EXHIBIT 3(C)(II)
DRAFT
SELLING GROUP AGREEMENT BY AND AMONG
THE UNITED STATES LIFE INSURANCE COMPANY
IN THE CITY OF NEW YORK, AMERICAN
GENERAL SECURITIES INCORPORATED, AND
THE WINCHESTER AGENCY, LTD.
This Selling Group Agreement ("Agreement") is made by and among THE UNITED
STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK ("USL"), a New York
domiciled life insurance company, AMERICAN GENERAL SECURITIES INCORPORATED (as
"Selling Group Member" and as "Distributor"), a Texas corporation and THE
WINCHESTER AGENCY, LTD. ("Associated Agency"), a New York corporation.
RECITALS
WHEREAS, USL is a wholly owned indirect subsidiary of AMERICAN GENERAL
CORPORATION ("AGC"), a Texas corporation;
WHEREAS, Distributor/Selling Group Member is a wholly owned indirect subsidiary
of AGC;
WHEREAS, the Associated Agency is a wholly owned indirect subsidiary of AGC;
WHEREAS, USL, Distributor/Selling Group Member and the Associated Agency are
affiliates under the ultimate common control of AGC pursuant to the insurance
laws of the State of New York;
WHEREAS, USL and Distributor are parties to a Distribution Agreement whereby USL
has granted Distributor a non-exclusive right to promote the sale of USL
products set forth in Schedule A;
WHEREAS, the Distribution Agreement described herein has been non-disapproved by
the New York Insurance Department;
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WHEREAS, USL, Selling Group Member/Distributor and the Associated Agency wish to
enter into this Agreement for the purpose of providing for the distribution of
certain variable life insurance policies and/or annuity contracts;
NOW THEREFORE, in consideration of the premises and mutual promises set forth
herein, and intending to be legally bound hereby, the parties agree as follows:
1. PRODUCT DISTRIBUTION. Subject to the terms, conditions and limitations of
this Agreement, the products sold under this Agreement shall be distributed
in accordance with this section.
(a) Designation of the Parties.
Distributor is a registered broker-dealer and distributor of the variable
life insurance policies and/or annuity contracts or certificates set forth
in Schedule A and Schedule A-1 (collectively, "Schedule A").
USL is a New York licensed life insurance company issuing the variable
products set forth on Schedule A and any successor or additional products
registered with the Securities and Exchange Commission (the "SEC") and
approved by the New York Insurance Department (as discussed in Paragraph
(c) of this section entitled "NEW PRODUCTS") and shall be collectively
referred to herein as the "Contracts."
Selling Group Member is registered with the SEC as a broker-dealer under
the Securities Exchange Act of 1934 ("1934 Act") and under any appropriate
regulatory requirements of state law and is a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD").
Selling Group Member has NASD registered representatives who will
distribute the Contracts.
The Associated Agency is a New York licensed insurance agency and is
appointed by USL as an agent of USL with the New York Insurance Department.
The relationship between the Associated Agency and USL is that of an
independent contractor.
The NASD registered representatives affiliated with Selling Group Member
are also New York licensed insurance agents of the Associated Agency and
are appointed by USL as agents of USL with the New York Insurance
Department ("Sales Persons"). The relationship between the Sales Persons
and Selling Group Member and the Sales Persons and USL is that of
independent contractor.
Distributor hereby appoints the Sales Persons to solicit and procure
applications for the Contracts.
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The appointment by Distributor of the Sales Persons and the appointment by
USL of the Associated Agency and the Sales Persons for the sale of these
Contracts is not to be deemed exclusive in any manner and only extends to
New York sales of the Contracts.
(b) Responsibilities Of The Parties/Compliance.
(I) SELLING GROUP MEMBER/SALES PERSONS.
Selling Group Member is authorized to recommend Sales Persons for
appointment by USL to solicit sales of the Contracts. Selling Group
Member shall be responsible for the sales activities of the Sales
Persons and shall exercise supervisory oversight over the Associated
Agency and the Sales Persons with respect to the offer and sale of the
Contracts.
Selling Group Member shall be solely responsible for the approval of
securities suitability determinations for the purchase of any Contract
or the selection of any investment option thereunder, in compliance
with federal and state securities laws and shall supervise the
Associated Agency and the Sales Persons in determining client
suitability. Selling Group Member shall hold USL harmless from any
financial claim resulting from improper securities suitability
decisions or failure to supervise the Associated Agency and the Sales
Persons in accordance with federal securities laws and NASD
regulations.
Selling Group Member will be responsible for the payment of commissions
to the Sales Persons, in accordance with the provisions of this
Agreement, after it receives the commissions from the Associated
Agency. Selling Group Member will be reimbursed by the Associated
Agency for its actual costs in rendering this service.
Selling Group Member will fully comply with the requirements of the
NASD and of the 1934 Act and such other applicable federal and state
laws and will establish rules, procedures and supervisory and
inspection techniques necessary to diligently supervise the activities
of the Sales Persons in connection with offers and sales of the
Contracts. Such supervision shall include, but not be limited to
providing, or arranging for, initial and periodic training in knowledge
of the Contracts. Upon request by USL, Selling Group Member will
furnish appropriate records as are necessary to establish diligent
supervision and client suitability.
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Selling Group Member shall incur all costs associated with registering
and complying with the various rules of the SEC and the NASD relating
to broker-dealers.
Distributor/Selling Group Member shall fully cooperate in any
insurance or securities regulatory examination, investigation, or
proceeding or any judicial proceeding with respect to USL, Selling
Group Member and the Associated Agency and their respective
affiliates, agents and representatives to the extent that such
examination, investigation, or proceeding arises in connection with
the Contracts. Selling Group Member shall immediately notify USL if
its broker-dealer registration or the registration of any of its Sales
Persons is revoked, suspended or terminated.
The Sales Persons shall be the only parties involved in the
solicitation, negotiation or procurement of the Contracts. All
correspondence relating to the sale of the Contracts will be between
USL, Selling Group Member, the Associated Agency, the Sales Persons
and the prospective purchaser.
The Sales Persons are authorized to collect the first purchase payment
or premium (collectively the "Premium") on the Contracts. The Sales
Persons will in turn remit the application and Premium to the Selling
Group Member which will after a determination of suitability, remit
the Premium to USL's lock box within 24 hours.
The Sales Persons shall take applications for the Contracts only on
preprinted applications supplied to them and/or the Associated Agency
by USL. All completed applications and supporting documents are the
sole property of USL and shall be retained by or on behalf of USL in
accordance with New York Insurance Regulation 152.
Selling Group Member is authorized to recommend Sales Persons for
appointment by USL to solicit sales of the Contracts.
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(II) THE ASSOCIATED AGENCY/SALES PERSONS.
Associated Agency will fully comply with the requirements of New York
Insurance Law and Regulations. Associated Agency shall fully
cooperate in any insurance or securities regulatory examination,
investigation, or proceeding or any judicial proceeding with respect
to USL, Distributor, Selling Group Member and Associated Agency and
their respective affiliates, agents and representatives to the extent
that such examination, investigation, or proceeding arises in
connection with the Contracts. Associated Agency shall immediately
notify Distributor if its insurance license or the license of any of
its Sales Persons is revoked, suspended, or terminated.
The Sales Persons shall complete a "Definition of Replacement Form"
with each application for the Contracts. The "Definition of
Replacement Form" shall be signed by the Sales Persons and each
applicant and the Sales Persons shall leave a copy of the form with
the applicant for his or her records. The Sales Persons shall attach
the completed and signed "Definition of Replacement Form" to each
application for the Contracts. Where the purchase of one of the
Contracts will result in, or is likely to result in, a replacement,
the Sales Persons shall comply in all respects with New York
Insurance Regulation 60.
(III) USL.
USL warrants that no Sales Person shall commence solicitation or aid,
directly or indirectly, in the solicitation of any application for
any Contract until that Sales Person is appropriately licensed and
appointed by USL to sell the Contracts. USL shall be responsible for
all fees required to obtain and/or maintain any licenses or
registrations required by New York Insurance Law.
Following Selling Group Member's determination of securities
suitability, USL will determine the insurance suitability of the
Contracts, and will determine in its sole discretion whether to
accept the applications submitted to USL by the Sales Persons and
issue Contracts.
USL will return any incomplete applications to the Selling Group
Member, which will then forward them to the Sales Persons.
USL will provide the Sales Persons with all policy forms, the
"Definition of Replacement Form" and any other regulatory forms
required to be completed in connection with the Contracts.
USL will inform the Associated Agency and Selling Group Member
regarding any limitations on the availability of the Contracts in New
York.
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USL represents that the prospectus(es) and registration statement(s)
relating to the Contracts contain no untrue statements of material
fact or omission of a material fact, the omission of which makes any
statement contained in the prospectus and registration statement
materially false or misleading. USL agrees to indemnify Associated
Agency and Selling Group Member from and against any claims,
liabilities and expenses which may be incurred by any of those
parties under the Securities Act of 1933, the 1934 Act, the
Investment Company Act of 1940, common law, or otherwise, that arises
out of a breach of this paragraph.
(IV) DISTRIBUTOR/SELLING GROUP MEMBER.
Distributor/Selling Group Member is authorized by USL to offer the
Contracts for sale by the Sales Persons under the terms of the
Distribution Agreement described herein.
(c) New Products.
USL and Distributor/Selling Group Member may agree upon additional or
successor products and commission schedules, in which event
Distributor/Selling Group Member will offer the product(s) through the
Sales Persons. However, the parties acknowledge that no such product can
be offered for sale prior to receipt of all necessary federal and state
approvals.
(d) Sales Material/Books and Records.
The Associated Agency, Selling Group Member and Sales Persons shall not
utilize, in their efforts to market the Contracts, any written brochure,
prospectus, descriptive literature, printed and published material, audio-
visual material or standard letters unless such material has been provided
preprinted by USL or unless USL has provided prior written approval for the
use of such literature. In accordance with New York Insurance Law
Regulation 152, the Associated Agency and/or Selling Group Member shall
maintain complete records indicating the manner and extent of distribution
of any such solicitation material, shall make such records and files
available to USL and shall forward such records to USL. Additionally,
Selling Group Member and/or the Associated Agency shall make such material
available to personnel of state insurance departments, the NASD or other
regulatory agencies, including the SEC, which may have regulatory authority
over USL or Distributor. The Associated Agency and Selling Group Member
jointly and severally hold USL and its affiliates harmless from any
liability arising from the use of any material which either (i) has not
been specifically approved in writing by USL, or (ii) although previously
approved, has been disapproved by USL in writing for further use.
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Selling Group Member will reflect all sales of the Contracts by the
Associated Agency and the Sales Persons on the books and records of Selling
Group Member.
(e) Prospectuses.
Selling Group Member warrants that solicitation for the sale of the
Contracts will be made by use of a currently effective prospectus, that a
prospectus will be delivered concurrently with each sales presentation and
that no statements shall be made to a client superseding or controverting
any statement made in the prospectus. USL and Distributor shall furnish
Selling Group Member, at no cost to Selling Group Member, reasonable
quantities of prospectuses to aid in the solicitation of Contracts.
2. COMPENSATION/CHARGES.
USL will remit to the Associated Agency all compensation set forth in
Schedule B (and Schedule B-1, if appropriate) annexed hereto. Associated
Agency will remit the commissions otherwise due and payable to Sales
Persons to Selling Group Member which, in turn, will pay the Sales Persons.
Associated Agency will assign a portion of the commissions to the Selling
Group Member for the actual costs incurred for the services performed in
paying the commissions and for its supervisory oversight and non-insurance
services. Such supervisory oversight and non-insurance services include the
following:
SUPERVISORY OVERSIGHT:
Supervise Sales Persons in solicitation of variable insurance products
Review applications and premium checks for completeness and accuracy
Review applications for suitability
Participate in reporting and resolution of any customer complaints.
NON-INSURANCE SERVICES:
Insure proper licensing of Sales Persons (insurance and securities)
Forward application and checks (if applicable) to appropriate location
Record transaction on books and records of Selling Group Member
Determine compensation for Sales Persons
Issue checks to Sales Persons
Track compensation paid to Sales Persons and issue 1099 at year end.
Actual costs of Selling Group Member supervisory oversight will be
determined applying generally accepted accounting principles and shall be
determined on a quarterly basis.
3. CUSTOMER SERVICE AND COMPLAINTS.
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The parties agree that USL may contact by mail or otherwise, any client,
agent, account executive, or employee of the Associated Agency or other
individual acting in a similar capacity if deemed appropriate by USL, in
the course of normal customer service for existing Contracts, in the
investigation of complaints, or as required by law. The parties agree to
cooperate fully in the investigation of any complaint. USL and Selling
Group Member jointly will handle and process all complaints associated with
the sale of the Contracts under this Agreement.
4. INDEMNIFICATION.
Selling Group Member, Associated Agency, and Sales Persons agree to hold
harmless and indemnify USL against any and all claims, liabilities and
expenses incurred by USL, and arising out of or based upon any alleged or
untrue statement of Selling Group Member, Associated Agency or Sales Person
other than statements contained in the approved sales material for any
Contract, or in the registration statement or prospectus for any Contract.
USL hereby agrees to indemnify and hold harmless Selling Group Member and
each of its employees, controlling persons, officers or directors against
any losses, expenses (including reasonable attorneys' fees and court
costs), damages or liabilities to which Selling Group Member and the
Associated Agency or such affiliates, controlling persons, officers or
directors become subject, under the Securities Act of 1933, New York
Insurance Laws or otherwise, insofar as such losses, expenses, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
USL's performance, non-performance or breach of this Agreement, or are
based upon any untrue statement contained in, or material omission from,
the prospectus for any of the Contracts.
5. LIMITATIONS ON AUTHORITY.
The Contract forms are the sole property of USL. No person other than USL
has the authority to make, alter or discharge any policy, Contract,
certificate, supplemental contract or form issued by USL. No party has the
right to waive any provision with respect to any Contract or policy; give
or offer to give, on behalf of USL, any tax or legal advice related to the
purchase of a Contract or policy; or make any settlement of any claim or
bind USL or any of its affiliates in any way. No person has the authority
to enter into any proceeding in a court of law or before a regulatory
agency in the name of or on behalf of USL.
6. ARBITRATION.
The parties agree that any controversy between or among them arising out of
their business or pursuant to this Agreement that cannot be settled by
agreement shall be taken to arbitration as set forth herein. Such
arbitration will be conducted according
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to the securities arbitration rules then in effect, of the American
Arbitration Association, NASD, or any registered national securities
exchange.
The arbitrators shall render a written opinion, specifying the factual and
legal bases for the award, with a view to effecting the intent of this
Agreement. The written opinion shall be signed by a majority of the
arbitrators. In rendering the written opinion, the arbitrators shall
determine the rights and obligations of the parties according to the
substantive and procedural laws of the State of New York. Accordingly, the
written opinion of the arbitrators will be determined by the rule of law
and not by equity. The decision of the majority of the arbitrators shall
be final and binding on the parties and shall be enforced by the courts in
New York.
7. GENERAL PROVISIONS.
(a) Waiver.
Failure of any of the parties to promptly insist upon strict
compliance with any of the obligations of any other party under this
Agreement will not be deemed to constitute a waiver of the right to
enforce strict compliance.
(b) Independent Assignment.
No assignment of this Agreement or of any obligations under this
Agreement shall be valid without prior written consent of USL.
Furthermore, this Agreement and any rights pursuant hereto shall be
assignable only upon the written consent of the New York State
Insurance Department and all of the parties hereto. Except as and to
the extent specifically provided in this Agreement, nothing in this
Agreement, expressed or implied, is intended to confer on any person
other than the parties hereto, or their respective legal successors,
any rights, remedies, obligations, or liabilities, or to relieve any
person other than the parties hereto or their respective legal
successors, from any obligations or liabilities that would otherwise
be applicable.
(c) Notice.
All notices, statements or requests provided for hereunder shall be
deemed to have been duly given when delivered by hand to an officer of
the other party, or when deposited with the U.S. Postal Service, via
first-class certified or registered mail, with postage pre-paid, or
when delivered by overnight courier service, telex or telecopier,
addressed as follows:
If to USL:
The United States Life Insurance Company in
the City of New York
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000 Xxxxxx Xxxx
Xxx Xxxx, XX 00000-0000
Attention: President
If to Selling Group Member/Distributor:
American General Securities Incorporated
0000 Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: F. Xxxx Xxxxxx, Xx.
If to the Associated Agency:
Winchester Agency, Ltd.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
or to such other persons or places as each party may from time to time
designate by written notice.
(d) Severability.
To the extent this Agreement may be in conflict with any applicable
law or regulation, this Agreement shall be construed in a manner
consistent with such law or regulation. The invalidity or illegality
of any provision of this Agreement shall not be deemed to affect the
validity or legality of any other provision of this Agreement.
(e) Amendment.
This Agreement may be amended only in writing and signed by all
parties. No amendment will impair the right to receive commissions
accrued with respect to Contracts issued and applications procured
prior to the amendment.
(f) Entire Agreement.
This Agreement together with such amendments as may from time to time
be executed in writing by the parties, constitutes the entire
agreement and understanding between the parties in respect to the
transactions contemplated hereby and supersedes all prior agreements,
arrangements and understandings related to the subject matter hereof.
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(g) Termination.
This Agreement may be terminated by any party upon 30 days' prior
written notice. It may be terminated, for cause, defined as a
material breach of this Agreement, by any party immediately.
Termination of this Agreement shall not impair the right to receive
commissions accrued to applications procured prior to the termination
except for a termination due to cause, or as otherwise specifically
provided in Schedule B (or Schedule B-1, as appropriate).
(h) Governing Law.
This Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York applicable
to contracts made and to be performed in that state, without regard to
principles of conflict of laws.
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By signing below, the undersigned agree to have read and be bound by the terms
and conditions of this Agreement.
Date:
------------------
THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK
000 Xxxxxx Xxxx
XXX XXXX, XX 00000
Signed By:
-------------------------------------------------
Name & Title:
-------------------------------------------------
WINCHESTER AGENCY, LTD.
000 Xxxxx Xxxxx Xxxxxx
XXXXXXXX, XX 00000
Signed By:
-------------------------------------------------
Name & Title:
-------------------------------------------------
AMERICAN GENERAL SECURITIES INCORPORATED
0000 Xxxxx Xxxxxxx
XXXXXXX, XX 00000
Signed By:
-------------------------------------------------
Name & Title:
-------------------------------------------------
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SCHEDULE A
CONTROL DATE - NOVEMBER 18, 1999
THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK
CONTRACTS COVERED BY THIS AGREEMENT
REGISTRATION FORMS SEPARATE
CONTRACT NAME AND NUMBERS ACCOUNT
------------- -----------------------------
Platinum Investor Form S-6 USL VL-R
Variable Life Insurance Nos. 811-09359
333-79471
SCHEDULE A-1 - GENERATIONS VARIABLE ANNUITY
CONTROL DATE - MAY 1, 2000
THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK
CONTRACTS COVERED BY THIS AGREEMENT
REGISTRATION FORMS SEPARATE
CONTRACT NAME AND NUMBERS ACCOUNT
------------- -----------------------------
Generations Variable Annuity Form N-4 USL VA-R
Nos. 811-09007
333-63673
SCHEDULE B - PLATINUM INVESTOR VARIABLE LIFE
CONTROL DATE - NOVEMBER 18, 1999
THE UNITED STATES LIFE INSURANCE COMPANY
IN THE CITY OF NEW YORK ("USL") AND
THE ASSOCIATED AGENCY
This Schedule B is made a part of the Selling Group Agreement ("Agreement") to
which it is attached. It is subject to the terms and conditions of the
Agreement. In no event shall USL be liable for the payment of any commission
with respect to any solicitation made, in whole or in part, by any person not
appropriately licensed and appointed prior to the commencement of such
solicitation.
PLATINUM INVESTOR VARIABLE LIFE:
1. COMMISSIONS TO BE PAID TO THE ASSOCIATED AGENCY
. 90% of premiums paid in the first Policy year up to the Target Premium;
. 4% of premiums which are not in excess of the Target Premium, paid in any
of Policy years 2 through 10;
. 2.5% of premiums which are in excess of the Target Premium, paid in any
of Policy years 1 through 10; and
. Beginning with the 2nd Policy year, an asset based commission of 6.25
basis points will be paid each quarter on the unloaned accumulation value
as of the end of the prior policy quarter.
2. DISCRETIONARY EXPENSE ALLOWANCE PAYMENT
At its sole discretion, USL may pay the Associated Agency an additional
expense allowance payment of up to 5% of first year target premium. In the
event that the Associated Agency personally produces any particular policy,
and USL determines that the Associated Agency qualifies in the aggregate
for some additional expense allowance payment, the Associated Agency will
only be eligible to receive an additional expense allowance payment of up
to 1% of first year Target Premium as to that policy.
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Whether or not the Associated Agency may be eligible to receive this
discretionary payment will, at a minimum, depend upon the ratio of the
Associated Agency total production offset by USL's expenses relative to
such production. In the event that USL determines, in it sole discretion,
that the Associated Agency is eligible for an additional expense allowance
payment, the Associated Agency will ensure that none of the additional
expense allowance payment is passed onto a Sales Person.
3. TARGET PREMIUM
The Target Premium is the maximum amount of premium to which the first year
commission rate applies. Commissions paid on premiums received in excess
of the Target Premium are paid at the excess rate. The Target Premium is
an amount calculated in accordance with the method of calculation and rates
from the USL Target Premium schedules. USL may change the Target Premium
schedules from time to time. The Target Premium applicable to a particular
coverage shall be determined from the schedule in force when the first
premium for such coverage is entered as paid in accounting records of USL.
4. TRAIL COMMISSIONS; WHEN PAID
The 0.25% annual trail is calculated on a quarterly basis as 0.0625%, and
is applied to the entire unloaned accumulation value on each quarterly
Policy anniversary. Payment will be made at the end of the calendar
quarter immediately following the corresponding quarterly Policy
anniversary. For example, for Policies issued February 1, the trail is
based on the unloaned accumulation value as of February 1, but is not
payable until the calendar quarter ended March 31.
5. COMMISSIONS ON INCREASES IN SPECIFIED AMOUNT
First year commissions will be paid on a portion of the premiums received
during the first year following the increase.
(a) A portion of the premium received is allocated to the increase segment
by multiplying the premium received by the ratio of:
1) the Target Premium for the increase segment, to
2) the total Target Premium.
(b) First year commissions are paid on the premium allocated to the
increase segment up to the Target Premium for the increase.
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(c) Renewal commissions are paid on the portion of the premium allocated
to the increase segment in excess of the Target Premium for the
increased segment.
(d) Renewal commissions are paid on the premium received that is not
allocated to the increase segment (unless the Policy is still in its
first Policy year and the Target Premium for the original Specified
Amount has not yet been received).
6. COMMISSIONS ON DEATH BENEFIT OPTION SWITCHES
No commissions are paid on changes in Death Benefit Options, either from
increasing to level, or from level to increasing.
7. COMMISSIONS ON RIDERS
Commissions paid on Riders for Platinum Investor are:
. 90% of premiums paid in the first Policy year up to the Target Premium;
. 4% of premiums which are not in excess of the Target Premium, paid in any
of Policy years 2 through 10; and
. 2.5% of premiums which are in excess of the Target Premium, paid in any
of Policy years 1 through 10.
8. COMMISSIONS ON SUBSTANDARD RATINGS
The Substandard Target Premium is equal to the Minimum Annual Premium (MAP)
for substandard ratings up to Table 6 plus permanent and temporary flat
extra premiums of more than seven years. Aviation extra premiums are
excluded from the Substandard Target Premium. Commissions paid on
substandard rating are:
. 90% of premiums paid for substandard ratings in the first Policy year up
to the Target Premium;
. 4% of premiums paid for substandard ratings, which are not in excess of
the Target Premium, in any of Policy years 2 through 10; and
. 2.5% of premiums paid for substandard ratings, which are in excess of the
Target Premium, paid in any of Policy years 1 through 10.
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9. CHANGE OF THE ASSOCIATED AGENCY
A Policy owner may elect to change representation from the Associated
Agency to another agency subsequent to the sale of the Policy, solely in
the Policy owner's discretion. After such change, further compensation
paid for the Policy will be paid to the new agency.
10. GUIDELINES AND COMMISSIONS ON INTERNAL EXCHANGES
USL maintains published rules that describe the guidelines and commissions
on internal exchanges. A copy of these rules may be obtained directly from
USL.
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SCHEDULE B-1 - GENERATIONS VARIABLE ANNUITY
CONTROL DATE - MAY 1, 2000
THE UNITED STATES LIFE INSURANCE COMPANY
IN THE CITY OF NEW YORK AND THE ASSOCIATED AGENCY
This Schedule B is attached to and made a part of the Selling Group Agreement
("Agreement") to which it is attached. It is subject to the terms and
conditions of the Agreement. In no event shall USL be liable for the payment of
any commission with respect to any solicitation made, in whole or in part, by
any person not appropriately licensed and appointed prior to the commencement of
such solicitation.
1. COMPENSATION TO ASSOCIATED AGENCY.
A commission will be paid to the Associated Agency as to the sale of the
Generations Variable Annuity as set forth in Schedule A according to one of
the following schedules. (See Broker/Data Sheet attached hereto and
incorporated by reference herein for compensation schedule currently in
effect.) (1) 6% of the aggregate Purchase Payments received and accepted by
USL with a properly completed application or as subsequent Purchase
Payments under the Certificates after the Certificate is in force; (2)
4.75% of such aggregate Purchase Payments, plus 0.25% trail commission
commencing at the end of the 12th month after receipt of the initial
Purchase Payment and continuing through the end of the seventh year
following receipt of the Purchase Payment, followed by a 0.50% trail
commission at the end of the third month of the eighth year following
receipt of the initial Purchase Payment; (3) 5.0% of such aggregate
Purchase Payments, plus a 0.25% trail commission commencing at the end of
the 12th month after receipt of the initial Purchase Payment and continuing
through the end of the seventh year following receipt of the Purchase
Payments, followed by a 0.50% trail commission commencing at the end of the
third month of the eighth year following receipt of the initial Purchase
Payment; (4) 5.5% of such aggregate Purchase Payments, plus at 0.50% trail
commission commencing at the end of the third month of the eighth year
after receipt of the initial Purchase Payment; or (5) 2.25% of such
aggregate Purchase Payments, plus a 0.75% trail commission commencing at
the end of the 12th month after receipt of the initial Purchase Payment.
"Trail commission" refers to an amount equal to an annual percentage of the
Certificate Account Value. Trail commissions will be initially calculated
as of the date specified in the above paragraph. Once trail commissions
have commenced, trail commissions shall be computed on each quarterly
Certificate anniversary by multiplying 0.0625% (in the case
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of a 0.25% trail commission), 0.125% (in the case of a 0.50% trail
commission) or 0.1875% (in the case of a 0.75% trail commission) by the
Certificate Account Value computed on each quarterly Certificate
anniversary. Trail commissions shall be paid at the calendar quarter end
which follows the computation of the trail commission. Trail commissions
shall continue until annuitization, surrender, or death which requires
distribution of the Certificate Account Value.
2. COMMISSION REDUCTIONS:
(a) FREE LOOK. If a Certificate is returned to USL pursuant to the "Free
Look" provision of the Certificate, the full commission paid by USL
will be returned to USL or, in the absence of such return, charged
back to the Associated Agency.
(b) REDUCTIONS FOR PURCHASE PAYMENTS AT AGE 81 AND LATER. A 50%
commission reduction shall apply with respect to Purchase Payments
made on or after the Annuitant's eighty-first birthday (regardless of
whether the Certificate has a Contingent Annuitant). Such commission
reduction is not applicable to trail commissions.
(c) CHARGEBACKS.
(i) CHARGEBACKS FOR WITHDRAWALS. A commission chargeback of 50%
shall apply for full or partial withdrawal of a purchase
payment made during the twelve months following its receipt
(excluding withdrawals made pursuant to the Systematic
Withdrawal Program that are within the Free Withdrawal
Privilege, as defined in the Certificate).
(ii) CHARGEBACKS IN OTHER SITUATIONS. A 100% chargeback shall
apply if USL, in its sole discretion, determines not to issue
or to rescind the Certificate.
In no event shall any commission adjustment or chargeback be assessed
for termination of a Certificate because of the death of the Annuitant
or Owner during the periods specified above.
(d) NO COMPENSATION PAYABLE. No compensation shall be payable:
(i) if USL, in its sole discretion, determines not to issue the
Certificate applied for or rescinds the Certificate;
ii
(ii) if USL refunds all or any portion of the Purchase Payments as a
result of a complaint or grievance;
(iii) if USL determines that a Purchase Payment made within 60 days
following a prior partial withdrawal, including systematic
withdrawals, is reasonably believed to be a reinvestment of part or
all of the prior partial withdrawal;
(iv) if the Owner, at the time the Certificate is purchased, is a bona-
fide employee of USL; provided, however, that the Owner shall have
completed, at the time the Certificate is purchased, appropriate
documents supplied by USL which provide for a waiver of all surrender
charges; or
(v) if USL or Distributor determines that any sales person signing an
application or any person or entity receiving compensation for
soliciting purchases of the Certificates is not duly licensed to sell
the Certificates in the state or jurisdiction of such attempted sale
and registered or otherwise qualified under the 1934 Act and rules
thereunder any applicable state laws and rules governing broker-
dealer and their related persons.
3. GENERAL COMPENSATION PROVISIONS.
The Associated Agency agrees to promptly deliver Certificates and holds USL
harmless from and against any claim arising from market loss to the Owner
of the Certificate resulting from late delivery by the Associated Agency.
Unless otherwise agreed, the Associated Agency shall forward to USL the first
full payment collected by the Associated Agency, without deduction for
compensation.
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