DISTRIBUTION AGREEMENT
This Agreement is entered into effective as of August 12, 1999 by and
among Fidelity Investments Life Insurance Company ("FILI"), Fidelity
Brokerage Services, Inc. ("FBSI") and Pacific Guardian Life Insurance
Company, Limited ("PGL").
In consideration of the mutual covenants and promises set forth
herein below, the parties do hereby agree as follows:
ARTICLE I. DEFINITIONS
1. "Contracts" means all variable annuity contracts issued by FILI.
2. "Fund" means the mutual fund investment options available under
the Contracts.
3. "1933 Act" means the Securities Act of 1933, as amended.
4. "1934 Act" means the Securities Exchange Act of 1934, as amended.
5. "1940 Act" means the Investment Company Act of 1940, as amended.
6. "Participation Agreement" refers to one or more participation
agreements to which FILI and the Funds are parties. Each
Participation Agreement, whether currently in existence or entered
into in the future, is incorporated herein by this reference.
7. "Payments" means all purchase payments made with respect to any
Contract, including initial and any subsequent purchase payments.
8. "Prospectus" means any prospectus included within any
Registration Statement for any Contract or Fund, including any
prospectus filed pursuant to Rule 424 or Rule 497 under the 0000 Xxx.
9. "Registration Statement" means the currently effective
registration statement or currently post-effective amendment thereto
relating to any Contract and/or Variable Account, including financial
statements and all exhibits thereto.
10. "SEC" means the United States Securities and Exchange
Commission.
11. "Variable Account" means each separate account of FILI
supporting any Contract, whether now in existence or established by
FILI in the future to support any Contract. A Variable Account may
consist of one or more divisions, each investing in shares of a Fund.
ARTICLE II. AGREEMENTS OF FILI
1. FILI hereby appoints PGL as its independent general agent for
sale of the Contracts in the State of Hawaii.
2. FILI, during the term of this Agreement, will immediately notify
FBSI and PGL in writing of the following:
(a) When the Registration Statement for any Contract has become
effective or when any amendment with respect to the Registration
Statement thereafter becomes effective;
(b) Any request by the SEC for any amendments or supplements to the
Registration Statement for any Contract or of any request for
additional information that must be provided by FBSI;
(c) The issuance by the SEC of any stop order with respect to the
Registration Statement for any Contract or any amendments thereto or
the initiation of any proceedings for that purpose or for any other
purpose relating to the registration and/or offering of the Contracts;
(d) Whether approval of the Contract forms is required under the laws
of Hawaii, and whether and when such approvals have been obtained.
FILI will be responsible for obtaining any and all approvals for
Contract forms in accordance with Hawaii laws, rules and regulations.
3. FILI will compile periodic marketing reports summarizing sales
results to the extent reasonably requested by FBSI or PGL.
4. FILI will provide to FBSI and PGL at least one complete copy of
all currently effective prospectuses, statements of additional
information and reports, that relate to the Contracts or a Variable
Account, after the filing of such document with the SEC.
5. FILI will keep appropriate books and records for FBSI, in
conformity with Rules 17a-3 and 17a-4 under the 1934 Act, showing all
commissions paid, all initial sales of contracts, all subsequent
Payments made by Contract owners, and such other information as may be
required from time to time by the SEC or the NASD. Such books and
records shall be the property of FILI and FBSI, available to each of
them immediately upon demand. Upon reasonable notice to FILI or FBSI,
PGL shall have full and free access, during ordinary business hours,
to such books and records.
ARTICLE III. AGREEMENTS OF FBSI AND PGL
1. FBSI represents and warrants that it is a broker-dealer duly
registered under the 1934 Act and a member of the National Association
of Securities Dealers, Inc. ("NASD").
2. PGL represents and warrants that it is a Hawaii domestic
insurance company, and that it will (i) not solicit sales of the
Contracts anywhere except in the State of Hawaii and (ii) not solicit
sales of the Contracts except through registered representatives of
FBSI. PGL will notify FILI promptly of each sub-agent it appoints to
sell the Contracts under this Agreement.
3. FBSI and PGL each agrees that it will be solely responsible for
carrying out its duties under this Agreement, and that they will do so
in material compliance with all applicable laws and regulations.
4. FBSI will sell the Contracts only through its registered
representatives who hold the requisite federal securities and Hawaii
resident or non-resident agent insurance licenses and have been
appointed as agents by FILI and as sub-agents by PGL. FILI, on behalf
of FBSI, will request of PGL that FBSI registered representatives
holding non-resident agent licenses be appointed as sub-agents of PGL,
and PGL will appoint such persons as its sub-agents, provided that PGL
may refuse to appoint any such person as sub-agent if doing so would
place PGL in violation of any applicable law or regulation, or PGL
Company policy. Once a sub-agent is appointed, PGL reserves the right
to terminate such appointment. FBSI shall use its best efforts to
maintain its registration under the 1934 Act and to continue to be a
member in good standing of the NASD. PGL shall use its best efforts
to maintain its qualification to act as a general agent in Hawaii.
FBSI shall be responsible for ensuring that its registered
representatives soliciting sales of the Contracts pass all necessary
NASD and Hawaii insurance exams, and take all actions necessary to
continue to qualify as registered representatives and insurance agents
in Hawaii, including continuing education requirements. FBSI shall
investigate the business reputation of all registered representatives
offering the Contracts, and their competence to sell the Contracts.
FBSI shall ensure that FBSI's registered representatives are
adequately and diligently trained, and shall be solely responsible for
their supervision. If any registered representative of FBSI fails to
maintain any required license and/or appointment or fails to meet
supervisory standards imposed by FILI, FBSI or PGL, FBSI shall
immediately notify FILI and PGL and shall advise such registered
representative that he or she is no longer authorized to offer or sell
the Contracts. FBSI shall establish any procedures necessary to
ensure that all required licenses, appointments and designations are
maintained by its registered representatives. Upon request by FILI or
PGL, FBSI shall furnish such records as are necessary to establish
that the foregoing requirements are being met.
5. FBSI shall ensure that retail sales of the Contracts made by its
registered representatives are made only where such sales constitute
suitable purchases under all applicable securities and insurance laws
and regulations.
6. FBSI agrees to use its best efforts to solicit applications for
the Contracts.
7. FBSI and PGL shall not engage in servicing the Contract. All
service requests shall be directed to FILI's Service Center in
accordance with such procedures as FILI may adopt from time to time.
8. All Payments and applications for Contracts sold under this
Agreement shall be sent directly to FILI's Service Center. Any money
received by PGL or a FBSI registered representative shall be remitted
promptly in full together with the application and any other forms
received by PGL or the registered representative and any other
documentation to the Service Center. Checks or money orders
representing Payments under the Contracts shall be drawn to the order
of "Fidelity Investments Life Insurance Company". FILI shall have the
unconditional right to reject, in whole or in part, any application
for a Contract. In the event an application is rejected, the amount
of the Payment received by FILI will be returned directly to the
purchaser and FILI will notify FBSI of such action. In the event a
Contract is returned to FILI within the applicable "free look" period,
FILI will return to the purchaser the amount required under the
Contract and will notify FBSI of such action. In the event that FBSI
or PGL has received compensation based on any Contract returned
pursuant to its free look provision, FBSI and PGL agree to repay
promptly such compensation to FILI.
9. PGL shall not develop any sales literature for the sale of the
Contracts. All sales literature will be supplied to sub-agents by
FILI or FBSI. FILI and FBSI are responsible to ensure that all sales
literature is compliant with any applicable laws, rules and
regulations. All sales literature must be provided to PGL at the sole
cost of FILI and FBSI. FBSI and its registered representatives shall
not give any information, nor make any representations on behalf of or
concerning FILI, a Variable Account, or a Contract, other than the
information and representations contained in a currently effective
Registration Statement (or post-effective amendment thereto) for a
Contract, or in reports for the Variable Accounts prepared for
distribution to Contract owners, or in sales literature or other
promotional material approved in writing by FILI. FBSI, in accordance
with its obligations under federal securities laws and regulations,
shall establish and implement reasonable procedures acceptable to FILI
for periodic inspection and ongoing supervision of sales practices of
FBSI's registered representatives, and shall make available to FILI
upon request periodic reports on the results of such inspections and
compliance with such procedures. FBSI is responsible for the
training, supervision and control of its registered representatives.
10. Neither FBSI nor PGL shall have authority on behalf of FILI to
make, alter or discharge any Contract. Neither FBSI nor PGL shall
expend, or contract for the expenditure of, the funds of FILI nor
shall FBSI nor PGL possess or exercise any authority on behalf of FILI
other than that expressly conferred under this Agreement.
11. FBSI and PGL each agree to maintain appropriate books and
records concerning sales of the Contracts under this Agreement as
required by FILI, or by any governmental authority (including without
limitation the SEC, the NASD and the Hawaii Insurance Department).
Such books and records shall be the property of FILI and upon
reasonable notice to FBSI and PGL, shall be made available to FILI
during ordinary business hours. FBSI and PGL shall permit such
governmental authorities reasonable access to such books and records
in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated under this Agreement.
Without limiting the foregoing, FBSI shall be responsible for
confirming purchases and redemptions of units of FILI's separate
accounts by purchasers and/or owners of the Contracts. Such
confirmations shall be the records of FBSI, even if located at the
offices of FILI, and if so located, shall be provided to FBSI upon
reasonable notice. Similarly, all records showing the identity of the
person credited for any retail sale of a Contract, whether maintained
at FBSI's offices or any other location shall be the records of FBSI,
the property of FBSI and shall be furnished to FBSI upon reasonable
notice if located anywhere other than FBSI.
12. FBSI shall pay the expenses associated with the initial
licensing and training of its registered representatives necessary for
the marketing of the Contracts.
ARTICLE IV. COMPENSATION
1. For each Contract that is sold on or after the effective date of
this Agreement, FILI shall pay PGL compensation equal to 2% of each
Payment received by FILI. All compensation payable to PGL will be
made by check payable to PGL. Payment for Payments received during
the previous calendar month should be received by the 10th day of the
following month. PGL shall pay the sub-agents commissions not to
exceed .50% of the Payments received under this Agreement. Commission
schedules will be determined by FILI in its sole discretion and may be
modified by FILI from time to time upon notice to PGL. PGL hereby
authorizes and appoints FBSI as its agent for the limited purposes of
(1) transmitting to the sub-agents the commissions due them from PGL
and (2) within one month of each calendar year end, transmitting to
the sub-agents information concerning the amount of commissions paid
to them during the prior calendar year. FBSI may fulfill the
requirements of the preceding sentence through its own efforts or
through cooperative efforts with any affiliated company in the
Fidelity Investments group of companies.
2. For each Payment received by FILI, it shall pay to FBSI such
compensation as may be mutually agreed to by them from time to time.
Such compensation shall be documented in a separate written agreement.
ARTICLE V. INDEMNIFICATION BY FILI
FILI agrees to indemnify and hold harmless PGL and FBSI, their
directors, officers, employees and agents (the "Indemnified Parties")
against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of FILI) or
litigation in either trial or appellate courts (including legal and
other expenses), or in alternative dispute resolution proceedings to
which the Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale of Contracts issued by
FILI and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the registration
statement or prospectus for the Contracts or contained in the
Contracts or sales literature for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading; or
(ii) arise out of or as a result of statements or representations
or wrongful conduct of FILI or persons under its control, with respect
to the sale or distribution of the Contracts;
(iii) arise out of or result from any material breach of any
representation and/or warranty made by FILI in this Agreement or arise
out of or result from any other material breach of this Agreement by
FILI; or
(iv) arise out of or result from PGL and FBSI's compliance with the
instructions, rules, bulletins, manuals or other guidelines issued by
FILI to PGL and FBSI, or arise out of or result from the failure of
any sub-agent appointed in connection with this Agreement to pay the
tax imposed under Section 237-13 of the Hawaii Revised Statutes;
all as limited by and in accordance with the provisions of (v)
through (vii) below.
(v) FILI shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation
or alternative dispute resolution proceedings incurred or assessed
against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations or duties under
this Agreement.
(vi) FILI shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified FILI in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon
such Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), but failure
to notify FILI of any such claim shall not relieve FILI from any
liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified
Parties, FILI shall be entitled to participate, at its own expense, in
the defense of such action. FILI also shall be entitled to assume the
defense thereof, with counsel reasonably satisfactory to the party
named in the action. After notice from FILI to such party of FILI's
election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it,
and FILI will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than
reasonable costs of investigation.
(vii) The Indemnified Parties will promptly notify FILI of the
commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Contracts.
The indemnification provided under this Article V shall survive the
termination of this Agreement.
ARTICLE VI. INDEMNIFICATION BY FBSI
FBSI agrees to indemnify and hold harmless PGL and FILI against any
and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of FBSI) or litigation
(including legal and other expenses), to which PGL or FILI may become
subject under any statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale of
the Contracts and arise as a result of any failure by FBSI to provide
the services and furnish the materials under the terms of this
Agreement, or arise out of or result from any material breach of any
representation and/or warranty made by FBSI in this Agreement or
result from any other material breach of this Agreement by FBSI. FBSI
shall not be liable under this indemnification provision with respect
to any claim made against PGL and FILI unless PGL and FILI shall have
notified FBSI in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the
claim shall have been served upon PGL or FILI or after PGL or FILI
shall have received notice of such service on any designated agent,
but failure to notify FBSI of any such claim shall not relieve PGL or
FBSI from any liability which it may have to PGL or FILI otherwise
than on account of this indemnification provision. In case any such
action is brought against PGL or FILI, FBSI shall be entitled to
assume the defense thereof, with counsel satisfactory to PGL and FILI.
After notice from FBSI of the election to assume such defense, PGL and
FILI shall bear the fees and expenses of any additional counsel
retained by it, and FBSI will not be liable to PGL or FILI under this
Agreement for any legal or other expenses subsequently incurred by PGL
or FILI independently in connection with the defense thereof other
than reasonable costs of investigation. PGL and FILI will promptly
notify FBSI of the commencement of any litigation or proceedings
against them in connection with the issuance and sale of the
Contracts.
ARTICLE VII. TERM OF AGREEMENT
1. The initial term of this Agreement shall be from the effective
date hereof through December 31, 1999. This Agreement shall renew
automatically from year to year thereafter. This Agreement may be
terminated by any party upon 30 days' prior written notice. Upon
termination of this Agreement, all authorizations, rights and
obligations shall cease except the indemnification provisions, and the
provisions of Article III requiring the maintenance of certain books
and records.
2. FILI's obligation to pay commissions (or other compensation) to
PGL shall continue with respect to those commissions which are due and
owing or which relate to an application taken as of the date of
termination and for which FILI subsequently issues a Contract.
ARTICLE VIII. NON-EXCLUSIVITY OF AGREEMENT
FILI may at any time distribute any Contract through any other proper
party or distribution system of its choice. PGL reserves the right to
sell any variable annuity contracts, either its own or those of
another company.
ARTICLE IX. ASSIGNABILITY
This Agreement may not be assigned without the prior written consent
of all the parties.
ARTICLE X. GOVERNING LAW
This Agreement shall in all respects be governed in accordance with
the laws of the State of Hawaii.
ARTICLE XI. NOTICE
Any notice shall be sufficiently given when personally received by
the other party, or when sent by registered or certified mail to the
other party. Notices to FILI and FBSI may be sent to their respective
Presidents at 00 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
Notices to PGL may be sent to Xxx Xxxxxxxx, Senior Vice President, at
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxx 00000.
ARTICLE XII. INVESTIGATIONS AND COMPLAINTS
Each party agrees to cooperate fully with all other parties in any
insurance, securities or other regulatory or judicial investigation or
proceeding arising in connection with the Contracts or FBSI's
registered representatives. Each party shall furnish to any
regulatory authority having jurisdiction any information which such
authority may request in order to ascertain whether sales of the
Contracts are made in compliance with applicable laws and/or
regulations. Each party further agrees to cooperate with each of the
others in resolving any customer complaints with respect to the
Contracts, any of the parties, or any of their agents, sub-agents,
registered representatives or employees.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first written above.
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Senior Vice President
FIDELITY BROKERAGE SERVICES, INC.
Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxxxxx
President
PACIFIC GUARDIAN LIFE INSURANCE COMPANY
/s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Senior Vice President
PACIFIC GUARDIAN LIFE INSURANCE COMPANY
/s/ Xxxx X. Xxxx
Xxxx X. Xxxx
Chairman
