Registration Statement, Prospectus,
such blue-sky application or other document (or any such
amendment or supplement thereto); or
(ii) any use of promotional, sales or advertising material for the
Contracts not approved in writing by the Companies or any
verbal or written misrepresentations or any unlawful sales
practices concerning the Contracts by the Wholesaler or the
Wholesaler Agency Affiliates under federal securities laws or
NASD regulations (but not including state insurance laws,
compliance with which is a responsibility of the Companies or
the Underwriter under this Agreement or otherwise); or
(iii) claims by agents, representatives or employees of the Wholesaler
for compensation or other remuneration of any type; or
(iv) any material breach by the Wholesaler or the Wholesaler Agency
Affiliates of any provision of this Agreement.
This indemnification obligation will be in addition to any liability
that the Wholesaler may otherwise have; PROVIDED, HOWEVER, that no
person shall be entitled to indemnification pursuant to this Section
11.b. if such loss, claim, damage or liability is due to the willful
misfeasance, bad faith, gross negligence or reckless disregard of
duty by the person seeking indemnification.
c. After receipt by a party entitled to indemnification ("indemnified
party") under this Section 11 of notice of the commencement of any
action, if a claim in respect thereof is to be made by the
indemnified party against any person obligated to provide
indemnification
32
under this Section 11 ("indemnifying party"), such indemnified
party will notify the indemnifying party in writing of the
commencement thereof as soon as practicable thereafter, PROVIDED
THAT the omission to so notify the indemnifying party will not
relieve it from any liability under this Section 11, except to the
extent that the omission results in a failure of actual notice to
the indemnifying party and such indemnifying party is damaged as a
result of the failure to give such notice. The indemnifying party,
upon the request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any
such proceeding, any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties
to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests
between them. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent
but if settled with such consent or if there be a final judgment
for the plaintiff, the indemnified party shall indemnify the
indemnified party from and against any loss or liability by reason
of such settlement or judgment.
d. The indemnification provisions contained in this Section 11 shall
remain operative in full force and effect, regardless of (i) any
investigation made by or on behalf of the Companies or by or on
behalf of any controlling person thereof, (ii) delivery of any
Contracts and premium payments therefor, or (iii) any termination
of this Agreement. A successor by law of the Wholesaler, AFLIAC,
FAFLIC or the Underwriter, as the case may be, shall be entitled to
the benefits of the indemnification provisions contained in this
Section 11.
33
12. TERMINATION
a. This Agreement may be terminated at the option of any party upon six
months' advance written notice to the other parties.
b. This Agreement may not be assigned without the express written
consent of the other parties hereto. This Agreement may be
terminated at the option of the Companies and the Underwriter, as
one party, or the Wholesaler and the Wholesaler Agency Affiliates, as
one party, upon the other party's material breach of any provision of
this Agreement.
c. Upon termination of this Agreement all authorizations, rights and
obligations shall cease except: (i) the obligation to settle accounts
hereunder, as set forth in Schedule 4; (ii) the provisions contained
in Sections 7 and 11 of this Agreement; and (iii) the indemnification
provisions set forth in Section 11 of this Agreement, or as otherwise
specifically noted in this Agreement.
34
13. RIGHTS, REMEDIES, ETC, ARE CUMULATIVE
The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties to this Agreement are
entitled to under state and federal laws. Failure of the Wholesaler or
the Wholesaler Agency Affiliates, as one party, or the Companies or the
Underwriter, as another party, to insist upon strict compliance by the
other party with any of the conditions of this Agreement shall not be
construed as a waiver of any of the conditions, but the same shall remain
in full force and effect. No waiver of any of the provisions of this
Agreement shall be deemed, or shall constitute, a waiver of any other
provisions, whether or not similar, nor shall any waiver constitute a
continuing waiver.
14. NOTICES
All notices hereunder are to be made in writing and shall be given:
if to the Companies to:
Xxxx X. Xxxxx, Vice President
Allmerica Financial Life Insurance and Annuity Company
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
if to the Underwriter to:
Xxxxxxx Xxxxxx, President
Allmerica Investments, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
if to the Wholesaler or Wholesaler Agency Affiliates to:
Xxxxxx X. X'Xxxxx
Delaware Distributors, L.P.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
35
or such other address as such party may hereafter specify in
writing. Each such notice to a party shall be either hand
delivered or transmitted by registered or certified United States
mail with return receipt requested, and shall be effective upon
delivery.
15. INTERPRETATION, JURISDICTION, ETC.
This Agreement constitutes the whole agreement between the parties to this
Agreement relating to the wholesaling activities contemplated in this
Agreement, and supersedes all prior oral or written negotiations between
the parties to this Agreement with respect to the subject matter of this
Agreement. This Agreement shall be construed and the provisions of this
Agreement interpreted under and in accordance with the internal laws of
the Commonwealth of Massachusetts without giving effect to principles of
conflict of laws.
16. ARBITRATION
Any controversy or claim arising out of or relating to this Agreement, or
the breach of this Agreement, shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.
17. HEADINGS
The headings in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions of this
Agreement or otherwise affect their construction or effect.
36
18. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of which
taken together shall constitute one and the same instrument.
19. SEVERABILITY
This is a severable agreement and in the event that any part or parts of
this Agreement shall be held to be unenforceable to its or their full
extent, then it is the intention of the parties to this Agreement that
such part or parts shall be enforced to the extent permitted under the
law, and, in any event, that all other parts of this Agreement shall
remain valid and duly enforceable as if the unenforceable part or parts
had never been a part of this Agreement.
20. REGULATION
This Agreement shall be subject to the provisions of the 1933 Act, 1934
Act and 1940 Act and the Regulations and the rules and regulations of
the NASD, from time to time in effect, including such exemptions from
the 1940 Act as the SEC may grant, and the terms of this Agreement shall
be interpreted and construed in accordance therewith.
37
IN WITNESS WHEREOF, each party hereto represents that the officer signing
this Agreement on the party's behalf is duly authorized to execute this
Agreement; and each party has caused this Agreement to be duly executed by
such authorized officer on the date specified below.
ALLMERICA FINANCIAL LIFE INSURANCE AND
ANNUITY COMPANY
Date: ____________________By: ________________________________________
Name:___________________________________
Title:__________________________________
FIRST ALLMERICA FINANCIAL LIFE INSURANCE
COMPANY
Date: ____________________By: ________________________________________
Name:___________________________________
Title:__________________________________
ALLMERICA INVESTMENTS, INC.
Date: ____________________By: ________________________________________
Name:___________________________________
Title:__________________________________
DELAWARE DISTRIBUTORS, L.P.
Date: ____________________By: ________________________________________
Name:___________________________________
Title:__________________________________
38
SCHEDULE 1
----------
WHOLESALER AGENCY AFFILIATES
NAME OF WHOLESALER AGENCY AFFILIATE STATE(S) IN WHICH LICENSED
None
SCHEDULE 2
----------
SEPARATE ACCOUNTS
AVAILABLE UNDER THE CONTRACTS
-------------------------------------------------------------------------------
Separate Account Subaccounts
Are Invested In The
Following Investment Portfolios
of the Delaware Group
Premium Fund, Inc.
Name of Separate Account
-------------------------------------------------------------------------------
1. Group VEL Account of Allmerica Decatur Total Return Series
Financial Life Insurance and Devon Series
Annuity Company DelCap Series
Social Awareness Series
REIT Series
Small Cap Value Series
Trend Series
International Equity Series
Emerging Markets Series
Delaware Series
Delchester Series
Capital Reserves Series
Strategic Income Series
Cash Reserve Series
-------------------------------------------------------------------------------
2. Group VEL Account of First Decatur Total Return Series
Allmerica Financial Life Devon Series
Insurance Company DelCap Series
Social Awareness Series
REIT Series
Small Cap Value Series
Trend Series
International Equity Series
Emerging Markets Series
Delaware Series
Delchester Series
Capital Reserves Series
Strategic Income Series
Cash Reserve Series
-------------------------------------------------------------------------------
SCHEDULE 3
----------
CONTRACTS SUBJECT TO WHOLESALING AGREEMENT
-------------------------------------------------------------------------------
SEC
Policy Registration
Marketing Name Form Number Number
-------------------------------------------------------------------------------
Group Vari-Exceptional
Life Plus (AFLIAC)* 1029-94 811-08704
-------------------------------------------------------------------------------
Group Vari-Exceptional
Life Plus (FAFLIC)* 1029-94NY 811-7663
-------------------------------------------------------------------------------
* This Wholesaling Agreement relates only to versions of the above
variable life insurance contracts that are funded with the Delaware
Group Premium Fund ("DGPF") Portfolios listed in Schedule 2. The
parties to this Agreement understand that the Companies market other
versions of such contracts that utilize funds other than DGPF
Portfolios and that this Agreement is not intended to cover such other
versions of such contracts.
SCHEDULE 4
----------
BROKER-DEALER COMPENSATION AND
WHOLESALER PROMOTIONAL ALLOWANCE SCHEDULE
AFLIAC AND FAFLIC VARIABLE ANNUITY CONTRACTS
(A) The Companies will pay commissions to Broker-Dealers whose Registered
Representatives sell Group Vari-Exceptional Life Plus Contract
Certificates based on a commission schedule. Generally commissions shall
be paid as follows:
For Each Certificate Year
Percentage of Total Premiums Paid
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Premiums Paid Year 1: 9%
Premiums Paid Year 2
and thereafter: 4%
Trail*: .25%
Alternative commission schedules are also available for Contract
Certificate sales, based on premium payments and the level of enrollment and
ongoing administrative services provided by Broker-Dealers and their
Registered Representatives.
Commissions will only be paid to a Broker-Dealer while a Sales Agreement
between the Companies and/or the Underwriter and the Broker-Dealer
remains in force.
(B) While the Wholesaling Agreement remains in force, the Companies will pay
the Wholesaler Promotional Allowances. Promotional Allowances will be
paid to the Wholesaler no less frequently than twice a month and will be
equal to .08% (8 basis points) multiplied by Contract Certificate
premiums received and accepted by the Companies during the period for
which the payment is calculated.
* Trail commissions will be paid within 60 days following the end of each
calendar quarter. Quarterly trail commissions will be .0625% (1/4 of
.25%) of the unloaned value of each eligible Certificate. For purposes
of trail commission calculations, unloaned account value means the cash
value of a Certificate on the last day of the calendar quarter
immediately preceding the payment date less the principal of any
Certificate loan and accrued interest thereon. The first
trail commission for a Certificate will be paid on the first quarterly
payment date following the first anniversary of the date of issue of the
Certificate (e.g., if the Certificate is issued on March 1, 1999, the
first trail commission will be payable within 60 days of March 31,
2000). Trail commissions will continue to be paid while a Sales
Agreement between the Companies and/or the Underwriter and the
Broker-Dealer remains in force and will be paid on a particular
Certificate while the Certificate remains in force.
SCHEDULE 5
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CONTRACT DEVELOPMENT AND IMPLEMENTATION
COST AND EXPENSE REIMBURSEMENT
The Wholesaler agrees to reimburse the Companies for Contract development and
implementation costs and expenses within 30 days following the end of the
Measurement Period, based on the following Schedule. For purposes of this
Schedule 5, the Measurement Period is the period of 24 calendar months
commencing with the first calendar month following the calendar month both
AFLIAC and FAFLIC Contracts are available for sale to the public, as
determined by the Companies.
Aggregate Premiums* Reimbursement
$0 to $5,000,000 $100,000
$5,000,001 to $10,000,000 $75,000
$10,000,001 to $15,000,000 $50,000
$15,000,001 to $20,000,000 $25,000
$20,000,001 and over $0
Notwithstanding the foregoing, no reimbursement shall be payable if aggregate
AFLIAC and FAFLIC first year premiums received and accepted by the Companies
during the last six months of the Measurement Period equal at least $9
million.
* Aggregate AFLIAC and FAFLIC first year and renewal premiums received and
accepted by the Companies prior to the end of the Measurement Period.
