Exhibit 1.A.(3)(a)
DRAFT: 4/16/97
MASTER DISTRIBUTION AND SERVICING AGREEMENT
AGREEMENT, made as of the 1st day of May, 1997, by and among Xxxx Xxxxxxx
Distributors, Inc. ("Distributors"), Xxxx Xxxxxxx Mutual Life Insurance Company
("JHMLICO"), Xxxx Xxxxxxx Variable Life Insurance Company ("JHVLICO"), and
JHMLICO and JHVLICO each on behalf of their respective existing and future
separate accounts registered under the Investment Company Act of 1940 ("1940
Act"), including Xxxx Xxxxxxx Variable Annuity Accounts U, V, JF of JHMLICO,
Xxxx Xxxxxxx Variable Annuity Account I of JHVLICO, Xxxx Xxxxxxx Mutual Variable
Life Insurance Account UV of JHMLICO, and Xxxx Xxxxxxx Variable Life Account U,
V and S of JHVLICO (collectively, together with any such future separate
accounts, and as the context indicates, the "Separate Accounts," excluding,
however, separate account supporting variable products for which Distributors is
not the principal underwriter distributor).
WHEREAS, JHMLICO and JHVLICO, a wholly-owned subsidiary of JHMLICO, are
parties to a distribution agreement dated August 26, 1993, as amended effective
August 1, 1996; JHMLICO is a party to a distribution agreement dated August 25,
1986; JHMLICO is a party to a distribution agreement dated June 8, 1987; one or
more Separate Accounts are parties to the aforesaid distribution agreements,
which set forth the terms and conditions under which JHMLICO has distributed and
served as principal underwriter for variable life insurance policies, variable
annuity contracts, and certificates under such policies and contracts that are
issued in group form (collectively,
"Policies," which term includes any such future policies, contracts and
certificates issued by JHMLICO and JHVLICO, excluding, however, those policies,
contracts and certificates for which Distributors does not serve as principal
underwriter or distributor;
WHEREAS, JHMLICO and JHVLICO (the "Insurers") on behalf of themselves and
their Separate Accounts, as parties to the aforesaid distribution agreements,
wish to combine and restate such distribution agreements into a master
distribution and servicing agreement under which Distributors, an indirect
wholly-owned subsidiary of JHMLICO, will succeed JHMLICO as the distributor and
principal underwriter of the Policies;
WHEREAS, Distributors is the principal underwriter of Xxxx Xxxxxxx
Variable Series Trust I ("Series"), a mutual fund registered under the 1940 Act,
pursuant to an Underwriting and Indemnity Agreement dated as of May 1, 1997, by
and among Series, Distributors and JHMLICO ("Underwriting Agreement");
WHEREAS, net premiums paid under Policies offered and sold by the
Insurers are and will be allocated to the Separate Accounts for investment in
shares of Series;
WHEREAS, net premiums under certain life insurance policies and/or
annuity contracts offered and sold by JHMLICO or JHVLICO are or will be
allocated to interests that are deemed to constitute "securities" because of
"market value adjustment" or similar provisions ("MVA Interests"), such
contracts and policies (as well as certificates
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issued under such group policies or contracts) being comprehended by the term
Policies for purposes of this Agreement;
WHEREAS, Distributors is registered as a broker-dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934 ("1934 Act") and is a member of the National Association of Securities
Dealers, Inc. ("NASD");
WHEREAS, the parties desire to have Distributors act as principal
underwriter and distributor of the Policies and assume responsibility for all of
the securities activities of each "person associated" (as that term is defined
in Section 3(a)(18) of the 0000 Xxx) with Distributors and engaged directly or
indirectly in the sale of the Policies ("associated persons"); and
WHEREAS, Distributors wishes to utilize the services of employees of
JHMLICO, who will be deemed to be associated persons of Distributors, to perform
various support and administrative functions in connection with Distributors'
responsibilities under this Agreement;
NOW, THEREFORE, the parties agree as follows:
1. Distributors shall act as the principal underwriter and distributor of the
Policies, and as such will assume full responsibility for the securities
activities of all of the associated persons. Distributors will train the
associated persons, register
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associated persons as its registered representatives or principals (as
required), and supervise and control them in the performance of their securities
activities. Distributors shall assume full responsibility for the continued
compliance by itself and the associated persons, including registered
representatives and registered principals, with all NASD requirements and
Federal and state legal requirements, to the extent applicable, in connection
with the sale of the Policies.
2. Distributors shall offer for sale and sell Policies on behalf of the
relevant Insurer in each state and other jurisdictions in which the Policies may
be lawfully sold. Such offering or sale shall be on such terms and conditions
and shall provide for such lawful compensation to Distributors, as Distributors
and the relevant Insurer shall determine, provided that such terms, conditions
and compensation shall be as set forth in or not inconsistent with any relevant
prospectus meeting the requirements of Section 10(a) of the Securities Act of
1933 ("1933 Act"), and containing the required information for or forming a part
of a registration statement effective under the 1933 Act.
3. Applications for Policies shall be solicited by insurance agents of the
relevant Insurer who are registered representatives or principals of
Distributors, and are duly and appropriately licensed for the sale of Policies
in each state or other jurisdiction in which lawful sales may be made. The
relevant Insurer shall have responsibility for arranging for such licensing.
Distributors shall review completed applications for Policies in terms of
suitability (except to the extent that responsibility for suitability
determinations is assumed by other broker-dealers pursuant to the selling
agreements
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referred to in Section 12, below) and shall determine whether to
accept or reject any application. JHMLICO on its own behalf and on behalf of
JHVLICO shall review such applications for purposes of insurance underwriting
and shall determine whether to accept or reject any application in accordance
with established underwriting rules. JHMLICO will determine an insured's risk
classification pursuant to its own and JHVLICO's underwriting rules.
4. Initial and subsequent premium payments under Policies shall be made by
check payable to the relevant Insurer, or by such other means as such Insurer
may agree. Any premiums paid will be refunded by the relevant Insurer, if a
Policy is not issued or is surrendered under any short-term cancellation
provision. Premium payments received by Distributors shall be remitted daily by
Distributors, or other broker-dealer acting through Distributors, to the
relevant Insurer for allocation to the Separate Accounts or MVA Interests in
accordance with the Policies and any related prospectuses.
5.1. As compensation for its services, the relevant Insurer will pay
Distributors commissions and service fees, and reimburse Distributors for other
direct and indirect expenses (including, without limitation, agency expense
allowances, general agent, district manager and supervisor compensation, agent
training allowances, deferred compensation and insurance benefits of agents,
general agents, district managers and supervisors, agency office clerical
expenses, marketing support and administrative services) actually incurred in
connection with the marketing and sale of Policies. The amounts payable to
Distributors shall comply with applicable compensation rules and
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procedures as Distributors and the relevant Insurer mutually agree upon from
time to time. Unless otherwise agreed to, the maximum commission and service
fees payable shall be as set forth in Exhibit A appended hereto.
5.2. Distributors intends to reallocate commissions and service fees to its
registered representatives or principals for the sale of Policies in amounts
determined by Distributors. For its convenience, Distributors authorizes
JHMLICO to make commission and service fee payments on behalf of Distributors,
directly to its registered representatives or principals. All such commissions
and service fees shall be reflected on Distributors' books and records as a
receipt of compensation from JHMLICO or JHVLICO, as the case may be, and a
disbursement to registered representatives or principals, notwithstanding the
direct payment by JHMLICO.
6.1. JHMLICO agrees to provide support, administrative and other such
services to Distributors, including personnel, to assist Distributors in the
performance of its duties as principal underwriter and distributor of the
Policies. In providing such services, all personnel of JHMLICO, or of JHVLICO to
the extent that JHVLICO may provide similar services, shall at all times be
subject to the supervision and control of Distributors. All such personnel are
hereby acknowledged and deemed to be associated persons of Distributors and, as
necessary to comply with regulatory requirements, will be registered
representatives or principals of Distributors.
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6.2. For the convenience of the parties, compensation payments will be made
by JHMLICO and/or JHVLICO, directly to their personnel provided to Distributors
as part of the salaries paid to such employees, consistent with such employee
compensation and employee benefit plans as are maintained by the Insurers.
Distributors acknowledge that personnel provided by JHMLICO or JHVLICO will not
be exclusively engaged in securities related activities and that they may have
other, non-securities, responsibilities as employees of JHMLICO or JHVLICO.
7. The books, accounts and records of Distributors, JHMLICO and JHVLICO as
to all transactions hereunder shall be maintained so as to disclose clearly and
accurately the nature and details of the transactions to ensure compliance with
applicable regulatory and reporting requirements. To the extent that either of
Distributors, JHMLICO or JHVLICO maintains on behalf of the other any records
required to be maintained by the other pursuant to 1940 Act Rules 31a-1 or 31a-2
under the 1940 Act or pursuant to 1934 Act Rules 17a-3 and 17a-4, such records
shall be maintained as agent for the other party and remain the property of the
party so required to maintain them, shall be surrendered promptly to that party
upon its request, and shall at all times be subject to inspection by the SEC,
NASD and any other appropriate governmental agency.
8. JHMLICO and JHVLICO will pay the expenses of preparing and printing
their respective registration statements, prospectuses and sales literature, and
for like expenses actually incurred in connection with the offering, sale and
delivery of Policies.
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Distributors shall pay all fees and expenses in connection with its
qualification as a broker-dealer and all other expenses relating to the
offering, sale or delivery of Policies, as contemplated by this Agreement.
9. In offering, selling and delivering Policies, Distributors will duly
conform in all respects with the laws of the United States and of each state in
which Policies may be offered for sale by it pursuant to this Agreement.
Applications will be solicited by registered representatives or principals of
Distributors, or any other broker-dealers who have been duly licensed as
contemplated by Section 12, below. In connection with the offer, sale or
delivery of Policies, Distributors will not give any information or make any
representation other than information and representations contained in or not
inconsistent with a prospectus meeting the requirement of Section 10(a) of the
1933 Act and containing the required information for or forming a part of a
registration statement which is effective under the 1933 Act.
10. JHMLICO agrees that, in the absence of a fixed account option under a
variable life insurance policy, or if no suitable fixed-dollar policy is
available from JHVLICO, it will issue a policy of fixed benefit insurance
without evidence of insurability in exchange for any JHVLICO Policy whenever the
owner of a Policy elects to exchange the Policy in accordance with its
provisions.
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11. No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought.
12. Distributors may enter into an agreement with one or more broker-
dealers registered under the 1934 Act for the sale of the Policies, whether
funded by the Separate Accounts, MVA Interests, or both. Any broker-dealer
offering, selling or delivering Policies will agree with Distributors to conform
duly in all respects with the laws of the United States and of each state in
which Policies may be offered for sale by it. No agent or representative of any
such broker-dealer shall solicit applications for Policies until duly licensed
and appointed as a life insurance agent of the relevant Insurer in the
appropriate jurisdiction. JHMLICO or JHVLICO, as the case may be, may directly
compensate other broker-dealers on behalf of Distributors, as provided in the
selling agreements with such other broker-dealers, or reimburse Distributors for
such amounts.
13. This Agreement shall be subject to the applicable provisions of the
Federal securities laws and the rules, regulations, and rulings thereunder,
including such exemptions as the SEC may grant, and the terms hereof shall be
interpreted and construed in accordance therewith.
14. Distributors shall, in connection with its obligations hereunder,
comply with all laws and regulations, whether Federal or state, and whether
relating to insurance or
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securities, including but not limited to the recordkeeping and sales supervision
requirements of such laws and regulations and rules of the NASD.
15. JHMLICO, JHVLICO and Distributors agree that (a) each party shall
advise the other promptly of any substantive customer complaint, or of any
notice of any regulatory investigation or proceeding or judicial processing
received by a party with respect to Distributors or any agent or representative
or which may affect the sale of the Policies, and (b) Distributors, JHMLICO and
JHVLICO will cooperate in investigating such complaint, and any response to such
complaint which any of them has prepared will be sent to the other parties for
approval not less than five business days prior to its transmittal to the
customer or regulatory authority.
16.1. Each Insurer agrees to indemnify and hold harmless Distributors and
its officers and directors against any losses, claims, damages or liabilities,
joint or several, to which Distributors 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 alleged untrue statement of a
material fact, required to be stated therein or necessary to make the statements
therein not misleading, contained in (a) any registration statement relating to
that Insurer's Separate Accounts or the MVA interests offered under that
Insurer's Policies, or any amendment thereof, or (b) any document executed by
that
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Insurer, specifically for the purpose of qualifying that Insurer's Policies for
sale under the securities laws of any jurisdiction.
16.2. Such Insurer will reimburse Distributors and each such officer or
director for any legal or other expenses reasonably incurred by Distributors or
such officer or director in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that such Insurer
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 JHMLICO or JHVLICO by or on behalf of Distributors
specifically for use in the preparation of any such registration statement or
any amendment thereof or any such qualification document or any amendment
thereof.
16.3. Distributors agrees to indemnify and hold harmless each Insurer, its
directors, each of its officers who has signed any registration statements
relating to that Insurer's Separate Accounts or MVA interests, each person, if
any, who controls that Insurer within the meaning of the 1933 Act or the 1934
Act, and that Insurer's Separate Accounts against any losses, claims, damages or
liabilities to which such Insurer or any such director, officer, controlling
person or Separate Account 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:
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16.4. 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 in (i) any
registration statement relating to such Separate Account or the MVA interests
offered under such Insurer's Policies or any amendment thereof, or (ii) any
document relating to such Separate Account or the MVA interests offered under
such Insurer's Policies or any amendment thereof, 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 JHMLICO or JHVLICO, by Distributors specifically for use in the
preparation of any registration statement relating to such Separate Account or
such MVA interests or any amendment thereof or any such qualification document
relating to such Separate Accounts or such MVA interests or any amendment
thereof; or
16.5. Any unauthorized use of sales materials or any verbal or written
misrepresentations or any unlawful sales practices concerning the Policies by
Distributors or otherwise attributable to a failure by Distributors to discharge
properly its responsibilities under this Agreement; or
16.6. Claims by agents or representatives or employees of Distributors for
commissions, service fees, expense allowances or other compensation or
remuneration of any type.
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16.7. Distributors will reimburse such Insurer, and any such director or
officer or controlling person for any legal or other expenses reasonably
incurred by such Insurer, director, officer or controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
action.
16.8. Promptly after receipt by a person or entity entitled to
indemnification ("Indemnified Person") under this Section 16 of notice of the
commencement of any action, if a claim in respect thereof is to be made against
any party obligated to provide indemnification under this Section 16
("Indemnifying Party"), such Indemnified Person 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 Section 16,
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 Person, 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 Person. Such participation
shall not relieve such Indemnifying Party of the obligation to reimburse the
Indemnified Person for reasonable legal and other expenses incurred by such
Indemnified Person in defending itself, except for such expenses incurred after
the Indemnifying Party has deposited funds sufficient to effect the settlement,
with prejudice, of the claim in respect of which indemnity is sought. No such
Indemnifying Party shall be liable to any such Indemnified Person on account of
any
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settlement of any claim or action effected without the consent of such
Indemnifying Party.
16.9. The indemnity agreements contained in this Section 16 shall survive
the termination of this Agreement.
17. All notices under this Agreement shall be given in writing and
addressed as follows:
(a) if to Distributors, to:
Xxxx Xxxxxxx Distributors, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
(b) if to JHMLICO, to:
Xxxx Xxxxxxx Mutual Life Insurance Company
000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
(c) if to JHVLICO, to:
Xxxx Xxxxxxx Variable Life Insurance Company
000 Xxxxxxxxx Xxxxxx
Xxxxxx XX 00000
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18. This Agreement shall terminate automatically if it shall be assigned
or if the Underwriting Agreement is terminated. This Agreement may be terminated
at any time on 60 days' written notice to the other party hereto, without the
payment of any penalty, by Distributors or JHMLICO as to Policies issued by
JHMLICO, or by Distributors or JHVLICO as to Policies issued by JHVLICO.
19. This Agreement shall be construed and governed in accordance with the
laws of the Commonwealth of Massachusetts.
20. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which shall be deemed one
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year above written.
Date: April __, 1997
Xxxx Xxxxxxx Distributors, Inc.
By:____________________________
Date: April __, 1997
Xxxx Xxxxxxx Mutual Life Insurance Company
By:____________________________
Date: April __, 1997
Xxxx Xxxxxxx Variable Life Insurance Company
By:____________________________
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EXHIBIT A
Scheduled Premium Policy (Flex V)
Maximum commission of 50% of premium paid under Modified Schedule of
premiums in Policy year 1, 10% of such premiums in Policy years 2-4, and 3% of
any other premiums.
Annual Premium Policy (VLI)
Maximum commission of 55% of premium paid in Policy year 1, 15% of
premium paid in Policy year 2, 10% of premium paid in Policy years 3-5, 5% of
premium paid in Policy years 6-10, and 3% of any other premiums.
Single Premium Policy
Maximum commission of 3%.
Flexible Premium Variable Survivorship Policy (VEP)
Maximum commission of 45% of Target Premium paid in Policy year 1, 5%
of Target Premium paid in Policy years 2-5, 3% of Target Premium paid in any
subsequent years, and 3% of any excess premium in any year.
Individual Deferred Combination Fixed/Variable Annuity Contract (Independence
Preferred)
Maximum commission of 3% of premium on contracts issued to Annuitants
issue age 0-70, maximum commission of 2% of premium on contracts issued to
Annuitants issue ages 71 and above.
Revised Flexible Premium Policy (New Flex V)
Maximum Commission of 50% of premium paid up to Required Premium in
Policy year 1, 8% of such premiums in Policy years 2-4, and 3% of any other
premiums.
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Universal Variable Policy (MVL)
Maximum commission of 50% of premium paid up to Required Premium paid
in Policy year 1, 6% of the Target Premium for Policy years 2-4; 3% of the
Target Premium in each year thereafter, and 3% of excess premium in any year.
Variable COLI Policy (VCOLI)
Maximum commission of 14% of Target Premium in Policy years 1-10; 3% of
Target Premium in Policy years 11 and thereafter; and 2% of any excess premium
paid.
Universal Variable Policy (MEVL)
Maximum commission of 20% of Target Premium in Policy year 1, plus 6%
of the Target Premium for the first Policy year which will be payable in each of
Policy years 2-4; 6% of the Target Premium paid for Policy years 2-4; 3% of the
Target Premium paid in each year thereafter; and 3% of excess premium in any
year.
Universal Variable Policy (MVUL)
Maximum commission of 65% of Target Premium in Policy year 1, plus 10%
of Target Premium in Policy years 2 through 10, 4% of Target Premium in each
year thereafter, and 4% of excess premium in any year.
Revised Flexible Premium Variable Survivorship Policy (MVEP)
Maximum commission of 65% of Target Premium paid in Policy year 1, 12%
of Target Premium paid in Policy years 2-5, 7.5% of Target Premium paid in
Policy years 6-10, and 3% of Target Premium paid in each year thereafter.
(Exhibit A, as amended, December 10, 1996)
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