Exhibit 3(a)
SELLING GROUP AGREEMENT BY AND AMONG AMERICAN GENERAL
SECURITIES INCORPORATED, THE UNITED STATES LIFE
INSURANCE COMPANY IN THE CITY OF NEW YORK,
___________________________________, AND
__________________________________________
This Selling Group Agreement ("Agreement") is made by and among AMERICAN GENERAL
SECURITIES INCORPORATED ("AGSI") a Texas corporation, THE UNITED STATES LIFE
INSURANCE COMPANY IN THE CITY OF NEW YORK ("USL"), a New York domiciled life
insurance company, ____________________________ ("Selling Group Member"), a
___________ corporation and __________________________ ("Associated Agency"), a
__________________ corporation.
RECITALS
WHEREAS, USL is a wholly owned indirect subsidiary of AMERICAN GENERAL
CORPORATION ("AGC"), a Texas corporation;
WHEREAS, AGSI is a wholly owned indirect subsidiary of AGC;
WHEREAS, USL and AGSI are affiliates under the ultimate common control of AGC
pursuant to the insurance laws of the State of New York;
WHEREAS, USL and AGSI are parties to a Distribution Agreement whereby USL has
granted AGSI a non-exclusive right to promote the sale of USL products set forth
in Schedule A;
WHEREAS, the Distribution Agreement described herein has been non-disapproved by
the New York Insurance Department;
WHEREAS, Selling Group Member and the Associated Agency are not affiliates of
USL or AGSI;
WHEREAS, AGSI, USL, Selling Group Member and the Associated Agency wish to enter
into this Agreement for the purpose of providing for the distribution of certain
variable life insurance policies and/or annuity contracts;
NOW THEREFORE, in consideration of the premises and mutual promises set forth
herein, and intending to be legally bound hereby, the parties agree as follows:
1. PRODUCT DISTRIBUTION. Subject to the terms, conditions and limitations of
--------------------
this Agreement, the products sold under this Agreement shall be distributed
in accordance with this section.
(a) Designation of the Parties.
--------------------------
AGSI is a registered broker-dealer and distributor of the variable life
insurance policies and/or annuity contracts or certificates set forth in
Schedule A.
USL is a New York licensed life insurance company issuing the variable
products set forth on Schedule A and any successor or additional products
registered with the Securities and Exchange Commission (the "SEC") and
approved by the New York Insurance Department (as discussed in Paragraph
(c) of this section entitled "NEW PRODUCTS") and shall be collectively
referred to herein as the "Contracts."
Selling Group Member is registered with the SEC as a broker-dealer under
the Securities Exchange Act of 1934 ("1934 Act") and under any appropriate
regulatory requirements of state law and is a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD"), unless
Selling Group Member is exempt from the broker-dealer registration
requirements of the 1934 Act.
Selling Group Member has NASD registered representatives who will
distribute the Contracts.
The Associated Agency is a New York licensed insurance agency and is
appointed by USL as an agent of USL with the New York Insurance Department.
The relationship between the Associated Agency and USL is that of an
independent contractor.
The NASD registered representatives affiliated with Selling Group Member
are also New York licensed insurance agents of the Associated Agency and
are appointed by USL as agents of USL with the New York Insurance
Department ("Sales Persons"). The relationship between the Sales Persons
and Selling Group Member and the Sales Persons and USL is that of
independent contractor.
AGSI hereby appoints Selling Group Member and the Sales Persons to solicit
and procure applications for the Contracts.
The appointment by AGSI of Selling Group Member and the Sales Persons and
the appointment by USL of the Associated Agency and the Sales Persons for
the sale of these Contracts is not to be deemed exclusive in any manner and
only extends to New York sales of the Contracts.
2
(b) Responsibilities Of The Parties/Compliance.
------------------------------------------
(i) SELLING GROUP MEMBER/SALES PERSONS.
----------------------------------
Selling Group Member shall be responsible for the sales activities of
the Sales Persons and shall exercise supervisory oversight over the
Associated Agency and the Sales Persons with respect to the offer and
sale of the Contracts.
Selling Group Member shall be solely responsible for the approval of
suitability determinations for the purchase of any Contract or the
selection of any investment option thereunder, in compliance with
federal and state securities laws and shall supervise the Associated
Agency and the Sales Persons in determining client suitability.
Selling Group Member shall hold USL and AGSI harmless from any
financial claim resulting from improper suitability decisions or
failure to supervise the Associated Agency and the Sales Persons in
accordance with federal securities laws and NASD regulation.
Selling Group Member will fully comply with the requirements of the
NASD and of the 1934 Act and such other applicable federal and state
laws and will establish rules, procedures and supervisory and
inspection techniques necessary to diligently supervise the activities
of the Sales Persons in connection with offers and sales of the
Contracts. Such supervision shall include, but not be limited to
providing, or arranging for, initial and periodic training in
knowledge of the Contracts. Upon request by AGSI or USL, Selling Group
Member will furnish appropriate records as are necessary to establish
diligent supervision and client suitability.
Selling Group Member shall incur all costs associated with registering
and complying with the various rules of the SEC and the NASD relating
to broker-dealers.
Selling Group Member shall fully cooperate in any insurance or
securities regulatory examination, investigation, or proceeding or any
judicial proceeding with respect to USL, AGSI, Selling Group Member
and the Associated Agency and their respective affiliates, agents and
representatives to the extent that such examination, investigation, or
proceeding arises in connection with the Contracts. Selling Group
Member shall immediately notify AGSI if its broker-dealer registration
or the registration of any of its Sales Persons is revoked, suspended
or terminated.
3
The Sales Persons shall be the only parties involved in the
solicitation, negotiation or procurement of the Contracts. All
correspondence relating to the sale of the Contracts will be
between USL, the Associated Agency, the Sales Persons and the
prospective purchaser.
The Sales Persons are authorized to collect the first purchase
payment or premium (collectively "Premiums") on the Contracts.
The Sales Persons will in turn remit the entire Premiums to USL.
The Sales Persons shall take applications for the Contracts only
on preprinted applications supplied to them and/or the Associated
Agency by USL. All completed applications and supporting
documents are the sole property of USL and shall be retained by
or on behalf of USL in accordance with New York Insurance
Regulation 152.
(ii) THE ASSOCIATED AGENCY/SALES PERSONS.
-----------------------------------
The Associated Agency is authorized to recommend Sales Persons
for appointment by USL to solicit sales of the Contracts. The
Associated Agency warrants that all such Sales Persons shall not
commence solicitation nor aid, directly or indirectly, in the
solicitation of any application for any Contract until that Sales
Person is appropriately licensed and appointed by USL to sell the
Contracts. Associated Agency shall be responsible for all fees
required to obtain and/or maintain any licenses or registrations
required by New York Insurance Law. Associated Agency will fully
comply with the requirements of New York Insurance Law and
Regulations.
Associated Agency shall fully cooperate in any insurance or
securities regulatory examination, investigation, or proceeding
or any judicial proceeding with respect to USL, AGSI, Selling
Group Member and Associated Agency and their respective
affiliates, agents and representatives to the extent that such
examination, investigation, or proceeding arises in connection
with the Contracts. Associated Agency shall immediately notify
AGSI if its insurance license or the license of any of its Sales
Persons is revoked, suspended, or terminated.
The Sales Persons shall complete a "Definition of Replacement
Form" with each application for the Contracts. The "Definition of
Replacement Form" shall be signed by the Sales Persons and each
applicant and the Sales Persons shall leave a copy of the form
with the applicant for his or her records. The Sales Persons
shall attach the completed and signed "Definition of Replacement
Form" to each application for the Contracts. Where the purchase
of one of the Contracts will result in, or is likely to result
in, a
4
replacement, the Sales Persons shall comply in all respects with
New York Insurance Regulation 60.
(iii) USL.
---
USL will determine in its sole discretion whether to accept and
issue Contracts submitted to USL by the Sales Persons.
USL will return any incomplete applications to the Sales Persons.
USL will provide the Sales Persons with all policy forms, the
"Definition of Replacement Form" and any other regulatory forms
required to be completed in connection with the Contracts.
USL will inform the Associated Agency, the Sales Persons and
Selling Group Member regarding any limitations on the
availability of the Contracts in New York.
USL represents that the prospectus(es) and registration
statement(s) relating to the Contracts contain no untrue
statements of material fact or omission of a material fact, the
omission of which makes any statement contained in the prospectus
and registration statement materially false or misleading. USL
agrees to indemnify Associated Agency and Selling Group Member
from and against any claims, liabilities and expenses which may
be incurred by any of those parties under the Securities Act of
1933, the 1934 Act, the Investment Act of 1940, common law, or
otherwise, that arises out of a breach of this paragraph.
(iv) AGSI.
----
AGSI is authorized by USL to offer the Contracts to Selling Group
Member for sale by the Sales Persons through the Distribution
Agreement described herein.
(c) New Products.
------------
USL and AGSI may propose and USL may issue additional or successor
products, in which event Selling Group Member, the Associated Agency and
the Sales Persons will be informed of the product and its related
Commission schedule. If Selling Group Member and the Associated Agency do
not agree to distribute such product(s), they must notify AGSI in writing
within 10 days of receipt of the Commission Schedule for such product(s).
If Selling Group Member and the Associated Agency do not indicate
disapproval of the new product(s) or the terms contained in the related
Commission Schedule, Selling Group Member and the
5
Associated Agency will be deemed to have thereby agreed to distribute such
product(s) and agreed to the related Commission Schedule which shall be
attached to and made a part of this Agreement.
(d) Sales Material/Books and Records.
--------------------------------
The Associated Agency, Selling Group Member and Sales Persons shall not
utilize, in their efforts to market the Contracts, any written brochure,
prospectus, descriptive literature, printed and published material, audio-
visual material or standard letters unless such material has been provided
preprinted by USL or unless USL has provided prior written approval for the
use of such literature. In accordance with New York Insurance Law
Regulation 152, the Associated Agency and/or Selling Group Member shall
maintain complete records indicating the manner and extent of distribution
of any such solicitation material, shall make such records and files
available to USL and/or AGSI and shall forward such records to USL and
AGSI. Additionally, Selling Group Member and/or the Associated Agency shall
make such material available to personnel of state insurance departments,
the NASD or other regulatory agencies, including the SEC, which may have
regulatory authority over USL or AGSI. The Associated Agency and Selling
Group Member jointly and severally hold USL, AGSI and their affiliates
harmless from any liability arising from the use of any material which
either (i) has not been specifically approved in writing by USL, or (ii)
although previously approved, has been disapproved by USL in writing for
further use.
Selling Group Member will reflect all sales of the Contracts by the
Associated Agency and the Sales Persons on the books and records of Selling
Group Member. Selling Group Member hereby designates the principal place of
business of the Associated Agency as an Office of Supervisory Jurisdiction
of Selling Group Member.
(e) Prospectuses.
------------
Selling Group Member warrants that solicitation for the sale of the
Contracts will be made by use of a currently effective prospectus, that a
prospectus will be delivered con-currently with each sales presentation and
that no statements shall be made to a client superseding or controverting
any statement made in the prospectus. USL and AGSI shall furnish Selling
Group Member and the Associated Agency, at no cost to Selling Group Member
or the Associated Agency, reasonable quantities of prospectuses to aid in
the solicitation of Contracts.
2. COMPENSATION.
------------
USL will remit to the Associated Agency all compensation set forth in
Schedule B annexed hereto. USL will not accept or otherwise honor any
assignment of
6
compensation by the Associated Agency in connection with the sale of the
Contracts, unless such assignment complies with all applicable New York
law.
3. CUSTOMER SERVICE AND COMPLAINTS.
-------------------------------
The parties agree that USL may contact by mail or otherwise, any client,
agent, account executive, or employee of the Associated Agency or other
individual acting in a similar capacity if deemed appropriate by USL, in
the course of normal customer service for existing Contracts, in the
investigation of complaints, or as required by law. The parties agree to
cooperate fully in the investigation of any complaint. USL will handle and
process all complaints associated with the sale of the Contracts under this
Agreement.
4. INDEMNIFICATION.
---------------
Selling Group Member, Associated Agency, and Sales Persons agree to hold
harmless and indemnify AGSI and USL against any and all claims, liabilities
and expenses incurred by either AGSI or USL, and arising out of or based
upon any alleged or untrue statement of Selling Group Member, Associated
Agency or Sales Person other than statements contained in the approved
sales material for any Contract, or in the registration statement or
prospectus for any Contract.
USL hereby agrees to indemnify and hold harmless Selling Group Member and
each of its employees, controlling persons, officers or directors against
any losses, expenses (including reasonable attorneys' fees and court
costs), damages or liabilities to which Selling Group Member and the
Associated Agency or such affiliates, controlling persons, officers or
directors become subject, under the Securities Act of 1933, New York
Insurance Laws or otherwise, insofar as such losses, expenses, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
USL's performance, non-performance or breach of this Agreement, or are
based upon any untrue statement contained in, or material omission from,
the prospectus for any of the Contracts.
5. FIDELITY BOND.
-------------
The Associated Agency represents that all directors, officers, employees
and Sales Persons of the Associated Agency licensed pursuant to this
Agreement or who have access to funds of USL are and will continue to be
covered by a blanket fidelity bond including coverage for larceny,
embezzlement and other defalcation, issued by a reputable bonding company.
This bond shall be maintained at the Associated Agency's expense.
7
Such bond shall be at least equivalent to the minimal coverage required
under the NASD Rules of Fair Practice, and endorsed to extend coverage to
life insurance and annuity transactions. The Associated Agency
acknowledges that USL may require evidence that such coverage is in force
and the Associated Agency shall promptly give notice to USL of any notice
of cancellation or change of coverage.
The Associated Agency assigns any proceeds received from the fidelity bond
company to USL to the extent of USL's loss due to activities covered by the
bond. If there is any deficiency, the Associated Agency will promptly pay
USL that amount on demand. The Associated Agency indemnifies and holds
harmless USL from any deficiency and from the cost of collection.
6. LIMITATIONS ON AUTHORITY.
------------------------
The Contract forms are the sole property of USL. No person other than USL
has the authority to make, alter or discharge any policy, Contract,
certificate, supplemental contract or form issued by USL. No party has the
right to waive any provision with respect to any Contract or policy; give
or offer to give, on behalf of USL, any tax or legal advice related to the
purchase of a Contract or policy; or make any settlement of any claim or
bind USL or any of its affiliates in any way. No person has the authority
to enter into any proceeding in a court of law or before a regulatory
agency in the name of or on behalf of USL.
7. ARBITRATION.
-----------
The parties agree that any controversy between or among them arising out of
their business or pursuant to this Agreement that cannot be settled by
agreement shall be taken to arbitration as set forth herein. Such
arbitration will be conducted according to the securities arbitration rules
then in effect, of the American Arbitration Association, NASD, or any
registered national securities exchange. Arbitration may be initiated by
serving or mailing a written notice. The notice must specify which rules
will apply to the arbitration. This specification will be binding on all
parties.
The arbitrators shall render a written opinion, specifying the factual and
legal bases for the award, with a view to effecting the intent of this
Agreement. The written opinion shall be signed by a majority of the
arbitrators. In rendering the written opinion, the arbitrators shall
determine the rights and obligations of the parties according the
substantive and procedural laws of the State of New York. Accordingly, the
written opinion of the arbitrators will be determined by the rule of law
and not by equity. The decision of the majority of the arbitrators shall
be final and binding on the parties and shall be enforced by the courts in
New York.
8
8. GENERAL PROVISIONS.
------------------
(a) Waiver.
------
Failure of any of the parties to promptly insist upon strict
compliance with any of the obligations of any other party under this
Agreement will not be deemed to constitute a waiver of the right to
enforce strict compliance.
(b) Independent Assignment.
----------------------
No assignment of this Agreement or of commissions or other payments
under this Agreement shall be valid without prior written consent of
USL. Furthermore, except as provided below, this Agreement and any
rights pursuant hereto shall be assignable only upon the written
consent of all of the parties hereto. Except as and to the extent
specifically provided in this Agreement, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than
the parties hereto, or their respective legal successors, any rights,
remedies, obligations, or liabilities, or to relieve any person other
than the parties hereto or their respective legal successors, from any
obligations or liabilities that would otherwise be applicable.
(c) Notice.
------
All notices, statements or requests provided for hereunder shall be
deemed to have been duly given when delivered by hand to an officer of
the other party, or when deposited with the U.S. Postal Service, via
first-class certified or registered mail, with postage pre- paid, or
when delivered by overnight courier service, telex or telecopier,
addressed as follows:
If to USL:
The United States Life Insurance Company in
the City of New York
125 Maiden Lane
New York, NY 10038-4992
Attention: General Counsel
If to Selling Group Member:
_____________________
_____________________
_____________________
Attention: _____________________
9
If to AGSI:
American General Securities Incorporated
2727 Allen Parkway
Houston, Texas 77019
Attention: F. Paul Kovach, Jr.
If to the Associated Agency:
_____________________
_____________________
_____________________
Attention: _____________________
or to such other persons or places as each party may from time to time
designate by written notice.
(d) Severability.
------------
To the extent this Agreement may be in conflict with any applicable
law or regulation, this Agreement shall be construed in a manner
consistent with such law or regulation. The invalidity or illegality
of any provision of this Agreement shall not be deemed to affect the
validity or legality of any other provision of this Agreement.
(e) Amendment.
---------
This Agreement may be amended only in writing and signed by all
parties. No amendment will impair the right to receive commissions
accrued with respect to Contracts issued and applications procured
prior to the amendment.
(f) Entire Agreement.
----------------
This Agreement together with such amendments as may from time to time
be executed in writing by the parties, constitutes the entire
agreement and understanding between the parties in respect to the
transactions contemplated hereby and supersedes all prior agreements,
arrangements and understandings related to the subject matter hereof.
10
(g) Termination.
-----------
This Agreement may be terminated by any party upon 30 days' prior
written notice. It may be terminated, for cause, defined as a
material breach of this Agreement, by any party immediately.
Termination of this Agreement shall not impair the right to receive
commissions accrued to applications procured prior to the termination
except for a termination due to cause, or as otherwise specifically
provided in Schedule B.
(h) Governing Law.
-------------
This Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York applicable
to contracts made and to be performed in that state, without regard to
principles of conflict of laws.
By signing below, the undersigned agree to have read and be bound by the terms
and conditions of this Agreement.
Date: ______________________________________
Selling Group Member
Address: _______________________________________________
_______________________________________________
11
Signed By: _________________________________________________________
Name & Title: _________________________________________________________
The United States Life Insurance Company in the City of New York
125 Maiden Lane
New York, NY 10038
Signed By: __________________________________________________________
Name & Title: __________________________________________________________
The Associated Agency
Address: __________________________________________________________
__________________________________________________________
Signed By: __________________________________________________________
Name & Title: __________________________________________________________
American General Securities Incorporated
2727 Allen Parkway
Houston, TX 77019
Signed By: __________________________________________________________
Name & Title: __________________________________________________________
12
Schedule A
Control Date - ________________, 1999
THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK
CONTRACTS COVERED BY THIS AGREEMENT
Registration Forms Separate
Contract Name and Numbers Account
- ------------- --------------------------------
Platinum Investor Form S-6 USL VL-R
Variable Life Insurance Nos. 811-09359
333-79471
13
Schedule B - Platinum Investor Variable Life
Control Date-_________, 1999
AMERICAN GENERAL SECURITIES INCORPORATED
THE UNITED STATES LIFE INSURANCE COMPANY
IN THE CITY OF NEW YORK ([]USL[]) AND
THE ASSOCIATED AGENCY
This Schedule B is made a part of the Selling Group Agreement ("Agreement") to
which it is attached. It is subject to the terms and conditions of the
Agreement. In no event shall USL be liable for the payment of any commission
with respect to any solicitation made, in whole or in part, by any person not
appropriately licensed and appointed prior to the commencement of such
solicitation.
Platinum Investor Variable Life:
- -------------------------------
1. Commissions to Be Paid to The Associated Agency
-----------------------------------------------
. 90% of premiums paid in the first Policy year up to the Target Premium;
. 4% of premiums which are not in excess of the Target Premium, paid in
any of Policy years 2 through 10;
. 2.5% of premiums which are in excess of the Target Premium, paid in any
of Policy years 1 through 10; and
. Beginning with the 2nd Policy year, an asset based commission of 6.25
basis points will be paid each quarter on the unloaned accumulation
value as of the end of the prior policy quarter.
2. Discretionary Expense Allowance Payment
---------------------------------------
At its sole discretion, USL may pay the Associated Agency an additional
expense allowance payment of up to 5% of first year target premium. In the
event that the Associated Agency personally produces any particular policy,
and USL determines that the Associated Agency qualifies in the aggregate
for some additional expense allowance payment, the Associated Agency will
only be eligible to receive an additional expense allowance payment of up
to 1% of first year Target Premium as to that policy.
i
Whether or not the Associated Agency may be eligible to receive this
discretionary payment will, at a minimum, depend upon the ratio of the
Associated Agency total production offset by USL's expenses relative to
such production. In the event that USL determines, in it sole discretion,
that the Associated Agency is eligible for an additional expense allowance
payment, the Associated Agency will ensure that none of the additional
expense allowance payment is passed onto a Sales Person.
3. Target Premium
--------------
The Target Premium is the maximum amount of premium to which the first year
commission rate applies. Commissions paid on premiums received in excess of
the Target Premium are paid at the excess rate. The Target Premium is an
amount calculated in accordance with the method of calculation and rates
from the USL Target Premium schedules. USL may change the Target Premium
schedules from time to time. The Target Premium applicable to a particular
coverage shall be determined from the schedule in force when the first
premium for such coverage is entered as paid in accounting records of USL.
4. Trail Commissions; When Paid
----------------------------
The 0.25% annual trail is calculated on a quarterly basis as 0.0625%, and
is applied to the entire unloaned accumulation value on each quarterly
Policy anniversary. Payment will be made at the end of the calendar quarter
immediately following the corresponding quarterly Policy anniversary. For
example, for Policies issued February 1, the trail is based on the unloaned
accumulation value as of February 1, but is not payable until the calendar
quarter ended March 31.
5. Commissions on Increases in Specified Amount
--------------------------------------------
First year commissions will be paid on a portion of the premiums received
during the first year following the increase.
(a) A portion of the premium received is allocated to the increase segment
by multiplying the premium received by the ratio of:
1) the Target Premium for the increase segment, to
2) the total Target Premium.
(b) First year commissions are paid on the premium allocated to the
increase segment up to the Target Premium for the increase.
ii
(c) Renewal commissions are paid on the portion of the premium allocated
to the increase segment in excess of the Target Premium for the
increased segment.
(d) Renewal commissions are paid on the premium received that is not
allocated to the increase segment (unless the Policy is still in its
first Policy year and the Target Premium for the original Specified
Amount has not yet been received).
6. Commissions on Death Benefit Option Switches
--------------------------------------------
No commissions are paid on changes in Death Benefit Options, either from
increasing to level, or from level to increasing.
7. Commissions on Riders
---------------------
Commissions paid on Riders for Platinum Investor are:
. 90% of premiums paid in the first Policy year up to the Target Premium;
. 4% of premiums which are not in excess of the Target Premium, paid in
any of Policy years 2 through 10; and
. 2.5% of premiums which are in excess of the Target Premium, paid in any
of Policy years 1 through 10.
8. Commissions on Substandard Ratings
----------------------------------
The Substandard Target Premium is equal to the Minimum Annual Premium (MAP)
for substandard ratings up to Table 6 plus permanent and temporary flat
extra premiums of more than seven years. Aviation extra premiums are
excluded from the Substandard Target Premium. Commissions paid on
substandard rating are:
. 90% of premiums paid for substandard ratings in the first Policy year up
to the Target Premium;
. 4% of premiums paid for substandard ratings, which are not in excess of
the Target Premium, in any of Policy years 2 through 10; and
. 2.5% of premiums paid for substandard ratings, which are in excess of
the Target Premium, paid in any of Policy years 1 through 10.
iii
9. Change of The Associated Agency
--------------------------------
A Policy owner may elect to change representation from the Associated
Agency to another agency subsequent to the sale of the Policy, solely in
the Policy owner's discretion. After such change, further compensation
paid for the Policy will be paid to the new agency.
10. Guidelines and Commissions on Internal Exchanges
------------------------------------------------
(a) USL Interest-Sensitive Products to USL Variable Universal Life
Products
USL Interest-Sensitive products may be exchanged for USL Variable
Universal Life products under the following guidelines:
(1) No exchanges are allowed during the first 5 Policy years of the
USL Interest-Sensitive product proposed for exchange;
(2) Surrender charges will be waived for exchanges to a new Platinum
Investor VUL policy as long as the new policy's surrender charges
are equal to or greater than the existing policy's surrender
charges;
(3) No commission will be earned on the initial exchange of any USL
Interest-Sensitive policy for an USL VUL policy; however, the
cash value may be applied against first year premiums up to the
Target Premium on a no commission basis; and
(4) All subsequent premiums will receive commissions calculated as
described in Sections 1, 4, 5, and 6 of this Schedule B.
(b) USL Traditional Products to USL Variable Universal Life Products
No exchanges are allowed between Traditional products and Variable
Universal Life products unless specifically stated in the traditional
product policy form.
(c) USL Term Insurance Products to USL Variable Universal Life Products
USL Term Insurance products may be exchanged for USL Variable
Universal Life products under the following guidelines:
iv
(1) If the current USL Term Insurance policy contains a conversion
option, the policy may be exchanged for a Platinum Investor
policy without evidence of insurability;
(2) If the current Term Insurance policy is exchanged for a Platinum
Investor policy, the policy owner will receive a conversion
credit on the base policy only by multiplying the premium paid in
year 1, up to the Target Premium, by .333. No commission is
earned on the conversion;
(3) All subsequent premiums will receive commissions calculated as
described in Sections 1, 4, 5, and 6 of this Schedule B.
v