DISTRIBUTION AGREEMENT
AGREEMENT dated March 1, 1989, by and between American Skandia Life Assurance
Corporation ("Skandia Life"), a Connecticut corporation, on its own behalf and
on behalf of its non-unitized Separate Accounts (the "Accounts") and Skandia
Life Equity Sales Corporation ("SLESCO"), a Delaware corporation.
WITNESSETH:
WHEREAS, one Account has been, and other Accounts may in the future be,
established and maintained by Skandia Life pursuant to the laws of the State of
Connecticut as non-unitized separate accounts to account for assets supporting
certain annuity contracts (the "Individual Contracts") and groups participating
through certificate of participation (the "Certificates"), issued or to be
issued by Skandia Life (such Certificates and Contracts are referred to herein
collectively as the "Contracts"); and
WHEREAS, Skandia Life desires to arrange for the underwriting of the Contracts
in conformity with the requirements of the Securities Exchange Act of 1934 (the
"Securities Exchange Act"); and
WHEREAS, SLESCO is registered as a broker-dealer under the Securities
Exchange Act and is a member of the National Association of Securities Dealers,
Inc. (the "NASD"); and
WHEREAS, Skandia Life proposes to register the Contracts under the Securities
Act of 1933, (herein sometimes referred to as the "1933 Act"), and to issue and
sell the Contracts to the public through SLESCO acting as the underwriter;
NOW, THEREFORE, Skandia Life and SLESCO hereby agree as follows:
1. Principal Underwriter. Skandia Life grants to SLESCO the exclusive
right, during the term of this Agreement, subject to the registration
requirements of the 1933 Act and the provisions of the Securities Exchange Act
to be the distributor and principal underwriter of the Contracts.
2. Sales Agreement. SLESCO is hereby authorized to enter into separate written
agreements, subject to prior written approval of Skandia Life, on such terms and
conditions as SLESCO may determine to be not inconsistent with this Agreement,
with organizations which agree to participate in the distribution of Contracts
and to use their best efforts to solicit applications for Contracts. Such
organizations and their agents or representatives soliciting applications for
Contracts shall be duly and appropriately licensed, registered or otherwise
qualified for the sale of such Contracts under the insurance laws and any
applicable blue-sky laws of each state or other jurisdiction in which such
contracts may be lawfully sold and in which Skandia Life is licensed to sell the
Contracts. Each organization shall be both registered as a broker/dealer under
the Securities Exchange Act and a member of the NASD, or if not so registered or
not such a member, then the agents and representative of such organization
soliciting applications for contracts shall be agents and registered
representatives of a registered broker/dealer and NASD member which is an
affiliate of such organization and which maintains full responsibility for the
training, supervision, and control of the agents or representatives selling the
Contracts.
SLESCO shall have the responsibility for supervision of all such organizations
only to the extent required by law and shall assume any legal responsibilities
of Skandia Life for the acts, commissions or defalcations of any such
organizations. Applications for Contracts solicited by such organizations
through their representatives shall be forwarded to Skandia Life. All payments
for Contracts shall be made by check to Skandia Life and remitted promptly by
such organizations directly to Skandia Life.
Skandia Life reserves the right to refuse to appoint any person proposed to be
associated with SLESCO, or its appointed distributors, as an agent, or, if
appointed, to terminate such appointment in its sole discretion. From time to
time as requested by Skandia Life, SLESCO or its appointed distributors will
furnish to Skandia Life a list of all persons authorized to sell the Contracts.
3. Insurance Agents.
(a) Such organizations appointed as distributors by SLESCO will undertake
to apply for appropriate insurance agent licenses or appointments insofar as
necessary to sell the Contracts, in the appropriate states or jurisdictions for
such organization's designated agents or representatives; provided that Skandia
Life reserves the right to refuse to license and/or appoint any proposed agent
or representative, or once licensed and/or appointed to terminate the same.
(b) Unless otherwise permitted by applicable law, each person engaged in
the sale of Contracts must be both an agent of Skandia Life and "a person
associated with a broker or dealer" as that term is defined in Section 3(a)(18)
of the Securities Exchange Act.
4. Suitability. Skandia Life wishes to ensure that Contracts distributed by
SLESCO will be issued to purchasers for whom the Contracts will be suitable.
SLESCO shall take reasonable steps to ensure that distributors appointed by it
shall not make recommendations to an applicant to purchase a Contract and shall
not cause a Contract to be issued in the absence of reasonable grounds to
believe that the purchase of the Contract is suitable for such applicant. While
not limited to the following, a determination of suitability shall be based on
information furnished to an agent after reasonable inquiry of such applicant
concerning the applicant's annuity and investment objectives, financial
situation and needs, and the likelihood of whether the applicant will persist
with the Contract for such a period of time that Skandia Life's acquisition
costs are amortized over a reasonable period of time require such distributors
to meet all requirements for suitability of all regulatory and self-regulatory
agencies having jurisdiction over the solicitation of the Contracts.
5. Prospectuses. Skandia Life will furnish to SLESCO currently effective
prospectuses relating to the Contracts in such numbers as SLESCO may reasonably
require from time to time.
6. Promotion Materials. SLESCO will consult with Skandia Life with respect
to the design, drafting, legal review, and filing of sales promotional
materials, and for the preparation of individual sales proposals related to the
sales of the Contracts. SLESCO shall file with the NASD all such sales
promotional material.
7. Reports. SLESCO will have the responsibility for maintaining records
identifying distributors appointed to sell the Contracts; and for furnishing any
periodic reports required by Skandia Life as to the sale of Contracts made
pursuant to this Agreement and commissions paid thereon.
8. Records. SLESCO shall maintain and preserve for the periods prescribed such
accounts, records and other documents as are required by applicable laws and
regulations, including but not limited to, the Securities Exchange Act. The
books, accounts and records of Skandia Life, SLESCO and SLESCO's appointed
distributors as to all transactions hereunder shall be maintained so as to
clearly and accurately disclose the nature and details of the transactions,
including such accounting information as necessary to support the reasonableness
of the amounts to be paid by Skandia Life hereunder.
9. Payments on Contracts. All premium payments on Contracts will be made payable
to Skandia Life and will be forwarded promptly to Skandia Life, or the service
office designated by it, accompanied by a completed Contract application.
Skandia Life reserves the right to reject any application in its sole
discretion.
10. Compensation on Contracts. SLESCO hereby authorizes and appoints Skandia
Life to pay any compensation due and receive any chargebacks payable on
Contracts solicited by distributors appointed by SLESCO. Skandia Life shall make
available to SLESCO reports on all compensation and chargebacks. The
compensation due on Contracts and any chargeback schedule will be stated in the
selling agreements between, on the one side, the distributors to be appointed by
SLESCO, and on the other side, SLESCO and Skandia Life. All commissions payable
by Skandia Life in connection with Contracts or Contract sales will be payable
to the appropriate distributors appointed by SLESCO in accordance with the terms
of the agreements then in effect.
11. Independent Contractor. SLESCO shall act as an independent contractor
and nothing herein contained shall constitute SLESCO or its agents or employees
as employees of Skandia Life in connection with the sale of the Contracts.
12. Investment and Proceedings.
(a) SLESCO and Skandia Life agree to cooperate fully in any regulatory
investigation or proceeding or judicial proceeding arising in connection with
Skandia Life, SLESCO, their affiliates and their agents or representatives to
the extent that such investigation or proceeding is in connection with Contracts
distributed under this Agreement. Without limiting the foregoing:
(i) SLESCO will be notified promptly of any customer complaint or
notice of any regulatory investigation or proceeding or judicial proceeding
received by Skandia Life with respect to SLESCO or any distributor which may
affect Skandia Life's issuance of the Contract marketed under this Agreement,
the continued ability of SLESCO to act as distributor and principal underwriter
or the ability to establish or maintain any selling agreement with a
distributor.
(ii) SLESCO will promptly notify Skandia Life of any customer complaint
or notice of any regulatory investigation or proceeding received by SLESCO or
its affiliates with respect to SLESCO or any distributor in connection with any
Contract distributed under this Agreement or any activity in connection with any
such Contract.
(b) In the case of a substantive customer complaint, SLESCO and Skandia
Life will cooperate in investigating such complaint and any response to such
complaint will be shared with the other party to this Agreement for approval not
less than five (5) business days prior to it being sent to the customer or
regulatory authority.
11. Indemnification.
(a) Skandia Life agrees to indemnify and hold harmless SLESCO and each
officer and director thereof against any losses, claims, damages or liabilities,
joint or several, to which SLESCO or such officer or director may become
subject, under the 1933 Act 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 (i) in any Registration Statement or any post-effective
amendment thereof or in the Prospectus or any amendment or supplement to the
Prospectus, or (ii) in any other document executed by Skandia Life specifically
for the purpose of qualifying any or all the Contracts for sales under the
securities, insurance or other laws of any jurisdiction, and Skandia Life will
reimburse SLESCO and each such officer or director, for any legal or other
expenses reasonably incurred by SLESCO or such officer or director in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided that Skandia Life will not be liable in any such case to the
extent that such loss, claim, damage or liability arises out of, or is based
upon, an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information (including
without limitation, negative responses to inquiries) furnished to Skandia Life
by or on behalf of SLESCO specifically for the use in the preparation of any
Registration Statement or any post-effective amendment thereof or any such
insurance or other regulatory filing or any amendment thereof or supplement
thereto.
(b) SLESCO agrees to indemnify and hold harmless Skandia Life and its
directors (including any person named in the Registration Statement, with his
consent, about to become a director), each of its officers who has signed any of
the Registration Statements and each person, if any, who controls Skandia Life
within the meaning of the 1933 Act or the 1934 Act, against any losses, claims,
damages or liabilities to which Skandia Life and any such director or officer or
controlling person may become subject, under the 1933 Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or based upon:
(i) Any untrue statement or alleged untrue statement of a material fact
or omission to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, contained (i) in any of the Registration
Statements or any post-effective amendments thereof, or (ii) in any blue-sky
application or other regulatory filing, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with information
(including, without limitation, negative responses to inquiries) furnished to
SLESCO by Skandia Life specifically for use in the preparation of any of the
Registration Statements or any such post-effective amendments thereof or any
such blue-sky application or other regulatory filing or any such amendment
thereof or supplement thereto; or
(ii) Any unauthorized use of sales materials or any verbal or written
misrepresentations or any unlawful sales practices concerning the Contracts by
SLESCO; or
(iii) Claims by agents or representatives or employees of SLESCO for
commissions, service fees, development allowances or other compensation or
remuneration of any type;
and SLESCO will reimburse Skandia Life and any director or officer or
controlling person for any legal or other expenses reasonably incurred by
Skandia Life, such director or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action.
This indemnity agreement will be in addition to any liability which SLESCO may
otherwise have.
(c) Promptly after receipt by a party entitled to indemnification
("indemnified party") under this paragraph 11 of notice of the commencement of
any action against any person obligated to provide Indemnification under this
paragraph 11 ("indemnifying party"), such indemnified party will notify the
indemnifying party in writing of the commencement thereof, and the omission so
to notify the indemnifying party will not relieve it from any liability under
this paragraph 11, except to the extent that the omission results in a failure
of actual notice to the indemnifying party is damaged solely as a result of the
failure to give such notice. In case any such action is brought against any
indemnified party and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to the extent it may wish,
jointly with any other indemnifying party similarly notified, to participate in
the defense thereof, with separate counsel. Such participation shall not relieve
such indemnifying party of the obligation to reimburse the indemnified party for
reasonable legal and other expenses incurred by such indemnified party in
defending himself, except for such expenses incurred after the indemnifying
party has deposited funds sufficient to effect the settlement, with prejudice,
of the claim in respect of which indemnity is sought. Any such indemnifying
party shall not be liable to any such indemnified party on account of any
settlement of any claim or action effected without the consent of such
indemnifying party.
The indemnity agreements contained in this paragraph 11 shall remain
operative and in full force and effect, regardless of (i) any investigation made
by or on behalf of SLESCO or any officer or director thereof or by or on behalf
of Skandia Life, (ii) delivery of any Contracts and payments therefor, and (iii)
any termination of this Agreement. A successor by law of SLESCO or of any of the
parties to this Agreement, as the case may be, shall be entitled to the benefits
of the indemnity agreements contained in this paragraph 11.
12. Termination. This Agreement shall terminate automatically if it shall be
assigned. This Agreement may be terminated at any time by either party hereto on
60 days' written notice to the other party hereto, without the payment of any
penalty. Upon termination of this Agreement all authorizations, rights and
obligations shall cease, except (i) the obligation to settle accounts hereunder,
including commissions on premiums subsequently received for Contracts in effect
at the time of termination; (ii) the agreements contained in paragraph 10
hereof; and (iii) the indemnity set forth in paragraph 11 hereof.
13. Regulation. This Agreement shall be subject to the provisions of the
Securities Exchange Act and the rules, regulations and rulings thereunder and of
the NASD, from time to time in effect, and the terms hereof shall be interpreted
and construed in accordance therewith. SLESCO shall submit to all regulatory and
administrative bodies having jurisdiction over the operations of Skandia Life or
the Account, present or future, any information, reports or other material which
any such body by reason of this Agreement may request or require pursuant to
applicable laws or regulations.
14. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
15. Applicable Law. This Agreement shall be construed and enforced in
accordance with the governed by the laws of the State of Connecticut.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
AMERICAN SKANDIA LIFE
ASSURANCE CORPORATION
By: _____________________________
Xxxxxxx X. Xxxxxxxx, XX
Vice-President and
Chief Financial Officer
Attest:
--------------------------
Secretary
SKANDIA LIFE EQUITY
SALES CORPORATION
By: ___________________________
Xxxxxxx X. Xxxxxx,
Vice-President
Attest:
-------------------------
Secretary
