Exhibit 99.1
AMENDMENT NO. 1 TO THE UNDERWRITING AGREEMENT
This Amendment No. 1 ("Amendment No. 1") to the Underwriting Agreement
by and between Sage Life Assurance Company of America, Inc. ("Insurer") and Sage
Distributors, Inc. ("Distributor"), dated as of July 24, 2000 (the "Underwriting
Agreement"), is entered into as of October 1, 2002.
WHEREAS, Insurer and Distributor previously entered into the
Underwriting Agreement pursuant to which Distributor provides certain
underwriting services to Insurer;
WHEREAS, Insurer and Distributor desire to amend the Underwriting
Agreement to provide for the full reimbursement by Insurer of Distributor's
costs of performing such underwriting services for Insurer;
NOW, THEREFORE, in consideration of the covenants and mutual promises
contained in this Amendment No. 1 and other good and valuable consideration, the
receipt and legal sufficiency of which are acknowledged, Insurer and Distributor
hereby agree as follows:
1. AMENDMENTS TO THE UNDERWRITING AGREEMENT.
1.1 Section 2 of the Underwriting Agreement is hereby amended
and restated in its entirety as follows:
COMMISSIONS; EXPENSES; BOOKS AND RECORDS; PAYMENTS; INSURER'S
EXPENSES; REGULATORY REQUIREMENTS
A. COMMISSIONS. Commissions resulting from transactions in the
Sage Variable Products through Distributor shall be paid by Insurer to
Distributor. Distributor agrees that in the event any Sage Variable Product is
tendered for redemption within seven days of the date of the sale or if it is
returned under the free look provision of any state, all commissions paid with
respect to that product shall be returned to Insurer. Commissions paid to
Distributor shall be used by Distributor to pay all commissions or other
transaction-based compensation payable in connection with the sales of any Sage
Variable Products to any registered person who has earned the commission. It is
understood, however, that the laws of many states in which the commissions are
earned require that the commissions and any other transaction-based compensation
be paid to an insurance agency and through the insurance agency to the
individuals entitled to receive the compensation. To comply with those laws, the
commissions and other transaction-based compensation may be retained by Insurer
for payment directly by insurer to the persons entitled to receive those
commissions and transaction-based compensation. It is understood that in
connection with those payments, all individuals who receive such compensation
must be registered as representatives of Distributor or Selling Brokers under
applicable securities laws, licensed as insurance agents under applicable
insurance laws and appointed to sell the Sage Variable Products by Insurer.
Furthermore, all compensation so paid shall be allocated to Distributor and
shown on the books and records of Distributor as if it were paid to Distributor.
B. EXPENSES. Insurer hereby agrees that it shall reimburse
Distributor for any and all other costs and expenses incurred by Distributor in
providing the underwriting services to Insurer pursuant to this Agreement to the
extent such costs exceed any income Distributor actually receives in connection
with providing such underwriting services. The charge to Insurer for such
underwriting services shall be determined by Distributor and shall be equal to
the result of (i) plus (ii) minus (iii), where
(i) is all direct and directly allocable costs incurred by
Distributor reasonably and equitably determined to be attributable to selling
the Sage Variable Products, including without limitation, (x) any and all
compensation that become payable to those Registered Representatives of
Distributor who are employees of Distributor and/or Insurer fully dedicated to
the sale of the Sage Variable Products, excluding commissions and
transaction-based compensation payable to Registered Representatives of
Distributor for wholesaling and referral activities (it being agreed that the
actual payment to the
Registered Representatives may be by Insurer or an affiliate under a common
Paymaster Agreement) and (y) all of Distributor's other costs incurred in
marketing the Sage Variable Products, including all travel expenses related
thereto and the costs of printing and distributing any advertising materials or
sales literature; and
(ii) is a reasonable charge for overhead, the amount of such
charge for overhead to be agreed upon by the parties hereto from time to time
(it being agreed that the overhead charge may be for shared services provided by
an affiliate under a cost sharing agreement); and
(iii) is any and all income Distributor actually receives in
connection with providing the underwriting services to Insurer pursuant to this
Agreement.
Notwithstanding the foregoing, the maximum amount of net
expenses as determined above for which Insurer shall be responsible to
Distributor under this subsection b, shall not in any calendar month exceed an
amount equal to $800,000, or such other amount as may be agreed to by Insurer
and Distributor from time to time. In the event the amount so determined is a
negative amount, Distributor shall not be required to reimburse Insurer for the
negative amount. Furthermore, it is understood that the amounts so determined
shall not be cumulative so that negative amounts shall not be included in
determining the reimbursement amount for each succeeding month. It is also
agreed that any individual expenditure described in clause (i)(y) in the
immediately preceding paragraph in excess of $25,000 shall be approved in
advance by Insurer; and any amount of travel or related expenses shall only be
reimbursable by Insurer to the extent such expenses are incurred in a manner
consistent with Insurer's own internal policies related to the incurrence and
documentation of travel or related expenses by Insurer's employees. The bases
for the determination of the amount of costs of Distributor to be reimbursed by
Insurer shall be established, modified and adjusted by mutual agreement where
necessary or appropriate to reflect fairly and equitably the incidence of cost
actually incurred by Distributor in connection with providing underwriting
services to Insurer.
C. BOOKS AND RECORDS. Distributor shall be responsible for
maintaining full and accurate books, records and accounts of all underwriting
services rendered pursuant to this Agreement in accordance with applicable laws
and regulations in such a way as to disclose clearly and accurately the nature
and detail thereof, including without limitation, such accounting information as
is necessary to support the reasonableness of charges under this Agreement and
such additional information as Insurer may reasonably request for purposes of
its internal bookkeeping and accounting operations. Distributor shall also
reflect on its books and records all commissions and transaction based
compensation payable for the sale of Sage Variable Products as if all such
commissions and compensation were paid to it and then paid by it to the
individuals entitled to receive such compensation. All commissions must be
reported on Distributor's FOCUS and NASD Fee Assessment reports as if they had
been received directly by Distributor. All records of Insurer and Distributor
concerning the sales of the Sage Variable Products and commissions paid in
connection with those sales must be available for inspection and audit by the
Distributor and its regulators, including the SEC and the NASD.
D. PAYMENTS. Distributor shall submit to Insurer within
fifteen (15) days after the end of each calendar month a written statement of
the amount estimated to be owed by Insurer for underwriting services pursuant to
this Agreement in that calendar month, and Insurer shall pay to Distributor
within thirty (30) days following receipt of such written statement the amount
set forth in the statement, unless Insurer notifies Distributor in writing that
such charges are disputed. Unless Distributor and Insurer can reconcile any such
dispute, they shall agree to the selection of a firm of independent certified
public accountants that shall determine the charges properly allocable to
Insurer and shall, within a reasonable time, submit such determination, together
with basis therefor, in writing to Distributor and Insurer, whereupon such
determination shall be binding. The expenses of such a determination by a firm
of independent certified public accountants shall be borne equally by
Distributor and Insurer.
E. INSURER'S EXPENSES. Insurer shall be responsible for all
costs it incurs in registering or qualifying the Sage Variable Products for sale
with the SEC and with the various state regulators and for all costs incurred in
preparing and printing prospectuses, statements of additional information,
marketing materials and such other documents as are required to maintain the
registration and qualification of the Sage Variable Products with the SEC and
the states.
F. REGULATORY REQUIREMENTS. It is understood that nothing in
the Underwriting Agreement as amended by this Amendment shall relieve
Distributor of its obligations to supervise its Registered Representatives and
to comply with all applicable rules and regulations applying to broker-dealers
of the SEC, NASD, and state securities regulators. It is further understood and
agreed that these regulatory requirements include the obligation of Distributor
to have one of its Registered Principals review, approve and, if necessary, file
with the NASD, all advertising used in connection with the sale of the Sage
Variable Products, before any of such advertising is used.
1.2 Section 7(d) of the Underwriting Agreement is hereby
amended by deleting reference to "Xx. Xxxxxxxxxxx X'Xxxxxx" and inserting in its
place "Xx. Xxxxx X. Xxxxxxx."
2. EFFECTIVE DATE. The Insurer shall file this Amendment No. 1 with the
Insurance Commissioner of the State of Delaware, and this Amendment No. 1 shall
be of no force and effect until (i) a thirty-day period, or such shorter period
as the Insurance Commissioner of the State of Delaware may permit, has elapsed
since the date of such filing and (ii) the Insurance Commissioner of the State
of Delaware has not disapproved this Amendment No. 1 during such period. Upon so
becoming in force and effect, this Amendment No. 1 shall be effective from and
after October 1, 2002.
3. CONFIRMATION OF THE AGREEMENT. Except as amended hereby, the
Underwriting Agreement shall remain in full force and effect and is hereby
ratified and confirmed in all respects.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment No. 1 as of the date first above written.
SAGE LIFE ASSURANCE OF AMERICA, INC.
By: /S/ XXXXX X. XXXXXXX
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Xxxxx X Xxxxxxx
President and Chief Executive Officer
SAGE DISTRIBUTORS, INC.
By: /S/ XXXXX X. XXXXXXX
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Xxxxx X. Xxxxxxx
President and Chief Executive Officer
