EXHIBIT 3(a)
SALES SUPPORT AGREEMENT
AGREEMENT made as of the 1st day of December, 1998, by and between THE PENN
MUTUAL LIFE INSURANCE COMPANY ("Penn Mutual"), a Pennsylvania Corporation, and
XXXXXX, XXXXXXXX & XXXX, INC. ("HTK"), a Pennsylvania Corporation.
W I T N E S S E D:
WHEREAS, Penn Mutual is engaged in the business of issuing fixed and
variable annuity contracts to the public;
WHEREAS, HTK is licensed as a life insurance agent of Penn Mutual under
state insurance laws, is registered as a broker-dealer under the Securities
Exchange Act of 1934 and is a member of the National Association of Security
Dealers, Inc.; and
WHEREAS, Penn Mutual desires that HTK provide sales support services in
connection with the sale of fixed and variable annuity contracts by designated
life insurance agents of Penn Mutual, and HTK desires to provide such services;
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, the parties agree as follows:
1. Training and Education
----------------------
1.1 HTK will provide training and educational services to designated
life insurance agents of Penn Mutual in connection with the sale of fixed and
variable annuity contract identified in Schedule I attached hereto. The fixed
and variable annuity contracts include individual contracts, group contracts and
certificates evidencing interest in group contracts, and are collectively
referred to herein as "contracts." Designated life insurance agents of Penn
Mutual are those life insurance agents who are designated by Penn Mutual and are
associated persons of HTK.
2. Compliance
----------
2.1 Penn Mutual will furnish HTK with the names of its life insurance
agents who indicate a desire to sell variable annuity contracts.
2.2 HTK, after investigation, will select the life insurance agents
of Penn Mutual who are to become qualified under federal and state securities
laws and rules of the NASD to engage in the sale of variable annuity contracts
and will use its best efforts to cause such life insurance agents to be
qualified. Life insurance agents so qualified will be "persons associated with"
HTK under the Securities Exchange Act of 1934 and the applicable rules of the
NASD. Upon such qualification of a life insurance agent, the fact will be
certified in writing to Penn Mutual by HTK.
2.3 Prior to permitting a life insurance agent to sell variable
annuity contracts, Penn Mutual, HTK, the life insurance agent and the supervisor
of the life insurance agent designed by HTK will enter into a mutual
satisfactory agreement pursuant to which the life insurance agent will
acknowledge that he will be an associated person of HTK in connection with his
selling activities relating to variable annuity contract, that such activities
will be under the supervision and control of HTK and the supervisor designated
by HTK, and that the life insurance agent's right to continue to sell variable
annuity contracts is subject to his or her continued compliance with such
agreement and the rules and procedures established by HTK.
2.4 It is contemplated that other personnel of Penn Mutual will
become qualified as associated persons of HTK in order to carry out securities
activities with respect to the sale of variable annuity contracts. HTK will
train such personnel as requested by Penn Mutual, and will use its best efforts
to cause such personnel to become qualified as associated persons. Upon such
qualification, the fact will be certified in writing to Penn Mutual by HTK.
2.5 HTK will fully comply with the requirements of NASD and of the
Securities Exchange Act of 1934 and will supervise diligently the security
activities of life insurance agents of Penn Mutual who are associated persons of
HTK. Upon request by HTK, Penn Mutual will furnish or request any life
insurance agent who is an associated person to furnish (at Penn Mutual's or the
life insurance agent's expense) such appropriate records that may be necessary
to insure diligent supervision.
2.6 In the event any associated person fails or refuses to submit to
supervision by HTK in accordance with this Agreement, or otherwise fails to meet
the rules and standards imposed by HTK on the associated person, HTK shall
certify such fact to Penn Mutual and shall immediately notify the associated
person that he or she is no longer authorized to engage in securities activities
with respect to the sale of variable annuity contracts, and HTK and Penn Mutual
shall take whatever additional action may be necessary to terminate such
securities activities of the associated person.
2.7 HTK will assume full responsibility for the security activities
of its associated persons with respect to the sale of variable annuity contracts
and for initial and continued compliance by itself and its associated persons
with applicable federal and state security laws and rules of the NASD, and in
connection therewith may demand and shall be entitled to receive such assurances
from Penn Mutual as HTK deems appropriate to demonstrate compliance with the
Securities Act of 1933 and the Investment Company Act of 1940.
2.8 Compensation and reimbursement of expenses payable to life
insurance agents in connection with sales of variable annuity contracts shall be
paid by Penn Mutual under Penn Mutual's agency contracts and will not be an
expense of HTK. All purchase payments paid under variable annuity contracts by
contract owners shall be paid to Penn Mutual and will not be income to HTK. HTK
shall have no interest in any commissions or other remuneration payable to life
insurance agents by Penn Mutual or in any purchase payments paid under '
variable annuity contracts to Penn Mutual. For regulatory purposes of the NASD
and the Securities Exchange Act of 1934, commissions paid by Penn Mutual shall
be appropriately reflected in the books and records maintained by or on behalf
of HTK.
2
2.9 At the request of HTK, some or all of the books and records
required to be maintained by a registered broker-dealer under the Securities
Exchange Act of 1934 in connection with the sale of variable annuity contracts
will be maintained by Penn Mutual as agent for HTK. 'Penn Mutual agrees that
such records are and shall remain the property of HTK, will be maintained and
preserved in conformity with the requirements of Rules 17a-3 and 17a-4 under the
Securities Exchange Act of 1934, to the extent that such requirements are
applicable to the variable annuity contracts, and will be subject to examination
by the Securities Exchange Commission in accordance with Section 17(a) of the
Securities Exchange Act of 1934.
2.1 A confirmation with respect to each purchase payment made under
variable annuity contracts will be sent to the holder of such contract in
accordance with Rule 15cl-4 under the Securities Exchange Act of 1934.
3. Compensation
------------
3.1 In payment for the services performed under this Agreement, Penn
Mutual shall compensate HTK as provided in Schedule I attached hereto.
3.2 The compensation for services provided under this Agreement shall
be paid within 15 days after the end of the calendar month in which purchase
payments are accepted by Penn Mutual. Should Penn Mutual for any reason return
a purchase payment, HTK shall repay Penn Mutual the total amount of any
compensation which Penn Mutual may have paid to HTK with respect to such
purchase payments.
4. General
-------
4.1 Schedule I attached to this Agreement shall be signed by the
parties to this Agreement and may be revised from time to time by agreement and
signature of the parties.
4.2 This Agreement shall continue in effect until terminated. Either
party may terminate the Agreement by giving the other party thirty days prior
written notice.
3
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year written
above.
Attest THE PENN MUTUAL LIFE
INSURANCE COMPANY
_________________________ By______________________________
Xxxxxxx X. Plush
Vice President, Products & Programs
Attest XXXXXX, XXXXXXXX & XXXX, INC.
_________________________ By______________________________
Xxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
4
Schedule I
To
Sales Support Agreement Dated December 1, 1998
INDIVIDUAL ANNUITY CONTRACTS:
-----------------------------
DIVERSIFIER II Individual Variable and Fixed Annuity Contracts - Flexible
Purchase Payments. Policy forms DI-283-F, DI-883-F, DI-1182-V, DI-783-V, DV-790
and DV-790-F and variations thereof as required under state insurance laws.
PENN MUTUAL OPTIMIZER Group Variable and Fixed Annuity Contract - Flexible
Purchase Payments. Policy form EB1555 and variations thereof as required under
state insurance laws.
TRADEWIND Individual Deferred Annuity Contract-Single Purchase Payment. Policy
SPDA-96 and variations thereof as required under state insurance laws.
PENNANT SELECT Individual Variable and Fixed Annuity Contract - Flexible
Purchase Payments. Policy form VAA-98 and variations thereof as required under
state insurance laws.
COMMANDER Individual Variable and Fixed Annuity Contract - Flexible Purchase
Payments. Policy form VAB-98 and variations thereof as required under state
insurance laws.
COMPENSATION:
-------------
With respect to Individual Annuity Contracts sold by designated Penn Mutual
agents/registered representative contracted through a Penn Mutual Career Agency
office (CAS), Penn Mutual shall compensate HTK as follows:
1. 0.37% of Diversifier II purchase payments. Amounts transferred from a Fixed
Annuity Contract to an Variable Contract or vice versa are not purchase
payments under the contract to which the amounts are transferred.
2. 0.37% of Penn Mutual Optimizer purchase payments.
3. 0.07% of Tradewind purchase payments.
4. 0.30% of Pennant Select purchase payments.
5. 0.10% of Commander purchase payments
With respect to Individual Annuity Contracts sold by designated Penn Mutual
agents/registered representative contracted through a Penn Mutual Regional
office (IFN) or the XxXxxxx Agency, PCP (XxXxxxx), Penn Mutual shall compensate
HTK as follows:
1. 0.35% of Diversifier II purchase payments. Amounts transferred from a Fixed
Annuity Contract to an Variable Contract or vice versa are not purchase
payments under the contract to which the amounts are transferred.
2. 0.35% of Penn Mutual Optimizer purchase payments.
3. 0.20% of Pennant Select purchase payments.
4. 0.075% of Commander purchase payments
Agreed
Attest The Penn Mutual Life Insurance Company
___________________________ By: _______________________________
Xxxxxxx X. Plush
Vice President Products & Programs
Attest Xxxxxx, Xxxxxxxx and Xxxx, Inc.
___________________________ By: _______________________________
Xxxxxx X. Xxxxxxxxx
President and Chief Executive
Officer
Date: _______________
EXHIBIT 3(b)
DISTRIBUTION AGREEMENT
BETWEEN
THE PENN MUTUAL LIFE INSURANCE COMPANY
(ISSUER)
AND
XXXXXX, XXXXXXXX & XXXX, INC.
(DISTRIBUTOR)
INDIVIDUAL VARIABLE AND FIXED ANNUITY CONTRACTS
-----------------------------------------------
DATED AS OF DECEMBER 1, 1998
AGREEMENT made as of the 1st day of December, 1998, between THE PENN MUTUAL
LIFE INSURANCE COMPANY ("Penn Mutual"), a Delaware corporation, and XXXXXX,
XXXXXXXX & XXXX, INC. ("Distributor"), a Pennsylvania corporation.
WITNESSETH:
WHEREAS, Penn Mutual is engaged in the business of issuing variable annuity
and fixed contracts to the public;
WHEREAS, Distributor is licensed as a life insurance agent of Penn Mutual
under state insurance laws, is registered as a broker-dealer under the
Securities Exchange Act of 1934 and is a member of the National Association of
Securities Dealers, Inc.; and
WHEREAS, Penn Mutual desires to appoint Distributor to distribute variable
and fixed annuity contracts and Distributor desires to accept such appointment;
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, the parties agree as follows:
1. APPOINTMENT OF DISTRIBUTOR
--------------------------
1.1 Subject to the terms and conditions herein contained, Penn Mutual
appoints Distributor as a nonexclusive distributor of its variable and fixed
annuity contracts (herein referred to as the "Contracts").
2. DISTRIBUTION OF CONTRACTS THROUGH OTHER AGENT/BROKER-DEALERS
------------------------------------------------------------
2.1 Distributor shall use its best efforts to distribute the Contracts
through qualified agent/broker-dealers in states and jurisdictions in which
Distributor may legally do so. Distributor shall assist Penn Mutual in
selecting, providing information to, and monitoring the performance of, such
agent/broker-dealers. Distributor shall distribute the Contracts pursuant to
selling agreements among Penn Mutual, Distributor and qualified agent/broker-
dealers.
3. COMPLIANCE WITH LAWS AND REGULATIONS
------------------------------------
3.1 Distributor shall strictly comply with all applicable insurance laws
and regulations in distributing Contracts and shall take all reasonable measures
to assure that its officers, directors, employees and other individuals acting
on its behalf comply with the applicable insurance laws and regulations.
1
3.2 Distributor shall strictly comply with all applicable securities laws
and regulations and with the rules of the National Association of Securities
Dealers, Inc. in distributing Contracts that are deemed to be securities within
the meaning of applicable securities laws, and shall take all reasonable
measures to assure that its officers, directors, employees and other individuals
acting on its behalf comply with the applicable securities laws, regulations and
rules.
3.3 Penn Mutual shall furnish Distributor with copies of the current
prospectus filed with the Securities and Exchange Commission (and filed with any
state securities regulatory office, if required) and required to be used in
distributing the Contracts.
3.4 Distributor shall not print, publish, distribute or use any
advertisement, sales literature or other writing relating to the Contracts
unless such advertisement, sales literature or other writing shall have first
been approved in writing by Penn Mutual.
4. MISCELLANEOUS
-------------
4.1 Distributor shall cooperate with Penn Mutual in investigating and
settling all claims which may be made against Penn Mutual involving the
distribution of Contracts. Distributor shall promptly forward to Penn Mutual any
notice of claim or relevant information concerning a potential claim which may
come into its possession, and shall promptly forward to Penn Mutual any legal
papers served on Distributor involving such claim.
4.2 Distributor shall indemnify and hold harmless Penn Mutual and each
director and officer of Penn Mutual against any losses, damages, or liabilities,
insofar as such losses, damages, and liabilities arise out of or are based upon
any unauthorized act of Distributor in distributing the Contracts or the failure
of Distributor and its officers, employees and representatives to comply with
the provisions of this Agreement.
4.3 Penn Mutual shall indemnify and hold harmless Distributor and each
director and officer against any losses, damages or liabilities, to which
Distributor or such director or officer becomes subject, under the Securities
Act of 1933 or otherwise, insofar as such losses, damages and liabilities arise
out of or are based upon any inaccurate or inadequate statement in the
Registration Statement for the Contracts.
4.4 This Agreement may be terminated, without cause, by either party upon
thirty days prior written notice. This Agreement may be terminated, for cause,
by either party immediately.
4.5 This Agreement shall be construed in accordance with and governed by
the laws of the Commonwealth of Pennsylvania.
2
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year written
above.
THE PENN MUTUAL LIFE INSURANCE COMPANY
Attest
_____________________________ By_______________________________________
ASSOCIATE SECRETARY Xxxxxxx X. Plush
Vice President, Products and Service
XXXXXX XXXXXXXX & XXXX, INC.
Attest
_____________________________ By_______________________________________
Xxxx X. Xxxxxxxxx
President and Chief Executive Officer
3
Exhibit 3(d)
National Accounts - Broker-Dealers Licensed
to Sell Variable Annuities and/or Variable
Life Insurance under Federal Securities and
State Insurance Laws
BROKER-DEALER SELLING AGREEMENT
THE PENN MUTUAL LIFE INSURANCE COMPANY (hereinafter called "Penn
Mutual") and Xxxxxx, Xxxxxxxx & Xxxx, Inc. (hereinafter called
"Distributor") enter into this Agreement with __________________
_______________________ (hereinafter called "Broker-Dealer") on
this date ______________, 19_______ agree as follows:
W I T N E S S E T H :
WHEREAS, Penn Mutual is in the business of issuing annuity and
life insurance contracts to the public;
WHEREAS, Distributor is a wholly owned subsidiary of Penn Mutual,
is registered as a broker-dealer under the Securities Exchange
Act of 1934, is a member of the National Association of
Securities Dealers, Inc., and is assisting Penn Mutual in the
distribution of such contracts;
WHEREAS, Broker-Dealer is properly licensed to sell variable
annuity and variable life insurance contracts under the insurance
laws of the state(s) in which Broker-Dealer will act under this
agreement, is registered as a Broker-Dealer under the Securities
Exchange Act of 1934 and is a member of the National Association
of Securities Dealer, Inc.;
NOW THEREFORE, in consideration of these premises and mutual
covenants herein contained, the parties agree as follows:
1. Appointment of 1.1 Subject to the terms and conditions of this
agreement, Penn Mutual and Distributor appoint Broker-
Broker-Dealer Dealer as a non-exclusive Broker-Dealer for the
solicitation of applications for, and the servicing of,
annuity and/or variable life insurance contracts
identified in the schedule(s) attached hereto, and
Broker-Dealer accepts such appointment. The annuity
and/or variable life insurance contracts identified in
the schedules(s) are referred to herein as "Contracts".
1.2 Broker-Dealer and its representatives shall be
independent contractors as to Penn Mutual and
Distributor and, subject to the terms and conditions of
this agreement, free to exercise their own judgment as
to the time, place and means of performing all acts
hereunder. Nothing in this agreement is intended to
create a relationship of employer and employee as
between Penn Mutual or Distributor, on the one hand, and
representatives of Broker-Dealer on the other.
2. Sale of Contracts. 2.1 Broker-Dealer shall use its best efforts to solicit
applications for Contracts from persons for whom the
Contracts are suitable,and to service such Contracts in
accordance with the terms and conditions of this
agreement.
2.2 All applications for Contracts shall be made on
application forms authorized by Penn Mutual. Broker-
Dealer shall diligently review all such applications for
accuracy and completeness and shall take all reasonable
and appropriate measures to assure that applications
submitted to Penn Mutual are accurate and complete.
2.3 All payments collected by Broker-Dealer for Penn
Mutual shall be received in trust and shall be remitted
immediately together with all required documentation, to
Penn Mutual at the address indicated on the application
or to such other address as Penn Mutual may specify in
writing. All checks or money orders for payment under
Contracts shall be drawn to the order of Penn Mutual.
2.4 All applications are subject to acceptance or
rejection by Penn Mutual in its sole discretion. Penn
Mutual may at any time in its sole discretion
discontinue issuing the Contracts or change the form and
content of new Contracts to be issued.
2.5 In soliciting applications for Contracts, Broker-
Dealer may not accept risks of any kind for or on behalf
of Penn Mutual and may not bind Penn Mutual by promise
or agreement or alter any Contract in any way.
3. Compensation. 3.1 In consideration of and as full compensation for the
services performed in accordance with this agreement,
Broker-Dealer will receive compensation from Penn Mutual
as set forth in the schedule(s) attached to this
agreement.
3.2. Should Penn Mutual for any reason return any
payment made under a Contract to the payor, Broker-
Dealer shall repay Penn Mutual the total amount of any
compensation which Penn Mutual may have paid with
respect to such payment.
3.3 Broker-Dealer may not withhold or deduct any part of
any premium or other payment due Penn Mutual for payment
of compensation under this agreement or for any other
purpose. The right of Broker-Dealer to receive any
compensation under this agreement shall at all times be
subordinate to the right of Penn Mutual or Distributor
to offset or apply such compensation against any
indebtedness of Broker-Dealer to Penn Mutual or
Distributor.
3.4 Penn Mutual may, in its sole discretion, change the
amount, terms and conditions, of compensation with
respect to payment received by Penn Mutual under
Contracts.
3.5 Penn Mutual shall not be obligated to pay any
compensation which would be in violation of applicable
laws of any jurisdiction, anything in this agreement to
the contrary notwithstanding.
4. Compliance With 4.1 Broker-Dealer and its representative shall not
solicit applications for Contracts in any state or
Insurance Laws jurisdiction unless they are duly licensed and qualified
to do so under the insurance laws and regulations of the
and Regulations. state or jurisdiction and unless Penn Mutual has
notified Broker-Dealer that the Contracts have been
approved for sale in the state or jurisdiction.
4.2 Penn Mutual may at any time, in its sole discretion,
withhold or withdraw authority of any representative of
Broker-Dealer to solicit applications for the Contracts.
Upon Penn Mutual giving written notice to Broker-Dealer
of its withdrawal of authority of a representative to
solicit applications, Broker-Dealer shall immediately
cause any such representative to cease all such
solicitations.
4.3 Broker-Dealer shall notify Penn Mutual in writing
immediately of the termination of the employment or
affiliation of an employee or representative who is an
appointed agent of Penn Mutual pursuant to this
agreement.
4.4 Broker-Dealer shall keep accurate and complete books
and records of all transactions relating to the
solicitation of applications and for servicing
Contracts. The books and records shall be made available
to Penn Mutual for inspection upon reasonable request.
4.5 If Broker-Dealer solicits applications for variable
life insurance contracts under this agreement, Broker-
Dealer and its representative shall observe the
Standards of Suitability for the Sale of Variable Life
Insurance set forth on the reverse side of the schedule
attached hereto identifying such contacts.
4.6 Broker-Dealer and its representatives shall comply
with all applicable insurance laws and regulations in
soliciting applications for and servicing Contracts.
Broker-Dealer shall be fully responsible for all acts of
its representatives in soliciting applications for and
servicing Contracts.
5. Compliance With 5.1 Broker-Dealer shall not solicit applications for
variable annuity or variable life insurance contracts
Securities Laws. unless Penn Mutual or Distributor has notified Broker-
Dealer that a registration statement required under the
Securities Act of 1933 is effective as to such contracts
and unless Broker-Dealer is duly registered as a broker-
dealer under the Securities Exchange Act of 1934, is a
member in good standing of the National Association of
Securities Dealers, Inc. and is duly licensed under any
applicable
securities laws of the state or jurisdiction in which
Broker-Dealer engages in such activity.
5.2 Penn Mutual or Distributor shall furnish Broker-
Dealer with copies of the current prospectuses (and
current supplements thereto) required to be used in
soliciting application for variable annuity and/or
variable life insurance contracts.
5.3 Broker-Dealer and its representatives shall comply
with all applicable securities laws and regulations and
with the rules of the National Association of
Securities Dealers, Inc. in soliciting applications for
and servicing variable annuity and/or variable life
insurance contracts. Broker-Dealer shall be fully
responsible for all acts of its representatives in
soliciting applications for and servicing variable
annuity and/or variable life insurance contracts.
6. Advertisements, 6.1 Broker-Dealer shall not print, publish, distribute
or use any advertisements, sales literature or other
Sales Literature writing relating to the Contracts unless such
advertisements, sales literature or other writing shall
have first been approved in writing by Penn Mutual and
Distributor.
6.2 Broker-Dealer shall exercise care not to
misrepresent the Contracts or Penn Mutual and shall
make no oral or written representation which is
inconsistent with the terms of the Contracts or with
the information in any prospectus or sales literature
furnished by Penn Mutual or it misleading in any way.
7. Indemnification. 7.1 Broker-Dealer shall indemnify or hold harmless Penn
Mutual and Distributor and each director and officer of
Penn Mutual and Distributor against any losses, claims,
damages or liabilities, including but not limited to
reasonable attorneys' fees and court cost to which Penn
Mutual or Distributor and any such director or officer
may become subject, under the Securities Act of 1933 or
otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out
of or are based upon any unauthorized use of sales
materials or any verbal or written misrepresentations
or any unlawful sales practices, or the failure of
Broker-Dealer, its officers, employees or
representative to comply with the provisions of this
agreement or the willful misfeasance, bad faith,
negligence or misconduct of Broker-Dealer, its
officers, employees, or representatives in the
solicitation of applications for and the servicing of
Contracts.
7.2 Penn Mutual and Distributor shall indemnify and
hold harmless Broker-Dealer and each officer or
director of Broker-Dealer against any losses, claims,
damages or liabilities, joint or several, including but
not limited to reasonable attorneys' fees and court
cost, to which Broker-Dealer or such officer or
director becomes subject, under the Securities Act of
1933 or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact, required
to be stated therein or necessary to make the
statements therein not misleading, contained in any
registration statement or any post-effective amendment
or supplement to the prospectus, or in any sales
material written by Penn Mutual or Distributor.
7.3 In the event Penn Mutual suffers a loss resulting
from Broker-Dealer activities, Broker-Dealer hereby
assigns any proceeds received under its fidelity bond
to Penn Mutual to the extent of such losses. If there
is any deficiency amount, whether due to a deductible
or otherwise, Broker-Dealer shall promptly pay Penn
Mutual such amount on demand and Broker-Dealer shall
indemnify and hold harmless Penn Mutual from any such
deficiency and from the costs of collection thereof
(including reasonable attorneys' fees).
8. Complaints, 8.1 Broker-Dealer shall promptly notify Penn Mutual and
Distributor of any allegation that Broker-Dealer or any
Investigations of its representatives violated any law, regulation or
rule in soliciting applications for or servicing
& Proceedings. Contracts,and shall provide Penn Mutual with full
details, including copies of all legal documents
pertaining thereto.
8.2 Broker-Dealer shall cooperate fully with Penn
Mutual and Distributor in any regulatory investigation
or proceeding or judicial proceeding involving the
solicitation of application for and servicing Contracts
by Broker-Dealer or any of its representatives.
9. Nonwaiver. 9.1 Forbearance by Penn Mutual or Distributor to enforce
any rights under this agreement shall not be construed
as a waiver of any of the terms and conditions of this
agreement and the same shall remain in full force and
effect. No waiver of any provision of this agreement
shall be deemed to be a waiver of any other provision,
whether or not similar, nor shall any waiver of a
provision of this agreement be deemed to constitute a
continuing waiver.
10. Amendment. 10.1 Penn Mutual reserves the right to amend this
Agreement at any time. Broker-Dealer's submission of an
application for a Contract after notice of any such
amendment shall constitute agreement of Broker-Dealer to
such amendment.
11. Termination and 11.1 This agreement may be terminated by any party, with
or without cause, upon giving written notices to the
Assignment. other parties. This agreement shall automatically
terminate if Broker-Dealer is adjudicated as bankrupt or
avails itself of any insolvency act or if a permanent
receiver or trustee in bankruptcy is appointed for the
property of Broker-Dealer. Upon termination of this
agreement, with or without cause, all authorizations,
rights and obligations shall cease, except the rights
and obligations set forth in sections 7 and 8 of this
agreement and the obligations to settle account
hereunder, including the immediate forwarding of all
payments received by Broker-Dealer under Contract to
Penn Mutual, and except as may be expressly stated
otherwise in this agreement.
11.2 This agreement may not be assigned without the
written consent of all parties.
12. Governing Law. 12.1 This agreement shall be construed in accordance
with and governed by the laws of the Commonwealth of
Pennsylvania.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated
below on the day and year first written.
___________________________________________________
___________________
Name of Broker-Dealer
By:
___________________________________________________
__________________
Signature
___________________________________________________
________________
Name
___________________________________________________
________________
Title
THE PENN MUTUAL LIFE INSURANCE COMPANY
By:
___________________________________________________
_______________
Signature
___________________________________________________
________________
Name
___________________________________________________
________________
Title
XXXXXX, XXXXXXXX & XXXX, INC.
By:
___________________________________________________
Signature
___________________________________________________
Name
___________________________________________________
Title
SCHEDULE A TO THE FOLLOWING SELLING AGREEMENTS:
BROKER-DEALER SELLING AGREEMENT
BROKER-DEALER SELLING AGREEMENT - FORM A-2
CORPORATE INSURANCE AGENT
SELLING AGREEMENT - FORM A-1
(EDITION OF OCTOBER, 1997)
Subject to the conditions and limitations of the
Broker's Selling Agreement, Broker is authorized to
solicit applications for the following contracts
issued by Penn Mutual (hereinafter referred to as
"contracts"), prior to termination of Broker's
Selling Agreement. No fee shall be paid with respect
to a purchase payment made after the Broker's Selling
Agreement has been terminated. Amounts transferred
among contracts are not purchase payments within the
meaning of the Broker's Selling Agreement or this
Schedule. This Schedule replaces and supersedes any
and all prior Schedules attached to the Broker's
Selling Agreement.
1. INDIVIDUAL FIXED ANNUITY CONTRACTS - DIVERSIFIER
II Subject to the conditions and limitations of the
Broker's Selling Agreement and this Schedule, Broker
shall be paid a fee for placing or servicing a
Diversifier II Individual Variable and Fixed Annuity
Contract equal to 6% of any purchase payment made
under such contract and a fee for placing and
servicing a Diversifier II Fixed-Only Annuity
Contract equal to 5% of any purchase payment under
such contract. If the Annuitant or Contractowner
(other than a trustee of a qualified plan) is over
age 81 on the date the Diversifier II contract is
issued, the fee shall be limited as follows: 80% of
such fee if the Annuitant or contractowner is age 82;
60% of such fee if the Annuitant or contractowner is
age 83; 40% of such fee if the Annuitant or
contractowner is age 84; 20% of such fee if the
Annuitant or contractowner is age 85.
2. INDIVIDUAL FIXED ANNUITY CONTRACTS - TRADEWIND
Subject to the conditions and limitations of the
Broker's Selling Agreement and this Schedule, Broker
shall be paid a fee for placing or servicing
TradeWind Annuity (TM) Contract equal to 6% of any
purchase payment under such contact. If the Annuitant
or Contractowner (other than a trustee of a qualified
plan) is over age 81 on the date the TradeWind (TM)
contract is issued, the fee shall be limited as
follows: 80% of such fee if the Annuitant or
contractowner is age 82; 60% of such fee if
the Annuitant or contractowner is age 83; 40% of such
fee if the Annuitant or contractowner is age 84; 20%
of such fee if the Annuitant or contractowner is age
85.
3. SINGLE PREMIUM IMMEDIATE ANNUITIES Subject to the
conditions and limitations of the Broker's Selling
Agreement and this Schedule, Broker shall be paid a
fee for placing a Single Premium Immediate Annuity
equal to 4% of the single premium received under such
contract.
4. GROUP COVERAGES Subject to the conditions and
limitations of the Broker's Selling Agreement and
this Schedule, Broker shall be paid a fee for
placing, or servicing group annuity policies,
specifically, a group annuity contract of Penn Mutual
on Contract Forms D1-1088 (N.Y.), D1-1088A (N.Y.) and
any other policies in the D1-1088 series, (a contract
on any such form being hereinafter called a
"Diversifier I Flex Group Annuity"), placed in force
through Broker under this agreement in amounts
equivalent to a percentage of such premiums. Such
percentage or table of percentages shall be as agreed
in amounts equivalent to a percentage of such
premiums. Said written documentation of Broker's fee
shall be submitted to Penn Mutual with the
Diversifier I Flex Group Annuity application on a
form signed by the plan trustee and agreed to by the
Penn Mutual home office. No compensation shall be
payable pursuant to this agreement which would be in
excess of the limits of Section 4228 of the Insurance
Law of the State of New York for the sale of
insurance products.
5. VARIABLE ESTATEMAX
During the period the Broker-Dealer Selling Agreement
is in effect, and subject to and in accordance with
the provisions thereof, Broker-Dealer shall be
compensated as follows with respect to a policy of
Penn Mutual know as the Last Survivor Flexible
Premium Adjustable Variable Life Insurance Policy
(Policy Forms VALJ-94(S) and VALJ-94(U)), (a policy
on any such form being hereinafter called a "Variable
EstateMax Policy"), that is placed in force under
this agreement. With respect to each Variable
EstateMax Policy, Broker-Dealer may elect to receives
fees under Option 1 or 2. If no option is selected
the default will be Option 1. Once each policy is in
force, no changes will be permitted to the choice of
compensation.
A. OPTION 1.
---------
(a) Basic First Year Compensation
-----------------------------
A fee for the first policy year of 50% of A plus 2.0% of B where A is
equal to the lesser of:
(i) the premium paid in year 1
(ii) the target premium for the policy, or
(iii) the lesser of the premium scheduled to be paid in year 1 or 2,
and B is equal to the excess of the premium paid in year 1 over A.
Target premiums are maintained on file in Penn Mutual's Home Office.
(b) Renewal Compensation
--------------------
A fee for the second through fifteenth years equal to 2.0% of the
premium paid for the policy year in question, and a fee for the
sixteenth and later policy years equal to 1.2% of the premium paid for
the policy year in question.
B. OPTION 2
--------
(a) Basic First Year Compensation
-----------------------------
Basic First Year Compensation is the same as in Option 1.
(b) Renewal Compensation
--------------------
Additionally, for the second through tenth policy years equal to 1.0% of
the premium paid for the policy year in question, and no fee for the
eleventh and later policy years. Additionally, for the second through
tenth policy years, an fee equal to 0.008333% of the policy value on
each monthly anniversary. Monthly anniversary is defined as the day in
each calendar month which is the same day of the month as the Policy
Date. For the eleventh and later policy years, fee equal to 0.020833% of
the policy value on each monthly anniversary. Policy value is as defined
in the policy.
C. EXPENSE ALLOWANCE
-----------------
For each calendar month while Broker-Dealer Selling Agreement is in
effect and before its termination, Broker-Dealer shall be entitled to the
expense from Penn Mutual described below, provided that the amount payable
as an expense allowance shall be limited to the total of reasonable
business expenses incurred by Broker-Dealer that are directly related to
the sale or service of Penn Mutual policies, and provided further that no
such allowance shall be payable to Broker-Dealer that would cause the total
of such allowances to exceed the limits of Section 4228 of the Insurance
Law of the State of New York. No payment pursuant to this agreement will be
used by Broker-Dealer to effect compensation for the sale of insurance in
excess of the limits of said Section 4228. Such allowance shall be 60% of
an amount equal to the Basic First Year Compensation during the calendar
month for which this allowance is being calculated.
D. COMPENSATION CHARGEBACKS
------------------------
A percentage of total compensation (including expense allowance, if any)
will be charged back for lapses, surrenders or if a policy is unwound
during the first policy year and during the 12 policy months following an
increase. The percentage is shown below and will vary depending on the
policy month of lapse/surrender/unwind.
Month of Chargeback
Lapse/Surrender/ Percentage
Unwind
------
0-6 100%
7-12 50%
6. CORNERSTONE VARIABLE UNIVERSAL LIFE
During the period the Broker-Dealer Selling Agreement is in effect, and subject
to and in accordance with the provisions thereof, Broker-Dealer shall be
compensated as follows with respect to a policy of Penn Mutual know as the
Flexible Premium Adjustable Variable Life Insurance Policy (Policy Forms VU-
90(S) and VU-90(U)), (a policy on any such form being hereinafter called a
"Cornerstone VUL Policy"), that is placed in force through Agent under this
agreement:
A. OPTION 1
--------
(a) Basic First Year Compensation
-----------------------------
A fee for the first policy year of 50% of A plus 3.75% of B where
A is equal to the lesser of:
(i) the premium paid in year 1
(ii) the target premium for the policy, or
(iii) the lesser of the premium scheduled to be paid in year
1 or 2, and B is equal to the excess of the premium paid in
year 1 over A. Target premiums are maintained on file in Penn
Mutual's Home Office.
If the insured is over attained age 75 when the policy is issued, the
fee for the first policy year will be limited to 35% of A plus 3.75%
of B.
(b) Renewal Compensation
--------------------
A fee for the second and third policy years of 4% (4.0% where the
insured has an attained age greater than 75) of an amount equal to
premium paid for the policy year in question, a fee for the fourth
through fifteenth years, equal to 4.0% of the premium paid for the
policy year in question, and a fee for the sixteenth and later policy
years equal to 1.2% of the premium paid for the policy year in question.
(c) Basic Compensation on Increases
-------------------------------
In the case of an increase in the Specified Amount of insurance, a fee
of 46% (31% where the insured has an attained age greater than 75 of C
where: C is equal to the lesser of:
(i) the premium paid in the twelve months following the
effective date of the increase,
(ii) the target premium for the amount of the increase, or
(iii) the increase in the scheduled premium.
B. OPTION 2
--------
(a) Basic First Year Compensation
-----------------------------
Basic First Year Compensation is the same as in Option 1.
(b) Renewal Compensation
--------------------
A fee for the second through tenth policy years equal to 3.0% of the
premium paid for the policy year in question, and no fee for the
eleventh and later policy years. Additionally, for the second through
tenth policy years, an fee equal to 0.008333% of the policy value on
each monthly anniversary. Monthly anniversary is defined as the day in
each calendar month which is the same day of the month as the Policy
Date. For the eleventh and later policy years, fee equal to 0.020833% of
the policy value on each monthly anniversary. Policy value is as defined
in the policy.
(c) Basic Compensation on Increases
-------------------------------
In the case of an increase in the Specified Amount of insurance, a fee
of 47% (32% where the insured has an attained age greater than 75) of C
where:
C is equal to the lesser of:
(i) the premium paid in the twelve months following the effective
date of the increase
(ii) the target premium for the amount of the increase, or
(iii) the increase in the scheduled premium.
C. EXPENSE ALLOWANCE
-----------------
For each calendar month while Broker-Dealer Selling Agreement is en effect
and before its termination, Broker-Dealer shall be entitled to the expense
from Penn Mutual described below, provided that the amount payable as an
expense allowance shall be limited to the total of reasonable business
expenses incurred by Broker-Dealer that are directly related to the sale or
service of Penn Mutual policies, and provided further that no such
allowance shall be payable to Broker-Dealer that would cause the total of
such allowances to exceed the limits of Section 4228 of the Insurance Law
of the State of New York. No payment pursuant to this agreement will be
used by Broker-Dealer to effect compensation for the sale of insurance in
excess of the limits of said Section 4228. Such allowance shall be 60% of
an amount equal to the Basic First Year Compensation during the calendar
month for which this allowance is being calculated.
D. COMPENSATION CHARGEBACKS
------------------------
A percentage of total compensation (including expense allowance, if any)
will be charged back for lapses, surrenders or if a policy is unwound
during the first policy year and during the 12 policy months following an
increase. The percentage is shown below and will vary depending on the
policy month of lapse/surrender/unwind.
Month of Chargeback
Lapse/Surrender/ Percentage
Unwind
------
0-3 100%
4-6 75%
7-9 50%
10-12 25%
7. CORNERSTONE VARIABLE UNIVERSAL LIFE II
During the period the Broker-Dealer Selling Agreement is in effect, and subject
to and in accordance with the provisions thereof, Broker-Dealer shall be paid a
fee for soliciting applications and servicing a policy of Penn Mutual known as
the Flexible Premium Adjustable Variable Universal Life Insurance Policy (Policy
Forms VU-94(S) and VU-94(U)), (a policy on any such form being hereinafter
called a "Cornerstone VUL II Policy"), that is placed in force before
termination of this agreement. With respect to each Cornerstone VUL II Policy,
Broker-Dealer may elect to receives fees under Option 1 or 2. If no option is
selected the default will be Option 1. Once each policy is in force, no changes
will be permitted to the choice of compensation.
A. OPTION 1
--------
(a) Basic First Year Compensation
-----------------------------
A fee for the first policy year equal to 50% of A plus 3.3% of B where
A is equal to the lesser of:
(i) the premium paid in year 1
(ii) the target premium for the policy, or
(iii) the lesser of the premium scheduled to be paid in year 1
or 2, and
B is equal to the excess of the premium paid in year 1 over A. Target
premiums are maintained on file in Penn Mutual's Home Office. If the
insured is over attained age 75 when the policy is issued, the fee for
the first policy year will be limited to 35% of A plus 3.3% of B.
(b) Renewal Compensation
--------------------
A fee for the second through fifteenth years equal to 3.0% of the
premium paid for the policy year in question, and a fee for the
sixteenth and later policy years equal to 1.2% of the premium paid for
the policy year in question.
(c) Basic Compensation on Increases
-------------------------------
In the case of an increase in the Specified Amount of insurance, a fee
of 47% (32% where the insured has an attained age greater than 75) of C
where:
C is equal to the lesser of:
(i) the premium paid in the twelve months following the effective
date of the increase
(ii) the target premium for the amount of the increase, or
(iii) the increase in the scheduled premium.
B. OPTION 2
--------
(a) Basic First Year Compensation
-----------------------------
Basic First Year Compensation is the same as in Option 1.
(b) Renewal Compensation
--------------------
A fee for the second through tenth policy years equal to
2.0% of the premium paid for the policy year in question, and no fee for
the eleventh and later policy years. Additionally, for the second
through tenth policy years, an fee equal to 0.008333% of the policy
value on each monthly anniversary. Monthly anniversary is defined as the
day in each calendar month which is the same day of the month as the
Policy Date. For the eleventh and later policy years, fee equal to
0.020833% of the policy value on each monthly anniversary. Policy value
is as defined in the policy.
(c) Basic Compensation on Increases
-------------------------------
In the case of an increase in the Specified Amount of insurance, a fee
of 47% (32% where the insured has an attained age greater than 75) of C
where:
C is equal to the lesser of:
(i) the premium paid in the twelve months following the effective
date of the increase
(ii) the target premium for the amount of the increase, or
(iii) the increase in the scheduled premium.
C. EXPENSE ALLOWANCE
-----------------
For each calendar month while Broker-Dealer Selling Agreement is
in effect and before its termination, Broker-Dealer shall be
entitled to the expense from Penn Mutual described below, provided
that the amount payable as an expense allowance shall be limited to
the total of reasonable business expenses incurred by Broker-Dealer
that are directly related to the sale or service of Penn Mutual
policies, and provided further that no such allowance shall be
payable to Broker-Dealer that would cause the total of such
allowances to exceed the limits of Section 42289 of the Insurance
Law of the State of New York. No payment pursuant to this agreement
will be used by Broker-Dealer to effect compensation for the sale of
insurance in excess of the limits of said Section 4228. Such
allowance shall be 60% of an amount equal to the Basic First Year
Compensation during the calendar month for which this allowance is
being calculated.
D. COMPENSATION CHARGEBACKS
------------------------
A percentage of total compensation (including expense allowance, if
any) will be charged back for lapses, surrenders or if a policy is
unwound during the first policy year and during the 12 policy months
following an increase. The percentage is shown below and will vary
depending on the policy month of lapse/surrender/unwind.
Month of Lapse/ Chargeback
Surrender/ Unwind Percentage
----------------- ----------
0-3 100%
4-6 75%
7-9 50%
10-12 25%
8. REPLACEMENT OF PENN MUTUAL POLICES
It is agreed that the compensation otherwise payable to Broker-Dealer for any
policy shall be reduced in accordance with the replacement control program in
effect at the time such policy is placed in force. It is anticipated that such
replacement control program may be changed form time to time as to policies in
force after such change.
9. POLICY DELIVERY RECEIPT
It is agreed that the Broker-Dealer shall be responsible for obtaining a signed
policy delivery receipt in accordance with Company policy.
The Penn Mutual Life Insurance Company
Xxxxxxxxxxxx, XX 00000
Independent Broker/Dealers
SCHEDULE A TO THE FOLLOWING SELLING AGREEMENTS:
BROKER-DEALER SELLING AGREEMENT
BROKER-DEALER SELLING AGREEMENT - FORM A-2
CORPORATE INSURANCE AGENT SELLING AGREEMENT - FORM A-1
(EDITION OF NOVEMBER, 1998)
Subject to the conditions and limitations of the Broker's Selling Agreement,
Broker is authorized to solicit applications for the following contracts issued
by Penn Mutual (hereinafter referred to as "contracts"), prior to termination of
Broker's Selling Agreement. No fee shall be paid with respect to a purchase
payment made after the Broker's Selling Agreement has been terminated. Amounts
transferred among contracts are not purchase payments within the meaning of the
Broker's Selling Agreement or this Schedule. This Schedule replaces and
supersedes any and all prior Schedules attached to the Broker's Selling
Agreement.
1. INDIVIDUAL FIXED ANNUITY CONTRACTS - DIVERSIFIER II
Subject to the conditions and limitations of the Broker's Selling Agreement and
this Schedule, Broker shall be paid a fee for placing or servicing a Diversifier
II Individual Variable and Fixed Annuity Contract equal to 6% of any purchase
payment made under such contract and a fee for placing and servicing a
Diversifier II Fixed-Only Annuity Contract equal to 5% of any purchase payment
under such contract. If the Annuitant or Contractowner (other than a trustee of
a qualified plan) is over age 81 on the date the Diversifier II contract is
issued, the fee shall be limited as follows: 80% of such fee if the Annuitant or
contractowner is age 82; 60% of such fee if the Annuitant or contractowner is
age 83; 40% of such fee if the Annuitant or contractowner is age 84; 20% of such
fee if the Annuitant or contractowner is age 85.
2. INDIVIDUAL FIXED ANNUITY CONTRACTS - TRADEWIND
Subject to the conditions and limitations of the Broker's Selling Agreement and
this Schedule, Broker shall be paid a fee for placing or servicing TradeWind
Annuity Contract equal to 6% of any purchase payment under such contact. If the
Annuitant or Contractowner (other than a trustee of a qualified plan) is over
age 81 on the date the TradeWind contract is issued, the fee shall be limited as
follows: 80% of such fee if the Annuitant or contractowner is age 82; 60% of
such fee if the Annuitant or contractowner is age 83; 40% of such fee if the
Annuitant or contractowner is age 84; 20% of such fee if the Annuitant or
contractowner is age 85.
3. SINGLE PREMIUM IMMEDIATE ANNUITIES
Subject to the conditions and limitations of the Broker's Selling Agreement and
this Schedule, Broker shall be paid a fee for placing a Single Premium Immediate
Annuity equal to 4% of the single premium received under such contract.
4. GROUP COVERAGES
Subject to the conditions and limitations of the Broker's Selling Agreement and
this Schedule, Broker shall be paid a fee for placing, or servicing group
annuity policies, specifically, a group annuity contract of Penn Mutual on
Contract Forms D1-1088 (N.Y.), D1-1088A (N.Y.) and any other policies in the D1-
1088 series, (a contract on any such form being hereinafter called a
"Diversifier I Flex Group Annuity"), placed in force through Broker under this
agreement in amounts equivalent to a percentage of such premiums. Such
percentage or table of percentages shall be as agreed in amounts equivalent to a
percentage of such premiums. Said written documentation of Broker's fee shall be
1
submitted to Penn Mutual with the Diversifier I Flex Group Annuity application
on a form signed by the plan trustee and agreed to by the Penn Mutual home
office. No compensation shall be payable pursuant to this agreement which would
be in excess of the limits of Section 4228 of the Insurance Law of the State of
New York for the sale of insurance products.
5. VARIABLE ESTATEMAX
During the period the Broker-Dealer Selling Agreement is in effect,
and subject to and in accordance with the provisions thereof, Broker-
Dealer shall be compensated as follows with respect to a policy of
Penn Mutual know as the Last Survivor Flexible Premium Adjustable
Variable Life Insurance Policy (Policy Forms VALJ-94(S) and VALJ-
94(U)), (a policy on any such form being hereinafter called a
"Variable EstateMax Policy"), that is placed in force under this
agreement. With respect to each Variable EstateMax Policy, Broker-
Dealer may elect to receives fees under Option 1 or 2. If no option is
selected the default will be Option 1. Once each policy is in force,
no changes will be permitted to the choice of compensation.
A. OPTION 1.
---------
(a) Basic First Year Compensation
-----------------------------
A fee for the first policy year of 50% of A plus 2.0% of B
where A is equal to the lesser of:
(i) the premium paid in year 1
(ii) the target premium for the policy, or
(iii) the lesser of the premium scheduled to be paid in year 1
or 2, and
B is equal to the excess of the premium paid in year 1 over A.
Target premiums are maintained on file in Penn Mutual's Home
Office.
(b) Renewal Compensation
--------------------
A fee for the second through fifteenth years equal to 2.0% of the
premium paid for the policy year in question, and a fee for the
sixteenth and later policy years equal to 1.2% of the premium
paid for the policy year in question.
B. OPTION 2
--------
(a) Basic First Year Compensation
------------------------------
Basic First Year Compensation is the same as in Option 1.
(b) Renewal Compensation
--------------------
Additionally, for the second through tenth policy years equal to
1.0% of the premium paid for the policy year in question, and no
fee for the eleventh and later policy years. Additionally, for
the second through tenth policy years, an fee equal to 0.08333%
of the policy value on
3
each monthly anniversary. Monthly anniversary is defined as the
day in each calendar month which is the same day of the month as
the Policy Date. For the eleventh and later policy years, fee
equal to 0.020833% of the policy value on each monthly
anniversary. Policy value is as defined in the policy.
C. EXPENSE ALLOWANCE
-----------------
For each calendar month while Broker-Dealer Selling
Agreement is in effect and before its termination, Broker-Dealer
shall be entitled to the expense from Penn Mutual described
below, provided that the amount payable as an expense allowance
shall be limited to the total of reasonable business expenses
incurred by Broker-Dealer that are directly related to the sale
or service of Penn Mutual policies, and provided further that no
such allowance shall be payable to Broker-Dealer that would cause
the total of such allowances to exceed the limits of Section 4228
of the Insurance Law of the State of New York. No payment
pursuant to this agreement will be used by Broker-Dealer to
effect compensation for the sale of insurance in excess of the
limits of said Section 4228. Such allowance shall be 60% of an
amount equal to the Basic First Year Compensation during the
calendar month for which this allowance is being calculated.
D. COMPENSATION CHARGEBACKS
------------------------
A percentage of total compensation (including expense
allowance, if any) will be charged back for lapses, surrenders or
if a policy is unwound during the first policy year and during
the 12 policy months following an increase. The percentage is
shown below and will vary depending on the policy month of
lapse/surrender/unwind.
Month of Chargeback
Lapse/Surrender/ Percentage
Unwind
------
0-6 100%
7-12 50%
6. CORNERSTONE VARIABLE UNIVERSAL LIFE
During the period the Broker-Dealer Selling Agreement is in effect,
and subject to and in accordance with the provisions thereof, Broker-
Dealer shall be compensated as follows with respect to a policy of
Penn Mutual know as the Flexible Premium Adjustable Variable Life
Insurance Policy (Policy Forms VU-90(S) and VU-90(U)), (a policy on
any such form being hereinafter called a "Cornerstone VUL Policy"),
that is placed in force through Agent under this agreement:
A. OPTION 1
--------
(a) Basic First Year Compensation
-----------------------------
A fee for the first policy year of 50% of A plus
3.75% of B where
A is equal to the lesser of:
(i) the premium paid in year 1
(ii) the target premium for the policy, or
(iii) the lesser of the premium scheduled to be paid in year 1 or 2,
and B is equal to the excess of the premium paid in year 1 over A.
Target premiums are maintained on file in Penn Mutual's Home Office.
(b) Renewal Compensation
--------------------
A fee for the second and third policy years of 4% of an amount equal
to premium paid for the policy year in question, a fee for the fourth
through fifteenth years, equal to 4.0% of the premium paid for the
policy year in question, and a fee for the sixteenth and later policy
years equal to 1.2% of the premium paid for the policy year in
question.
(c) Basic Compensation on Increases
-------------------------------
In the case of an increase in the Specified Amount of insurance, a fee
of 46% of C where:
C is equal to the lesser of:
(i) the premium paid in the twelve months following the
effective date of the increase,
(ii) the target premium for the amount of the increase, or
5
(iii) the increase in the scheduled premium.
B. OPTION 2
--------
(a) Basic First Year Compensation
-----------------------------
Basic First Year Compensation is the same as in Option 1.
(b) Renewal Compensation
--------------------
A fee for the second through tenth policy years equal to 3.0% of the
premium paid for the policy year in question, and no fee for the
eleventh and later policy years. Additionally, for the second through
tenth policy years, an fee equal to 0.08333% of the policy value on
each monthly anniversary. Monthly anniversary is defined as the day in
each calendar month which is the same day of the month as the Policy
Date. For the eleventh and later policy years, fee equal to 0.020833%
of the policy value on each monthly anniversary. Policy value is as
defined in the policy.
(c) Basic Compensation on Increases
-------------------------------
In the case of an increase in the Specified Amount of insurance, a fee
of 47% of C where:
C is equal to the lesser of:
(i) the premium paid in the twelve months following the
effective date of the increase
(ii) the target premium for the amount of the increase, or
(iii) the increase in the scheduled premium.
C. EXPENSE ALLOWANCE
-----------------
For each calendar month while Broker-Dealer Selling Agreement is en
effect and before its termination, Broker-Dealer shall be entitled to
the expense from Penn Mutual described below, provided that the amount
payable as an expense allowance shall be limited to the total of
reasonable business expenses incurred by Broker-Dealer that are
directly related to the sale or service of Penn Mutual policies, and
provided further that no such allowance shall be payable to Broker-
Dealer that would cause the total of such allowances to exceed the
limits of Section 4228 of the Insurance Law of the State of New York.
No payment pursuant to this agreement will be used by Broker-Dealer to
effect compensation for the sale of insurance in excess of the limits
of said Section 4228. Such allowance shall be 60% of an amount equal
to the Basic First Year Compensation during the calendar month for
which this allowance is being calculated.
D. COMPENSATION CHARGEBACKS
------------------------
A percentage of total compensation (including expense allowance,
if any) will be charged back for lapses, surrenders or if a
policy is unwound during the first policy year and during the 12
policy months following an increase. The percentage is shown
below and will vary depending on the policy month of
lapse/surrender/unwind.
Month of Chargeback
Lapse/Surrender/ Percentage
Unwind
------
0-3 100%
4-6 75%
7-9 50%
10-12 25%
7. Cornerstone UNIVERSAL LIFE II
During the period the Broker-Dealer Selling Agreement is in
effect, and subject to and in accordance with the provisions
thereof, Broker-Dealer shall be paid a fee for soliciting
applications and servicing a policy of Penn Mutual known as the
Flexible Premium Adjustable Variable Universal Life Insurance
Policy (Policy Forms VU-94(S) and VU-94(U)), (a policy on any
such form being hereinafter called a "Cornerstone VUL II
Policy"), that is placed in force before termination of this
agreement. With respect to each Cornerstone VUL II Policy,
Broker-Dealer may elect to receives fees under Option 1 or 2. If
no option is selected the default will be Option 1. Once each
policy is in force, no changes will be permitted to the choice of
compensation.
A. OPTION 1
--------
(a) Basic First Year Compensation
-----------------------------
A fee for the first policy year equal to 50% of A
plus 3.3% of B where
A is equal to the lesser of:
(i) the premium paid in year 1
(ii) the target premium for the policy, or
(iii) the lesser of the premium scheduled to be
paid in year 1 or 2, and
B is equal to the excess of the premium paid in year 1 over A.
Target premiums are maintained on file in Penn Mutual's Home
Office.
(b) Renewal Compensation
--------------------
A fee for the second through fifteenth years equal to 3.0% of the
premium paid for the policy year in question, and a fee for the
sixteenth and later policy years equal to 1.2% of the premium
paid for the policy year in question.
(c) Basic Compensation on Increases
-------------------------------
In the case of an increase in the Specified Amount of insurance,
a fee of 47% of C where:
C is equal to the lesser of:
(i) the premium paid in the twelve months following
the effective date of the increase
(ii) the target premium for the amount of the increase
or
(iii) the increase in the scheduled premium.
B. OPTION 2
--------
(a) Basic First Year Compensation
-----------------------------
Basic First Year Compensation is the same as in Option 1.
(b) Renewal Compensation
--------------------
A fee for the second through tenth policy years equal to 2.0% of
the premium paid for the policy year in question, and no fee for
the eleventh and later policy years. Additionally, for the second
through tenth policy years, an fee equal to 0.08333% of the
policy value on each monthly anniversary. Monthly anniversary is
defined as the day in each calendar month which is the same day
of the month as the Policy Date. For the eleventh and later
policy years, fee equal to 0.020833% of the policy value on each
monthly anniversary. Policy value is as defined in the policy.
9
(c) Basic Compensation on Increases
-------------------------------
In the case of an increase in the Specified Amount of
insurance, a fee of 47% of C where:
C is equal to the lesser of:
(i) the premium paid in the twelve months following
the effective date of the increase
(ii) the target premium for the amount of the increase
or
(iii) the increase in the scheduled premium.
C. EXPENSE ALLOWANCE
-----------------
For each calendar month while Broker-Dealer Selling
Agreement is en effect and before its termination, Broker-Dealer
shall be entitled to the expense from Penn Mutual described
below, provided that the amount payable as an expense allowance
shall be limited to the total of reasonable business expenses
incurred by Broker-Dealer that are directly related to the sale
or service of Penn Mutual policies, and provided further that no
such allowance shall be payable to Broker-Dealer that would cause
the total of such allowances to exceed the limits of Section 4228
of the Insurance Law of the State of New York. No payment
pursuant to this agreement will be used by Broker-Dealer to
effect compensation for the sale of insurance in excess of the
limits of said Section 4228. Such allowance shall be 60% of an
amount equal to the Basic First Year Compensation during the
calendar month for which this allowance is being calculated.
D. COMPENSATION CHARGEBACKS
------------------------
A percentage of total compensation (including expense allowance,
if any) will be charged back for lapses, surrenders or if a
policy is unwound during the first policy year and during the 12
policy months following an increase. The percentage is shown
below and will vary depending on the policy month of
lapse/surrender/unwind.
Month of Lapse/ Chargeback
Surrender/Unwind Percentage
---------------- ----------
0-3 100%
4-6 75%
7-9 50%
10-12 25%
8. PENNANT SELECT(TM)
During the period the Broker-Dealer Selling Agreement is in
effect, and subject to and in accordance with the provisions
thereof, Broker-Dealer shall be paid a fee for soliciting
applications and servicing Contracts of Penn Mutual known as the
Pennant Select Individual Variable and Fixed Annuity Contract
(Policy Form VAA-98 and any variation thereof), (a policy on any
such form being hereinafter called a "Pennant Select Annuity
Contract"), that is placed in force before termination of this
agreement. With respect to each Pennant Select Annuity Contract,
Broker-Dealer may elect to receives fees under Option 1, 2 or 3.
If no option is selected the default will be Option 1. Once each
policy is in force, no changes will be permitted to the choice of
compensation.
A. OPTION 1
--------
(a) 7.00% (4.2% where the insured has an attained age
greater than 80) of aggregate purchase payments up to
$1,000,000 per Contract; aggregate purchase payments in
excess of $1,000,000 require a separate written agreement
with the Home Office.
B. OPTION 2
--------
(a) 6.7% (4.0% where the insured has an attained age
greater than 80) of aggregate purchase payments up to
$1,000,000 per Contract; aggregate purchase payments in
excess of $1,000,000 require a separate written agreement
with the Home Office.
(b) 0.50% of the Account Value, for the eighth and later
contract years, calculated on a quarterly basis and paid at
a quarter of the stated rate, and commencing with the first
calendar quarter of the eight Contract year and payable at
the end of each calendar quarter.
C. OPTION 3
--------
(a) 5.85% (3.5% where the insured has an attained age
greater than 80) of aggregate purchase payments in excess of
$1,000,000 require a separate written agreement with the
Home Office.
(b) 0.20% of the Account Value, for the second through
seventh contract years, calculated on a quarterly basis and
paid at a quarter of the stated rate, and commencing with
the first calendar quarter of following the first Contract
anniversary year and payable at the end of each calendar
quarter.
(c) 0.50% of the Account Value, for the eighth and later
contract years, calculated on a quarterly basis and paid at
a quarter of the stated rate, and commencing with the first
calendar quarter of the eight Contract year and payable at
the end of each calendar quarter.
9. Commander(TM)
During the period the Broker-Dealer Selling Agreement is in effect, and subject
to and in accordance with the provisions thereof, Broker-Dealer shall be paid a
fee for soliciting applications and servicing Contracts of Penn Mutual known as
the Commander Individual Variable and Fixed Annuity Flexible Purchase Payment
Annuity Contract (Policy Forms VAB-98 and any variation thereof), (a policy on
any such form being hereinafter called a "Commander Annuity Contract"), that is
placed in force before termination of this agreement.
A. 1.00% of aggregate purchase payments up to
$1,000,000 per Contract; aggregate purchase payments in
excess of $1,000,000 require a separate written
agreement with the Home Office; and
B. 1.00% of the Account Value, for the second through
seventh contract years, calculated on a quarterly basis
and paid at a quarter of the stated rate, and
commencing with the first calendar quarter of following
the first Contract anniversary year and payable at the
end of each calendar quarter.
10. REPLACEMENT OF PENN MUTUAL POLICES
It is agreed that the compensation otherwise payable to Broker-Dealer for any
policy shall be reduced in accordance with the replacement control program in
effect at the time such policy is placed in force. It is anticipated that such
replacement control program may be changed form time to time as to policies in
force after such change.
13
11. POLICY DELIVERY RECEIPT
It is agreed that the Broker-Dealer shall be responsible for obtaining a signed
policy delivery receipt in accordance with Company policy.
Exhibit 3(e)
PENN THE PENN MUTUAL LIFE INSURANCE COMPANY
MUTUAl Xxxxxxxxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000
--------------------------------------------------------------------------------
National Accounts - Corporate Insurance Agents
Licensed to Sell Variable Annuities and/or Variable
Life Insurance under State Insurance Laws
(Companion Agreement - Form A-1)
CORPORATE INSURANCE AGENT SELLING AGREEMENT
THE PENN MUTUAL LIFE INSURANCE COMPANY (hereinafter
called "Penn Mutual"), and Xxxxxx Xxxxxxxx & Xxxx, Inc.
(hereinafter called "Distributor") enter into this
Agreement with __________________________________
(hereinafter called "Corporate Insurance Agent") on
this date ______________, 19____ agrees as follows:
WITNESSETH:
WHEREAS, Penn Mutual is in the business of issuing
annuity and life insurance contracts to the public;
WHEREAS, Distributor is a wholly owned subsidiary of
Penn Mutual, is registered as a broker-dealer under the
Securities Exchange Act of 1934, is a member of the
National Association of Securities Dealers, Inc., and
is assisting Penn Mutual in the distribution of such
contracts;
WHEREAS, Corporate Insurance Agent is properly licensed
under the insurance laws of the state(s) in which it
will act under this agreement;
WHEREAS, Corporate Insurance Agent is affiliated with
______________________________ a corporation which is
registered as a broker-dealer under the Securities
Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. (hereinafter
referred to as "Broker-Dealer");
WHEREAS, the parties desire to enter into an
arrangement under which Corporate Insurance Agent and
Broker-Dealer agree to sell certain annuity and life
insurance contracts issued by Penn Mutual;
NOW THEREFORE, in consideration of these premises and
mutual covenants herein contained, the parties agree as
follows:
--------------------------------------------------------------------------------
1. APPOINTMENT OF 1.1 Subject to the terms and conditions of this
CORPORATE agreement, Penn Mutual and Distributor appoint
INSURANCE AGENT. Corporate Insurance Agent as a non-exclusive agent
for the solicitation of applications for, and the
servicing of, annuity Insurance Agent and/or
variable life insurance contracts identified in
the schedule(s) attached hereto, and Corporate
Insurance Agent accepts such appointment. The
annuity and/or variable life insurance contracts
identified in the schedules(s) are referred to
herein as "Contracts".
1.2 Corporate Insurance Agent and its representatives
shall be independent contractors as to Penn Mutual
and Distributor and, subject to the terms and
conditions of this agreement, free to exercise
their own judgment as to the time, place and means
of performing all acts hereunder. Nothing in this
agreement is intended to create a relationship of
employer and employee as between Penn Mutual or
Distributor, on the one hand, and representatives
of Corporate Insurance Agent on the other.
--------------------------------------------------------------------------------
2. INSURANCE AND 2.1 The sale of variable annuity and variable life
SECURITIES insurance contracts identified in the schedule(s)
REGULATIONS- attached hereto is subject to and regulated under
COORDINATION OF federal securities laws (and may also be subject
AGREEMENTS. to and regulated under certain state securities
laws), in addition to state insurance laws. It is
understood and agreed that representatives of
Corporate Insurance Agent shall be registered
representative of Broker-Dealer and that Broker-
Dealer shall contemporaneously enter into a
Broker-Dealer Selling Agreement with Penn Mutual
and Distributor covering the sale of such
contracts. This agreement and the Broker-Dealer
Selling Agreement shall govern the sales of such
contracts.
--------------------------------------------------------------------------------
3. SALE OF CONTRACTS. 3.1 Corporate insurance Agent shall use its best
efforts to solicit applications for Contracts from
persons for whom the Contracts are suitable, in
accordance with the terms and conditions of this
agreement.
3.2 All applications for Contracts shall be made on
applications forms authorized by Penn Mutual.
Corporate Insurance Agent shall diligently review
all such applications for accuracy and
completeness and shall take all reasonable and
appropriate measures to assure that applications
submitted to Penn Mutual are accurate and
complete.
3.3 All purchase payments collected by Corporate
Insurance Agent for Penn Mutual shall be received
in trust and shall be remitted immediately
together with the application and any other
required documentation, to Penn Mutual at the
address indicated on the application or to such
other address as Penn Mutual may specify in
writing. All checks or money orders for payments
under Contracts shall be drawn to the order of
Penn Mutual.
3.4 All applications are subject to acceptance or
rejection by Penn Mutual in its sole discretion.
Penn Mutual may at any time in its sole discretion
discontinue issuing the Contracts or change the
form and content of new Contracts to be issued.
3.5 In soliciting applications for Contracts,
Corporate Insurance Agent may not accept risk of
any kind for or on behalf of Penn Mutual and may
not bind Penn Mutual by promise or agreement or
alter any Contract in any way.
--------------------------------------------------------------------------------
4. COMPENSATION. 4.1 In consideration of and as full compensation for
the services performed in accordance with this
agreement, Corporate Insurance Agent will receive
compensation from Penn Mutual as set forth in the
schedule(s) attached to this agreement. The
schedule(s) shall be signed and dated by the
parties.
4.2 Should Penn Mutual for any reason return any
payment made under a Contract to the payor,
Corporate Insurance Agent shall repay Penn Mutual
the total amount of any compensation which Penn
Mutual may have paid with respect to such payment.
4.3 Corporate Insurance Agent may not withhold or
deduct any part of any premium or other payment
due Penn Mutual for payment of compensation under
this agreement or for any other purpose. The right
of Corporate Insurance Agent to receive any
compensation under this agreement shall at all
times be subordinate to the right of Penn Mutual
or Distributor to offset or apply such
compensation against any indebtedness of Corporate
Insurance Agent to Penn Mutual or Distributor.
4.4 Penn Mutual may, in its sole discretion, change
the amount, terms and conditions, of compensation
set forth in the schedule(s) attached to this
agreement, with respect to payment received by
Penn Mutual under Contracts.
4.5 Penn Mutual shall not be obligated to pay any
compensation which would be in violation of
applicable laws of any jurisdiction, anything in
this agreement to the contrary notwithstanding.
4.6 With respect to compensation paid in connection
with the sale of variable annuity and/or variable
life insurance contracts, Corporate Insurance
Agent shall, on behalf of Broker-Dealer, maintain
such books and records as are necessary for
Broker-Dealer to comply with applicable record
keeping requirements under federal and state
securities laws and under the rules of the
National Association of Securities Dealer, Inc.
Such records shall be maintained and preserved in
conformity with the requirements of Rules 17a-3
and 17a-4 under the Securities Exchange Act of
1934, to the extent that such requirements are
applicable to the variable annuity and/or variable
life contracts. Further, with respect to such
records, Corporate Insurance Agent shall be
subject to examination by the Securities and
Exchange Commission in accordance with Section
17(a) of the Securities Exchange Act of 1934.
--------------------------------------------------------------------------------
5. COMPLIANCE WITH 5.1 Corporate Insurance Agent and its representative
INSURANCE LAWS shall not solicit applications for Contracts in
AND REGULATIONS. any state or jurisdiction unless they are duly
licensed and qualified to do so under the
insurance laws and regulations of the state or
jurisdiction and unless Penn Mutual has notified
Corporate Insurance Agent that the Contracts have
been approved for sale in the state or
jurisdiction.
5.2 Penn Mutual may at any time in its sole discretion
withhold or withdraw authority of any
representative of Corporate Insurance Agent to
solicit applications for the Contracts. Upon Penn
Mutual giving written notice to Corporate
Insurance Agent of its withdrawal of authority of
a representative to solicit applications,
Corporate Insurance Agent shall immediately cause
any such representative to cease all such
solicitations.
5.3 Corporate Insurance Agent shall notify Penn Mutual
in writing immediately of the termination of the
employment or affiliation of an employee or
representative who is an appointed agent of Penn
Mutual pursuant to this agreement.
5.4 Corporate Insurance Agent shall keep accurate and
complete books and records of all transactions
relating to the solicitation of applications and
for servicing Contracts. The books and records
shall be made available to Penn Mutual for
inspection upon reasonable request.
5.5 If Corporate Insurance Agent solicits applications
for or servicing variable life insurance contracts
under this agreement, Corporate Insurance Agent
and its representative shall observe the Standards
of Suitability for the Sale of Variable Life
Insurance set forth on the reverse side of the
schedule attached hereto identifying such
contacts.
5.6 Corporate Insurance Agent and its representatives
shall comply with all applicable insurance laws
and regulations in soliciting applications for and
servicing Contracts. Corporate Insurance Agent
shall be fully responsible for all acts of its
representatives in soliciting applications for and
servicing Contracts.
--------------------------------------------------------------------------------
6. ADVERTISEMENTS, 6.1 Corporate Insurance Agent shall not print,
SALES LITERATURE publish, distribute or use any advertisements,
AND OTHER sales literature or other writing relating to the
COMMUNICATIONS. Contracts unless such advertisements, sales
literature or other writing shall have first been
approved in writing by Penn Mutual and
Distributor.
6.2 Corporate Insurance Agent shall exercise care not
to misrepresent the Contracts or Penn Mutual and
shall make no oral or written representation which
is inconsistent with the terms of the Contracts or
with the information in any prospectus or sales
literature furnished by Penn Mutual or it
misleading in any way.
--------------------------------------------------------------------------------
7. INDEMNIFICATION. 7.1 Corporate Insurance Agent shall indemnify or hold
harmless Penn Mutual and Distributor and each
director and officer of Penn Mutual and
Distributor against any losses, claims, damages or
liabilities, including but not limited to
reasonable attorneys' fees and court cost to which
Penn Mutual or Distributor and any such director
or officer may become subject, under the
Securities Act of 1933 or otherwise, insofar as
such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are
based upon any unauthorized use of sales materials
or any verbal or written misrepresentations or any
unlawful sales practices, or the failure of
Corporate Insurance Agent, its officers, employees
or representative to comply with the provisions of
this agreement or the willful misfeasance, bad
faith, negligence or misconduct of Corporate
Insurance Agent, its officers, employees, or
representatives in the solicitation of
applications for and the servicing of Contracts.
7.2 Penn Mutual and Distributor shall indemnify and
hold harmless Corporate Insurance Agent and each
officer or director of Corporate Insurance Agent
against any losses, claims, damages or
liabilities, joint or several, including but not
limited to reasonable attorneys' fees and court
cost, to which Corporate Insurance Agent or such
officer or director becomes subject, under the
Securities Act of 1933 or otherwise, insofar as
such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue
statement of a material fact, required to be
stated therein or necessary to make the statements
therein not misleading, contained in any
registration statement or any post-effective
amendment or supplement to the prospectus, or in
any sales material written by Penn Mutual or
Distributor.
7.3 In the event Penn Mutual suffers a loss resulting
from Corporate Insurance Agent activities,
Corporate Insurance Agent hereby assigns any
proceeds received under its fidelity bond to Penn
Mutual to the extent of such losses. If there is
any deficiency amount, whether due to a deductible
or otherwise, Corporate Insurance Agent shall
promptly pay Penn Mutual such amount on demand and
Corporate Insurance Agent shall indemnify and hold
harmless Penn Mutual from any such deficiency and
from the costs of collection thereof (including
reasonable attorneys' fees).
--------------------------------------------------------------------------------
8. COMPLAINTS, 8.1 Corporate Insurance Agent shall promptly notify
INVESTIGATIONS & Penn Mutual and Distributor of any allegation that
PROCEEDINGS. Corporate Insurance Agent or any of its
representatives violated any law, regulation or
rule in soliciting applications for or servicing
Contracts, and shall provide Penn Mutual with full
details, including copies of all legal documents
pertaining thereto.
8.2 Corporate Insurance Agent shall cooperate fully
with Penn Mutual and Distributor in any regulatory
investigation or proceeding or judicial proceeding
involving the solicitation of application for and
servicing Contracts by Corporate Insurance Agent
or any of its representatives.
--------------------------------------------------------------------------------
9. NONWAIVER. 9.1 Forbearance by Penn Mutual or Distributor to
enforce any rights under this agreement shall not
be construed as a waiver of any of the terms and
conditions of this agreement and the same shall
remain in full force and effect. No waiver of any
provision of this agreement shall be deemed to be
a waiver of any other provision, whether or not
similar, nor shall any waiver of a provision of
this agreement be deemed to constitute a
continuing waiver.
--------------------------------------------------------------------------------
10. AMENDMENT. 10.1 Penn Mutual reserves the right to amend this
Agreement at any time. Corporate Insurance Agent's
submission of an application for a Contract after
notice of any such amendment shall constitute
agreement of Corporate Insurance Agent to such
amendment.
--------------------------------------------------------------------------------
11. TERMINATION AND 11.1 This agreement may be terminated by any party,
ASSIGNMENT. with or without cause, upon giving written notices
to the other parties. This agreement shall
automatically terminate if Corporate Insurance
Agent is adjudicated as bankrupt or avails itself
of any insolvency act or if a permanent receiver
or trustee in bankruptcy is appointed for the
property of Corporate Insurance Agent. Upon
termination of this agreement, with or without
cause, all authorizations, rights and obligations
shall cease, except the rights and obligations set
forth in sections 7 and 8 of this agreement and
the obligations to settle account hereunder,
including the immediate forwarding of all payments
received by Corporate Insurance Agent under
Contract to Penn Mutual, and except as may be
expressly stated otherwise in this agreement.
11.2 This agreement may not be assigned without the
written consent of all parties.
--------------------------------------------------------------------------------
12. GOVERNING LAW. 12.1 This agreement shall be construed in accordance
with and governed by the laws of the Commonwealth
of Pennsylvania.
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers designated below on the day and year first written.
_____________________________________________________
Name of Corporate Insurance Agent
By: ______________________________________________
Signature
______________________________________________
Name
______________________________________________
Title
THE PENN MUTUAL LIFE INSURANCE COMPANY
By: ______________________________________________
Signature
______________________________________________
Name
______________________________________________
Title
XXXXXX, XXXXXXXX & XXXX, INC.
By: ______________________________________________
Signature
______________________________________________
Name
______________________________________________
Title
PENN THE PENN MUTUAL LIFE INSURANCE COMPANY
MUTUAL Xxxxxxxxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000
--------------------------------------------------------------------------------
SCHEDULE 1 TO CORPORATE INSURANCE AGENT SELLING AGREEMENT
Individual Variable and Fixed Annuity Contracts -
Diversifier II
Individual Fixed - Only Annuity Contracts - Diversifier II
Date of Corporate Insurance Agent Selling Agreement to which
this schedule is attached: _____________
--------------------------------------------------------------------------------
1. AUTHORIZATION Subject to the conditions and limitations of the Corporate
TO SELL. Insurance Agent Selling Agreement, Corporate Insurance Agent
is authorized to solicit applications for Diversifier II
Individual Variable and Fixed Annuity Contracts and
Diversifier II Individual Fixed-Only Annuity Contracts
issued by Penn Mutual (hereinafter referred to as
"Contracts").
--------------------------------------------------------------------------------
2. COMPENSATION. Subject to the conditions and limitations of the Corporate
Insurance Agent Selling Agreements and this Schedule,
Corporate Insurance Agent shall be paid a fee for placing or
servicing a Diversifier II Individual Variable and Fixed
Annuity Contract equal to _____% of any purchase payment
made under such Contract and a fee for placing and servicing
a Diversifier II Fixed-Only Annuity Contract equal to _____%
of any purchase payment made under such Contract. No fee
shall be paid with respect to a purchase payment made under
a contract after the Corporate Insurance Agent Selling
Agreement has been terminated. If the Annuitant or
Contractowner (other than a trustee of a Qualified Plan) is
over age 81 on the date the Diversifier II Contract is
issued, the fee shall be limited as follows: 80% of such fee
if the Annuitant or Contractowner is age 82; 60% of such fee
if the Annuitant or Contractowner is age 83; 40% of such fee
if the Annuitant or Contractowner is age 84; and 20% of such
fee if the Annuitant of Contractowner is age 85. Amounts
transferred among Contracts are not purchase payments with
the meaning of the Corporate Insurance Agent Selling
Agreement of this Schedule.
This Schedule 1 replaces and supersedes any and all prior
Schedule 1's attached to the Corporate Insurance Agent
Selling Agreement.
Agreed:
Date: ____________________ ___________________________________________
Corporate Insurance Agent
By: ______________________________________
Signature
______________________________________
Name
______________________________________
Title
THE PENN MUTUAL LIFE INSURANCE COMPANY
By: ______________________________________
Signature
______________________________________
Name
______________________________________
Title
XXXXXX, XXXXXXXX & XXXX, INC.
By: ______________________________________
Signature
______________________________________
Name
______________________________________
Title
PENN THE PENN MUTUAL LIFE INSURANCE COMPANY
MUTUAL Xxxxxxxxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000
--------------------------------------------------------------------------------
SCHEDULE 3 TO CORPORATE INSURANCE AGENT SELLING AGREEMENT
Variable Universal Life Insurance Contracts - Penn Mutual
Cornerstone VUL II Date of Corporate Insurance Agent Selling
Agreement to which this schedule is attached:
________________________________________________
--------------------------------------------------------------------------------
1. AUTHORIZATION Subject to and in accordance with the provision of the
TO SELL. Corporate Insurance Agent Selling Agreement, Corporate
Insurance Agent is authorized to solicit applications for
Form VU-94(s) and Form VU-94(u) Flexible Premium Adjustable
Variable Universal Life Insurance Policies and such
variations of such form of contract as may be designated by
Penn Mutual and approved under applicable state insurance
laws ("Cornerstone VUL II Policies").
--------------------------------------------------------------------------------
2. COMPENSATION. During the period the Corporate Insurance Agent Selling
Agreement and this schedule is in effect, and subject to and
in accordance with the provisions thereof, Corporate
Insurance Agent shall be compensated as follows:
2.1 Basic First Year Compensation
-----------------------------
A fee for the first policy year of 50% of an amount
equal to the first T of premium paid for the first
policy year and 3.3% of an amount equal to the premium
paid for the first policy year in excess of T. However,
if the insured is over attained age 75 on the date the
policy is issued, the fee for the first policy year
will be limited to 35% of an amount equal to the first
T of premium paid for the first policy year and 3.3% of
an amount equal to premium paid for the first policy
year in excess of T. T is equal to the amount set forth
in Table 1 below for each $1,000 or fraction thereof
the initial Specified Amount of insurance as set forth
in the policy in question. In calculating compensation
payable pursuant to this subsection, it will be deemed
that any increase in Specified Amount of the policy in
question that is effective during the first six policy
months of such policy took place prior to the issuance
of such policy, and the calculations pursuant to this
subsection shall be based upon an initial Specified
Amount as so adjusted.
2.2 Renewal Compensation
--------------------
A fee for the second through fifteen policy years of
3.00% of an amount equal to premium paid for the policy
year in question, and a fee for the sixteenth and later
policy years equal to 1.20% of premium paid for the
policy year in question.
2.3 Basic Compensation on Increases
-------------------------------
In the case of an increase in the Specified Amount of
insurance, a fee of 47% (32% where the insured has an
attained age greater than 75) of an amount equal to the
smaller of (1) the first T of premium paid for the
twelve months following the effective date of any
increase in Specified Amount of the policy in question
and (2) total increase in scheduled annual basis
premium. Such fee shall be paid only once for each such
increase. T is defined in subsection 2.1 above.
--------------------------------------------------------------------------------
2.4 Expense Allowance
-----------------
For each calendar month while Corporate Insurance Agent
Selling Agreement is in effect and before its
termination, Corporate Insurance Agent shall be
entitled to the expense from Penn Mutual described
below, provided that the amount payable as an expense
allowance shall be limited to the total of reasonable
business expenses incurred by Corporate Insurance Agent
that are directly related to the sale or service of
Penn Mutual policies, and provided further that no such
allowance shall be payable to Corporate Insurance Agent
that would cause the total of such allowances to exceed
the limits of Section 4228 of the Insurance Law of the
State of New York. No payment pursuant to this
agreement will be used by Corporate Insurance Agent to
effect compensation for the sale of insurance in excess
of the limits of said Section 4228. Such allowance
shall be 60% of an amount equal to the Basic First Year
Compensation and Basic Compensation on Regular
increases for the Cornerstone, VUL Policies during the
calendar month for which this allowance is being
calculated.
2.5 Compensation Chargebacks
------------------------
A percentage of total compensation (including expense
allowance) will be charged back for lapses/surrenders
during the first policy year and during the 12 policy
months following an increase. The percentage is shown
below and is dependent on the policy month of
lapse/surrender.
Policy Month of Chargeback
Lapse/Surrender Percentage
--------------- ----------
1-3 100%
4-6 75%
7-9 50%
10-12 25%
13+ 0%
2.6 Replacement of Penn Mutual Policies
-----------------------------------
It is agreed that the compensation otherwise payable to
Corporate Insurance Agent for any policy shall be
reduced in accordance with the replacement control
program of Penn Mutual in effect at the time such
policy is placed in force. It is anticipated that such
replacement control program may be changed from time to
time as to policies in force after such change.
2.7 Policy Delivery Receipt
-----------------------
it is agreed that the Corporate Insurance Agent shall
be responsible for obtaining a signed policy delivery
receipt. No compensation otherwise payable to the
Corporate Insurance Agent for any policy shall be paid
until Penn Mutual is in possession of a signed policy
delivery receipt (or facsimile copy thereof) for said
policy.
This Schedule 3 replaces and supersedes any and
all prior Schedule 3's attached to the Corporate
Insurance Agent Selling Agreement.
Agreed:
Date: ____________________ _________________________________________
Name of Corporate Insurance Agent
By: _____________________________________
Signature
_____________________________________
Name
_____________________________________
Title
THE PENN MUTUAL LIFE INSURANCE COMPANY
By: _____________________________________
Signature
_____________________________________
Name
_____________________________________
Title
XXXXXX, XXXXXXXX & XXXX, INC.
By: _____________________________________
Signature
_____________________________________
Name
_____________________________________
Title
TABLE 1
Variable Universal Life
Target Premiums
Male Female Unisex Male Female Unisex
---- ------ ------ ---- ------ ------
Age NS SM NS SM NS SM Age NS SM NS SM NS SM
--- -- -- -- -- -- -- --- -- -- -- -- -- --
0 N/A 2.82 N/A 2.44 N/A 2.77 41 11.35 13.61 9.72 11.40 11.01
1 N/A 2.81 N/A 2.45 N/A 2.77 42 11.88 14.27 10.15 11.91 11.53
2 N/A 2.91 N/A 2.53 N/A 2.86 43 12.45 14.96 10.60 12.43 12.07
3 N/A 3.00 N/A 2.61 N/A 2.96 44 13.04 15.68 11.08 12.98 12.64
4 N/A 3.11 N/A 2.70 N/A 3.06 45 13.67 16.45 11.58 13.56 13.24
5 N/A 3.22 N/A 2.79 N/A 3.17 46 14.34 17.26 12.11 14.16 13.88
6 N/A 3.33 N/A 2.89 N/A 3.28 47 15.05 18.11 12.67 14.80 14.56
7 N/A 3.46 N/A 2.99 N/A 3.40 48 15.80 19.02 13.26 15.47 15.27
8 N/A 3.59 N/A 3.10 N/A 3.53 49 16.60 19.97 13.89 16.17 16.03
9 N/A 3.73 N/A 3.21 N/A 3.67 50 17.45 20.98 14.55 16.91 16.84
10 N/A 3.87 N/A 3.33 N/A 3.81 51 18.35 22.05 15.24 17.69 17.70
11 N/A 4.03 N/A 3.45 N/A 3.96 52 19.31 23.19 15.98 18.51 18.61
12 N/A 4.19 N/A 3.59 N/A 4.12 53 20.33 24.39 16.77 19.38 19.58
13 N/A 4.36 N/A 3.72 N/A 4.28 54 21.42 25.65 17.59 20.29 20.60
14 N/A 4.53 N/A 3.86 N/A 4.45 55 22.57 26.99 18.47 21.26 21.70
15 N/A 4.70 N/A 4.01 N/A 4.62 56 23.80 28.40 19.40 22.28 22.86
16 N/A 4.88 N/A 4.16 N/A 4.79 57 25.10 29.88 20.40 23.36 24.09
17 N/A 5.06 N/A 4.32 N/A 4.96 58 26.50 31.46 21.46 24.51 25.40
18 N/A 5.25 N/A 4.48 N/A 5.13 59 27.98 33.13 22.59 25.74 26.81
19 N/A 5.44 N/A 4.65 N/A 5.31 60 29.57 34.91 23.82 27.07 28.31
20 4.83 5.65 4.17 4.82 4.70 5.50 61 31.27 36.80 25.13 28.50 29.92
21 5.00 5.84 4.32 5.01 4.86 5.69 62 33.09 38.80 26.54 30.03 31.63
22 5.17 6.05 4.49 5.20 5.04 5.90 63 35.03 40.93 28.06 31.68 33.47
23 5.36 6.27 4.66 5.41 5.22 6.12 64 37.11 43.18 29.69 33.43 35.43
24 5.56 6.51 4.84 5.62 5.41 6.35 65 39.33 45.54 31.43 35.29 37.53
25 5.76 6.76 5.02 5.83 5.62 6.59 66 41.69 48.04 33.29 37.27 39.76
26 5.99 7.03 5.22 6.08 5.83 6.85 67 44.22 50.00 35.28 39.38 42.15
27 6.22 7.31 5.43 6.32 6.06 7.13 68 46.93 50.00 37.44 41.65 44.71
28 6.47 7.62 5.65 6.58 6.31 7.43 69 49.85 50.00 39.78 44.12 47.46
29 6.74 7.94 5.87 6.85 6.57 7.74 70 50.00 50.00 42.33 46.80 50.00
30 7.02 8.28 6.11 7.14 6.84 8.07 71 50.00 50.00 45.12 49.74 50.00
31 7.31 8.64 6.37 7.44 7.12 8.42 72 50.00 50.00 48.16 50.00 50.00
32 7.63 9.03 6.63 7.75 7.43 8.79 73 50.00 50.00 50.00 50.00 50.00
33 7.96 9.43 6.91 8.08 7.75 9.18 74 50.00 50.00 50.00 50.00 50.00
34 8.31 9.86 7.20 8.43 8.08 9.59 75 50.00 50.00 50.00 50.00 50.00
35 8.67 10.31 7.51 8.80 8.44 10.03 76 50.00 50.00 50.00 50.00 50.00
36 9.06 10.79 7.84 9.19 8.81 10.49 77 50.00 50.00 50.00 50.00 50.00
37 9.47 11.30 8.18 9.59 9.21 10.97 78 50.00 50.00 50.00 50.00 50.00
38 9.90 11.83 8.53 10.01 9.62 11.48 79 50.00 50.00 50.00 50.00 50.00
39 10.36 12.39 8.91 10.46 10.06 12.02 80 50.00 50.00 50.00 50.00 50.00
----------------------------------------------------------------------------------------------
40 10.84 12.99 9.30 10.92 10.52 12.58
NS is to be used for both Nonsmoker Standard and Preferred.
THE PENN MUTUAL LIFE INSURANCE COMPANY
Standards of Suitability for Sale
---------------------------------
of Variable Life Insurance
--------------------------
The Standards of suitability for the sale of Variable Life Insurance Policies
are as follows:
(1) The applicant is furnished with a prospectus effective under the Securities
Act of 1933 which accurately and adequately inform the applicant of all
relevant particulars of the Variable Life Insurance Policy, including the
investment risks assumed under the Policy.
(2) The purchase of the Variable Life Insurance Policy by the applicant is
reasonably consistent with the insurance needs and financial objectives
expressed by the applicant; and
(3) The purchase of the Variable Life Insurance Policy by the applicant is
reasonably consistent with the insurance needs and financial objectives of
the applicant, as determined objectively by the Company's sales agent after
reasonable inquiry into the relevant financial and family situation of the
applicant.
No recommendation shall be made to an applicant to purchase a Variable Life
Insurance Policy in the absence of reasonable grounds to believe that the Policy
is not unsuitable for the applicant. Reasonable grounds for believing that the
Policy is not unsuitable shall be based upon information furnished after
reasonable inquiry of the applicant concerning the applicant's insurance and
investment objectives, financial situation and needs and any other information
known to the Company or the sales agent making the recommendation.
PENN THE PENN MUTUAL LIFE INSURANCE COMPANY
MUTUAL Xxxxxxxxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000
--------------------------------------------------------------------------------
SCHEDULE 4 TO CORPORATE INSURANCE AGENT SELLING AGREEMENT
Variable Universal Life Insurance Contracts - Penn Mutual
Variable EstateMax
Date of Corporate Insurance Agent Selling Agreement to
which this schedule is attached: ________________________
--------------------------------------------------------------------------------
1. AUTHORIZATION Subject to and in accordance with the provision of the
TO SELL. Corporate Insurance Agent Selling Agreement, Corporate
Insurance Agent is authorized to solicit applications for
Form VALJ-94(u) and Form VALJ-94(u) Last Survivor Flexible
Premium Adjustable Variable Life Insurance Policy and such
variations of such form of contract as may be designated by
Penn Mutual and approved under applicable state insurance
laws ("Variable EstateMax").
--------------------------------------------------------------------------------
2. COMPENSATION. During the period the Corporate Insurance Agent Selling
Agreement and this schedule is in effect, and subject to
and in accordance with the provisions thereof, Corporate
Insurance Agent shall be compensated as follows:
2.1 Basic First Year Compensation
-----------------------------
A fee for the first policy year of 50% of an amount
equal to the first R of premium paid for the first
policy year and 2.00% of an amount equal to the
premium paid for the first policy year in excess of R.
R is equal to seventyfive percent (75%) of an Adjusted
Guideline Annual Premium for each $1,000 or fraction
thereof of the initial Specified Amount of insurance
as set forth in the Variable EstateMax Policy in
question. The Adjusted Guideline Annual Premium is the
Guideline Annual Premium as defined in Section 7702 of
the Internal Revenue Service Code of 1986, as amended,
or as set forth in any applicable successor provision
thereto, adjusted to reflect four percent (4%)
interest from the date of issue through the policy
maturity date, and excluding the effect of any per
policy expense loads and substandard ratings. The
policy maturity date is the date that the younger
insured would reach attained age 100.
2.2 Renewal Compensation
--------------------
A fee for the second through fifteen policy years of
2.0% of an amount equal to premium paid for the policy
year in question, and a fee for the sixteenth and
later policy years equal to 1.2% of premium paid for
the policy year in question.
2.3 Expense Allowance
-----------------
For each calendar month while Corporate Insurance
Agent Selling Agreement is in effect and before its
termination, Corporate Insurance Agent shall be
entitled to the expense from Penn Mutual described
below, provided that the amount payable as an expense
allowance shall be limited to the total of reasonable
business expenses incurred by Corporate Insurance
Agent that are directly related to the sale or service
of Penn Mutual policies, and provided further that no
such allowance shall be payable to Corporate Insurance
Agent that would cause the total of such allowances to
exceed the limits of Section 4228 of the Insurance Law
of the State of New York. No payment pursuant to this
agreement will be used by Corporate Insurance Agent to
effect compensation for the sale of insurance in
excess of the limits of said Section 4228. Such
allowance shall be 60% of an amount equal to the Basic
First Year Compensation and Basic Compensation on
Regular increases for the Variable EstateMax during
the calendar month for which this allowance is being
calculated.
2.4 Compensation Chargebacks
------------------------
A percentage of total compensation (including expense
allowance) will be charged back for lapses/surrenders
during the first policy year and during the 12 policy
months following an increase. The percentage is shown
below and is dependent on the policy month of
lapse/surrender.
Policy Month of Chargeback
Lapse/Surrender Percentage
--------------- ----------
1-3 100%
4-6 100%
7-9 50%
10-12 50%
13+ 0%
2.5 Replacement of Penn Mutual Policies
-----------------------------------
It is agreed that the compensation otherwise payable
to Corporate Insurance Agent for any policy shall be
reduced in accordance with the replacement control
program of Penn Mutual in effect at the time such
policy is placed in force. It is anticipated that such
replacement control program may be changed from time
to time as to policies in force after such change.
2.6 Policy Delivery Receipt
-----------------------
it is agreed that the Corporate Insurance Agent shall
be responsible for obtaining a signed policy delivery
receipt. No compensation otherwise payable to the
Corporate Insurance Agent for any policy shall be paid
until Penn Mutual is in possession of a signed policy
delivery receipt (or facsimile copy thereof) for said
policy.
This Schedule 4 replaces and supersedes any and
all prior Schedule 4's attached to the Corporate
Insurance Agent Selling Agreement.
Agreed:
Date:____________________ ---------------------------------------------
Name of Corporate Insurance Agent
By: ---------------------------------------
Signature
---------------------------------------
Name
---------------------------------------
Title
THE PENN MUTUAL LIFE INSURANCE COMPANY
By: ---------------------------------------
Signature
---------------------------------------
Name
---------------------------------------
Title
XXXXXX, XXXXXXXX & XXXX, INC.
By: ---------------------------------------
Signature
---------------------------------------
Name
---------------------------------------
Title
THE PENN MUTUAL LIFE INSURANCE COMPANY
Standards of Suitability for Sale
---------------------------------
of Variable Life Insurance
--------------------------
The Standards of suitability for the sale of Variable Life Insurance Policies
are as follows:
(1) The applicant is furnished with a prospectus effective under the Securities
Act of 1933 which accurately and adequately inform the applicant of all
relevant particulars of the Variable Life Insurance Policy, including the
investment risks assumed under the Policy.
(2) The purchase of the Variable Life Insurance Policy by the applicant is
reasonably consistent with the insurance needs and financial objectives
expressed by the applicant; and
(3) The purchase of the Variable Life Insurance Policy by the applicant is
reasonably consistent with the insurance needs and financial objectives of
the applicant, as determined objectively by the Company''s sales agent
after reasonable inquiry into the relevant financial and family situation
of the applicant.
No recommendation shall be made to an applicant to purchase a Variable Life
Insurance Policy in the absence of reasonable grounds to believe that the Policy
is not unsuitable for the applicant. Reasonable grounds for believing that the
Policy is not unsuitable shall be based upon information furnished after
reasonable inquiry of the applicant concerning the applicant's insurance and
investment objectives, financial situation and needs and any other information
known to the Company or the sales agent making the recommendation.
PENN THE PENN MUTUAL LIFE INSURANCE COMPANY
MUTUAL Xxxxxxxxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000
--------------------------------------------------------------------------------
National Accounts - Broker-Dealers Licensed
to Sell Variable Annuities and/or Variable
Life Insurance under Federal Securities Laws
(Companion Agreement - Form A-2)
BROKER-DEALER SELLING AGREEMENT
THE PENN MUTUAL LIFE INSURANCE COMPANY (hereinafter called
"Penn Mutual") and Xxxxxx, Xxxxxxxx & Xxxx, Inc.
(hereinafter called "Distributor") enter into this
Agreement with __________________________________
(hereinafter called "Broker-Dealer") on this date
_________________, 19___ agree as follows:
WITNESSETH:
WHEREAS, Penn Mutual is in the business of issuing annuity
and life insurance contracts to the public;
WHEREAS, Distributor is a wholly owned subsidiary of Penn
Mutual, is registered as a broker-dealer under the
Securities Exchange Act of 1934, is a member of the
National Association of Securities Dealers, Inc., and is
assisting Penn Mutual in the distribution of such
contracts;
WHEREAS, Broker-Dealer is registered as a Broker-Dealer
under the Securities Exchange Act of 1934 and is a member
of the National Association of Securities Dealers, Inc.;
WHEREAS, Broker-Dealer is affiliated with ____________
______________, (hereinafter referred to as "Corporate
Insurance Agent") a corporation which is properly licensed
under the insurance laws of the state(s) in which Broker-
Dealer will act under this agreement;
WHEREAS, the parties desire to enter into an arrangement
under which Broker-Dealer and Corporate Insurance Agent
agree to sell certain variable annuity and variable life
insurance contracts issued by Penn Mutual;
NOW THEREFORE, in consideration of these premises and
mutual covenants herein contained, the parties agree as
follows:
--------------------------------------------------------------------------------
1. APPOINTMENT OF 1.1 Subject to the terms and conditions of this agreement,
BROKER-DEALER Penn Mutual and Distributor authorizes Broker-Dealer
as a non-exclusive agent for the solicitation of
applications for, and the servicing of, variable
annuity and/or variable life insurance contracts
identified in the schedule(s) attached hereto, and
Broker-Dealer accepts such authorization. The variable
annuity and/or variable life insurance contracts
identified in the schedule(s) are referred to herein
as "Contracts".
1.2 Broker-Dealer and its representatives shall be
independent contractors as to Penn Mutual and
Distributor and, subject to the terms and conditions
of this agreement, free to exercise their own judgment
as to the time, place and means of performing all acts
hereunder. Nothing in this agreement is intended to
create a relationship of employer and employee as
between Penn Mutual or Distributor, on the one hand,
and representatives of Broker-Dealer on the other.
--------------------------------------------------------------------------------
2. SECURITY 2.1 The sale of variable annuity and variable life
REGULATIONS AND insurance contracts identified in the schedule(s)
INSURANCE attached hereto is subject to and regulated under
COORDINATION OF state insurance laws and regulations, in addition to
AGREEMENTS. federal securities laws and regulations, and in some
cases, state securities laws. It is understood and
agreed that registered representatives of Broker-
Dealer shall also be representative of Corporate
Insurance Agent and that Corporate Insurance Agent
shall contemporaneously enter into a Corporate
Insurance Agent Selling Agreement with Penn Mutual and
Distributor covering the sale of such contracts. This
agreement and the Corporate Insurance Agent Selling
Agreement shall govern the sales of such contracts.
--------------------------------------------------------------------------------
3. SALE OF 3.1 Broker-Dealer shall use its best efforts to solicit
CONTRACTS. applications for Contracts from persons for whom the
Contracts are suitable, in accordance with the terms
and conditions of this agreement.
3.2 All applications for Contracts shall be made on
applications forms authorized by Penn Mutual. Broker-
Dealer shall diligently review all such applications
for accuracy and completeness and shall take all
reasonable and appropriate measures to assure that
applications submitted to Penn Mutual are accurate and
complete.
3.3 All purchase payments collected by Broker-Dealer for
Penn Mutual shall be received in trust and shall be
remitted immediately, together with the application
and any other required documentation, to Penn Mutual
at the address indicated on the application or to such
other address as Penn Mutual may specify in writing.
All checks or money orders for payments under
Contracts shall be drawn to the order of Penn Mutual,
except as may be provided in the Corporate Insurance
Agent Selling Agreement (referred to in Section 2.1 of
this agreement).
3.4 All applications are subject to acceptance or
rejection by Penn Mutual in its sole discretion. Penn
Mutual may at any time in its sole discretion
discontinue issuing the Contracts or change the form
and content of new Contracts to be issued.
3.5 In soliciting applications for Contracts, Broker-
Dealer may not accept risk of any kind for or on
behalf of Penn Mutual and may not bind Penn Mutual by
promise or agreement or alter any Contract in any way.
--------------------------------------------------------------------------------
4. COMPENSATION. 4.1 In consideration of and as full compensation for the
services performed in accordance with this agreement,
Corporate lnsurance Agent will receive compensation
from Penn Mutual as set forth in the schedule(s)
attached to the Corporate Insurance Agent Selling
Agreement referred to in Section 2.1 of this
agreement.
4.2 Should Penn Mutual for any reason return to the payor
any payment made under a Contract Broker-Dealer shall
cause Corporate Insurance Agent to repay Penn Mutual
the total amount of any compensation which Penn Mutual
may have paid Corporate Insurance Agent with respect
to such payment.
4.3 Penn Mutual may, in its sole discretion, change the
amount, terms and conditions of compensation with
respect to payment received by Penn Mutual under
Contracts.
4.4 Penn Mutual shall not be obligated to pay any
compensation which would be in violation of applicable
laws of any jurisdiction, anything in this agreement
to the contrary notwithstanding.
4.5 With respect to compensation paid to Corporate
Insurance Agent in connection with the sale of
variable annuity and/or variable life insurance
contracts, Broker-Dealer shall cause Corporate
Insurance Agent to maintain, on behalf of Broker-
Dealer, such books and records as are necessary for
Broker-Dealer to comply with applicable recordkeeping
requirements under federal and state securities laws
and under the rules of the National Association of
Securities Dealers, Inc.
--------------------------------------------------------------------------------
5. COMPLIANCE WITH 5.1 Broker-Dealer shall not solicit applications for
SECURITIES LAW. Contracts unless Penn Mutual or Distributor has
notified Broker-Dealer that a registration statement
required under the Securities Act of 1933 is effective
as to such contracts and unless Broker-Dealer is duly
registered as a broker-dealer under the Securities
Exchange Act of 1934, is a member in good standing of
the National Association of Securities Dealers, Inc.,
and is duly licensed under any applicable securities
laws of the state or jurisdiction in which Broker-
Dealer engages in such activity.
5.2 Penn Mutual or Distributor shall furnish Broker-Dealer
with copies of the current prospectuses (and current
supplements thereto) required to be used in soliciting
applications for variable annuity and/or variable life
insurance contracts.
5.3 Broker-Dealer and its representatives shall comply
with all applicable securities laws and regulations
and with the rules of the National Association of
Securities Dealers, Inc. in soliciting applications
for and servicing Contracts. Broker-Dealer shall be
fully responsible for all acts of its representatives
in soliciting applications for and servicing
Contracts.
--------------------------------------------------------------------------------
6. ADVERTISEMENTS, 6.1 Broker-Dealer shall not print, publish, distribute or
SALES LITERATURE use any advertisements, sales literature or other
AND OTHER writing relating to the Contracts unless such
COMMUNICATIONS. advertisements, sales literature or other writing
shall have first been approved in writing by Penn
Mutual and Distributor.
6.2 Broker-Dealer shall exercise care not to misrepresent
the Contracts or Penn Mutual and shall make no oral or
written representation which is inconsistent with the
terms of the Contracts or with the information in any
prospectus or sales literature furnished by Penn
Mutual or it misleading in any way.
--------------------------------------------------------------------------------
7. INDEMNIFICATION. 7.1 Broker-Dealer shall indemnify or hold harmless Penn
Mutual and Distributor and each director and officer
of Penn Mutual and Distributor against any losses,
claims, damages or liabilities, including but not
limited to reasonable attorneys' fees and court cost
to which Penn Mutual or Distributor and any such
director or officer may become subject, under the
Securities Act of 1933 or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any
unauthorized use of sales materials or any verbal or
written misrepresentations or any unlawful sales
practices, or the failure of Broker-Dealer, its
officers, employees or representatives to comply with
the provisions of this agreement or the willful
misfeasance, bad faith, negligence or misconduct of
Broker-Dealer, its officers, employees, or
representatives in the solicitation of applications
for and the servicing of
Contracts.
7.2 Penn Mutual and Distributor shall indemnify and hold
harmless Broker-Dealer and each officer or director of
Broker-Dealer against any losses, claims, damages or
liabilities, joint or several, including but not
limited to reasonable attorneys' fees and court cost,
to which Broker-Dealer or such officer or director
becomes subject, under the Securities Act of 1933 or
otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged
untrue statement of a material fact, required to be
stated therein or necessary to make the statements
therein not misleading, contained in any registration
statement or any post-effective amendment or
supplement to the prospectus, or in any sales material
written by Penn Mutual or Distributor.
7.3 In the event Penn Mutual suffers a loss resulting from
Broker-Dealer activities, Broker-Dealer hereby assigns
any proceeds received under its fidelity bond to Penn
Mutual to the extent of such losses. If there is any
deficiency amount, whether due to a deductible or
otherwise, Broker-Dealer shall promptly pay Penn
Mutual such amount on demand and Broker-Dealer shall
indemnify and hold harmless Penn Mutual from any such
deficiency and from the costs of collection thereof
(including reasonable attorneys' fees).
--------------------------------------------------------------------------------
8. COMPLAINTS, 8.1 Broker-Dealer shall promptly notify Penn Mutual and
INVESTIGATIONS & Distributor of any allegation that Broker-Dealer or
PROCEEDINGS. any of its representatives violated any law,
regulation or rule in solicitin applications for or
servicing Contracts, and shall provide Penn Mutual
with full details, including copies of all legal
documents pertaining thereto.
8.2 Broker-Dealer shall cooperate fully with Penn Mutual
and Distributor in any regulatory investigation or
proceeding or judicial proceeding involving the
solicitation of application for and servicing
Contracts by Broker-Dealer or any of its
representatives.
--------------------------------------------------------------------------------
9. NONWAIVER. 9.1 Forbearance by Penn Mutual or Distributor to enforce
any rights under this agreement shall not be construed
as a waiver of any of the terms and conditions of this
agreement and the same shall remain in full force and
effect. No waiver of any provision of this agreement
shall be deemed to be a waiver of any other provision,
whether or not similar, nor shall any waiver of a
provision of this agreement be deemed to constitute a
continuing waiver.
--------------------------------------------------------------------------------
10.AMENDMENT. 10.1 Penn Mutual reserves the right to amend this Agreement
at any time. Broker-Dealer's submission of an
application for a Contract after notice of any such
amendment shall constitute agreement of Broker-Dealer
to such amendment.
--------------------------------------------------------------------------------
11.TERMINATION AND 11.1 This agreement may be terminated by any party, with or
ASSIGNMENT. without cause, upon giving written notices to the
other parties. This agreement shall automatically
terminate if Broker-Dealer is adjudicated as bankrupt
or avails itself of any insolvency act or if a
permanent receiver or trustee in bankruptcy is
appointed for the property of Broker-Dealer. Upon
termination of this agreement, with or without cause,
all authorizations, rights and obligations shall
cease, except the rights and obligations set forth in
sections 7 and 8 of this agreement and the obligations
to settle account hereunder, including the immediate
forwarding of all payments received by Broker-Dealer
under Contract to Penn Mutual, and except as may be
expressly stated otherwise in this agreement.
11.2 This agreement may not be assigned without the written
consent of all parties.
--------------------------------------------------------------------------------
12.GOVERNING LAW. 12.1 This agreement shall be construed in accordance with
and governed by the laws of the Commonwealth of
Pennsylvania.
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers designated below on the day and year first written.
____________________________________________
Name of Broker-Dealer
By: _______________________________________
Signature
_______________________________________
Name
_______________________________________
Title
THE PENN MUTUAL LIFE INSURANCE COMPANY
By: _______________________________________
Signature
_______________________________________
Name
_______________________________________
Title
XXXXXX, XXXXXXXX & XXXX, INC.
By: _______________________________________
Signature
_______________________________________
Name
_______________________________________
Title
PENN THE PENN MUTUAL LIFE INSURANCE COMPANY
MUTUAL Xxxxxxxxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000
--------------------------------------------------------------------------------
SCHEDULE 1 TO BROKER-DEALER SELLING AGREEMENT
Individual Variable and Fixed Annuity Contracts -
Diversifier II Individual Fixed - Only Annuity Contracts -
Diversifier II
Date of Broker-Dealer Selling Agreement to which this
schedule is attached: ________________
--------------------------------------------------------------------------------
1. AUTHORIZATION Subject to the conditions and limitations of the Broker-
TO SELL. Dealer Selling Agreement, Broker-Dealer is authorized to
solicit applications for Diversifier II Individual Variable
and Fixed Annuity Contracts and Diversifier II Individual
Fixed-Only Annuity Contracts issued by Penn Mutual
(hereinafter referred to as "Contracts").
This Schedule 1 replaces and supersedes any and all prior Schedule 1's attached
to the Broker-Dealer Selling Agreement.
Agreed:
Date:___________________________ _____________________________________________
Name of Broker-Dealer
By:__________________________________________
Signature
__________________________________________
Name
__________________________________________
Title
THE PENN MUTUAL LIFE INSURANCE COMPANY
By:__________________________________________
Signature
__________________________________________
Name
__________________________________________
Title
XXXXXX, XXXXXXXX & XXXX, INC.
By:__________________________________________
Signature
__________________________________________
Name
__________________________________________
Title
PENN THE PENN MUTUAL LIFE INSURANCE COMPANY
MUTUAL Xxxxxxxxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000
--------------------------------------------------------------------------------
SCHEDULE 3 TO BROKER-DEALER SELLING AGREEMENT
Variable Universal Life Insurance Contracts - Penn Mutual
Cornerstone VUL II
Date of Broker-Dealer Selling Agreement to which this
schedule is attached:____________
--------------------------------------------------------------------------------
1. AUTHORIZATION Subject to and in accordance with the provisions of the
TO SELL. Broker-Dealer Selling Agreement, Broker-Dealer is
authorized to solicit applications for Form VU-94(s) and
Form VU-94(u) Flexible Premium Adjustable Variable
Universal Life Insurance Policies and such variations of
such form of contracts as may be designated by Penn Mutual
and approved under applicable state insurance laws
("Cornerstone VUL II Policies").
This Schedule 3 replaces and supersedes any and all prior Schedule 3's attached
to the Broker-Dealer Selling Agreement.
Agreed:
Date:___________________________ _____________________________________________
Name of Broker-Dealer
By:__________________________________________
Signature
__________________________________________
Name
__________________________________________
Title
THE PENN MUTUAL LIFE INSURANCE COMPANY
By:__________________________________________
Signature
__________________________________________
Name
__________________________________________
Title
XXXXXX, XXXXXXXX & XXXX, INC.
By:__________________________________________
Signature
__________________________________________
Name
__________________________________________
Title
PENN THE PENN MUTUAL LIFE INSURANCE COMPANY
MUTUAL Xxxxxxxxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000
--------------------------------------------------------------------------------
SCHEDULE 4 TO BROKER-DEALER SELLING AGREEMENT
Variable Universal Life Insurance Contracts-Penn Mutual
Variable EstateMax
Date of Broker-Dealer Selling Agreement to which this
schedule is attached:____________
--------------------------------------------------------------------------------
1. AUTHORIZATION Subject to and in accordance with the provision of the
TO SELL. Broker-Dealer Selling Agreement, Broker-Dealer is
authorized to solicit applications for Form VALJ-94(s) and
Form VALJ-94(u) Last Survivor Adjustable Variable Life
Insurance Policies and such variations of such form of
contract as may be designated by Penn Mutual and approved
under applicable state insurance laws ("Variable EstateMax
Policies").
This Schedule 4 replaces and supersedes any and all prior Schedule 4's attached
to the Broker-Dealer Selling Agreement.
Agreed:
Date:___________________________ _____________________________________________
Name of Broker-Dealer
By:__________________________________________
Signature
__________________________________________
Name
__________________________________________
Title
THE PENN MUTUAL LIFE INSURANCE COMPANY
By:__________________________________________
Signature
__________________________________________
Name
__________________________________________
Title
XXXXXX, XXXXXXXX & XXXX, INC.
By:__________________________________________
Signature
__________________________________________
Name
__________________________________________
Title
The Penn Mutual Life Insurance Company
Xxxxxxxxxxxx, XX 00000
Independent Broker/Dealers
SCHEDULE A TO THE FOLLOWING SELLING AGREEMENTS:
BROKER-DEALER SELLING AGREEMENT
BROKER-DEALER SELLING AGREEMENT - FORM A-2
CORPORATE INSURANCE AGENT SELLING AGREEMENT - FORM A-1
(EDITION OF NOVEMBER, 1998)
Subject to the conditions and limitations of the Broker's Selling Agreement,
Broker is authorized to solicit applications for the following contracts issued
by Penn Mutual (hereinafter referred to as "contracts"), prior to termination of
Broker's Selling Agreement. No fee shall be paid with respect to a purchase
payment made after the Broker's Selling Agreement has been terminated. Amounts
transferred among contracts are not purchase payments within the meaning of the
Broker's Selling Agreement or this Schedule. This Schedule replaces and
supersedes any and all prior Schedules attached to the Broker's Selling
Agreement.
1. INDIVIDUAL FIXED ANNUITY CONTRACTS - DIVERSIFIER II
Subject to the conditions and limitations of the Broker's Selling Agreement and
this Schedule, Broker shall be paid a fee for placing or servicing a Diversifier
II Individual Variable and Fixed Annuity Contract equal to 6% of any purchase
payment made under such contract and a fee for placing and servicing a
Diversifier II Fixed-Only Annuity Contract equal to 5% of any purchase payment
under such contract. If the Annuitant or Contractowner (other than a trustee of
a qualified plan) is over age 81 on the date the Diversifier II contract is
issued, the fee shall be limited as follows: 80% of such fee if the Annuitant or
contractowner is age 82; 60% of such fee if the Annuitant or contractowner is
age 83; 40% of such fee if the Annuitant or contractowner is age 84; 20% of such
fee if the Annuitant or contractowner is age 85.
2. INDIVIDUAL FIXED ANNUITY CONTRACTS - TRADEWIND
Subject to the conditions and limitations of the Broker's Selling Agreement and
this Schedule, Broker shall be paid a fee for placing or servicing TradeWind
Annuity Contract equal to 6% of any purchase payment under such contact. If the
Annuitant or Contractowner (other than a trustee of a qualified plan) is over
age 81 on the date the TradeWind contract is issued, the fee shall be limited as
follows: 80% of such fee if the Annuitant or contractowner is age 82; 60% of
such fee if the Annuitant or contractowner is age 83; 40% of such fee if the
Annuitant or contractowner is age 84; 20% of such fee if the Annuitant or
contractowner is age 85.
3. SINGLE PREMIUM IMMEDIATE ANNUITIES
Subject to the conditions and limitations of the Broker's Selling Agreement and
this Schedule, Broker shall be paid a fee for placing a Single Premium Immediate
Annuity equal to 4% of the single premium received under such contract.
4. GROUP COVERAGES
Subject to the conditions and limitations of the Broker's Selling Agreement and
this Schedule, Broker shall be paid a fee for placing, or servicing group
annuity policies, specifically, a group annuity contract of Penn Mutual on
Contract Forms D1-1088 (N.Y.), D1-1088A (N.Y.) and any other policies in the D1-
1088 series, (a contract on any such form being hereinafter called a
"Diversifier I Flex Group Annuity"), placed in force through Broker under this
agreement in amounts equivalent to a percentage of such premiums. Such
percentage or table of percentages shall be as agreed in amounts equivalent to a
percentage of such premiums. Said written documentation of Broker's fee shall be
1
submitted to Penn Mutual with the Diversifier I Flex Group Annuity application
on a form signed by the plan trustee and agreed to by the Penn Mutual home
office. No compensation shall be payable pursuant to this agreement which would
be in excess of the limits of Section 4228 of the Insurance Law of the State of
New York for the sale of insurance products.
5. VARIABLE ESTATEMAX
During the period the Broker-Dealer Selling Agreement is in effect,
and subject to and in accordance with the provisions thereof, Broker-
Dealer shall be compensated as follows with respect to a policy of
Penn Mutual know as the Last Survivor Flexible Premium Adjustable
Variable Life Insurance Policy (Policy Forms VALJ-94(S) and VALJ-
94(U)), (a policy on any such form being hereinafter called a
"Variable EstateMax Policy"), that is placed in force under this
agreement. With respect to each Variable EstateMax Policy, Broker-
Dealer may elect to receives fees under Option 1 or 2. If no option is
selected the default will be Option 1. Once each policy is in force,
no changes will be permitted to the choice of compensation.
A. OPTION 1.
---------
(a) Basic First Year Compensation
-----------------------------
A fee for the first policy year of 50% of A plus 2.0% of B
where A is equal to the lesser of:
(i) the premium paid in year 1
(ii) the target premium for the policy, or
(iii) the lesser of the premium scheduled to be paid in year
1 or 2, and
B is equal to the excess of the premium paid in year 1 over A.
Target premiums are maintained on file in Penn Mutual's Home
Office.
(b) Renewal Compensation
--------------------
A fee for the second through fifteenth years equal to 2.0% of the
premium paid for the policy year in question, and a fee for
the sixteenth and later policy years equal to 1.2% of the
premium paid for the policy year in question.
B. OPTION 2
--------
(a) Basic First Year Compensation
-----------------------------
Basic First Year Compensation is the same as in Option 1.
(b) Renewal Compensation
--------------------
Additionally, for the second through tenth policy years equal to
1.0% of the premium paid for the policy year in question, and no
fee for the eleventh and later policy years. Additionally, for the
second through tenth policy years, an fee equal to 0.08333% of the
policy value on
3
each monthly anniversary. Monthly anniversary is defined as the
day in each calendar month which is the same day of the month as
the Policy Date. For the eleventh and later policy years, fee
equal to 0.020833% of the policy value on each monthly
anniversary. Policy value is as defined in the policy.
C. EXPENSE ALLOWANCE
-----------------
For each calendar month while Broker-Dealer Selling
Agreement is en effect and before its termination, Broker-Dealer
shall be entitled to the expense from Penn Mutual described
below, provided that the amount payable as an expense allowance
shall be limited to the total of reasonable business expenses
incurred by Broker-Dealer that are directly related to the sale
or service of Penn Mutual policies, and provided further that no
such allowance shall be payable to Broker-Dealer that would cause
the total of such allowances to exceed the limits of Section 4228
of the Insurance Law of the State of New York. No payment
pursuant to this agreement will be used by Broker-Dealer to
effect compensation for the sale of insurance in excess of the
limits of said Section 4228. Such allowance shall be 60% of an
amount equal to the Basic First Year Compensation during the
calendar month for which this allowance is being calculated.
D. COMPENSATION CHARGEBACKS
------------------------
A percentage of total compensation (including expense
allowance, if any) will be charged back for lapses, surrenders or
if a policy is unwound during the first policy year and during
the 12 policy months following an increase. The percentage is
shown below and will vary depending on the policy month of
lapse/surrender/unwind.
Month of Chargeback
Lapse/Surrender/ Percentage
Unwind
------
0-6 100%
7-12 50%
6. CORNERSTONE VARIABLE UNIVERSAL LIFE
During the period the Broker-Dealer Selling Agreement is in effect,
and subject to and in accordance with the provisions thereof, Broker-
Dealer shall be compensated as follows with respect to a policy of
Penn Mutual know as the Flexible Premium Adjustable Variable Life
Insurance Policy (Policy Forms VU-90(S) and VU-90(U)), (a policy on
any such form being hereinafter called a "Cornerstone VUL Policy"),
that is placed in force through Agent under this agreement:
A. OPTION 1
--------
(a) Basic First Year Compensation
-----------------------------
A fee for the first policy year of 50% of A plus
3.75% of B where
A is equal to the lesser of:
(i) the premium paid in year 1
(ii) the target premium for the policy, or
(iii) the lesser of the premium scheduled to be paid in year 1 or 2,
and B is equal to the excess of the premium paid in year 1 over A.
Target premiums are maintained on file in Penn Mutual's Home Office.
(b) Renewal Compensation
--------------------
A fee for the second and third policy years of 4% of an amount equal
to premium paid for the policy year in question, a fee for the fourth
through fifteenth years, equal to 4.0% of the premium paid for the
policy year in question, and a fee for the sixteenth and later policy
years equal to 1.2% of the premium paid for the policy year in
question.
(c) Basic Compensation on Increases
-------------------------------
In the case of an increase in the Specified Amount of insurance, a fee
of 46% of C where:
C is equal to the lesser of:
(i) the premium paid in the twelve months following the
effective date of the increase,
(ii) the target premium for the amount of the increase, or
5
(iii) the increase in the scheduled premium.
B. OPTION 2
--------
(a) Basic First Year Compensation
-----------------------------
Basic First Year Compensation is the same as in Option 1.
(b) Renewal Compensation
--------------------
A fee for the second through tenth policy years equal to 3.0% of the
premium paid for the policy year in question, and no fee for the
eleventh and later policy years. Additionally, for the second through
tenth policy years, an fee equal to 0.08333% of the policy value on
each monthly anniversary. Monthly anniversary is defined as the day in
each calendar month which is the same day of the month as the Policy
Date. For the eleventh and later policy years, fee equal to 0.020833%
of the policy value on each monthly anniversary. Policy value is as
defined in the policy.
(c) Basic Compensation on Increases
-------------------------------
In the case of an increase in the Specified Amount of insurance, a fee
of 47% of C where:
C is equal to the lesser of:
(i) the premium paid in the twelve months following the
effective date of the increase
(ii) the target premium for the amount of the increase, or
(iii) the increase in the scheduled premium.
C. EXPENSE ALLOWANCE
-----------------
For each calendar month while Broker-Dealer Selling Agreement is en
effect and before its termination, Broker-Dealer shall be entitled to
the expense from Penn Mutual described below, provided that the amount
payable as an expense allowance shall be limited to the total of
reasonable business expenses incurred by Broker-Dealer that are
directly related to the sale or service of Penn Mutual policies, and
provided further that no such allowance shall be payable to Broker-
Dealer that would cause the total of such allowances to exceed the
limits of Section 4228 of the Insurance Law of the State of New York.
No payment pursuant to this agreement will be used by Broker-Dealer to
effect compensation for the sale of insurance in excess of the limits
of said Section 4228. Such allowance shall be 60% of an amount equal
to the Basic First Year Compensation during the calendar month for
which this allowance is being calculated.
D. COMPENSATION CHARGEBACKS
------------------------
A percentage of total compensation (including expense allowance,
if any) will be charged back for lapses, surrenders or if a
policy is unwound during the first policy year and during the 12
policy months following an increase. The percentage is shown
below and will vary depending on the policy month of
lapse/surrender/unwind.
Month of Chargeback
Lapse/Surrender/ Percentage
Unwind
------
0-3 100%
4-6 75%
7-9 50%
10-12 25%
7. Cornerstone UNIVERSAL LIFE II
During the period the Broker-Dealer Selling Agreement is in
effect, and subject to and in accordance with the provisions
thereof, Broker-Dealer shall be paid a fee for soliciting
applications and servicing a policy of Penn Mutual known as the
Flexible Premium Adjustable Variable Universal Life Insurance
Policy (Policy Forms VU-94(S) and VU-94(U)), (a policy on any
such form being hereinafter called a "Cornerstone VUL II
Policy"), that is placed in force before termination of this
agreement. With respect to each Cornerstone VUL II Policy,
Broker-Dealer may elect to receives fees under Option 1 or 2. If
no option is selected the default will be Option 1. Once each
policy is in force, no changes will be permitted to the choice of
compensation.
A. OPTION 1
--------
(a) Basic First Year Compensation
-----------------------------
A fee for the first policy year equal to 50% of A
plus 3.3% of B where
A is equal to the lesser of:
(i) the premium paid in year 1
(ii) the target premium for the policy, or
(iii) the lesser of the premium scheduled to be
paid in year 1 or 2, and
B is equal to the excess of the premium paid in year 1 over A.
Target premiums are maintained on file in Penn Mutual's Home
Office.
(b) Renewal Compensation
--------------------
A fee for the second through fifteenth years equal to 3.0% of the
premium paid for the policy year in question, and a fee for the
sixteenth and later policy years equal to 1.2% of the premium
paid for the policy year in question.
(c) Basic Compensation on Increases
-------------------------------
In the case of an increase in the Specified Amount of insurance,
a fee of 47% of C where:
C is equal to the lesser of:
(i) the premium paid in the twelve months following
the effective date of the increase
(ii) the target premium for the amount of the increase
or
(iii) the increase in the scheduled premium.
B. OPTION 2
--------
(a) Basic First Year Compensation
-----------------------------
Basic First Year Compensation is the same as in Option 1.
(b) Renewal Compensation
--------------------
A fee for the second through tenth policy years equal to 2.0% of
the premium paid for the policy year in question, and no fee for
the eleventh and later policy years. Additionally, for the second
through tenth policy years, an fee equal to 0.08333% of the
policy value on each monthly anniversary. Monthly anniversary is
defined as the day in each calendar month which is the same day
of the month as the Policy Date. For the eleventh and later
policy years, fee equal to 0.020833% of the policy value on each
monthly anniversary. Policy value is as defined in the policy.
9
(c) Basic Compensation on Increases
-------------------------------
In the case of an increase in the Specified Amount of
insurance, a fee of 47% of C where:
C is equal to the lesser of:
(i) the premium paid in the twelve months following
the effective date of the increase
(ii) the target premium for the amount of the increase
or
(iii) the increase in the scheduled premium.
C. EXPENSE ALLOWANCE
-----------------
For each calendar month while Broker-Dealer Selling
Agreement is en effect and before its termination, Broker-Dealer
shall be entitled to the expense from Penn Mutual described
below, provided that the amount payable as an expense allowance
shall be limited to the total of reasonable business expenses
incurred by Broker-Dealer that are directly related to the sale
or service of Penn Mutual policies, and provided further that no
such allowance shall be payable to Broker-Dealer that would cause
the total of such allowances to exceed the limits of Section 4228
of the Insurance Law of the State of New York. No payment
pursuant to this agreement will be used by Broker-Dealer to
effect compensation for the sale of insurance in excess of the
limits of said Section 4228. Such allowance shall be 60% of an
amount equal to the Basic First Year Compensation during the
calendar month for which this allowance is being calculated.
D. COMPENSATION CHARGEBACKS
------------------------
A percentage of total compensation (including expense allowance,
if any) will be charged back for lapses, surrenders or if a
policy is unwound during the first policy year and during the 12
policy months following an increase. The percentage is shown
below and will vary depending on the policy month of
lapse/surrender/unwind.
Month of Lapse/ Chargeback
Surrender/Unwind Percentage
---------------- ----------
0-3 100%
4-6 75%
7-9 50%
10-12 25%
8. PENNANT SELECT(TM)
During the period the Broker-Dealer Selling Agreement is in
effect, and subject to and in accordance with the provisions
thereof, Broker-Dealer shall be paid a fee for soliciting
applications and servicing Contracts of Penn Mutual known as the
Pennant Select Individual Variable and Fixed Annuity Contract
(Policy Form VAA-98 and any variation thereof), (a policy on any
such form being hereinafter called a "Pennant Select Annuity
Contract"), that is placed in force before termination of this
agreement. With respect to each Pennant Select Annuity Contract,
Broker-Dealer may elect to receives fees under Option 1, 2 or 3.
If no option is selected the default will be Option 1. Once each
policy is in force, no changes will be permitted to the choice of
compensation.
A. OPTION 1
--------
(a) 7.00% (4.2% where the insured has an attained age
greater than 80) of aggregate purchase payments up to
$1,000,000 per Contract; aggregate purchase payments in
excess of $1,000,000 require a separate written agreement
with the Home Office.
B. OPTION 2
--------
(a) 6.7% (4.0% where the insured has an attained age
greater than 80) of aggregate purchase payments up to
$1,000,000 per Contract; aggregate purchase payments in
excess of $1,000,000 require a separate written agreement
with the Home Office.
(b) 0.50% of the Account Value, for the eighth and later
contract years, calculated on a quarterly basis and paid at
a quarter of the stated rate, and commencing with the first
calendar quarter of the eight Contract year and payable at
the end of each calendar quarter.
C. OPTION 3
--------
(a) 5.85% (3.5% where the insured has an attained age
greater than 80) of aggregate purchase payments in excess of
$1,000,000 require a separate written agreement with the
Home Office.
(b) 0.20% of the Account Value, for the second through
seventh contract years, calculated on a quarterly basis and
paid at a quarter of the stated rate, and commencing with
the first calendar quarter of following the first Contract
anniversary year and payable at the end of each calendar
quarter.
(c) 0.50% of the Account Value, for the eighth and later
contract years, calculated on a quarterly basis and paid at
a quarter of the stated rate, and commencing with the first
calendar quarter of the eight Contract year and payable at
the end of each calendar quarter.
9. Commander(TM)
During the period the Broker-Dealer Selling Agreement is in
effect, and subject to and in accordance with the provisions
thereof, Broker-Dealer shall be paid a fee for soliciting
applications and servicing Contracts of Penn Mutual known as
the Commander Individual Variable and Fixed Annuity Flexible
Purchase Payment Annuity Contract (Policy Forms VAB-98 and
any variation thereof), (a policy on any such form being
hereinafter called a OCommander Annuity ContractO), that is
placed in force before termination of this agreement.
A. 1.00% of aggregate purchase payments up to
$1,000,000 per Contract; aggregate purchase payments in
excess of $1,000,000 require a separate written
agreement with the Home Office; and
B. 1.00% of the Account Value, for the second through
seventh contract years, calculated on a quarterly basis
and paid at a quarter of the stated rate, and
commencing with the first calendar quarter of following
the first Contract anniversary year and payable at the
end of each calendar quarter.
10. REPLACEMENT OF PENN MUTUAL POLICES
It is agreed that the compensation otherwise payable to Broker-Dealer for any
policy shall be reduced in accordance with the replacement control program in
effect at the time such policy is placed in force. It is anticipated that such
replacement control program may be changed form time to time as to policies in
force after such change.
13
11. POLICY DELIVERY RECEIPT
It is agreed that the Broker-Dealer shall be responsible for obtaining a signed
policy delivery receipt in accordance with Company policy.
