EXHIBIT 3(b)
THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Mailing Address:
X.X. Xxx 00000
Xxx Xxxxxxx, XX 00000-0000
SELLING
AGREEMENT
SELLING AGREEMENT
This SELLING AGREEMENT ("Agreement") is by and among THE UNITED STATES LIFE
INSURANCE COMPANY IN THE CITY OF NEW YORK, a New York corporation ("Insurer"),
SUNAMERICA CAPITAL SERVICES, INC., a Delaware corporation ("Distributor") and
the broker/dealer (as indicated on the signature page of this Agreement),
together with its duly licensed insurance affiliates indicated on the attached
Annex I (the "Broker/Dealer Affiliates" and collectively, "Broker/Dealer").
This Agreement is for the purpose of arranging for the distribution of certain
variable and fixed annuity contracts and any other life insurance products
identified on Exhibit 1 hereto (together with any products listed on addendums,
if any, to Exhibit 1 hereto, the "Contracts"), issued by the Insurer and, in the
case of variable Contracts, for which Distributor is the distributor, through
sales people who are licensed producers of the Insurer for insurance purposes
and who are associated with and are registered representatives of Broker/Dealer
(each, a "Subproducer").
1. APPOINTMENT AND AUTHORIZATION. In consideration of the mutual promises and
covenants contained in this Agreement, and subject to the terms and
conditions of this Agreement, Insurer appoints and Distributor, as
principal underwriter for variable Contracts, authorizes Broker/Dealer and
its Subproducers, to solicit and procure applications for the Contracts and
Broker/Dealer accepts such authorization.
A. This appointment and authorization is not deemed to be exclusive in
any manner and only extends to those jurisdictions where the Contracts
have been approved for sale and in which Insurer and Broker/Dealer are
both licensed as required by applicable regulatory requirements.
B. Where permitted by state law, Broker/Dealer is acting as general
agent hereunder and shall be responsible for the duties of both a
broker/dealer and general agent hereunder. If Broker/Dealer
Affiliate(s), rather than Broker/Dealer, is licensed as an insurance
agent in one or more states, such affiliate(s) shall act as general
agent hereunder in such states and shall be responsible for the duties
of a general agent hereunder in such states.
2. REPRESENTATIONS AND WARRANTIES.
A. Each party hereto represents and warrants to each other party, as
follows:
(i) It is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its formation and has all requisite
power, corporate or otherwise to carry on its business as now being
conducted and to perform its obligations as contemplated by this
Agreement.
(ii) It has all licenses, approvals, permits and authorizations of,
and registrations with, all authorities and agencies, including
non-governmental self-regulatory organizations ("SROs"), required
under all federal, state, and local laws and regulations to enable it
to perform its obligations as contemplated by this Agreement.
(iii) The execution, delivery and performance of this Agreement have
been duly and validly authorized by all necessary corporate action, if
applicable, and this Agreement constitutes the legal, valid and
binding agreement of each party hereto, enforceable against it in
accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights
generally and general principles of equity.
B. Broker/Dealer additionally represents and warrants as follows:
(i) It is registered as a broker and dealer with the Securities and
Exchange Commission ("SEC") under the Securities Exchange Act of 1934,
as amended ("1934 Act"), and is a member in good standing of the
Financial Industry Regulatory Authority ("FINRA").
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(ii) It has complied with, and during the term of this Agreement shall
continue to comply with, all applicable state and federal rules,
regulations and interpretive guidance of governmental agencies or
other regulatory bodies including SROs having jurisdiction over
Broker/Dealer or over the premises on which Broker/Dealer and its
Subproducers are soliciting the sale of Contracts.
(iii) It is duly licensed as a corporate insurance agent, or it has
entered into an insurance networking arrangement with the
Broker/Dealer Affiliates identified on Annex I hereto in accordance
with the no-action letter Xxxxxx & Xxxxxx (sub. nom. First of America
Brokerage Services, Inc.) (avail. Sept. 28, 1995) issued by the SEC
staff with respect to the non-registration as a broker-dealer of an
insurance agency associated with a registered broker-dealer, as such
letter may be modified and amended by subsequently issued no action
letters and superseding rules and interpretations, and is in
compliance with the terms and conditions of such guidance.
3. SUBPRODUCERS.
A. Broker/Dealer shall not permit any Subproducer to solicit sales of
Contracts unless Subproducer is appointed by Insurer. By submitting a
Subproducer for appointment, Broker/Dealer represents and warrants
that: (1) such Subproducer is a registered representative of
Broker/Dealer and is recommended for appointment with Insurer as
provided herein; (2) such Subproducer is fully licensed under
applicable laws to transact business with Insurer and shall maintain
such license(s) throughout appointment with Insurer; (3) Broker/Dealer
has the authority to supervise and control activities of such
Subproducer in connection with transactions contemplated by this
Agreement; and (4) all background investigations required by state and
federal laws have been made with respect to such Subproducer.
(i) Insurer will prescribe appropriate forms and procedures for use in
submitting requests for the appointment of sales people as
Subproducers. Such forms and procedures will include due diligence
questionnaires. Broker/Dealer must complete and submit to Insurer the
due diligence questionnaire requested by Insurer for all Subproducers
it proposes for appointment.
(ii) An application for appointment should not be submitted if the
Subproducer proposed for appointment has not received the necessary
and appropriate training to comply with all aspects of this Agreement.
(iii) Broker/Dealer is responsible for investigating the character,
work experience and background of any proposed Subproducer prior to
recommending appointment by Insurer. Broker/Dealer must provide
written notice to Insurer if it presents for appointment any
Subproducer who: (1) holds any state or federal criminal record; or
(2) has personally or through a business entity filed for bankruptcy
protection in the last seven (7) years; or (3) has been sanctioned by
the FINRA, the SEC, any state insurance department, any state
securities agency or any other regulatory agency with jurisdiction
over such individual; or (4) is not covered by an active error &
omissions insurance policy covering sales of annuity products
(collectively, any such Subproducer shall be referred to as
a "non-appointed Subproducer"). If Broker/Dealer desires any such
non-appointed Subproducer to become appointed with Insurer, such
non-appointed Subproducer must submit any required information
requested by Insurer and such appointment may be reviewed and rejected
in Insurer's sole discretion.
B. Insurer reserves the right to refuse to appoint any proposed
Subproducer and to terminate or refuse to renew any relationship with
any Subproducer, with or without cause, at any time.
C. Broker/Dealer shall ensure that Subproducers remain duly licensed,
meet the training and compliance requirements set forth in Section 7
of this Agreement, and comply with all applicable federal, state and
local laws and regulations and the rules of FINRA and other SROs
having jurisdiction over the parties ("Applicable Rules").
Broker/Dealer shall inform Insurer of any Subproducer who fails to
follow any of Broker/Dealer's supervision and training programs.
Broker/Dealer shall notify Insurer promptly, in writing, of any giving
or receiving of notice of termination of any Subproducer.
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D. To the extent that Exhibit 1 hereto does not include all Contracts of
Insurer registered as securities under the federal securities laws,
Broker/Dealer is responsible for ensuring that its Subproducers,
unless otherwise agreed to with Insurer in writing by means of an
executed selling agreement or an amendment hereto, do not offer to
sell any other variable contracts issued by Insurer, other than the
Contracts.
E. Broker/Dealer understands and acknowledges that Insurer: (1) relies
on Broker/Dealer to comply with the requirements set forth in this
Agreement with respect to Subproducers, (2) relies on the background
checks of Subproducers performed by the Broker/Dealer; and, (3) does
not independently confirm any information provided with respect to a
Subproducer; and (4) does not provide any training or supervision of
Subproducers sufficient to fulfill the obligations of Broker/Dealer
under this Agreement or Applicable Rules.
4. SALES MATERIAL.
A. Broker/Dealer shall not use any written, electronic (including
illustrations or software programs there for) or audiovisual material
(including prepared scripts for oral presentations) to create interest
in Insurer or the Contracts ("Marketing Material"), unless such
Marketing Material has been provided by, or approved in writing in
advance of such use by, the Insurer and/or Distributor.
B. In accordance with the requirements of Applicable Rules,
Broker/Dealer shall, to the extent required by Applicable Rules,
maintain complete records indicating the manner and extent of
distribution of any Marketing Material. This Marketing Material shall
be made available promptly to appropriate federal and state regulatory
agencies and SROs as required by Applicable Rules and to Distributor
and Insurer upon written request.
C. In conducting business under this Agreement, the Broker/Dealer shall,
and shall cause each Subproducer to, refrain from using Insurer and/or
any of its affiliates' service marks, names and/or logos unless prior
written approval from Insurer and/or any of its affiliates, as
applicable, is obtained.
D. Insurer and Distributor reserve the right to recall any material
provided by them at any time for any reason, and Broker/Dealer and
Subproducers shall promptly comply with any such request and shall not
use such material thereafter. Broker/Dealer shall return or destroy
all material immediately upon termination of this Agreement.
5. PROSPECTUSES. For any Contract, which is a registered security,
Broker/Dealer warrants that it shall deliver a currently effective
prospectus for the Contract and for the underlying funds prior to or
concurrent with each solicitation; and if required by state law, the
Statement of Additional Information for the Contract. No statements shall
be made to a client superseding or controverting or otherwise inconsistent
with any statement made in any prospectus for a Contract or
underlying funds. Insurer and Distributor shall furnish reasonable
quantities of prospectuses at no cost to the Broker/Dealer for use in the
solicitation of the Contracts.
6. SALES IN BANKS. If Broker/Dealer sells, or intends to sell, Contracts on
the premises of any federal or state chartered bank, thrift or savings and
loan institution (collectively, "Bank"), Broker/Dealer shall comply with
the requirements of applicable laws, regulations and guidelines of any
regulatory authority having jurisdiction over the activities of Bank or
occurring on Bank premises ("Applicable Banking Laws"), as well as
Applicable Rules and Annex II. Without limiting the foregoing,
Broker/Dealer shall ensure that all advertisements and sales literature
used by Broker/Dealer comply with Applicable Banking Laws and shall inform
Insurer in writing of any legends and other disclosures that are required
by Applicable Banking Laws to be contained in advertisements or sales
literature for policies issued by Insurer. Broker/Dealer shall observe, and
will comply with, all requirements of any bank on whose premises
Broker/Dealer engages in sales activities pursuant to this Agreement.
Broker/Dealer shall furnish to Insurer such appropriate records or
documents as Insurer may request that evidence compliance with this
provision, including verification certificates in a form satisfactory to
Insurer.
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7. POLICIES: SOLICITATIONS, SUPERVISION AND TRAINING.
A. Compliance with Law. In the performance of its obligations hereunder,
Broker/Dealer shall fully comply, and shall ensure that its
Subproducers fully comply, with Applicable Rules.
B. New Business. Broker/Dealer and Subproducers shall comply with
Applicable Rules in the solicitation of Contracts and submission of
applications for the Contracts.
(i) Requests to purchase a Contract shall be taken only on preprinted
application forms supplied by the Insurer unless the Contract is to be
issued pursuant to the Electronic Issuance Program (described below)
(collectively referred to as "Requests to Purchase"). The Contract
forms, applications and supporting documentation are the sole property
of the Insurer. Broker/Dealer shall ensure that all application
information will be accurate and can be relied upon by the Insurer.
All Requests to Purchase are subject to acceptance by Insurer at its
sole discretion.
(ii) Insurer has in place an electronic and telephonic process to (1)
facilitate issuance of the Contracts without the use of a paper
application, and/or (2) obtain additional information that is required
to complete the application process and for Insurer to process such
application (the "Electronic Issuance Program"). Broker/Dealer shall
ensure that its Subproducers do not participate in the Electronic
Issuance Program should Broker/Dealer desire not to utilize this
program. If applications and/or application information are
transmitted to the Insurer pursuant to the Electronic Issuance
Program, the following provisions shall apply:
(1) Broker/Dealer must communicate with owners of Contracts issued
through the Electronic Issuance Program in order to obtain and
deliver promptly to Insurer the signed confirmation for such
Contracts and other requisite forms or supporting documentation
as Insurer may reasonably request. Broker/Dealer must provide
assistance or cooperation required to enforce a Contract issued
under the Electronic Issuance Program, which shall include, but
not be limited to, providing Insurer access to recordings of
telephone conversations with customers containing their consent
to the purchase of Contracts, or providing statements or
affidavits from such Subproducers as to the customer's consent to
the making of Contracts. Broker/Dealer shall ensure that its
Subproducers promptly return to Insurer completed and signed
forms (including replacement-related state forms) and other
supporting documentation as the Insurer may reasonably request.
(2) In the event the owner of a Contract seeks to repudiate or
rescind the Contract and Insurer, in its sole discretion, waives
any surrender charges, the full commission paid by Insurer will
be returned to Insurer upon demand or, in the absence of such
demand, charged back to the recipient of the commission. In
addition, all amounts equal to any market loss arising from such
rescission or repudiation will be paid by Broker/Dealer on
demand, or in the absence of such demand, charged back to
Broker/Dealer.
(3) Broker/Dealer shall be solely responsible for the transmission or
failure of transmission of any application information to
Insurer. Broker/Dealer shall ensure that all application
information submitted through the Electronic Issuance Program
will be accurate and can be relied upon by Insurer.
(4) Broker/Dealer shall pay Insurer all amounts equal to any market
loss resulting from the misallocation of the initial purchase
payment into the subaccounts, which misallocation was the result
of Insurer relying on application information submitted by
Broker/Dealer or its Subproducers via the Electronic Issuance
Program. In the absence of a demand for payment, such amounts
shall be charged back to Broker/Dealer.
C. Suitability. Neither Broker/Dealer nor any Subproducer shall solicit
an application from, or recommend the purchase of a Contract to, an
applicant without having reasonable grounds to believe, in accordance
with Applicable Rules that such purchase is suitable
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for the applicant. While not limited to the following, the
Broker/Dealer shall ensure that a determination of suitability shall
be based on information supplied after a reasonable inquiry concerning
the applicant's insurance and investment objectives, financial
situation, age, and needs ("Suitability Analysis"). Broker/Dealer
shall provide Insurer with an annual certification regarding
Broker/Dealer's compliance with this Section 7(C). Such certification
shall disclose, if applicable, the occurrence of any material
violations of this Section 7(C) that Broker/Dealer is aware of or
should reasonably be aware of. The parties acknowledge that Insurer
and Distributor will rely on Broker/Dealer's Suitability Analysis, and
utilize Broker/Dealer's records of its Suitability Analysis, for
purposes of complying with Applicable Rules. Broker/Dealer shall
furnish to Insurer such appropriate records or documents as Insurer
may request that evidence compliance with this provision, including
verification certificates in a form satisfactory to Insurer.
D. Purchase Payments. Broker/Dealer shall take purchase payments only in
forms acceptable to Insurer and Distributor. The parties acknowledge
that any third-party check that has been endorsed over to Insurer is
not an acceptable form of payment for any Contract. The parties
further acknowledge that any purchase payments received by
Broker/Dealer or any Subproducer shall at all times be the property of
Insurer. Broker/Dealer acknowledges that if any purchase payment is
held at any time by it: (i) Broker/Dealer shall segregate such
purchase payments from its own funds and (ii) Broker/Dealer shall
promptly remit such purchase payments to the lock box or other
place designated by Insurer for receipt of premium payments.
E. Contract Delivery. Upon issuance of a Contract by Insurer, Insurer
will deliver such Contract to its purchaser. If a Contract is returned
to Broker/Dealer or Subproducer pursuant to the "Free Look" provision
or any other right to examine provision of the Contract, the
Broker/Dealer will return the contract to Insurer promptly, which
means returned to the Insurer's Annuity Service Center (as identified
in the prospectus) on or before the 3(rd) business day after receipt
by Broker/Dealer or Subproducer.
F. Authority of Insurer. No person other than Insurer has the authority
to make, alter or discharge any policy form and/or administrative
form, including any Contract form, Contract application, Contract
certificate, supplemental contract, amendments, endorsements, or
riders issued by the Insurer. No person other than Insurer has the
right to waive or modify any provision with respect to any Contract or
policy, or to extend the time for payment of any premiums, bind
Insurer to reinstate any terminated Contracts or policies or accept
notes for payment of premiums. No person other than Insurer has the
authority to (i) enter into any proceeding in a court of law or before
a regulatory agency in the name of or on behalf of the Insurer, or
(ii) institute or file any response to any legal proceeding in
connection with any matter pertaining to the Contracts on behalf of
Insurer without its prior written consent (except that if
Broker/Dealer is named as a party in such proceedings, it may enter
into legal proceedings on its own behalf without the written consent
of Insurer).
G. Short Term Trading. Broker/Dealer shall abide by the provisions set
forth in the Contract prospectuses regarding transfers of funds
between investment options. Broker/Dealer represents and warrants that
it has established and currently maintains internal control procedures
to monitor and deter trading activities that seek to benefit from
short-term price fluctuations or price irregularities, commonly
referred to as market timing.
H. Supervision & Training. Broker/Dealer shall ensure that it has such
rules, procedures, supervisory and inspection techniques as necessary
to diligently supervise, control and train its Subproducers to ensure
compliance with the terms of this Agreement and Applicable Rules.
Broker/Dealer shall be responsible for supervision, control and
training of its Subproducers in connection with their solicitation and
servicing activities with respect to the Contracts and shall supervise
compliance with Applicable Rules.
(i) Broker/Dealer shall comply with, and shall ensure that any
Subproducer who is soliciting applications for and/or servicing
Contracts complies with all policies, procedures and guidelines of
Insurer, whether included herein or provided separately by Insurer to
Broker/Dealer (collectively, the "Insurance Procedures").
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(ii) Broker/Dealer shall furnish to Insurer such appropriate records
or documents as Insurer may request that evidence compliance with this
provision, including verification certificates in a form satisfactory
to Insurer.
I. No Solicitations. Unless required by a determination of suitability,
Broker/Dealer shall ensure that neither it nor any Subproducer
appointed hereunder will solicit, induce or attempt to solicit or
induce Contract owners to terminate, surrender, cancel, replace or
exchange such Contract. Broker/Dealer acknowledges that unauthorized
solicitation is likely to cause irreparable injury to the Insurer and
that, in the event of a violation or threatened violation of a party's
obligations hereunder, Insurer shall have no adequate remedy at law
and shall therefore be entitled to enforce each such obligation by
temporary or permanent injunctive or mandatory relief obtained in any
court of competent jurisdiction without the necessity of proving
damages, posting any bond or other security, and without prejudice to
any other rights and remedies which may be available at law or in
equity.
J. Anti-Money Laundering.
(i) Broker/Dealer shall maintain an anti-money laundering ("AML")
Program in compliance with Applicable Rules that at a minimum, must
include the following elements: (1) policies, procedures and controls
that are tailored to Broker/Dealer's business, including the
distribution of Contracts; (2) designation of a compliance officer to
administer and oversee the AML Program; (3) ongoing employee and agent
training; (4) an independent audit function to test the effectiveness
of the AML Program; (5) a Customer Identification Program adopted
pursuant to Section 326 of the USA PATRIOT Act (together with all
future amendments, the "PATRIOT Act") and its implementation
regulations; (6) provides for the filing of all necessary anti-money
laundering reports, including currency transaction reports and
suspicious activity reports; (7) provides for screening of all new and
existing customers against the Office of Foreign Asset Control
("OFAC") list and any other government list that is or becomes
required under the Bank Secrecy Act, as amended (together with the USA
PATRIOT Act, the "Act"); and (8) allows appropriate examiners and
regulators to examine information, books and records maintained by
Broker/Dealer in connection with its AML Program.
(ii) The parties acknowledge that Insurer has established an AML
Program pursuant to applicable requirements of the Act. As part of
Insurer's AML Program and as permitted by AML regulations promulgated
under the Act that are applicable to Insurer, the parties acknowledge
that Insurer will rely on Broker/Dealer to, and Broker/Dealer agrees
to, (1) verify a customer's identification and the source(s) of funds
to be used to purchase a Contract, (2) alert Insurer of any facts or
"red flags" that suggest existence of a suspicious transaction
involving Insurer's Contracts, and (3) unless otherwise agreed to by
Insurer, provide appropriate AML training to Broker/Dealer's employees
and Subproducers involved in the solicitation, sale and/or servicing
of Contracts.
K. Books and Records; Certain Reports; Cooperation. Broker/Dealer shall
maintain complete and accurate records concerning the solicitation and
sale of Contracts (including all relevant customer-related
information) and information regarding the customs relating to the
sale and/or servicing of the Contracts (including the manner and
extent of distribution of any sales, marketing or other solicitation
material) in accordance with Applicable Rules.
(i) Broker/Dealer shall make all such records and files available to
Insurer or Distributor, at such times as Insurer or Distributor may
request, so as to enable Insurer or Distributor, as the case may be,
to fulfill its obligations under Applicable Rules arising out of or in
connection with this Agreement. Broker/Dealer shall give Insurer or
its authorized representatives access to Broker/Dealer's premises
during normal business hours for the purpose of reviewing and
evaluating compliance by Broker/Dealer and its Subproducers with
Insurance Procedures. Broker/Dealer shall also use its reasonable
efforts to assist Insurer with any such review and evaluation,
including making available to Insurer (or its authorized
representatives) Broker/Dealer's employees or agents to answer any
questions Insurer or its authorized representatives may have. Any such
on-site review or evaluation conducted by Insurer or its authorized
representative shall be performed
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during normal business hours and in such a manner so as to minimize
any undue interruptions to the normal business operations of Broker/
Dealer.
(ii) Broker/Dealer shall also make such records and files available to
state insurance departments, the FINRA or other regulatory agencies,
including the SEC, that have regulatory authority over any of the
parties hereto.
(iii) Insurer shall make available to Broker/Dealer, at such times as
Broker/Dealer may reasonably request, copies of books, records and
other relevant information maintained by Insurer concerning the
solicitation and sale of Contracts that enables Broker/Dealer to
comply with its obligations under Applicable Rules that arise as a
result of the Agreement.
(iv) Broker/Dealer shall file, or cause to be filed, all reports
required to be filed by a licensed insurance agent or producer under
applicable state insurance laws and regulations and by a registered
broker/dealer under applicable federal securities laws and regulations
(including regulations of the FINRA).
(v) In the event Broker/Dealer has any concerns regarding the scope or
manner in which the Insurance Procedures are to be implemented,
Insurer and Broker/Dealer will discuss such concerns and cooperate
fully so as to achieve a prompt and reasonable resolution which
ensures that the Insurance Procedures and the rules, procedures and
guidelines of Broker/Dealer with respect to the solicitation and
servicing activities related to the Contracts are consistent with
Applicable Rules.
L. Complaints, Investigations and Examinations. Broker/Dealer shall
promptly notify Insurer and Distributor of (i) any written customer
complaint or any allegation, in writing or otherwise, that
Broker/Dealer or any Subproducer violated any law, regulation or rule
in connection with soliciting or servicing any Contract, (ii) any
disciplinary proceedings that have been threatened or instituted
against any of its Subproducers soliciting sales of any Contract, or
(iii) notice of any regulatory inquiry, investigation or proceeding or
any threatened or filed lawsuit or claim received by Broker/Dealer or
any Subproducer relating to, in each case, any Contract or any
activity undertaken in connection with this Agreement. Insurer and
Broker/Dealer shall each cooperate fully in any inquiry, investigation
or proceeding arising out of or in connection with transactions
contemplated by this Agreement, including any regulatory inquiry,
investigation or proceeding or judicial proceeding arising out of or
in connection with the Contracts. Broker/Dealer shall obtain approval
from Insurer for written response to customer complaints.
M. Change of Subproducer and/or Broker/Dealer of Record. In the event
Broker/Dealer requests a transfer of any Contract or Contracts to
Broker/Dealer from a different broker/dealer, Broker/Dealer shall act
in conformity with Applicable Rules.
8. COMMISSION PAYMENTS.
A. Broker/Dealer shall be entitled to receive a commission based upon
purchase payments received and accepted by Insurer for Contracts
issued pursuant to this Agreement. Such commission shall be equal to
the amount of the applicable rate of commission set forth in the
Commission Schedule attached hereto as Exhibit 1 hereto which is
incorporated herein by reference and may be amended or supplemented
from time to time. Insurer reserves the right to offer additional
commissions from time to time, which will be communicated to
Broker/Dealer by Insurer and/or Distributor.
B. Commissions payable to Broker/Dealer shall be paid by Insurer on
behalf of Distributor, consistent with applicable SEC requirements. In
conformance with FINRA Notice to Members 84-48, Broker/Dealer waives
payment of the commission from Distributor until Distributor is in
receipt of the commission.
C. In no event shall Insurer or Distributor be liable for the payment of
any commissions with respect to any solicitation made, in whole or in
part, by any person not in compliance with state and federal
licensing, registration and appointment requirements. Under no
circumstances shall Insurer be liable for the payment of any
commissions with respect to
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any solicitation which occurred, in whole or in part, in a
jurisdiction where the Contract was not approved for sale.
D. If a Contract is returned to Insurer pursuant to the "Free Look"
provision or any other right to examine provision of the Contract, the
full commission paid to Broker/Dealer will be unearned and shall be
returned to the Insurer upon demand or, in the absence of such demand,
charged back to the recipient of the commission.
E. Insurer and Distributor shall not be obligated for the payment of
commissions for a Contract if it is determined by Insurer, based on a
good faith review of the facts and circumstances and discussion with
the Broker/Dealer, that Contract would not have been issued except for
a misrepresentation or omission by Broker/Dealer or any Subproducer,
even if such Contract is not rescinded. In this instance, 100% of the
commission paid on that Contract will be considered unearned and will
be returned to the Insurer upon demand or, in the absence of such
demand, charged back to the recipient of the commission.
F. In no event shall Insurer incur obligations under this Agreement to
issue any Contracts, provide benefits under any features offered by
any Contracts or pay any commission in connection therewith if the
Contract owner has exceeded any specified maximum age limitations as
set forth in the applicable product prospectus when the Contract
application was accepted. With respect to such Contracts where there
has been a misstatement of age and/or inadvertent issuance to an over
age owner, the full commission paid by Insurer will be unearned and
shall be returned to Insurer upon demand or, in the absence of such
demand, charged back to the recipient of the commission.
G. Initial and/or subsequent Purchase Payments that exceed, or that
cause all Contract(s) owned by the same owner to exceed, the dollar
amount(s) specified in the prospectus and as amended from time-to-time
("Large Case Purchase Payment") require pre-approval by Insurer.
Insurer reserves the right to reject any such initial or subsequent
Purchase Payments or may accept such Purchase Payments under terms
communicated to Broker/Dealer but decided in Insurer's sole
discretion.
H. Compensation for the sale of any Contract that is renewed, changed,
exchanged or otherwise converted from any other contract issued by
Insurer or any affiliate shall be paid according to Insurer's
policies, in its sole discretion.
I. Broker/Dealer acknowledges and understands that no commission or other
compensation shall be paid to Broker/Dealer with respect to a Contract
after Broker/Dealer is no longer designated as a broker/dealer of
record for such Contract. Broker/Dealer acknowledges and understands
that a commission charge-back may occur if a Subproducer of
Broker/Dealer terminates employment with Broker/Dealer and a Contract
owner designates a different broker/dealer of record and a commission
was paid while the change of broker/dealer is being processed.
J. Broker/Dealer shall be solely responsible for the payment of any
commission or consideration of any kind to Subproducers. Broker/Dealer
shall be solely responsible under applicable tax laws for the
reporting of compensation paid to Subproducers and for any withholding
of taxes from compensation paid to Subproducers, including, without
limitation, FICA, FUTA, and federal, state and local taxes.
9. INDEMNIFICATION.
A. Broker/Dealer shall indemnify, defend and hold harmless Insurer and
Distributor and each person who controls or is associated or
affiliated with Insurer or Distributor within the meaning of the
federal securities laws and its and their respective directors,
officers, agents, employees, attorneys and representative of any of
the foregoing, from and against any and all losses, expenses, claims,
damages and liabilities, joint or several, as incurred (including any
costs of investigation and legal expenses and any amounts paid in
settlement of any action, suit or proceeding of any claim asserted)
which result from, arise out of or are based upon any allegation
involving:
Page 9 of 18
(i) any breach in a material respect of any of Broker/Dealer's
representations, warranties or covenants under this Agreement by
Broker/Dealer or any Broker/Dealer Affiliates;
(ii) any violation in a material respect by Broker/Dealer, any
Broker/Dealer Affiliate or any Subproducer of any Applicable Rules, in
each case as it relates to this Agreement and the transactions
contemplated hereby; or
(iii) any claim by Subproducers or other agents or representatives of
Broker/Dealer for commissions or other compensation or remuneration of
any type.
(iv) Without limiting Section 9(A) above, in the event a Contract
owner makes a claim regarding a violation of sales practice or
suitability obligation for breach of a purported duty owed by Insurer
and/or Distributor and such claim asserts a violation of any sales
practice, suitability or Broker/Dealer obligation owed to a Contract
owner, Broker/Dealer shall indemnify Insurer and/or Distributor, as
the case may be, in accordance with the provisions set forth in
Section 9(A) above.
B. Distributor shall indemnify, defend and hold harmless Broker/Dealer
and each person who controls or is associated or affiliated with
Broker/Dealer within the meaning of the federal securities laws and
its and their respective directors, officers, corporate agents,
employees, attorneys and any representatives thereof, from and against
any and all losses, expenses, claims, damages and liabilities, joint
or several, as incurred (including any costs of investigation and
legal expenses and any amounts paid in settlement of any action, suit
or proceeding of any claim asserted) which result from, arise out of
or are based upon:
(i) any breach in a material respect of any of Distributor's
representations, warranties or covenants under this Agreement by
Distributor; or
(ii) any violation in a material respect by Distributor of any of the
Applicable Rules, solely as it relates to this Agreement and
transactions contemplated hereby.
C. Insurer shall indemnify, defend and hold harmless Broker/Dealer and
each person who controls or is associated or affiliated with
Broker/Dealer within the meaning of the federal securities laws and
its and their respective directors, officers, corporate agents,
employees, attorneys and any representatives thereof, from and against
all losses, expenses, claims, damages and liabilities, joint or
several, as incurred (including any costs of investigation and legal
expenses and any amounts paid in settlement of any action, suit or
proceeding of any claim asserted) which result from, arise out of or
are based upon:
(i) any breach in a material respect of any of the Insurer's
representations, warranties or covenants under this Agreement by
Insurer; or
(ii) any violation in a material respect by Insurer of any any federal
or state securities law or regulation, insurance law or regulation as
it relates to this Agreement and the transactions contemplated hereby.
D. If any third party makes a claim that is covered by Section 9 above
and the party seeking indemnification ("Indemnitee") intends to seek
indemnification from the party that owes indemnification obligations
("Indemnitor"), the Indemnitee shall provide prompt written request
for indemnification under Section 9 (the "Claims Notice") to the
Indemnitor and the Indemnitor shall provide a written acceptance or
rejection of such request within ten (10) days after its receipt of
the Claim Notice. If the Indemnitor fails to respond to the Claims
Notice within such ten-day period, or refuses to defend the claim as
required by Section 9, the Indemnitee may resist the claim and/or
settle or otherwise pay the claim; provided, however, that the
Indemnitee shall advise the Indemnitor of its intent to settle or pay
the claim prior to doing so. The Indemnitor shall pay all fees and
costs incurred by the Indemnitee arising out of or relating to that
defense and any such settlement or payment.
Page 10 of 18
E. The indemnification provided for herein shall survive termination of
this Agreement.
10. FIDELITY BOND. Broker/Dealer represents that all directors, officers,
employees, representatives and/or Subproducers who are appointed pursuant
to this Agreement or who have access to funds intended to be delivered from
the client to Insurer or from the Insurer to the client and will continue
to be covered by a blanket fidelity bond including coverage for larceny,
embezzlement or any other defalcation, issued by a reputable bonding
company. This bond shall be maintained at Broker/Dealer's expense. Such
bond shall be at least equivalent to the minimal coverage required under
the rules of FINRA, endorsed to extend coverage to life insurance and
annuity transactions. Broker/Dealer acknowledges that the Insurer may
require evidence that such coverage is in force and Broker/Dealer shall
promptly give notice to the Insurer of any notice of cancellation or change
of coverage. Broker/Dealer shall segregate these funds in a manner
reasonably agreed upon by all parties until the matter is concluded.
Broker/Dealer shall assign any proceeds received from the fidelity bond
company to the Insurer to the extent of the Insurer's loss due to
activities covered by the bond upon resolution of the matter. If there is
any deficiency, Broker/Dealer will promptly pay the Insurer that amount on
demand to satisfy any deficiency and the costs of collection.
11. CONFIDENTIALITY.
A. Confidential Information. The parties acknowledge that, in the
performance of the Agreement, they receive or have access to
information about customers and other proprietary information of the
other parties, including names, addresses, account balances, account
numbers, account activity, social security numbers, taxpayer
identification numbers, and financial and health information, as well
as all forms and types of financial, business, technical, or economic
information, whether tangible or intangible, and whether or how
stored, compiled, or memorialized physically, electronically,
graphically, photographically, or in writing ("Confidential
Information"). Confidential Information excludes information that (1)
is independently developed by a party without violating the disclosing
party's proprietary rights, (2) is or becomes publicly known (other
than through unauthorized disclosure), (3) is intentionally disclosed
by the owner of such information to a third party free of any
obligation of confidentiality, (4) is already known by a party, as
evidenced by the written records of that party, free of an obligation
of confidentiality other than pursuant to this Agreement, or (5) is
rightfully received by a party free of any obligation of
confidentiality.
B. Use. The parties may use Confidential Information only in connection
with this Agreement and may not disclose Confidential Information to
any other party except as permitted by the Xxxxx-Xxxxx-Xxxxxx Act,
other applicable federal and state laws and regulations regarding
privacy, this Agreement or as otherwise agreed to in writing by the
parties hereto. The parties may disclose Confidential Information to
their respective employees and agents or to third party vendors (1)
who are involved in the issuance, administration or maintenance of a
customer's account or (2) otherwise on a need-to-know basis, provided
that, in each case, they have first adequately apprised any such
employee, agent, and or third party vender to observe this
confidentiality. In the case of employees and/or agents, the party
shall provide adequate training to ensure this confidentiality. The
parties will take reasonable steps to protect the Confidential
Information, applying at least the same security measures and level of
care as they employ to protect their own Confidential Information. If
a party is compelled by applicable law to disclose any Confidential
Information, the party so compelled must promptly notify, in writing,
the party whose Confidential Information is being disclosed before
disclosing such Confidential Information so that such other party is
afforded the opportunity to seek relief from such disclosure or to
limit the scope of the disclosure.
C. Security. Each party shall comply with all federal, state, and local
law or regulation related to privacy, including Regulation S-P of the
SEC and Title V of the Xxxxx-Xxxxx-Xxxxxx Act. Broker/Dealer shall
notify Distributor and Insurer promptly upon any breach of
Confidential Information. Each party shall maintain an effective
information security program to protect the Confidential Information,
which program includes administrative, technical, and physical
safeguards:
(i) to insure the security and confidentiality of Confidential
Information;
Page 11 of 18
(ii) to protect against any anticipated threats or hazards to the
security or integrity of such Confidential Information; and
(iii) to protect against unauthorized access to or use of Confidential
Information which could result in substantial harm or inconvenience to
either party or other affiliates, or to customers of any of them.
D. Injunctive Relief. The parties acknowledge that the unauthorized
disclosure of Confidential Information is likely to cause irreparable
injury to the disclosing party and that, in the event of a violation
or threatened violation of a party's obligations hereunder, the
disclosing party shall have no adequate remedy at law and shall
therefore be entitled to enforce each such obligation by temporary or
permanent injunctive or mandatory relief obtained in any court of
competent jurisdiction without the necessity of proving damages,
posting any bond or other security, and without prejudice to any other
rights and remedies which may be available at law or in equity.
E. Information Received in Error. If Confidential Information, which is
not necessary for the purposes of this Agreement, is received by one
party from the other party in error, the other party shall promptly
return the original and destroy all copies of the same and/or destroy
or certify in writing to the requesting party that the Confidential
Information has been destroyed
F. Use Upon Termination. At the termination of this Agreement, or in the
event a party makes a request for the return of their Confidential
Information, the other parties will promptly return the original and
all copies of same, or certify in writing to the requesting party that
the Confidential Information has been destroyed, provided however,
that each party shall retain Confidential Information in its
possession necessary to service its customers. This Confidentiality
provision shall survive the termination of this Agreement.
G. The provisions governing the change of Broker/Dealer and Subproducer
contained in Section 7(M) of this Agreement apply to this Section 11.
12. TERMINATION.
A. Termination without Cause; Termination of Subproducer Appointment.
(i) This Agreement shall continue for an indefinite term, subject to
the termination by any party hereto upon 30 days prior written notice
(a "Termination Notice") to the other parties hereto. The Termination
Notice shall state the effective date of termination (the "Termination
Date"), which shall be a date no earlier than 30 days after the date
on which the Termination Notice was delivered to the non-terminating
parties.
(ii) In addition, immediately upon notice to Subproducer, Insurer may
terminate appointment of a Subproducer who does not meet production
requirements, as determined in the sole discretion of Insurer. Any
such notice shall be delivered to the Subproducer at the last address
of record that Insurer has for him or her.
B. Termination for Cause. This Agreement shall terminate without further
action on the part of any party hereto under the following
circumstances:
(i) a party hereto shall have committed a material breach of any of
its representations, warranties or covenants under this Agreement,
which breach is not cured to the satisfaction of the non-breaching
part(ies) within 10 days after notice of such breach is delivered to
the breaching party (or within such longer cure period as the
non-breaching part(ies) may agree);
(ii) the suspension, revocation or non-renewal of any then required
insurance or securities license of Broker/Dealer or any of its
Broker/Dealer Affiliates; or
(iii) the deregistration of Broker/Dealer or its termination of
membership with the FINRA.
Page 12 of 18
(iv) If this Agreement is terminated pursuant to this Section 12(B),
Broker/Dealer's right under this Agreement to receive compensation
that is due and payable on or after the Termination Date pursuant to
the Commission Schedule (attached hereto as Exhibit 1) shall
immediately terminate.
C. Rights and Obligations. Upon termination of this Agreement, all
authorizations, rights and obligation under this Agreement shall
terminate and cease to be in effect, except for the provisions of the
following provisions: Section 7 (Policies: Solicitations, Supervision
and Training) with respect to any Contract issued hereunder prior to
termination, including the provisions of client services, Section 8
(Commissions), Section 9 (Indemnifications), Section 10 (Fidelity
Bond), Section 11 (Confidentiality), Section 13 (General Provisions)
and this Section 12 (Termination).
13. GENERAL PROVISIONS.
A. Representations, Warranties and Covenants. The representations,
warranties and covenants of Broker/Dealer set forth in this Agreement
are continuous during the term of this Agreement, and Broker/Dealer
shall notify each of Insurer and Distributor immediately, in writing,
if, at any time during the course of this Agreement, any of the
representations, warranties or covenants set forth herein become
inaccurate or untrue of the facts related thereto. All representations
and warranties made in or pursuant to this Agreement shall survive the
termination of this Agreement.
B. Attorneys' Fees. The prevailing party to any dispute between any of
the parties to this Agreement shall be entitled to an award of
attorneys' fees and costs.
C. Waiver. Waiver by any of the parties to promptly insist upon strict
compliance with any of the obligations of any other party under this
Agreement will not be deemed to constitute a waiver of the right to
enforce strict compliance.
D. Independent Contractor. Broker/Dealer is an independent contractor
and its Subproducers, who are appointed as agents or producers of
Insurer, are agents of Broker/Dealer and not employees, agents or
representatives of Insurer or Distributor.
E. Independent Assignment; Delegation. No assignment of this Agreement
(whether by operation of law or otherwise) or of commissions or other
payments under this Agreement by Broker/Dealer shall be valid without
the prior written consent of the Insurer. If Broker/Dealer delegates
or subcontracts with another third-party to perform any of
Broker/Dealer's obligations under this Agreement, Broker/Dealer shall
remain fully responsible and liable for all obligations performed by
such third-party to the same extent as if such obligations were
performed by Broker/Dealer. Upon written notice to Broker/Dealer,
Distributor and Insurer may transfer the Agreement to an affiliate via
assignment and/or novation and such affiliate shall assume the rights
and obligations of Distributor or Insurer, as applicable, upon the
date specified in such notice.
F. Notice. Any communication or notice pursuant to this Agreement shall
be in the form of a written or facsimile message and be delivered to
the addresses set forth on the signature pages hereto, and shall be
deemed delivered and treated as effective (i) when delivered, if
delivered in person (by hand or by messenger), or by overnight courier
or if sent by facsimile transmission (receipt of which is confirmed),
(ii) on the fifth (5th) day after mailing, if mailed pursuant to
United States first-class mail (or any express mail service), postage
prepaid, or (iii) upon transmittal if in the form of an electronic
message.
G. Severability. To the extent this Agreement may be in conflict with
any applicable law or regulation, this Agreement shall be construed in
a manner not inconsistent with such law or regulation. The invalidity
or illegality of any provision of this Agreement shall not be deemed
to affect the validity or legality of any other provision of this
Agreement.
H. Entire Agreement; No Third Party Beneficiaries. This Agreement,
together with the annexes, exhibits and addendums hereto, (i)
constitute the entire agreement of the parties hereto, and supersedes
all prior agreements and undertakings, both written and oral, among
the parties hereto with respect to the subject matter hereof and
thereof, and
Page 13 of 18
(ii) other than with respect to the matters set forth in Section 12
(Indemnification), is not intended to confer upon any person or entity
other than the parties hereto any rights or remedies hereunder.
I. Changes in Law. During the term of this Agreement, in the event of
changes to Applicable Rules, which affect the performance of a party's
obligation under this Agreement, the parties shall discuss, negotiate
and implement in good faith appropriate changes to this Agreement upon
the request of any of the other parties hereto.
J. Amendment. Except as expressly provided herein, no amendment to
this Agreement shall be effective unless set forth in writing and
signed by all the parties hereto. Notwithstanding the foregoing:
(i) any amendment or modification of this Agreement shall be effective
without having been executed by Distributor if such amendment or
modification does not materially and adversely affect the rights and
obligations of Distributor hereunder;
(ii) Annex 1 hereto may be amended to provide for additional and/or
new Broker/Dealer Affiliates of the Broker/Dealer, which shall become
subject to and be bound by the terms of this Agreement, upon delivery
by Broker/Dealer to Insurer of a revised Annex 1 that sets forth the
information and is executed by Broker/Dealer and such additional or
new Broker/Dealer Affiliates;
(iii) Annex II hereto may be amended at any time upon written
notification from Distributor or Insurer to Broker/Dealer.
(iv) Exhibit 1 hereto, any addendum to Exhibit 1 hereto adopted
pursuant to this Section 13(J), and any fee amendment entered into
between Insurer and Broker/Dealer on or after the date hereof may, in
each case, be amended or modified by Insurer or Distributor upon 10
days' prior written notice to Broker/Dealer (which notice, solely for
purposes of this subclause (iv) shall be deemed received by
Broker/Dealer on the earlier of actual receipt or 10 days after
mailing or transmission); and
(v) For purposes of the preceding subclause (iv), the submission of an
application for any Contract by Broker/Dealer or its Subproducers
after the expiration of the 10-day period described therein shall
constitute Broker/Dealer's agreement to such amendment.
K. New York Law. This Agreement shall be construed in accordance with
the laws of the State of New York, without regard to its conflicts of
law principles.
L. Rules of Construction. For purposes of this Agreement, the word
"including" (and unless the context otherwise requires, "include" or
"includes") shall be deemed to be followed by the words "without
limitation." The provisions hereof have been subject to the mutual
consultation, negotiation and agreement of the parties hereto and
there shall be no construction against any party based on any
presumption of that party's involvement in the drafting hereof.
M. Venue. Venue for any action between the parties shall be Los Angeles,
California.
N. Counterparts. This Agreement may be executed in any number of
counterparts, and each of such counterparts shall, for all purposes,
constitute an agreement binding on all parties notwithstanding that
not all parties are signatories to the same counterpart.
O. Headings. The section headings contained in this Agreement are
inserted for convenience only and will not affect in any way the
meaning or interpretation of this Agreement.
P. Effectiveness. This Agreement shall be effective as of the date first
set forth below.
Page 14 of 18
IN WITNESS WHEREOF, this Agreement, dated_____________, has been executed
by duly authorized representatives of Insurer, Distributor and Broker/Dealer.
"INSURER":
THE UNITED STATES LIFE INSURANCE COMPANY Send mail to:
IN THE CITY OF NEW YORK Executive Vice President
The United States Life
Insurance Company in the
City of New York
00000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, XX 00000
By:
--------------------------------
Name: Fax No. (000) 000-0000
------------------------------
Title:
-----------------------------
With a copy to (which shall
not constitute notice):
General Counsel
First SunAmerica Life
Insurance Company
1 SunAmerica Center
0000 Xxxxxx xx xxx Xxxxx,
00(xx) Xxxxx Xxx Xxxxxxx,
XX 00000
Fax No. (000) 000-0000
"DISTRIBUTOR":
SUNAMERICA CAPITAL SERVICES, INC. Send mail to:
General Counsel
SunAmerica Capital Services, Inc.
Harborside Financial Center,
0000 Xxxxx 0
Xxxxxx Xxxx, XX 00000
By:
------------------------------
Xxxxxxx X. Xxxxxx
Senior Vice President and
Chief Distribution Office Fax No. (000) 000-0000
"BROKER/DEALER":
Send mail to:
---------------------------------- ----------------------------
----------------------------
----------------------------
----------------------------
----------------------------
By:
--------------------------------
Name: Fax No.
------------------------------ -----------------------
Title:
-----------------------------
Page 15 of 18
ANNEX I
This Annex I appends the Selling Agreement dated _______________________ (the
"Agreement") between The United States Life Insurance Company in the City of New
York, SunAmerica Capital Services, Inc. and _________________________
("Broker/Dealer"). The undersigned is affiliated with Broker/Dealer and
represents that it holds the necessary corporate insurance license to act as
general agent in connection with the sale of Contracts, as defined in the
Agreement, in those states so identified next to its name. By executing this
Annex I, each of the undersigned shall be bound by the terms and conditions of
the Agreement as if it were a party thereto.
COMPANY TAX I.D. NO.
Signature:
Page 16 of 18
ANNEX II
Sales in Banks. Applicable Banking Laws, for purposes of any sales activity of
Broker/Dealer on the premises of a Bank as defined in the Agreement, shall
include, without limitation, the Interagency Statement on Retail Sales of
Nondeposit Investment Products (Board of Governors of the Federal Reserve
System, Federal Deposit Insurance Corporation, Office of the Comptroller of the
Currency, and Office of Thrift Supervision, February 14, 1994) and any
subsequent release designed to provide governance to banks in connection with
the sale of nondeposit investment products ("Applicable Banking Laws"), FINRA
Rule 2350 and Insurance Customer Protection Rules adopted under the
Xxxxx-Xxxxx-Xxxxxx Act of 1999.
Page 17 of 18
EXHIBIT 1
Commission Schedule
[This page is interntionally left blank. Please see attached Commission
Schedule(s)]
Page 18 of 18
