EXHIBIT 3(B)
VARIABLE UNIVERSAL LIFE
SELLING AGREEMENT
This Agreement is made and entered into this __ day of ________, 1999, by and
among American General Life Insurance Company, a Texas domiciled insurance
company ("Company"); American General Securities Incorporated, a Texas
corporation ("AGSI"); Banc One Securities Corporation ("Broker/Dealer"), of
Greencrest, State of Ohio; and Banc One Insurance Services Corporation
("Insurance Agent"), of Milwaukee, State of Wisconsin.
RECITALS:
A. AGSI is a registered broker/dealer and the distributor of the policies
identified in Schedule A of this Agreement. Company is a life insurance
company.
B. Pursuant to a Distribution Agreement with AGSI ("Distribution Agreement"),
Company has appointed AGSI as the principal underwriter of the class or
classes of variable universal life insurance policies identified in Schedule
A to this Agreement at the time that this Agreement is executed, and such
other class or classes of variable universal life policies or variable life
insurance policies that may be added to Schedule A from time to time in
accordance with Section 2(g) of this Agreement (each, a "Class of Policies").
Such Class of Policies together with any additional policies shown on
Schedule A shall be referred to herein as "Policies". Each Class of Policies
will be issued by Company through one or more separate accounts ("Separate
Accounts") and each Class of Policies will be funded by (i) shares of
beneficial interest in certain investment companies (each series of shares of
beneficial interest, a "Fund" and, together, the "Funds") and/or (ii) a fixed
account option(s). Company has authorized AGSI to enter into separate written
agreements with broker/dealers pursuant to which such broker/dealers would be
authorized to participate in the distribution of the Policies and would agree
to use their best efforts to solicit applications for the Policies.
C. The parties to this Agreement desire that Broker/Dealer and Insurance Agent
be authorized to solicit applications for the sale of the Policies to the
general public subject to the terms and conditions set forth herein.
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NOW, THEREFORE, in consideration of the premises and of the mutual promises and
covenants hereinafter set forth, the parties agree as follows:
1. ADDITIONAL DEFINITIONS
(a) Registration Statement - With respect to each Class of Policies, the
most recent effective registration statement(s) filed with the SEC or
the most recent effective post-effective amendment(s) thereto with
respect to such Class of Policies, including financial statements
included therein and all exhibits thereto. There may be more than one
Registration Statement in effect at a time for a Class of Policies; in
such case, any reference to "the Registration Statement" for a Class
of Policies shall refer to any or all, depending on the context, of
the Registration Statements for such Class of Policies.
(b) Prospectus - With respect to each Class of Policies, the prospectus
for such Class of Policies included within the Registration Statement
for such Class of Policies; provided, however, that, if the most
recently filed prospectus filed pursuant to Rule 497 under the 1933
Act subsequent to the date on which the Registration Statement became
effective differs from the prospectus on file at the time the
Registration Statement became effective, the term "Prospectus" shall
refer to the most recently filed prospectus filed under Rule 497 from
and after the date on which it shall have been filed.
(c) 1933 Act - The Securities Act of 1933, as amended.
(d) 1934 Act - The Securities and Exchange Act of 1934, as amended.
(e) 1940 Act - The Investment Company Act of 1940, as amended.
(f) Agent - An individual associated with Insurance Agent and
Broker/Dealer who is appointed by Company as an agent for the purpose
of soliciting applications.
(g) Premium - A payment made under a Policy to purchase benefits under
such Policy.
(h) Service Center - American General Life Insurance Company Variable
Universal Life Administration Center, P. O. Box 4880, Houston, Texas
77210-4880, or such other address as may be designated from time to
time by Company and provided to Insurance Agent and Broker/Dealer.
(i) Operations Manual - The manual prepared and other written rules and
procedures provided by Company to Agents, as revised from time to
time.
(j) SEC - The Securities and Exchange Commission.
(k) NASD - The National Association of Securities Dealers, Inc.
(l) Affiliate - With respect to a person, any other person controlling,
controlled by, under common control with or licensed to use the
tradename/trademark of such person.
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(m) Broker of Record - Generally, the person or entity designated in
Company's records as the person or entity, with respect to a Policy,
that is entitled to receive compensation payable with respect to such
Policy and is able to contact directly the owner of such Policy. In
the case of compensation payable with respect to a Premium, the Broker
of Record shall be the party designated as such in Company's records,
at the time such Premium is accepted by Company. In the case of any
payment of compensation payable with respect to Policy value, the
Broker of Record shall be the party designated as such in Company's
records.
2. AUTHORIZATION OF BROKER/DEALER AND INSURANCE AGENT
(a) AGSI hereby authorizes Broker/Dealer under the securities laws, and
Company hereby authorizes and appoints Insurance Agent under the
insurance laws, in a non-exclusive capacity, to distribute or
facilitate distribution of the Policies. Broker/Dealer and Insurance
Agent accept such authorization and appointment and shall use their
best efforts to find purchasers for the Policies, in each case
acceptable to Company.
(b) AGSI and Company shall notify Broker/Dealer and Insurance Agent in
writing of all states and jurisdictions in which Company is licensed
to sell the Policies.
(c) Broker/Dealer and Insurance Agent acknowledge that no territory is
exclusively assigned hereunder, and Company reserves the right in its
sole discretion to establish or appoint one or more agencies in any
jurisdiction in which Insurance Agent transacts business hereunder.
(d) Insurance Agent is vested under this Agreement with power and
authority to select and recommend individuals associated with
Insurance Agent for appointment as Agents of Company, and individuals
so recommended by Insurance Agent may become Agents, provided that
Company reserves the right in its good faith discretion to refuse to
appoint any proposed agent or, once appointed, to terminate the same
at any time.
(e) Neither Broker/Dealer nor Insurance Agent shall expend or contract for
the expenditure of the funds of AGSI or Company. Broker/Dealer and
Insurance Agent each shall pay all expenses incurred by each of them
in the performance of this Agreement, unless otherwise specifically
provided for in this Agreement or unless AGSI and Company shall have
agreed in advance in writing to share the cost of certain expenses.
Initial and renewal state appointment fees for Agents of Company shall
be paid by Company. Broker/Dealer will be obligated to pay all other
fees, including, but not limited to, transfer fees and termination
fees, and any other fees required to be paid to obtain state insurance
licenses for Insurance Agent or appointees of Insurance Agent. Neither
Broker/Dealer nor Insurance Agent shall possess or exercise any
authority on behalf of AGSI or Company other than that expressly
conferred on Broker/Dealer or Insurance Agent by this Agreement. In
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particular, and without limiting the foregoing, neither Broker/Dealer
nor Insurance Agent shall have any authority, nor shall either grant
such authority to any Agent, on behalf of AGSI or Company: to make,
alter or discharge any Policy or other contract entered into pursuant
to a Policy; to waive any Policy forfeiture provision; to extend the
time of paying any Premiums; or to receive any monies or Premiums due
to Company from applicants for or purchasers of the Policies (except
for the sole purpose of forwarding monies or premiums to Company).
(f) Broker/Dealer and Insurance Agent acknowledge that Company has the
right in its good faith discretion to reject any applications or
Premiums received by it and to return or refund to an applicant such
applicant's Premium.
(g) Except as otherwise provided in Section 6 herein, Schedule A to this
Agreement may not be amended by AGSI and Company without the prior
written consent of Insurance Agent.
(h) AGSI and Company acknowledge that Broker/Dealer and Insurance Agent
are each an independent contractor. Accordingly, Broker/Dealer and
Insurance Agent are not obliged or expected to give full time and
energies to the performance of their obligations hereunder, nor are
Broker/Dealer and Insurance Agent obliged or expected to represent
AGSI or Company exclusively. Nothing herein contained shall
constitute Broker/Dealer, Insurance Agent, Agents or any agents or
representatives of Broker/Dealer or Insurance Agent as employees of
Company or AGSI in connection with solicitation of applications for
the Policies.
3. LICENSING AND REGISTRATION OF BROKER/DEALER, INSURANCE AGENT AND AGENTS
(a) Broker/Dealer represents that it is a broker/dealer registered with
the SEC under the 1934 Act, and is a member in good standing of the
NASD. Broker/Dealer must, at all times when performing its functions
and fulfilling its obligations under this Agreement, be duly
registered as a broker/dealer under the 1934 Act and as required by
applicable law, in each state or other jurisdiction in which
Broker/Dealer intends to perform its functions and fulfill its
obligations hereunder, and be a member in good standing of the NASD.
(b) Insurance Agent represents that it is a licensed life insurance
agent as required to solicit applications, except that if Insurance
Agent cannot be qualified to be a licensed life insurance agent until
appointed by an insurer, the Insurance Agent represents that it is
qualified to be a licensed insurance agent but for the appointment by
an insurer. Insurance Agent must, at all times when performing its
functions and fulfilling its obligations under this Agreement, be duly
licensed and appointed by Company to sell the Policies in each state
or other jurisdiction in which Insurance Agent intends to perform its
functions and fulfill its obligations hereunder.
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(c) Broker/Dealer shall ensure that no individual shall offer or sell the
Policies on behalf of Broker/Dealer in any state or other jurisdiction
in which the Policies may lawfully be sold unless such individual is
an associated person of Broker/Dealer (as that term is defined in
Section 3(a)(18) of the 1934 Act) and duly registered with the NASD
and any applicable state securities regulatory authority as a
registered person of Broker/Dealer qualified to distribute the
Policies in such state or jurisdiction.
(d) Insurance Agent shall ensure that no individual shall offer or sell
the Policies in any state or other jurisdiction unless such individual
is duly licensed and appointed as an Agent of Company, and
appropriately licensed, registered or otherwise qualified to offer and
sell the Policies to be offered and sold by such individual under the
insurance laws of such state or jurisdiction. All matters concerning
the licensing of any individuals recommended for appointment by
Insurance Agent under any applicable state insurance law shall be a
matter directly between Insurance Agent and such individual, and the
Insurance Agent shall furnish Company, upon Company's request, with
proof of proper licensing of such individual or other proof,
reasonably acceptable to Company, of satisfaction by such individual
of licensing or appointment requirements including: (i) certificate by
the Insurance Agent of the character and fitness of such
individual; (ii) a copy of the most recent third party credit check or
character report obtained pursuant to the licensing requirements of
applicable state insurance law prior to Company's appointing any such
individual as an Agent of Company; and (iii) a copy of such
individual's state insurance license. Insurance Agent agrees to
maintain documentation regarding the background investigation of
individuals conducted prior to appointment during the period the
individual is appointed by Company and shall provide such information
to Company as may be required by valid request of any regulatory
authority.
4. BROKER/DEALER, INSURANCE AGENT, COMPANY AND AGSI'S RIGHTS AND
RESPONSIBILITIES
(a) Broker/Dealer and Insurance Agent hereby represent and warrant that
they are duly in compliance with all applicable federal and state
securities laws and regulations, and all applicable insurance laws and
regulations. Broker/Dealer and Insurance Agent each shall carry out
their respective obligations under this Agreement in continued
compliance with such regulations. Broker/Dealer shall be responsible
for securities training, supervision and control of Agents in
connection with their solicitation activities with respect to the
policies and shall supervise Agents' compliance with applicable
federal and state
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securities law and NASD requirements in connection with such
solicitation activities. Broker/Dealer and Insurance Agent shall use
reasonable best efforts to comply and ensure that Agents comply with
the rules and procedures set forth in the Operations Manual, and the
rules set forth below, and Broker/Dealer and Insurance Agent shall be
responsible for such compliance. Insurance Agent shall train,
supervise and be responsible for the conduct of Agents in their
solicitation activities in connection with the Policies, and shall
supervise Agents' strict compliance with the applicable rules and
regulations of any governmental or other insurance agencies that have
jurisdiction over variable policies activities, as well as the rules
and procedures of Company pertaining to the solicitation, sale and
submission of applications for the Policies, which are set forth in
Company's Operations Manual, as they may be amended from time to time
in Company's good faith discretion. However, changes to Company's
Operations Manual will not be effective as they relate to Insurance
Agent, Broker/Dealer and Agents, unless Company provides thirty (30)
days' written notice to Insurance Agent. In the event of a
contradiction between the provisions of this Agreement and Company's
Operations Manual, the provisions of this Agreement shall prevail.
Broker/Dealer shall be solely responsible for background
investigations of Agents to determine their qualifications, good
character, and moral fitness to sell the Policies.
(b) Broker/Dealer and Insurance Agent shall comply with the Principles and
Code of Ethical Market Conduct (the "Principles and Code") adopted by
Company and set forth in Schedule B, which is made a part hereof.
Insurance Agent agrees to make available training regarding the
Principles and Code to Agents and to assure compliance with the
Principles and Code by Agents. Company will provide materials that
may be used in such training. Schedule B may be amended or modified
by Company at any time, in any manner, and without prior notice.
(c) Broker/Dealer, Insurance Agent and Agents shall not offer or attempt
to offer the Policies, nor solicit applications for the Policies, nor
deliver Policies, in any state or jurisdiction in which the Policies
may not lawfully be sold or offered for sale. For purposes of
determining where the Policies may be offered and applications
solicited, Insurance Agent may rely on written notification, as
revised from time to time, that Insurance Agent receives from Company.
However, changes to the Principles and Code will not be effective as
to Insurance Agent, Broker/Dealer and Agents without thirty days'
written notice to Insurance Agent. In the event of a contradiction
between the provisions of this Agreement and the Principles and Code,
the provisions of this Agreement shall prevail.
(d) Broker/Dealer, Insurance Agent and Agents shall not solicit
applications for the Policies without delivering the then-currently
effective Prospectus for the Policies, the then-currently
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effective prospectus(es) for the underlying fund(s) and, where
required by state insurance law, the then-currently effective
statement of additional information for the Policies.
(e) Broker/Dealer, Insurance Agent and Agents shall not recommend the
purchase of a Policy to an applicant unless each has reasonable
grounds to believe that such purchase is suitable for the applicant in
accordance with, among other things, applicable regulations of any
state insurance commission, the SEC and the NASD.
(f) Insurance Agent shall return promptly or facilitate the return to
Company all receipts for delivered Policies, all undelivered Policies
and all receipts for cancellation. Upon issuance of a Policy by
Company and delivery of such Policy to Insurance Agent or its
designee, Insurance Agent shall promptly deliver or facilitate
delivery of such Policy to its purchaser. For purposes of this
provision "promptly" shall be deemed to mean not later than five (5)
calendar days. Company will assume that a Policy issued by Company
will be delivered by Insurance Agent or its designee to the purchaser
of such Policy within five (5) calendar days for purposes of
determining when to transfer Premiums initially allocated to the Money
Market Account available under such Policy to the particular
investment options specified by such purchaser. As a result, if a
purchaser exercises the free look provisions under a Policy,
Broker/Dealer shall indemnify Company for any loss incurred by Company
that results from Insurance Agent's failure to deliver or facilitate
delivery of such Policy to its purchaser within the contemplated five
(5) calendar day period.
(g) Neither Broker/Dealer nor Insurance Agent, nor any of their directors,
partners, officers, employees, registered persons, associated persons,
agents or affiliated persons, in connection with the offer or sale of
the Policies, shall give any information or make any representations
or statements, written or oral, concerning the Policies, a Fund or
Fund Shares, other than information or representations contained in
the Prospectuses, statements of additional information and
Registration Statements for the Policies, or a Fund, or in reports or
proxy statements therefore, or in promotional, sales or advertising
material or other information supplied and approved in writing by AGSI
and Company.
(h) Broker/Dealer and Insurance Agent shall not use or implement any
promotional, sales or advertising material relating to the Policies
without the prior written approval of AGSI and Company.
(i) Broker/Dealer and Insurance Agent shall be solely responsible under
applicable tax laws for the reporting of compensation paid to Agents.
(j) Insurance Agent represents that it maintains and shall maintain such
books and records concerning the activities of Agents as may be
required by the appropriate insurance regulatory agencies that have
jurisdiction and that may be reasonably required by Company
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to adequately reflect the Policies processed through Insurance Agent.
Insurance Agent shall make such books and records available to
Company.
(k) Broker/Dealer represents that it maintains and shall maintain
appropriate books and records concerning the activities of Agents as
are required by the SEC, the NASD and other agencies having
jurisdiction and that may be reasonably required by AGSI to reflect
adequately the Policies processed through Insurance Agent.
Broker/Dealer shall make such books and records available to AGSI
and/or Company at any reasonable time upon written request by AGSI
and/or Company.
(l) Company and AGSI's Books and Records and Broker/Dealer and Insurance
Agent's Right to Accounting.
(i) During the term of this Agreement, Company and AGSI shall keep
accurate books of account and records covering all transactions
relating to this Agreement at Company's and AGSI's principal place
of business for not less than two (2) years after the expiration, or
earlier termination, of this Agreement and to allow Insurance Agent,
Broker/Dealer and their representatives to audit those books of
account and records and to make copies of them at Insurance Agent's
or Broker/Dealer's expense, provided Insurance Agent or
Broker/Dealer has a good faith reason to believe that the
recordkeeping is inaccurate, and provided Company or AGSI receives
ten (10) days' prior written notice. If the audit reveals payments
and commission fees or other payments due to Insurance Agent or
Broker/Dealer in excess of 10 percent more than the payments paid to
Insurance Agent or Broker/Dealer for the period covered by the
audit, all audit fees, costs and expenses shall be borne by Company
or AGSI, in addition to interest on the amount discovered to be due,
from the first dollar more than the payments actually paid.
Interest charged shall be in the amount of two percentage points
above the prime rate as established by Bank One Wisconsin.
(ii) If Insurance Agent's or Broker/Dealer's and Company's or AGSI's
auditors shall disagree on whether the amount owed exceeds 10
percent, Insurance Agent's or Broker/Dealer's auditor(s) and
Company's or AGSI's auditor(s) shall jointly select a third auditor
whose determination of the amount owed shall be final and binding
upon the parties.
(iii) Insurance Agent's or Broker/Dealer's receipt and deposit of
monies shall not prevent or limit Insurance Agent's or
Broker/Dealer's right to contest the accuracy of correctness of any
statement for those monies.
(m) Both parties shall promptly furnish to each other or its authorized
agent any reports and information that it may reasonably request for
the purpose of meeting its reporting and
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record keeping requirements under the insurance laws of any state,
under any applicable federal and state securities laws, rules and
regulations, and the rules of the NASD.
(n) Broker/Dealer shall secure and maintain a fidelity bond (including
coverage for larceny, embezzlement and other defalcation), issued by a
reputable bonding company, covering all of its directors, officers,
agents and employees who have access to funds of Company. This bond
shall be maintained at Broker/Dealer's expense in at least the amount
prescribed under Rule 3020 of the NASD Conduct Rules. Upon request,
Broker/Dealer shall provide AGSI with a copy of said bond.
Broker/Dealer shall also self-insure or secure and maintain errors and
omissions insurance and shall provide evidence of same acceptable to
AGSI in its good faith discretion and covering Broker/Dealer,
Insurance Agent, and Agents. Broker/Dealer hereby assigns any
proceeds received from any fidelity bonding company, errors and
omissions or other liability coverage, to AGSI or Company as their
interests may appear, to the extent of their loss due to activities
covered by the bond, policy or other liability coverage. If there is
any deficiency amount, whether due to a deductible or otherwise,
Broker/Dealer shall promptly pay such amount on demand. Broker/Dealer
hereby indemnifies and holds harmless AGSI and Company from any such
deficiency and from the costs of collection thereof, including
reasonable attorney's fees.
5. SALES MATERIALS
(a) During the term of this Agreement, AGSI and Company will provide
Broker/Dealer and Insurance Agent, without charge, with as many copies
of Prospectuses (and any supplements thereto), current Fund
prospectus(es) (and any supplements thereto) except for the One Group
Investment Trust materials, as Broker/Dealer or Insurance Agent may
reasonably request. Upon termination of this Agreement, Broker/Dealer
and Insurance Agent will promptly return to AGSI any Prospectuses,
Fund prospectuses, and other materials and supplies furnished by AGSI
or Company to Broker/Dealer or Insurance Agent or to Agents.
(b) During the term of this Agreement, Insurance Agent will be responsible
for providing or having provided all promotional, sales and
advertising material to be used by Broker/Dealer and Insurance Agent,
subject to Company's prior written approval. Insurance Agent will
file such materials or will cause such materials to be filed with the
SEC, the NASD, and/or with any state securities regulatory
authorities, as appropriate.
(c) During the term of this Agreement, Broker/Dealer and Insurance Agent
will comply with Company advertising procedures set forth in Schedule
C to this Agreement for any
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advertising material pertaining to Company's products. Schedule C may
be amended or modified at any time by Company, in any manner, with
prior notice.
(d) Neither Company nor AGSI shall use any advertising material,
prospectus, proposal, or representation either in general or in
relation to a Policy of Company referring to Insurance Agent,
Broker/Dealer or its Affiliates or the Policies written under this
Agreement unless furnished by Insurance Agent or until the consent of
Insurance Agent shall have been first secured. Neither Broker/Dealer
nor Insurance Agent shall use any advertising material, prospectus,
proposal, or representation either in general or in relation to a
Policy of Company referring to Company, AGSI, or the Policies written
under this Agreement unless furnished by Company or until Company's
consent shall have been first secured. The consideration for and the
giving of consent as described above shall relate to only one specific
request and shall not be construed to have applied to any subsequent
materials or programs. Company and/or A.G. Distributors shall be
responsible for the cost of development, marketing fees, printing and
advertising costs related to this Agreement, except as otherwise
provided in Section 5 hereof
(e) All requests for written consent shall contain direct reproductions of
all material; i.e. art work, copy, script, photographs, videotape,
magnetic recording tape, etc. to be used in the reproduction of the
advertisement in the printed or electronic media. In addition, all
requests shall include the schedule(s) for the commencement and
duration of the advertising campaign for which the subject material
will be used.
6. COMMISSION AGREEMENT
(a) During the term of this Agreement, AGSI and Company shall pay to
Insurance Agent as compensation for Policies for which Broker/Dealer
is the Broker of Record, the commissions and fees set forth in
Schedule A to this Agreement, as such Schedule A may be amended or
modified at any time, with prior written consent of Insurance Agent,
by AGSI or Company, and subject to the other provisions of this
Agreement. The payment of such commissions and fees shall be subject
to the terms and conditions of this Agreement and those set forth on
Schedule A. Any amendment to Schedule A will be applicable to any
Policy for which an initial application or premium is received by the
Service Center on or after the effective date of such amendment.
Compensation with respect to any Policy shall be paid to Insurance
Agent only for so long as Insurance Agent appointed on the
recommendation of and affiliated with Broker/Dealer is the Broker of
Record for such Policy.
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(b) All commissions or fees payable under this Agreement shall be vested
and will continue to be paid on Policies in force even after
termination of this Agreement, except as otherwise provided in this
subsection. No compensation shall be payable, and Insurance Agent
agrees to reimburse AGSI and Company for any compensation that may
have been paid to Insurance Agent or any Agents in any of the
following situations: (i) Company, in its good faith discretion,
determines not to issue the Policy applied for; (ii) Company refunds
the premiums upon the applicant's surrender or withdrawal pursuant to
any "free-look" privilege; (iii) Company refunds the premiums paid by
applicant as a result of a complaint by applicant; (iv) Company
determines that any person soliciting an application who is required
to be licensed or any other person or entity receiving compensation
for soliciting applications or premiums for the Policies is not or was
not duly licensed as an insurance agent; or (v) any other situation
listed in Section 8, subsections (a) (i), (ii), (iv), (vi) and (vii)
of this Agreement.
7. INTERESTS IN AGREEMENT. Agents shall have no interest in this Agreement or
right to any commissions to be paid by AGSI, Company, Insurance Agent or
Broker/Dealer. Insurance Agent and Broker/Dealer shall be jointly
responsible for the payment of any commission or consideration of any kind to
Agents. Insurance Agent and Broker/Dealer shall have no right to withhold or
deduct any commission from any Premiums which it may collect unless and only
to the extent that Schedule D to this Agreement permits Insurance Agent or
Broker/Dealer to net commissions against Premiums collected. Unless
otherwise provided in this Agreement, Schedule D may not be modified at any
time by Company, in any manner, without the prior written consent of
Insurance Agent. Insurance Agent or Broker/Dealer shall have no interest
in any compensation paid by Company to AGSI or any affiliate, now or
hereafter, in connection with the sale of any Policies hereunder.
8. TERMINATION OF AGREEMENT. This Agreement may be terminated by any party
hereto without cause upon thirty (30) days' prior written notice to the other
parties stating the date and time of termination.
(a) Company may also terminate this Agreement for cause:
(i) License Suspension or Revocation. In the event of any order of
suspension or revocation of Insurance Agent's license by any
insurance regulatory authority or of Broker/Dealer's ceasing to
be a registered broker/dealer or a member of the NASD,
termination shall be effective on the date of such suspension,
revocation or cessation; or
(ii) Misapplication of Funds. In the event of Broker/Dealer or
Insurance Agent's misapplication, misdirection or
misappropriation of funds or property received under
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this Agreement or in the event of their failure to remit
promptly funds due to Company, Policy-holders or applicants,
after written demand thereof, termination shall be effective
immediately upon written notice; or
(iii) Default. In the event of breach of this Agreement or
Broker/Dealer or Insurance Agent's failure to timely and fully
comply with Company's directives, rules, regulations or manuals,
including the Operations Manual; or
(iv) Conviction. In the event of conviction of Broker/Dealer, or
Insurance Agent or any of their principal officers of a felony
or of violation of the securities or insurance laws or
regulations of any jurisdiction or of any law the violation of
which reflects adversely upon the honesty and integrity of
Broker/Dealer, or Insurance Agent or any of their principal
officers, whether or not classified as a felony, termination
shall be effective immediately upon written notice; or
(v) Bankruptcy. In the event Broker/Dealer or Insurance Agent
submits to or becomes subjected to bankruptcy, receivership or
common law composition of creditors, termination shall be
effective immediately upon notice; or
(vi) Prejudice. In the event Broker/Dealer or Insurance Agent has
otherwise acted to prejudice materially the interests of Company
or AGSI in breach of this Agreement, termination shall be
effective immediately upon written notice; or
(vii) Replacement. In the event Broker/Dealer or Insurance Agent
endeavors to induce agents of Company or AGSI to leave its
services or Policy-owners of Company to relinquish their
Policies, termination shall be effective immediately upon
notice.
(b) Broker Dealer or Insurance Agent may terminate this Agreement for
cause:
(i) Failure of Company or AGSI to timely pay any fees or commissions
due and payable to Insurance Agent under this Agreement; or
(ii) Failure of Company or AGSI to comply with its obligations under
this Agreement.
(c) Cure Period. In the event of termination for Cause pursuant to
Section 8, subsections (a) (iii) or (b) (i) or (ii), and upon request,
the other party has the right to a sixty (60) day cure period for the
Breach. If the party is able to cure the Breach to the good faith
satisfaction of the other party within the cure period, this Agreement
will continue in effect as though it were never terminated.
(d) Right To Terminate Due to Law. Notwithstanding the above, Company and
AGSI reserve the right to discontinue offering any Policy or product
at any time with written notice to Insurance Agent if it is prevented
by law, rule or regulation from offering the product or Policy in a
particular state or in its current form.
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(e) Right to Modify Underwriting/Pricing: Company and AGSI agree that they
will not modify underwriting standards or pricing for the Policies
without the prior written consent of Insurance Agent, unless such
modification to the underwriting standards or pricing is: (i) due to a
state and/or federal law, rule, regulation or ruling; (ii) due to an
action taken by a third party, which neither the Company nor AGSI has
control over; or (iii) due to the Company not meeting its profit
targets as a result of actual business experience. Such written
consent of Insurance Agent, shall be given in good faith, and not be
unreasonably withheld. In the event that the Company and AGSI modifies
the underwriting standards or pricing on the Policies due to (i), (ii)
or (iii), as stated herein, then the Company or AGSI shall give sixty
days written notice to the Insurance Agent.
Upon termination of this Agreement, all authorizations, rights and
obligations shall cease, except the agreements in Sections 4 (f), 4
(k), 4 (l) and 4(m), 6, 9, 10, 12, 15, 16, 17, Schedule E, Standard 2
(last two bullet points), and the payment of any accrued and unpaid
compensation to Insurance Agent. In the event of termination of this
Agreement for any violation as set forth in sections 8(a), (b), (d),
(f) or (g) above, no compensation of any kind shall thereafter be
payable to Broker/Dealer or Insurance Agent.
9. COMPLAINTS AND INVESTIGATIONS
(a) Complaint Log. Company, AGSI , Insurance Agent and Broker/Dealer
shall each develop and maintain their own log containing Policyholder
complaints arising out of the policies contemplated by this Agreement,
in a form and substance acceptable to each other (except
that affiliated companies may develop a joint log rather than two
separate logs). The log will record the date and substance of each
oral and written Policyholder complaint and date and substance of
resolution of each such complaint. Entries in Company and AGSI's log
that pertain to complaints arising out of the policies contemplated by
this Agreement shall be provided to Insurance Agent by Company upon
reasonable request.
(b) Notification of Complaints. Each party will notify the other party
upon receipt of any Policyholder complaint or other complaint against
that party or its agents or producers or third party vendors arising
from performance, or lack thereof, of this Agreement. For purposes of
this Agreement, a Policyholder complaint includes, but is not limited
to, a verbal or written notification that: (1) alleges
misrepresentation of information, improper sales practices or
confusion over the Policy's status as a non-FDIC insured product; or
(2) unfair
13
treatment by former or current employees or agents of Insurance Agent,
Broker/Dealer, Company, AGSI or Affiliates of each. Each party will,
upon receipt of any summons, complaint, or notice of suit, forward
such notice to the other party by facsimile transmission or by express
or overnight mail. Each party will upon receipt of any inquiry from an
insurance department or other regulatory body with respect to activity
under this Agreement, forward such inquiry to the other party by
facsimile transmission or by express or overnight mail.
(c) AGSI, Company, Broker/Dealer and Insurance Agent shall cooperate fully
in any insurance regulatory investigation or proceeding or judicial
proceeding arising in connection with the Policies marketed under this
Agreement. In addition, AGSI, Company, Broker/Dealer and Insurance
Agent shall cooperate fully in any securities regulatory investigation
or proceeding or judicial proceeding with respect to AGSI,
Broker/Dealer, their Affiliates and their agents, to the extent that
such investigation or proceeding is in connection with the Policies
marketed under this Agreement. Without limiting the foregoing:
(i) Broker/Dealer and Insurance Agent will be notified promptly of
any customer complaint or notice of any regulatory investigation
or proceeding or judicial proceeding received by AGSI or Company
with respect to Insurance Agent or any Agent or which may affect
the issuance of any Policy marketed under this Agreement.
(ii) Broker/Dealer and Insurance Agent will promptly notify AGSI and
Company of any written customer complaint or notice of any
regulatory investigation or proceeding or judicial proceeding
received by Broker/Dealer, Insurance Agent or their Affiliates
with respect to themselves, their Affiliates, or any Agent in
connection with any Policy marketed under this Agreement or any
activity in connection with any such Policy.
(d) In the case of a customer complaint, AGSI, Company, Broker/Dealer and
Insurance Agent will cooperate in investigating such complaint and any
response by Broker/Dealer or Insurance Agent to such complaint will be
sent to AGSI and Company for approval not less than (5) five business
days prior to its being sent to the customer or regulatory authority,
except that if a more prompt response is required, the proposed
response shall be communicated by telephone or facsimile. Upon receipt
of all required information needed to reasonably evaluate the
response, AGSI and Company agree to review and reply in a timely
manner.
10. CONFIDENTIAL INFORMATION.
14
(a) Information Defined. Company, AGSI, Broker/Dealer and Insurance Agent
each possess certain information, including, without limitation,
pricing information, computer and operational systems, marketing
strategies and intellectual property rights that attach to products
and services, customer lists and customer account information prepared
or furnished by each party ("Information"). However, Information
shall not include any portion of Information:
(i) which, at the time of disclosure, is known to the receiving
party or is generally available to the public;
(ii) which, after disclosure, through no act on the part of the
receiving party becomes generally available to the public; or
(iii) which is furnished to the receiving party on a non-
confidential basis by any third party having a bona fide right
to do so; or
(iv) that is required to be furnished to any governmental agency, by
law or regulation or by order of a court of law.
(b) Exchange of Confidential Information. All Information provided by
Company or AGSI to Insurance Agent or Broker/Dealer or by
Broker/Dealer or Insurance Agent to Company or AGSI pursuant to this
Agreement is the confidential Information of the party providing such
Information. The party receiving such Information agrees to hold such
Information in confidence for the term of this Agreement and for a
period of two (2) years thereafter, upon the following conditions,
which are understood to be acceptable by each party:
(i) The receiving party will receive and hold in confidence
Information disclosed and will not use it except for the
purposes stated in this Agreement. Accordingly, without limiting
the foregoing, each party agrees that it will not use this
Information in connection with any other person, firm, or
corporation.
(ii) The receiving party will take such steps as may be reasonably
necessary to prevent the disclosure of Information to any third
party.
(iii) Each party will confine Information to those employees or agents
(including employees of affiliates) who are directly concerned
with the evaluation or use of the same, and will make
disclosures only after informing the employee or agent
(including employees of affiliates) of the obligations under
this Agreement.
(iv) Neither party shall analyze, reverse engineer or otherwise use
for independent development any Information submitted to it by
the other party. Any written materials submitted to Insurance
Agent or Broker/Dealer by Company or AGSI or by Company or AGSI
to Insurance Agent or Broker/Dealer shall, at the written
request of the other, be returned to the other party within ten
days, by secure delivery
15
means.
11. MODIFICATION OF AGREEMENT. This Agreement supersedes all prior agreements,
either oral or written, between the parties relating to the Policies and,
except as otherwise provided herein, may not be modified in any way unless
by written agreement signed by all of the parties hereto.
12. INDEMNIFICATION.
(a) Broker/Dealer and Insurance Agent, jointly and severally, shall
indemnify and hold harmless AGSI and Company and each person who
controls or is associated with AGSI or Company within the meaning of
such terms under the federal securities laws, and any officer,
director, employee or agent of the foregoing, against any and all
losses, claims, damages or liabilities, joint or several (including
any investigative, legal and other expenses reasonably incurred in
connection with, and any amounts paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they or any of
them may become subject under any statute or regulation, at common law
or otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon any actual or alleged:
(i) violation(s) by Broker/Dealer, Insurance Agent, or an Agent of
federal or state securities law or regulation(s), insurance law
or regulation(s), or any rule or requirement of the NASD;
(ii) unauthorized use of sales or advertising material, any oral or
written misrepresentations, or any unlawful sales practices
concerning the Policies, by Broker/Dealer, Insurance Agent or an
Agent;
(iii) claims by Agents or other agents or representatives of Insurance
Agent or Broker/Dealer for commissions or other compensation or
remuneration of any type;
(iv) any failure on the part of Broker/Dealer, Insurance Agent, or an
Agent to submit Premiums or applications to Company, or to
submit the correct amount of a Premium, on a timely basis and in
accordance with Schedule D of this Agreement and the Operations
Manual;
(v) any failure on the part of Broker/Dealer, Insurance Agent, or an
Agent to deliver Policies to purchasers thereof on a timely
basis and in accordance with Section 4 of this Agreement and the
Operations Manual; or
(vi) a breach by Broker/Dealer or Insurance Agent of any provision of
this Agreement;
16
(vii) the gross negligence or intentional act or omissions of
Insurance Agent or Broker/Dealer.
This indemnification will be in addition to any liability which
Broker/Dealer and Insurance Agent may otherwise have.
(b) AGSI and Company, jointly and severally, shall indemnify and hold
harmless Broker/Dealer and Insurance Agent and each person who
controls or is associated with Broker/Dealer or Insurance Agent within
the meaning of such terms under the federal securities laws, and any
officer, director, employee or agent of the foregoing, against any and
all losses, claims, damages or liabilities, joint or several
(including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of,
any action, suit or proceeding or any claim asserted), to which they
or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages or
liabilities arise out of or are based upon:
(i) violation(s) by AGSI or Company of federal or state securities
law or regulation(s), insurance law or regulation(s), or any
rule or requirement of the NASD;
(ii) unauthorized use of sales or advertising material, any oral or
written misrepresentations, or any unlawful sales practices
concerning the Policies, by AGSI or Company;
(iii) claims for unpaid commissions or other compensation or
remuneration of any type due to Broker/Dealer or Insurance
Agent;
(iv) a breach by AGSI or Company of any provision of this Agreement;
(v) the gross negligence or intentional acts or omissions of AGSI or
Company.
This indemnification will be in addition to any liability which AGSI
and Company, jointly and severally, may otherwise have.
(C) WARRANTY OF 21ST CENTURY COMPLIANCE. Company and AGSI warrant to use
their best efforts to ensure all software and hardware utilized by
Company or AGSI which affect the offering and servicing of the
Policies under this Agreement will be 21st Century Compliant.
17
"21st Century Compliant" shall be defined as software and hardware
systems and services that (i) correctly processed date fields and
internal date field dependent logic to accurately process and utilize
dates beyond December 31, 1999; and (ii) store and represent dates in
a manner which enables Company and AGSI (or Insurance Agent or
Broker/Dealer, if necessary) to easily identify or use the century
portion of any date fields without any special processing; (iii)
otherwise performs all 21st Century Compliant functions in regular
processing as required in order to perform the regular processing and
servicing of the Policies hereunder. Company and AGSI will indemnify
Insurance Agent and Broker/Dealer for any loss, cost, or liability
incurred by either or both arising from a failure to provide such 21st
Century Compliant software and hardware systems as required in this
Agreement. Notwithstanding the foregoing, Insurance Agent and
Broker/Dealer shall not be entitled to any recovery herein to the
extent that the damages are solely caused by Insurance Agent or
Broker/Dealer's failure to be 21st Century Compliant.
(d) TIME OF COMPLETION
(i) The parties to this Agreement desire that the Broker/Dealer and
Insurance Agent be authorized to solicit applications for the
sale of the Class of Policies relating to the One VUL Solution
product Policy to the general public at the earliest possible
time, subject to the terms and conditions set forth herein;
therefore, the parties hereto agree as follows:
(A) The Insurance Agent and the Broker/Dealer have approved all
of the terms and conditions of the One VUL Solution Product
Policy in the form that such policy exists as of September
20, 1999 and understand that any changes to such terms and
conditions requested by Insurance Agent, Broker/Dealer or as
required by law would cause a delay in the approval of
the Policy with the various state departments of insurance;
(B) The Company will file the appropriate pre-effective
registration statement regarding the One VUL Solution
product with the Securities and Exchange Commission no later
than September 20, 1999 and will use its best efforts to
have such registration statement declared effective within
120 days of filing;
(C) The Company will begin filing the One VUL Solution product
Policy with the appropriate state departments of insurance
no later than October 1, 1999 and will have completed all
initial filings by October 20, 1999, and will use its best
efforts
18
to obtain approvals of the Policy from the various state
departments of insurance as soon as possible;
(D) The One VUL Solution product will be issue ready at the
earliest possible time and in accordance with this
Agreement, but in no event later than February 15, 2000;
provided,however, that the Company and AGSI obtain all
necessary federal and state regulatory authority approvals
before February 8, 2000; that Insurance Agent and
Broker/Dealer use their best efforts in assisting the
Company in the development and implementation of the One VUL
Solution product; and that no other event beyond the
reasonable control of the Company and which has a material
effect on the ability of Company to carry out the terms of
the Agreement occurs that would delay the One VUL Solution
product from being issue ready on February 15, 2000.
(ii) The parties hereto understand and agree that Insurance Agent
will suffer damages in the event that the One VUL Solution
product is not issue ready on February 15, 2000; therefore, in
the event that the One VUL Solution product is not issue ready
on February 15, 2000, the Company will pay Insurance Agent, as
liquidated damages, an amount equal to $250,000 per Month
("Month" to be defined as each thirty day period) for such delay
(the "Delay Payment"); provided however, that the Company shall
not owe to Insurance Agent any Delay Payment if such delay is as
a result of (x) changes to the terms and conditions of the form
of the One VUL Solution product policy that exists as of
September 20, 1999 if such changes were requested by Insurance
Agent, Broker/Dealer or as required by law; (y) the Company's
inability to obtain all necessary federal and state regulatory
authority approvals before February 8, 2000; or (z) an event
that is beyond the reasonable control of the Company and which
has a material effect on the ability of Company to carry out the
terms of the Agreement has occurred.
(iii) The Delay Payment shall be pro-rated, if necessary, and the
total amount due for any one Month, including any pro-rated
amounts, shall be due and payable within five days after the end
of each Month. This provision for liquidated damages is solely
applicable to the failure by the Company to complete the work in
a timely manner and is not applicable to a breach or default by
the Company of any other provision of this Agreement.
(iv) The parties agree to use reasonable good faith efforts to
continue development of the One VUL Solution product as well as
modifications thereof which would enable Insurance
19
Agent to offer simplified issue to a greater number of
Customers, and as otherwise agreed to by the parties from time
to time.
(e) After receipt by a party entitled to indemnification ("indemnified
party") under this Section 12 of notice of the commencement of any
action, if a claim in respect thereof is to be made against any person
obligated to provide indemnification under this Section 12
("indemnifying party"), such indemnified party will notify the
indemnifying party in writing of the commencement thereof as soon as
practicable thereafter, provided that the omission so as to notify the
indemnifying party will not relieve it from any liability under this
Section 12, except to the extent that the omission results in a
failure of actual notice to the indemnifying party and such
indemnifying party is damaged as a result of the failure to give such
notice. The indemnifying party, upon the request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified
party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceedings. In
any such proceeding, any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of
both parties by the same counsel would be inappropriate due to actual
or potential differing interests between them. The indemnifying party
shall not be liable for any settlement of any proceeding effected
without its written consent, but if such proceeding is settled with
such consent or if final judgment is entered in such proceeding for
the plaintiff, the indemnifying party shall indemnify the indemnified
party from and against any loss or liability by reason of such
settlement or judgment.
13. Rights, Remedies, etc. are Cumulative. The rights, remedies and obligations
contained in this Agreement are cumulative and are in addition to any and
all rights, remedies and obligations, at law or in equity, which the parties
hereto are entitled to under state and federal laws. Failure of either party
to insist upon strict compliance with any of the conditions of this
Agreement shall not be construed as a waiver of any of the conditions, but
the same shall remain in full force and effect. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver
of any other provisions, whether or not similar, nor shall any waiver
constitute a continuing waiver.
20
14. NOTICES. All notices hereunder are to be made in writing and shall be given:
if to AGSI, to:
American General Securities Incorporated
Attention: Chief Compliance Officer
2727 Allen Parkway
Houston, Texas 77019
if to Company, to:
American General Life Insurance Company
Attention: General Counsel
2929 Allen Parkway
Houston, Texas 77019
if to Broker/Dealer, to: if to Insurance Agent, to:
Banc One Securities Corp. Banc One Insurance Services Corp
733 Greencrest Drive 111 East Wisconsin Avenue
Westerville, OH 43081 Milwaukee, WI 53202
Attention: _________________ Attention: Glen J. Milesko,
President & CEO
or such other address as such party may hereafter specify in writing. Each
such notice to a party shall be either hand delivered or transmitted by
registered or certified United States mail with return receipt requested,
and shall be effective upon delivery.
15. INTERPRETATION, JURISDICTION, ETC. This Agreement and any proprietary
variable universal life agreement constitute the whole agreement between the
parties hereto with respect to the subject matter hereof, and supersede all
prior oral or written understandings, agreements or negotiations between the
parties with respect to the subject matter hereof. No prior writings by or
between the parties hereto with respect to the subject matter hereof shall
be used by either party in connection with the
21
interpretation of any provision of this Agreement. Time is of the essence
with respect to any time periods or dates agreed upon in the Agreement. This
Agreement shall be construed and its provisions interpreted under and in
accordance with the internal laws of the State of Wisconsin without giving
effect to principles of conflict of laws.
16. CUSTOMER CONFIDENTIALITY:
(a) Company and AGSI agree that the names and addresses of all customers
and prospective customers of the Insurance Agent, Broker/Dealer, and
of Insurance Agent and Broker/Dealer's parent company and of any
Affiliated company which may come to the attention of the Company or
AGSI as the result of disclosure by Insurance Agent or Broker/Dealer
are confidential and will remain confidential for a period of two
years following termination of this Agreement, regardless of the cause
of termination. Such customer information shall not be used during
such time period, without the prior written consent of the Insurance
Agent, by Company or AGSI for any purpose whatsoever except as may be
necessary in connection with the administration and servicing of the
Policies sold by or through the Insurance Agent or Broker/Dealer
pursuant to this Agreement.
(b) In no event shall the names and addresses of such customers and
prospective customers be furnished by Company or AGSI to any other
company or person including, but not limited to: (1) any of its
managers, agents or brokers which are not associated with the
Insurance Agent or Broker/Dealer, (2) any company affiliated with
Company or AGSI or any manager, agent or broker of such company, or
(3) any securities broker-dealer or any insurance agent affiliated
with such broker-dealer, except as is necessary to effectuate the
terms of this Agreement (the parties referred to in subsections (1)-
(3) are hereinafter referred to as "Company Affiliates"). If such
information is furnished by Company or AGSI to Company Affiliates
pursuant to this section, the Company Affiliates must agree to treat
this information as confidential and will not use this information
except in accordance with this section. Company and AGSI and Company
Affiliates agree that they shall not solicit any customers whose names
it is agreed constitute confidential information pursuant to this
Section, except where this business is solicited for Insurance Agent
or Broker/Dealer, and is agreed to by Insurance Agent.
(c) The intent of this paragraph is that Company, AGSI and Company
Affiliates shall not utilize, or knowingly permit to be utilized, the
information, gained through this Agreement, of Insurance Agent,
Broker/Dealer or of its parent company or of any Affiliates or of the
customers of any of the foregoing for the solicitation of sales of any
product or service.
22
(d) Notwithstanding the above, Company and AGSI and Company Affiliates
shall be free to comply with any proper regulatory demand for
information which relates to this Agreement and Insurance Agent and
Broker/Dealer and to provide on a customary and routine basis,
communications which are sent, generally, by Company, AGSI or Company
Affiliates to its Policyholders.
(e) This section 16 shall survive termination of this Agreement.
17. SETOFFS; CHARGEBACKS. Broker/Dealer and Insurance Agent hereby authorize
AGSI and Company to set off from all amounts otherwise payable to
Broker/Dealer and Insurance Agent all liabilities of Broker/Dealer,
Insurance Agent or Agents. Broker/Dealer and Insurance Agent shall be
jointly and severally liable for the payment of all monies due to AGSI
and/or Company which may arise out of this Agreement or any other agreement
between Broker/Dealer, Insurance Agent and AGSI or Company including, but
not limited to, any liability for any chargebacks or for any amounts
advanced by or otherwise due AGSI or Company hereunder. AGSI and Company do
not waive any of their rights to pursue collection of any indebtedness owed
by Broker/Dealer or Insurance Agent or its Agents to AGSI or Company. In the
event AGSI or Company initiates legal action to collect any indebtedness of
Broker/Dealer, Insurance Agent or its Agents, Broker/Dealer and Insurance
Agent shall reimburse AGSI and Company for reasonable attorney fees and
expenses in connection therewith. [Neither AGSI nor the Company shall be
required to pay any commissions as compensation for the Policies in advance
of such compensation becoming due to Insurance Agent.
18. HEADINGS. The headings in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
19. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
20. SEVERABILITY. This is a severable Agreement. In the event that any
provision of this Agreement would require a party to take action prohibited
by applicable federal or state law or prohibit a party from taking action
required by applicable federal or state law, then it is the intention of the
parties hereto that such provision shall be enforced to the extent permitted
under the law, and, in any event, that all other provisions of this
Agreement shall remain valid and duly enforceable as if the provision at
issue had never been a part hereof.
23
21.MOST FAVORED CUSTOMER/EXCLUSIVITY.
(a) For the period covered by this Agreement, Company and AGSI agree to
treat Insurance Agent and Broker/Dealer as a most favored bank-
related insurance agency and broker/dealer. Company and AGSI agree
that they will not reassign staff to work on any other project to the
detriment of Insurance Agent or Broker/Dealer without consulting with
Insurance Agent or Broker/Dealer.
(b) Company and AGSI represent that the prices, terms, benefits,
warranties and payments, structures and features of the variable
universal life products authorized herein under this Agreement are
comparable to or better than terms of a similar nature offered by
Company or AGSI to any current bank-related insurance agency or
broker/dealer for a similar class of variable universal life products.
If, during the term of this Agreement, Company or AGSI offer an
arrangement not included in this Agreement for a similar class of
variable universal life products authorized herein to any other bank-
related insurance agent or broker/dealer which is similarly situated
to Insurance Agent providing such bank-related agency or broker/dealer
with more favorable terms, Company and AGSI agree the same or similar
arrangement will be offered if Insurance Agent and/or Broker/Dealer
meet or exceed the same criteria and this Agreement shall thereupon be
deemed amended to provide the same or similar terms or arrangement to
Insurance Agent and/or Broker/Dealer.
(c) Company and AGSI agree that the product design, features, benefits and
structure of the variable universal life product hereunder is
confidential to and proprietary to Insurance Agent. Accordingly,
Company and AGSI agree that they will not market and distribute the
variable universal life product designed under the program pursuant
to this Agreement either by themselves or through Company Affiliates,
associations and business partners. Insurance Agent and Broker/Dealer,
in turn, agree to use reasonable best efforts to promote the variable
universal life products available under this Agreement to generate
reasonable annual sales based on agreed upon production objectives.
22. The parties agree that the attached Schedule E shall be incorporated herein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
24
BANC ONE SECURITIES CORPORATION BANC ONE INSURANCE SERVICES
"Broker/Dealer" CORPORATION "INSURANCE AGENT"
By: By:
----------------------------- ------------------------------
Name: Name: Glen J. Milesko
---------------------------
(Printed Name)
Title: Title: President and CEO
--------------------------
Date: Date:
--------------------------- ----------------------------
AMERICAN GENERAL LIFE INSURANCE AMERICAN GENERAL SECURITIES
COMPANY INCORPORATED
By: By:
----------------------------- ------------------------------
Name: Name:
--------------------------- ----------------------------
(Printed Name) (Printed Name)
Title: Title:
-------------------------- ---------------------------
25
EXHIBITS FOR VARIABLE UNIVERSAL LIFE
SELLING AGREEMENT
Schedule A - Commissions Schedule
Schedule B - Principles and Code
Schedule C - Advertising Procedures
Schedule D - Net Premiums
Schedule E - Marketing and Customer Service Compliance Standards
26
SCHEDULE A
TO THE VARIABLE UNIVERSAL LIFE
SELLING AGREEMENT DATED ____________________AMONG BANC ONE SECURITIES
CORPORATION ("BROKER/DEALER"), BANC ONE INSURANCE SERVICES
CORPORATION ("INSURANCE AGENT"), AMERICAN GENERAL LIFE INSURANCE
COMPANY ("COMPANY")
AND
AMERICAN GENERAL SECURITIES INCORPORATED ("AGSI")
The Selling Agreement described above is hereby supplemented as provided in the
section titled "Commission Agreement," to define the current rate of gross
commissions payable on the authorized products shown below.
PRODUCTS
Insurance Agent's authority as a soliciting agent of the Company shall be for
the following product(s):
The One(R) VUL Solution/(SM)/
(Policy Form No. 99615)
COMMISSIONS
The Commissions Schedule below is subject to the terms and conditions of the
Agreement to which it is attached. In no event shall the Company be liable for
payment of any commissions with respect to any solicitation made, in whole or in
part, by any person not appropriately licensed and appointed prior to the
commencement of the solicitation.
1. ANNUAL COMMISSIONS TO BE PAID TO INSURANCE AGENCY.
(a) FOR A POLICY ISSUED BASED ON SIMPLIFIED UNDERWRITING.
For a Policy issued based on simplified underwriting, compensation
will be paid based on either (i) Percent of Premium or (ii) Policy
Accumulation Value (Trail).
(i) Compensation based on Percent of Premium.
. 6% of premiums paid
(ii) Compensation based on Accumulation Value.
. Non-Modified Endowment Contract Policies. Beginning with
1
the first Policy year, a trail commission of 1.20% of each
Policy's accumulation value (reduced by any outstanding
loans), in the variable investment options. The trail
commission will be reduced by 0.25% beginning in Policy Year
11. Thus, the schedule in effect is as follows: (i) 1.20% of
each Policy's accumulation value (reduced by any outstanding
loans) in the variable investment options for Policy years 1
through 10; and (2) 0.95% of each Policy's accumulation value
(reduced by any outstanding loans) in the variable investment
options for Policy years 11 through 15.
. Modified Endowment Contract Policies. Beginning with the
first Policy year, a trail commission of 1.20% of each
Policy's accumulation value (reduced by any outstanding
loans), in the variable investment options. The trail
commission will be reduced by 0.15% beginning in Policy Year
6. Thus, the schedule in effect is as follows: (i) 1.20% of
each Policy's accumulation value (reduced by any outstanding
loans) in the variable investment options for Policy years 1
through 5; and (2) 1.05% of each Policy's accumulation value
(reduced by any outstanding loans) in the variable investment
options for Policy years 6 through 10.
(b) FOR A POLICY ISSUED BASED ON FULL UNDERWRITING.
For a Policy issued based on full underwriting, compensation will be paid
based on either (i) Percent of Premium or (ii) Policy Accumulation Value
(Trail),
(i) Compensation based on Percent of Premium.
. 6% of premiums paid in the first Policy year through Policy
Year 3 up to the Target Premium; and
. 3% of premiums paid in Policy years 4+ up to the Target
Premium.
(ii) Compensation based on Accumulation Value. Beginning with the
first Policy year, a trail commission of 2.50% of each Policy's
accumulation value (reduced by any outstanding loans), in the
variable investment options. The trail commission will be reduced by
1.50% beginning in Policy year 2, with further reductions of 0.50% in
Policy year 11 and 0.25% in Policy year 21. Thus, the schedule in
effect is as follows: (i) 2.50% of each Policy's accumulation value
(reduced by any outstanding loans) in the variable investment options
for Policy year 1; (ii) 1.00% of each Policy's accumulation value
(reduced by any outstanding loans) in the variable investment options
for Policy years 2 through 10; (iii) 0.50% of each Policy's
accumulation value (reduced by any outstanding loans) in the variable
investment options for Policy years 11
2
through 20; and (iv) 0.25% of each Policy's accumulation value
(reduced by any outstanding loans) in the variable investment options
for Policy years 21+.
2. CHARGEBACKS.
The following commission chargebacks shall apply on Policy surrender:
. 100% of commissions paid on a Policy surrendered during the first Policy
year; and
. 75% of commissions paid on a Policy surrendered during the second Policy
year.
This commission chargeback schedule shall only apply to compensation paid based
on percent of premium.
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 American General Life Target Premium schedules. The Company 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 the Company.
4. TRAIL COMMISSIONS: WHEN PAID.
The annual trail commissions, as set forth in above, are calculated on a
quarterly basis and are 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 November 1, 1999, the first
trail payment is based on the unloaned accumulation value as of February 1,
2000, but is not payable until the calendar quarter ending March 31, 2000,
and mailed shortly thereafter.
5. CHANGE OF BROKER-DEALER.
A Policy owner may elect to change representation to another broker-dealer
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 broker-dealer.
6. GUIDELINES AND COMMISSIONS ON INTERNAL EXCHANGES.
Generally, no commissions will be earned on the initial exchange of any
Company contract or any contract issued by a company which is affiliated
with the Company for The One(R) VUL Solution/(sM)./ All subsequent premium
payments will receive commissions calculated in accordance with the
administrative rules established by the Company in its sole discretion and
in effect at the time of the exchange.
EFFECTIVE DATE:
This SCHEDULE A shall be effective for authorized products sold on and after
__________________________, and shall continue in effect until amended,
supplemented, or superseded by written agreement of all the parties.
Acknowledged and Agreed:
3
BANC ONE SECURITIES CORPORATION BANC ONE INSURANCE SERVICES, INC.
By: By:
----------------------------- ------------------------------
Name: Name:
--------------------------- ----------------------------
(Printed Name) (Printed Name)
Title: Title:
-------------------------- ---------------------------
AMERICAN GENERAL LIFE INSURANCE AMERICAN GENERAL SECURITIES
COMPANY INCORPORATED
By: By:
----------------------------- ------------------------------
Name: Name:
--------------------------- ----------------------------
(Printed Name) (Printed Name)
Title: Title:
-------------------------- ---------------------------
4
SCHEDULE B
AMERICAN GENERAL LIFE INSURANCE COMPANY
PRINCIPLES AND CODE OF ETHICAL MARKET CONDUCT
DATED JUNE 24, 1997
NOTE: The principles appear in bold. The remaining text constitutes the code.
1. AMERICAN GENERAL LIFE INSURANCE COMPANY WILL CONDUCT BUSINESS ACCORDING TO
HIGH STANDARDS OF HONESTY AND FAIRNESS AND WILL RENDER THAT SERVICE TO THEIR
CUSTOMERS WHICH, IN THE SAME CIRCUMSTANCES, THEY WOULD APPLY TO OR DEMAND FOR
THEMSELVES.
To conduct business according to high standards of honesty and fairness,
American General Life Insurance Company will implement policies and
procedures designed to provide reasonable assurance that:
a. Insofar as individual products or those marketed on an individual basis
are concerned, American General's distributors make reasonable efforts to
determine the insurable needs or financial objectives of American
General's customers based upon relevant information obtained from the
customer and enter into transactions which assist the customer in meeting
his or her insurable needs or financial objectives.
b. American General maintains compliance with applicable laws and
regulations.
c. In cooperation with consumers, regulators and others, American General
affirmatively seeks to improve the practices for sales and marketing of
life and annuity products.
d. The Principles of Ethical Market Conduct are reflected in American
General's policies and practices.
2. AMERICAN GENERAL LIFE INSURANCE COMPANY WILL PROVIDE COMPETENT AND CUSTOMER-
FOCUSED SALES AND SERVICE.
To provide for competent sales and services of life and annuity products,
American General Life Insurance Company will develop policies and procedures
designed to provide reasonable assurance that:
a. American General's distributors are of good character and business
repute, and have appropriate qualifications and training.
b. American General's distributors are duly licensed or otherwise qualified
under state law.
c. American General's distributors and employees involved in the sales
process are adequately trained, as appropriate to American General's
distribution system, to focus on customers' needs and objectives.
d. American General's distributors have adequate knowledge of American
General's products and their operation.
e. American General's distributors and employees involved in the sales
process are trained, as appropriate to its distribution system, in the
need to comply with applicable insurance laws and regulations and the
concepts in the Principles and Code of Ethical Market Conduct.
f. American General's distributors and employees involved in the sales
process participate, as appropriate to American General's distribution
system, in continuing education.
3. AMERICAN GENERAL LIFE INSURANCE COMPANY WILL ENGAGE IN ACTIVE AND FAIR
COMPETITION.
American General Life Insurance Company is committed to competition as the
most effective and efficient means of providing products and services to
customers. Competition is also the most efficient regulator of activities. To
maintain and enhance competition in the marketplace for life and annuity
products, American General will develop policies and procedures designed to
provide reasonable assurance that:
a. American General maintains compliance with applicable state and federal
laws fostering fair competition.
b. American General's distributors do not replace existing life insurance
policies and annuity policies without first communicating to the
customer, in a manner consistent with Principle 4, information that he or
she needs in order to ascertain whether such replacement of existing
policies or contracts may or may not be in his or her best interest.
c. American General's distributors and employees involved in the sales
process refrain from disparaging competitor insurers.
4. AMERICAN GENERAL LIFE INSURANCE COMPANY WILL PROVIDE ADVERTISING AND SALES
MATERIALS THAT ARE CLEAR AS TO PURPOSE AND HONEST AND FAIR AS TO CONTENT.
To provide sales and advertising materials which are clear as to purpose and
honest and fair as to content, American General Life Insurance Company will
develop policies and procedures designed to provide reasonable assurance
that:
a. Presentation of any material designed to lead to sales or solicitation of
life and annuity products is done in a manner consistent with the best
interests of the customer. All such sales or solicitation communications
should be based upon the principles of fair dealing and good faith, and
will have a sound basis in fact.
b. Materials presented as part of a sale are comprehensible in light of the
complexity of the product being sold.
c. American General maintains compliance with applicable laws and
regulations related to advertising, unfair trade practices, sales
illustrations, and other similar provisions.
d. Illustrations of premiums and considerations, costs, values, and benefits
are accurate and fair, and contain appropriate disclosure of amounts
which are not guaranteed and those which are guaranteed in the policy or
contract.
2
5. AMERICAN GENERAL LIFE INSURANCE COMPANY WILL PROVIDE FOR FAIR AND EXPEDITIOUS
HANDLING OF CUSTOMER COMPLAINTS AND DISPUTES.
To resolve any complaints and disputes that may arise concerning market
conduct, American General Life Insurance Company will develop policies and
procedures designed to provide reasonable assurance that:
a. Complaints are identified, evaluated, and handled in compliance with
applicable state law and regulations related to consumer complaint
handling.
b. Good faith efforts are made to resolve complaints and disputes without
resorting to civil litigation.
6. AMERICAN GENERAL LIFE INSURANCE COMPANY WILL MAINTAIN A SYSTEM OF SUPERVISION
AND REVIEW THAT IS REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THESE
PRINCIPLES OF ETHICAL MARKET CONDUCT.
American General Life Insurance Company will develop or assign
responsibilities designed to provide reasonable assurance, as appropriate to
American General's size and distribution system, that:
a. American General establishes and enforces policies and procedures
reasonably designed to comply with the Principles and Code of Ethical
Market Conduct.
b. There is an adequate system of supervision of the market activities of
its distributors and employees involved in the sales process in order to
monitor their compliance with these Principles and Code and applicable
laws and regulations.
c. Compliance training sessions are conducted for employees involved in the
sales process and instruction on American General's compliance
requirements is made available to all distributors.
d. Policies and procedures provide for auditing and monitoring of
information related to sales practices of its employees involved in the
sales process and distributors.
3
SCHEDULE C
AMERICAN GENERAL LIFE INSURANCE COMPANY ("COMPANY")
ADVERTISING PROCEDURES
ADVERTISING GENERALLY INCLUDES:
(a) printed or published materials;
(b) audiovisual material and descriptive literature;
(c) newspaper, radio, television, and billboard ads;
(d) prepared sales talks;
(e) sales presentations;
(f) illustrations and form letters;
(g) representations made by agents;
(h) circulars and leaflets;
(i) letters of solicitation;
(j) direct mail solicitations;
(k) telephone solicitation, both inbound and outbound;
(l) web sites;
(m) any material used to sell, retain, or modify an insurance policy; and
(n) material used for the recruitment, training, and education of Company's
personnel and agents that is designed to be used or is used to induce the
public to purchase, increase, modify, reinstate, borrow on, surrender,
replace or retain a policy.
ADVERTISING GENERALLY DOES NOT INCLUDE:
(a) interorganizational materials used by an insurer and not for public
distribution;
(b) communications with policyholders other than materials urging policyholders
to purchase, increase, modify, or retain a policy;
(c) a general announcement sent by a group policyholder to members of the
eligible group that a policy has been written or arranged;
(d) correspondence between a prospective group policyholder and an insurer in
the course of negotiating a group Policy;
(e) materials used solely for the recruitment, training, and education of an
insurer's personnel and agents provided that the material does not induce
the public to purchase, increase, modify or retain a policy of insurance.
ALL ADVERTISEMENTS MUST:
(a) Not be misleading, confusing, or deceptive;
(b) Must be factually accurate;
(c) Clearly identify the full name of the insurer;
(d) Make clear that insurance is the subject of the solicitation;
(e) Clearly identify the type of insurance being sold;
(f) Not give the appearance of selling stock or other securities;
(g) Except for variable products, not give the appearance of being a
solicitation of or by an investment department;
(h) Not state that the policy is available for a limited time only, unless such
is truly the case;
1
(i) Include policy form numbers if a specific policy is advertised (place in
bottom right corner);
(j) Include a Control Number designation with blank to be completed by Company,
in bottom left corner. (This indicates Company's approval of the ad.);
(k) Conform to Associated Press (AP) style;
(l) Indicate that available endorsements and/or riders may be subject to
additional costs, if such is true;
(m) Verify that all testimonials, appraisals and analyses are genuine;
(n) Not state, imply or create an impression that the insurer is recommended by
U. S. Government or any state or other governmental agency;
(o) Not advertise benefits that do not match the policy benefits contained in
the Policy;
(p) Not disparage competitors, their policies, services, business methods, or
practices;
(q) Not make inaccurate comparisons with competitors;
(r) Not make unfair or incomplete comparisons of policies, benefits, dividends,
or rates;
(s) Not include the term "savings," "investment," "investment plan," "savings
plan," "interest plan," "founders plan," "dividends," "cash dividends,"
"surplus," "units of participation," "profit sharing," or "charter plan" to
imply that the product advertised is something other than insurance;
(t) Not refer to premiums as deposits, savings, or contributions, unless the
use of these terms is not misleading in the context in which they are used;
(u) Not imply that policyholders are part of an introductory, initial or
special offer, unless such is truly the case;
(v) Not indicate that the agent is a financial planner, investment adviser, or
other expert unless the agent has appropriate credentials to support such a
statement;
REQUIRED DISCLOSURES:
(a) All policy benefits advertised must include limitations and exclusions;
(b) The guaranteed rate must be disclosed with EQUAL PROMINENCE if the current
rate is displayed, if advertising is to be used in states that require
equal prominence (see attached list for current list of states);
(c) If rates are advertised, the time period during which they will be offered
must be included;
(d) Ads which are invitations to contract or which describe the policy features
must disclose all expenses and policy fees (including but not limited to
surrender charges and 10% federal income tax penalty for withdrawals of
interest prior to age 59 1/2);
(e) Ads for products offered through financial institutions must include the
OCC disclosure:
----------------------------
|NOT | MAY LOSE VALUE|
|FDIC- | NO BANK |
|INSURED | GUARANTEE |
----------------------------
This disclosure should be at least as large as the text describing the
financial institution's investment products. The disclosure should appear
on the cover of the brochure or on the first part of the relevant written
text;
(f) Ads must clearly identify the company selling the insurance product and not
suggest that a financial institution or other entity is the seller;
(g) Advertisements containing insurer ratings must identify the scope/extent of
the ratings;
(h) Any use of the word "guaranteed" must be accompanied by a statement that
clearly identifies what is guaranteed and by whom;
2
(i) Printed product advertisements that will be distributed exclusively in
California must include the individual agent's or the agency's California
license number. The license number must be the same size as the telephone
or fax number or address printed on the advertisement;
(j) Advertisements that will be distributed in Florida must include the name of
the Florida licensed soliciting agent. This requirement may be satisfied by
attaching the agent's business card to the advertisement.
APPROVAL AND SUBMISSION PROCEDURES:
All advertising materials referencing Company or an annuity or insurance product
issued by Company must be approved in writing by Company prior to use. All
requests for written consent of advertisement must be forwarded to:
American General Life Insurance Company
Attn: Theresa Jacoby
2929 Allen Parkway
Houston, TX 77019
Please allow for 10 business days' turnaround from the time that the request for
written consent is received by Company.
STATES THAT REQUIRE EQUAL PROMINENCE IN ADVERTISING:
Alabama Maryland North Carolina
Florida Michigan North Dakota
Georgia Missouri Oklahoma
Indiana Nebraska South Dakota
Iowa Nevada Texas
Kansas New Mexico Washington
Louisiana New York Wisconsin
Note: In Minnesota, you cannot advertise the interest rate unless the effective
net annual yield is disclosed in an equally prominent manner.
3
SCHEDULE D
TO THE
VARIABLE UNIVERSAL LIFE
SELLING AGREEMENT
DATED ____________________
AMONG
BANC ONE SECURITIES CORPORATION ("BROKER/DEALER"),
BANC ONE INSURANCE SERVICES CORPORATION ("INSURANCE AGENT"),
AMERICAN GENERAL LIFE INSURANCE COMPANY ("COMPANY")
AND
AMERICAN GENERAL SECURITIES INCORPORATED ("AGSI ")
The Selling Agreement described above is hereby supplemented as provided in the
section titled "Interests in Agreement," to define the current method of
accounting and payment requirements of the Company.
Insurance Agent and/or Broker/Dealer agrees to render to Company or its
designated third-party administrator ("TPA") detailed policy transaction reports
identifying the insured, Policy number, premium amount, and such other specific
data as Company may request.
Insurance Agent and/or Broker/Dealer agrees to provide Company or its TPA with
Policy transaction reports via submission of properly completed Daily Premium
Reports and copies of applications for all Policies issued.
Insurance Agent and/or Broker/Dealer agrees to deposit the gross premiums
hereunder in Company's designated accounts established at Banc One branches no
later than the close of each business day for business issued on the business
day last preceding the date of the Daily Premium Report. Such Company
designated accounts shall be established solely for the Company products on
Schedule A to the Selling Agreement described herein, and shall be separate from
any accounts set up by any affiliates of the Company.
Insurance Agent and Broker/Dealer agree that no maintenance fees, service
charges, or any other fees or charges will be assessed against Company by Agent
and Broker/Dealer; however any applicable fees from other affiliates of
Insurance Agent and Broker/Dealer will not be waived.
Insurance Agent and Broker/Dealer agree that neither Insurance Agent nor
Broker/Dealer is authorized to issue checks on Company's account.
This Schedule D shall in no way provide for gross premiums received, hereunder,
in Company's designated accounts to be netted against any payable compensation
as set forth in Schedule A to the Selling Agreement described herein.
EFFECTIVE DATE:
This SCHEDULE D shall be effective for authorized products sold on and after
___________________________, and shall continue in effect until amended,
supplemented, or superseded.
Acknowledged and Agreed:
"BROKER/DEALER" "INSURANCE AGENT"
BANC ONE SECURITIES CORPORATION BANC ONE INSURANCE SERVICES CORPORATION
By: By:
------------------------------ -------------------------------
Name: Name:
---------------------------- -----------------------------
(Printed Name) (Printed Name)
Title: Title:
--------------------------- ----------------------------
AMERICAN GENERAL LIFE INSURANCE AMERICAN GENERAL SECURITIES
COMPANY INCORPORATED
By: By:
------------------------------ -------------------------------
Name: Name:
---------------------------- -----------------------------
(Printed Name) (Printed Name)
Title: Title:
--------------------------- ----------------------------
2
INSERT
SCHEDULE E
MARKETING AND CUSTOMER SERVICE
COMPLIANCE STANDARDS
American General Life Insurance Company ("Company"), Banc One Securities
Corporation ("Broker/Dealer"), and Banc One Insurance Services Corporation
("Insurance Agent") acknowledge that marketing insurance products through
financial institutions presents unique customer service and compliance
challenges. Primarily, in marketing insurance products through financial
institutions the Company, Broker/Dealer and Insurance Agent must ensure that
their clients understand that they are purchasing an insurance product
underwritten by the Company and not an FDIC insured financial institution
product. Secondly, the Company, Broker/Dealer and Insurance Agent recognize
that the insurance products made available in the financial institution market
are typically purchased by older consumers. The Company, Broker/Dealer and
Insurance Agent must ensure that their insurance purchasing clients understand
the nature and terms of the insurance product they are considering. Further,
the Company, Broker/Dealer and Insurance Agent must exercise reasonable care to
ensure that the insurance product purchased by the client is suitable for that
particular client. The Company, Broker/Dealer and Insurance Agent recognize and
understand these compliance and customer services challenges. Company,
Broker/Dealer and Insurance Agent accept the responsibility of appropriately
servicing the financial institution markets and have established the following
compliance and customer service standards ("Standards").
The Standards discussed below are intended to establish a criteria to allow the
Company, Broker/Dealer and Insurance Agent to present a level of customer
service and compliance to their customers that should be expected of insurance
product providers in the financial institution market.
These Standards have been established consistent with and in furtherance of
Company's commitment to conducting itself with the highest standards of
responsibility and upholding its values: people make the difference,
straightforward communication, commitment to integrity, and energy and drive to
succeed.
These Standards should be read as supplementary to the terms and conditions of
the Variable Universal Life Selling Agreement ("Agreement") and the schedules
attached thereto. If there is any conflict between the language in the
Standards and the terms and conditions of the Agreement, the terms and
conditions of the Agreement will control, specifically the Insurance Agents'
Duties and Responsibilities in Section 4 of the Agreement.
STANDARD 1: COMPANY, BROKER/DEALER AND INSURANCE AGENT WILL PROVIDE EFFECTIVE
AND EFFICIENT CUSTOMER SERVICE.
. Company, Broker/Dealer and Insurance Agent acknowledge that they must
provide exemplary customer service to customers.
. Company, Broker/Dealer and Insurance Agent will respond to all customer
inquiries and complaints as quickly as practical so to provide customers with
a meaningful response.
. Company, Broker/Dealer and Insurance Agent will, in responding to customer
inquiries and complaints, utilize straightforward communication in addressing
that customers' inquiry or complaint.
. Insurance Agent will, when appropriate, direct customer inquiries and
complaints directly to Company for response and not advise customers to
address inquiries or complaints to state or federal
2
regulators.
. Insurance Agent will work with Company to promptly obtain and remit all
information required to provide a complete response to a customer complaint
or inquiry.
STANDARD 2: COMPANY, BROKER/DEALER AND INSURANCE AGENT WILL ONLY SELL A
CUSTOMER PRODUCTS THAT MEET THE CUSTOMER'S FINANCIAL AND INSURANCE NEEDS.
. Company, Broker/Dealer and Insurance Agent will sell an insurance product
to a customer only after conducting a thorough review of the customers'
insurance needs and determining that the insurance product recommended meets
that customer's need.
. Insurance Agent will establish procedures to ensure that its selling
representative utilizes appropriate suitability tools to determine if an
insurance product is acceptable for the customer.
. Company will refund to the customer all premium payments received by
Company if it is later determined that an insurance product sold to a
customer did not meet the customer's stated needs. Such refunds shall be made
under applicable Company policies and procedures.
. If the Company refunds the customer's premium payments because it is
determined that the insurance product did not meet the customer's stated
needs the Insurance Agent will refund to Company all commissions earned by
Insurance Agent for the sale of that insurance product in compliance with the
Company's chargeback policies and procedures which shall not be contrary to
the terms of this Agreement.
STANDARD 3: THE COMPANY, BROKER/DEALER AND INSURANCE AGENT WILL ONLY MARKET
THROUGH QUALIFIED SALES REPRESENTATIVES.
. Insurance Agent will provide to Company a certification that it has
conducted background checks of each individual selling representative to
verify that they are qualified to be appointed to the Company pursuant to all
state and federal requirements including, the Federal Violent Crime Control
and Law Enforcement Act of 1994.
STANDARD 4: THE COMPANY, BROKER/DEALER AND INSURANCE AGENT WILL ONLY MARKET
THROUGH TRAINED SALES REPRESENTATIVES.
. Insurance Agent will provide to Company a certification that it has
provided to its sales representatives sufficient and adequate training with
regard to the insurance products the Insurance Agent markets and compliance
issues relevant to those insurance products and the financial institution
market. Included in this training will be instruction addressing issues
specifically relating to insurance sales to older customers.
STANDARD 5: THE COMPANY, BROKER/DEALER AND INSURANCE AGENT WILL MONITOR THE
SALES PROCESS.
To ensure compliance with Company and state and federal regulatory and IMSA
requirements:
. Company, Broker/Dealer and Insurance Agent will allow each other to
conduct reasonable audits of their respective marketing and operations area.
3