EXHIBIT I-A(3)(a)
SALES AGREEMENT
AGREEMENT dated as of January 31, 1995, by and between Separate
Account VUL-2, established pursuant to Article XIV-1/2 of the Illinois
Insurance Code (the "Separate Account"), of The American Franklin Life
Insurance Company, an Illinois legal reserve stock life insurance corporation
("American Franklin"), and Franklin Financial Services Corporation, a
Delaware corporation ("Franklin Financial");
W I T N E S S E T H :
WHEREAS, pursuant to a Sales Agreement of even date herewith,
Franklin Financial has been appointed the exclusive principal underwriter of
the Separate Account in respect of interests in the Separate Account issued
under American Franklin's EquiBuilder II-TM- flexible premium variable life
insurance policies; and
WHEREAS, the Separate Account and Franklin Financial desire to enter
into an agreement setting forth the terms on which Franklin Financial will
act as principal underwriter for the Separate Account in respect of interests
in the Separate Account issued under American Franklin's EquiBuilder III-TM-
flexible premium variablE life insurance policies (the "Policies");
NOW, THEREFORE, it is hereby agreed as follows:
1. SERVICES TO BE PROVIDED AND EXPENSES TO BE ASSUMED BY FRANKLIN
FINANCIAL. Franklin Financial will act as the exclusive principal underwriter
(as that term is defined in the Investment Company Act of 1940, as amended (the
"1940 Act")) for the Separate Account in respect of interests in the Separate
Account issued under the Policies. Until the termination of the employment of
Franklin Financial as principal underwriter for the Separate Account pursuant to
the terms hereof, Franklin Financial will provide, or provide for, in its
offices all services and will assume all expenses required for the sale of those
Policies of American Franklin that depend in whole or in part on the investment
performance of the Separate Account and are sold prior to such termination.
In the event that the employment of Franklin Financial as principal
underwriter for the Separate Account is terminated, Franklin Financial will
thereafter continue to assume any continuing sales expense and to provide any
continuing sales service required in connection with such Policies.
Notwithstanding anything to the contrary in the foregoing, however,
Franklin Financial shall not be obligated to pay, and the Separate Account shall
pay, (i) taxes, if any, based on the income of, capital gains of assets in, or
existence of, the Separate Account, (ii) taxes, if any, in connection with the
acquisition, disposition or transfer of assets of the Separate Account, (iii)
commissions, sales charges or other capital items payable in connection with the
purchase or sale of the Separate Account's investments, and (iv) interest on
account of any borrowings by the Separate Account.
The services of Franklin Financial to the Separate Account under this
Agreement are not to be deemed exclusive and Franklin Financial shall be free to
render similar services to others, including without limitation such other
separate accounts as are now or may hereafter be established by American
Franklin or any of its affiliates.
2. COMPENSATION TO BE PAID TO FRANKLIN FINANCIAL. For providing the
services set forth above, Franklin Financial shall receive and accept as full
compensation therefor the amounts described as sales expense deductions from
premiums and as contingent deferred sales charges in the prospectus (the
"Prospectus") forming a part of the Registration Statement filed by the Separate
Account under the Securities Act of 1933, as amended, with respect to the
Policies.
3. INTERESTED AND AFFILIATED OFFICERS. It is understood that members of
the Board of Directors, officers, employees or agents of American Franklin and
its affiliates may also be directors, officers, employees or agents of Franklin
Financial.
4. FORM OF CONTRACTS. As long as Franklin Financial is acting as
principal underwriter for the Separate Account hereunder, Franklin Financial and
American Franklin will have the exclusive right as between them and the Separate
Account to determine the form and substance of the Policies, subject to all
applicable provisions of federal and state law.
5. LIABILITY OF FRANKLIN FINANCIAL. In the absence of gross negligence
or willful misconduct in the performance of its duties, or of reckless disregard
of its obligations and duties under this
Agreement, neither Franklin Financial nor any of its officers, directors,
employees or agents shall be subject to liability for any act or omission in the
course of, or connected with, rendering services or performing its obligations
hereunder.
6. TERM OF AGREEMENT. The employment of Franklin Financial as principal
underwriter for the Separate Account pursuant to the terms of this Agreement
shall continue in effect from year to year from the date hereof unless
terminated as provided below. The employment of Franklin Financial as principal
underwriter for the Separate Account pursuant to the terms hereof as well as the
provisions of this Agreement relating to such employment shall immediately
terminate in the event of the assignment of this Agreement (within the meaning
of the 1940 Act), and the employment of Franklin Financial as principal
underwriter for the Separate Account pursuant to the terms hereof as well as the
provisions of this Agreement relating to such employment may be terminated at
any time by either party without the payment of any penalty on not more than 60
days' nor less than 30 days, notice to the other. Such notice shall be given in
writing, addressed and delivered, or mailed postpaid, to the other party at the
principal office of such party.
IN WITNESS WHEREOF, the parties hereto have caused this Sales Agreement
to be executed as of the day and year first above written.
SEPARATE ACCOUNT VUL-2 OF THE
AMERICAN FRANKLIN LIFE INSURANCE
COMPANY
By: THE AMERICAN FRANKLIN LIFE
INSURANCE COMPANY, Depositor
By:
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Name: Xxxxxxx X. Xxxxxx, Xx.
Title: Senior Vice President
General Counsel and Secretary
FRANKLIN FINANCIAL SERVICES
CORPORATION
By:
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Name: Xxxxxx X. Xxxxxx
Title: President
