DISTRIBUTION AGREEMENT
AGREEMENT dated November 8, 1996, by and between First Golden American
Life Insurance Company of New York ("First Golden"), a New York corporation,
on its own behalf and on behalf of Separate Account NY-B, the Fixed Account
and Separate Account NY-A (the "Accounts") and Directed Services, Inc.
("DSI"), a New York corporation.
WHEREAS, the Accounts are separate accounts established and maintained by
First Golden pursuant to the laws of the State of New York for variable life
and annuity contracts issued by First Golden under which income, gains, and
losses, whether or not realized, from assets allocated to such Accounts, are
credited to or charged against such Accounts without regard to other income,
gains or losses of First Golden; and
WHEREAS, First Golden proposes to issue and sell annuity contracts
through the Separate Account NY-B and the Fixed Account and life insurance
contracts through Separate Account NY-A to suitable purchasers; and
WHEREAS, DSI is duly registered as a broker-dealer under the Securities
Exchange Act of 1934 ("1934 Act") and is a member of the National Association
of Securities Dealers, Inc. ("NASD"); and
WHEREAS, First Golden and DSI desire to enter into an agreement pursuant
to which DSI will act as a principal underwriter for the sale of the contracts
and may distribute the contracts through one or more organizations as set
forth in Section 3. below.
NOW, THEREFORE, FIRST GOLDEN AND DSI HEREBY AGREE AS FOLLOWS:
1. TERM
This Agreement shall remain in force until it is terminated in accordance
with the provisions of paragraph 13.
2. PRINCIPAL UNDERWRITER
First Golden hereby appoints DSI and DSI accepts such appointment, during
the term of this Agreement, subject to any registration requirements of
The Securities Act of 1933 ("1933 Act"), The Investment Company Act of
1940 ("1940 Act"), and the provisions of the 1934 Act, to be a
distributor and principal underwriter of the contracts issued through the
Accounts. DSI shall offer the contracts for sale and distribution at
premium rates to be set by First Golden. Contracts may be sold only by
persons who are duly licensed insurance agents appointed by First Golden
and NASD registered representatives as set forth in Section 3 below.
First Golden hereby appoints DSI as its agent for the sale of contracts
in such jurisdictions as First Golden is properly licensed to sell
contracts.
1
3. SALES AGREEMENTS
DSI is hereby authorized to enter into separate written agreements
("Sales Agreements"), on such terms and conditions as DSI may determine
not to be inconsistent with this Agreement, with broker/dealers which
agree to participate in the distribution of and to use their best efforts
to solicit applications for contracts. Such broker/dealers and their
agents or representatives soliciting applications for contracts shall be
duly and appropriately licensed, registered or otherwise qualified for
the sale of contracts under the insurance laws and any applicable
securities laws of each state or other jurisdiction in which the
contracts may be lawfully sold and in which First Golden is licensed to
sell contracts. Each such broker/dealer shall be both registered as a
broker-dealer under the 1934 Act and a member of the NASD, or if not so
registered or not such a member, then the agents and representatives of
such organization soliciting applications for contracts shall be agents
and registered representatives of a registered broker/dealer and NASD
member which is the parent or affiliate of such organization and which
maintains full responsibility for the training, supervision, and control
of the agents and representatives selling contracts.
DSI shall have the responsibility for the supervision of all such
broker/dealers to the extent required by law and shall assume any legal
responsibilities of First Golden for the acts, commissions or
defalcations of any such broker/dealers. Application materials for
contracts solicited by such broker/dealers through their agents or
representatives shall be forwarded to DSI. All payments for contracts
shall be remitted promptly by such broker/dealers directly to First
Golden.
If held at any time by DSI or a broker-dealer, such payments shall be
held in a fiduciary capacity as agent for First Golden and shall be
remitted promptly to First Golden. All such payments, whether by check,
money order, or wire order, shall be the property of First Golden.
Anything in this Distribution Agreement to the contrary notwithstanding,
First Golden shall retain the rights to control the sale of contracts and
to appoint and discharge agents for the sale of contracts. DSI shall be
held to the exercise of reasonable care in carrying out the provisions of
this Distribution Agreement.
4. AGENTS
DSI is authorized to appoint the broker/dealers described in paragraph 3
above as agents of First Golden for the sale of contracts. First Golden
will undertake to appoint such as agents authorized to represent First
Golden in the appropriate states or jurisdictions; provided that First
Golden reserves the right to refuse to appoint any proposed agent, or
once appointed to terminate the same without notice.
5. SUITABILITY
First Golden wishes to ensure that the contracts distributed by DSI will
be issued to purchasers for whom the contracts shall be suitable. DSI
shall take reasonable steps to ensure that the various agents appointed
by it to sell contracts shall not make recommendations to an applicant to
purchase contracts in the absence of reasonable grounds to believe that
2
the purchase of contracts is suitable for such applicant. While not
limited to the following, a determination of suitability shall be based
on information furnished to an agent after reasonable inquiry concerning
the applicant's insurance and investment objectives and financial
situation and needs.
6. SALES MATERIALS
The responsibility of the parties hereto for consulting with respect to
the design and the drafting and legal review and filing of sales
materials, and for the preparation of sales proposals related to the sale
of contracts shall be as the parties hereto agree in writing. DSI shall
ensure, in its Sales Agreements, that organizations appointed by it, and
registered representatives of such organizations, shall not use, develop
or distribute any sales materials which have not been approved by First
Golden.
7. REPORTS
DSI shall have the responsibility for, with respect to agents appointed
by it, maintaining the records of agents licensed, registered and
otherwise qualified to sell contracts, and for furnished periodic reports
to First Golden as to the sale of contracts made pursuant to this
Agreement.
8. RECORDS
DSI shall maintain and preserve for the periods prescribed by law or
other agreement, such accounts, books, and other documents as are
required of it by applicable laws and regulations. The books, accounts
and records of First Golden, the Accounts and DSI as to all transactions
hereunder shall be maintained so as to clearly and accurately disclose
the nature and details of the transactions, including such accounting
information as necessary to support the reasonableness of the amounts to
be paid by First Golden hereunder.
9. COMPENSATION
First Golden shall pay DSI the compensation due it as set forth in the
attached Exhibit, as such Exhibit may from time to time be amended.
10. INDEPENDENT CONTRACTOR
DSI shall act as an independent contractor and nothing herein contained
shall constitute DSI or its agents or employees as employees of First
Golden in connection with the sale of contracts.
11. INVESTIGATION AND PROCEEDINGS
(a) DSI and First Golden agree to cooperate fully in insurance
regulatory investigations or proceedings or judicial proceedings
arising in connection with the offering, sale or distribution of
contracts distributed under this Agreement. DSI and First Golden
further agree to cooperate fully in any securities regulatory
3
investigation or proceeding or judicial proceeding with respect to
First Golden, DSI, their affiliates and their agents or
representatives to the extent that such investigation or proceeding
is in connection with the contracts offered, sold or distributed
under this Agreement. Without limiting the foregoing:
(i) DSI will be notified promptly of any customer
complaint or notice of any regulatory investigation or
proceeding or judicial proceeding received by First Golden with
respect to DSI or any agent or representative which may affect
First Golden's issuance of contracts marketed under this
Agreement.
(ii) DSI will promptly notify First Golden of any customer
complaint or notice of any regulatory investigation or
proceeding received by DSI or its affiliates with respect to
DSI or any agent or representative in connection with any
contracts distributed under this Agreement or any activity in
connection with contracts.
(b) In the case of a substantive customer complaint, DSI and First
Golden will cooperate in investigating such complaint and any
response to such complaint will be sent to the other party to this
Agreement for approval not less than 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, telegraph or facsimile.
12. INDEMNIFICATION
(a) First Golden agrees to indemnify and hold harmless DSI and its
affiliates and each officer and director thereof against any losses,
claims, damages or liabilities, joint or several, to which DSI or
its affiliates or such officer or director may become subject, under
the 1933 Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a
material fact, required to be stated therein or necessary to make
the statements therein not misleading, contained:
(i) in any prospectus, or any amendment thereof, or
(ii) in any blue-sky application or other document
executed by First Golden specifically for the purpose of
qualifying contracts for sale under the securities laws of any
jurisdiction.
First Golden will reimburse DSI and each officer or director,
for any legal or other expenses reasonably incurred by DSI or such
officer or director in connection with investigating or defending
any such loss, claim, damage, liability or action; provided that
First Golden will not be liable in any such case to the extent that
such loss, claim, damage or liability arises out of, or is based
upon, an untrue statement or alleged untrue statement or omission or
4
alleged omission made in reliance upon and in conformity with
information (including, without limitation, negative responses to
inquiries) furnished to First Golden by or on behalf of DSI
specifically for use in the preparation of any prospectus or any
amendment thereof or any such blue-sky application or any amendment
thereof or supplement thereto.
(b) DSI agrees to indemnify and hold harmless First Golden and its
directors, each of its officers who has signed the registration
statement and each person, if any, who controls First Golden within
the meaning of the 1933 Act or the 1934 Act, against any losses,
claims, damages or liabilities to which First Golden and any such
director or officer or controlling person may become subject, under
the 1933 Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are
based upon:
(i) Any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading,
contained (a) in any prospectus or any amendments thereof, or,
(b) in any blue-sky application, in each case to the extent,
but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in
reliance upon and in conformity with information (including
without limitation, negative responses to inquiries) furnished
to First Golden by DSI specifically for use in the preparation
of any prospectus or any amendments thereof or any such blue-
sky application or any such amendment thereof or supplement
thereto; or
(ii) Any unauthorized use of sales materials or
any verbal or written misrepresentations or any unlawful
sales practices concerning contracts by DSI; or
(iii) Claims by agents or representatives or
employees of DSI for commissions, service fees, expense
allowances or other compensation or remuneration of any
type.
DSI will reimburse First Golden and any director or officer or
controlling person for any legal or other expenses reasonably
incurred by First Golden, such director or controlling person in
connection with investigating or defending any such loss, claim,
damage, liability or action. This indemnity agreement will be in
addition to any liability which DSI may otherwise have.
(c) Promptly after receipt by a party entitled to indemnification
("indemnified party") under this paragraph 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 paragraph 12 ("indemnifying party"), such indemnified party
will notify the indemnifying party in writing of the commencement
thereof, but the omission so to notify the indemnifying party will
5
not relieve it from any liability under this paragraph 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
solely as a result of the failure to give such notice. In case any
such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to
the extent that it may wish, to assume the defense thereof, with
separate counsel satisfactory to the indemnified party. Such
participation shall not relieve such indemnifying party of the
obligation to reimburse the indemnified party for reasonable legal
and other expenses incurred by such indemnified party in defending
himself, except for such expenses incurred after the indemnifying
party has deposited funds sufficient to effect the settlement, with
prejudice, of the claim in respect of which indemnity is sought.
Any such indemnifying party shall not be liable to any such
indemnified party on account of any settlement of any claim or
action effected without the consent of such indemnifying party.
The indemnity agreements contained in this paragraph 12 shall
remain operative and in full force and effect, regardless of:
(i) any investigation made by or on behalf of DSI or any
officer or director thereof or by or on behalf of First
Golden;
(ii) delivery of any contracts and payments therefore;
and
(iii) any termination of this Agreement.
A successor by law of DSI or of any of the parties to this
Agreement, as the case may be, shall be entitled to the benefits of
the indemnity agreements contained in this paragraph 12.
13. TERMINATION
a. This Agreement may be terminated at any time by mutual consent
of the parties.
b. Either party may terminate if the other materially breaches any
of the terms of this Agreement and fails to cure the breach within
sixty days of notification by the other party of such breach.
c. Upon termination of this Agreement all authorizations, rights
and obligations shall cease except;
(i) the obligation to settle accounts hereunder,
including commissions for contracts in effect at the time of
termination;
(ii) the agreements contained in paragraph 11 hereof; and
(iii) the indemnity set forth in paragraph 12 hereof.
6
14. REGULATION
This Agreement shall be subject to the provisions of the 1940 Act and the
1934 Act and the rules, regulations, and rulings thereunder and of the
NASD, from time to time in effect, including such exemptions from the
1940 Act as the SEC may grant, and the terms hereof shall be interpreted
and construed in accordance therewith.
DSI shall submit to all regulatory and administrative bodies having
jurisdiction over the operations of First Golden or the Accounts, present
or future, any information, reports or other material which any such body
by reason of this Agreement may request or require pursuant to applicable
laws or regulations.
15. SEVERABILITY
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
16. GENERAL
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of New York.
A. Force Majeure
Either party may be excused for delay or failure to perform
under this Agreement if such delay or failure is due to the direct
or indirect result of acts of God or government, war or national
emergency, or for any cause beyond the reasonable control of either
party.
B. Entire Agreement
This Agreement and any attachments hereto and the material
incorporated herein by reference set forth the entire Agreement
between the parties, and supersede all prior representations,
agreements and understandings, written or oral. Changes in the
Agreement may be made only in a writing signed by both the parties
hereto.
C. Notices
All notices or other communications under this Agreement shall
be in writing and, unless otherwise specifically provided for
herein, shall be deemed given when addressed,
(a) if to First Golden:
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
First Golden American Life Insurance
Company of New York
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
7
(b) if to DSI:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Directed Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
D. Successors, Assigns
This Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective successors and assigns.
Neither this Agreement nor any right hereunder may be assigned
without the written consent of the other parties.
E. Governing Law
This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
F. Severability
If any term or provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the
remainder of terms and provisions of this Agreement shall remain in
full force and effect and shall not be affected or impaired thereby.
G. Counterparts
This Agreement may be executed in one or more counterparts,
each of which shall constitute an original and all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
FIRST GOLDEN AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
Attest: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Secretary
DIRECTED SERVICES, INC.
/s/ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
President
Attest: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Secretary
8
