1
Exhibit (b)(3)(ii)
PROMOTIONAL AGENT AGREEMENT
AGREEMENT ("Agreement") made as of this 1st day of January, 1996 by and
among NASL Financial Services, Inc. ("NASL Financial"), a broker-dealer
registered under the Securities Exchange Act of 1934 (1934 Act") and a member of
the National Association of Securities Dealers, Inc. ("NASD"), North American
Security Life Insurance Company ("Security Life"), a stock life insurance
company issuing, developing and sponsoring financial services products, and Xxxx
Xxxxx Associates, Inc. (including, with respect to Investment Products, Xxxx
Xxxxx Distributors, Inc., collectively "Promotional Agent"), also registered as
a broker-dealer under the 1934 Act and a member of the NASD, and NAWL Holding
Company, Inc. ("NAWL"), a holding company owning all voting stock of Security
Life and Promotional Agent, provided that, Security Life shall be deemed to be a
party to only those parts of this Agreement that pertain to Insurance Products,
as hereinafter defined. This Agreement hereby supercedes all prior promotional
agent agreements by and among the parties.
I. DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
set forth below:
Insurance Products - fixed and variable annuity contracts issued by
Security Life as of the date of this Agreement together with any
products developed during the period of this Agreement that are
regulated as insurance products under the laws of the several States of
the United States, some of which are also regulated as securities under
the federal securities laws.
Investment Products - shares of the North American Funds portfolios
sponsored by Security Life as of the date of this Agreement together
with any other products developed during the period of this Agreement
that are regulated as securities under the federal securities laws but
that are not regulated as insurance products under the laws of the
several States of the United States.
Financial Services Products - Insurance Products and Investment
Products, collectively.
Selling Agreements - contracts among Broker-Dealers, Promotional Agent
and NASL Financial (and Security Life in the case of Insurance
Products) providing for the distribution of Financial Services Products
issued, sponsored or developed by Security Life.
Broker-Dealers - brokerage firms and insurance agencies (to the extent
they are licensed to sell Financial Services Products) that have
entered into Selling Agreements to distribute Financial Services
Products to retail customers.
II. INTRODUCTION
WHEREAS, Security Life is in the business of issuing, developing and
sponsoring various Financial Services Products;
WHEREAS, Security Life distributes such Financial Services Products
through its wholly-owned subsidiary NASL Financial, which is the
principal underwriter of all its products regulated under the federal
securities laws;
WHEREAS, NASL Financial is authorized to enter into Selling Agreements
(with Security Life's consent in the case of Insurance Products) with
Broker-Dealers for the distribution of Financial Services Products; and
WHEREAS, Promotional Agent wishes to assist NASL Financial in making
arrangements with Broker-Dealers for the distribution of Financial
Services Products and in promoting the sale thereof through such
Broker-Dealers, and NASL Financial wishes the Promotional Agent to do
so;
2
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:
III. APPOINTMENT OF PROMOTIONAL AGENT
A. APPOINTMENT
NASL Financial hereby appoints Promotional Agent as its non-exclusive
agent for the promotion of sales of the Financial Services Products
specified in Schedule A hereto through Broker-Dealers, and Promotional
Agent accepts such appointments subject to the terms and conditions set
forth herein.
IV. DUTIES OF PROMOTIONAL AGENT
A. PROMOTION OF CONTRACTS
Promotional Agent agrees to use its best efforts to promote the sale of
Financial Services Products through Broker-Dealers, and in furtherance
thereof Promotional Agent shall to the extent it deems appropriate and
at its own expense:
(i) Use its best efforts to secure duly qualified Broker-Dealers to
enter into Selling Agreements for the distribution of Financial
Services Products;
(ii) Assist the Broker-Dealers who have entered into Selling Agreements
in obtaining for their registered representatives pursuant to Section
V, paragraph A (i) of this Agreement all necessary licenses,
registrations and appointments required by applicable regulatory
authorities so as to enable such registered representatives to sell
Financial Services Products;
(iii) Arrange on a periodic basis and preside over educational meetings
with Broker-Dealers who have entered into Selling Agreements so as to
ensure that their registered representatives are familiar with the
provisions and features of the Financial Services Products;
(iv) Provide technical assistance at the time of sale of Financial
Services Products to Broker-Dealers who have entered into Selling
Agreements;
(v) Prepare sales and promotional materials, such materials being
subject, however, to the prior approval of Security Life as provided in
Section VII B of this Agreement, and engage public relations advisors
as required;
(vi) Hold seminars for customers and potential customers of
Broker-Dealers who have entered into Selling Agreements;
(vii) Provide assistance to Broker-Dealers who have entered into
Selling Agreements in the ongoing servicing of Financial Services
Products;
(viii) Provide advice to Security Life on the development and redesign
of Financial Services Products for which it has or will be granted
exclusive promotional rights;
(ix) Bear costs of printing additional Prospectuses and Statements of
Additional Information for use in marketing activities; and
(x) Bear costs of printing additional annual and semiannual reports for
use in marketing activities.
3
B. RIGHT TO REJECT SELECTED BROKER-DEALERS
In connection with securing Broker-Dealers to distribute Financial
Services Products, Promotional Agent will use its best efforts to
ascertain that each Broker-Dealer wishing to execute a Selling
Agreement shall have the highest business ethics and reputation, be
duly qualified with all federal, state and other regulatory bodies to
carry on the business of a Broker-Dealer, and otherwise be a suitable
person to represent NASL Financial and its affiliated companies. NASL
Financial may refuse to enter into a Selling Agreement with a
Broker-Dealer selected by Promotional Agent if such Broker-Dealer is
deemed by NASL Financial or Security Life to be unsuitable for any
reason. Neither NASL Financial nor Security Life will incur any
obligation to compensate, or reimburse the expenses of, Promotional
Agent as a result of any such refusal.
C. PROMOTIONAL AGENT'S EXPENSES
Promotional Agent will be responsible for all expenses (excluding
first time and renewal licensing expenses for sellers of Insurance
Products) incurred in recruiting Broker-Dealers to distribute Financial
Services Products and in performing its other duties under this
Agreement. Promotional Agent shall also be responsible for those
expenses specified in the attached Schedule B ("Statement of Expenses
and Compensation") with respect to each category of Financial Services
Products under this Agreement.
D. MARKETING OF SIMILAR PRODUCTS
Promotional Agent agrees that it will not promote the sale of Financial
Services Products similar to or competitive with Financial Services
Products without the consent of NAWL.
E. DISPUTES WITH BROKER-DEALERS
Promotional Agent will provide reasonable assistance to NASL Financial
in resolving any differences and disputes between NASL Financial and
Broker-Dealers which have entered into Selling Agreements under the
auspices of Promotional Agent. Promotional Agent shall not have the
right to establish any procedures for the settlement of, or to settle,
any disputes on behalf of NASL Financial without first obtaining NASL
Financial's written approval of such procedure or settlement.
Promotional Agent will at all times represent NASL Financial's best
interests in resolving any such disputes.
F REQUIRED REPORTS
Promotional Agent agrees, within 90 days after expiration of each
calendar year, to furnish Security Life with a written statement of
amounts received under or on account of this Agreement and amounts
expended thereunder during such calendar year. Such statement will
specify the compensation or profits received under this Agreement by
the respective directors, officers and other principal management
personnel of Promotional Agent, and such other items and further detail
as Security Life may reasonably require.
V. DUTIES OF NASL FINANCIAL AND SECURITY LIFE
A. DUTIES
NASL Financial or Security Life shall to the extent they deem
appropriate and at their own expense:
(i) Where permitted, obtain such corporate registrations and agent
licenses as are necessary to carry on business and issue and sell
Financial Services Products in all states of the United States and its
territories and shall process all licensing, registration and
appointment applications of Broker-Dealers;
4
(ii) Underwrite fixed and variable annuities and variable life
policies;
(iii) Issue variable life policies, fixed and variable annuities and
provide full administration services therefore;
(iv) Design, in consultation with Promotional Agent, such additional
Financial Services Products as may be agreed upon from time to time
which can be marketed by Promotional Agent pursuant to this Agreement;
(v) Draft and file as required, prospectuses, contracts, application
forms and Selling Agreements;
(vi) Comply with all other legal and regulatory requirements in respect
of Financial Services Products; and
(vii) Review marketing materials prepared by Promotional Agent
promptly.
B. COOPERATION OF NASL FINANCIAL AND SECURITY LIFE
NASL Financial and Security Life agree that to the extent the
cooperation or concurrence of one is required to enable the other to
fulfill its obligations pursuant to this Agreement, they will cooperate
or concur to the extent permitted by law.
C. NON-LIMITATION
This Agreement shall not be construed so as to in any way limit or
affect the rights of NASL, NAWL or its parent, The Manufacturers Life
Insurance Company, or any of their subsidiaries, associates or
affiliates from designing or distributing through other channels any
product within or outside the United States, including variable
annuities, fixed annuities, variable life products or mutual funds.
VI. COMPENSATION
A. COMPENSATION SCHEDULE
In consideration of providing the services called for under this
Agreement, with respect to each category of Financial Services Products
the Promotional Agent shall receive the compensation detailed in
Schedule B ("Statement of Expenses and Compensation") attached hereto
and as amended from time to time pursuant to Section X, paragraph I of
this Agreement. Such compensation shall constitute full compensation to
Promotional Agent for all services performed and expenses incurred
under this Agreement.
VII. LIMITATIONS ON PROMOTIONAL AGENT'S AUTHORITY
A. SOLICITATION
Nothing contained herein shall be construed as granting authority to
Promotional Agent to sell Financial Services Products directly to, or
solicit applications for Financial Services Products directly from,
customers or prospective customers.
B. MARKETING MATERIALS
Promotional Agent will not use any marketing materials without Security
Life's or NASL Financial's (as applicable) prior review and written
approval.
5
C. RESTRICTION ON INFORMATION
Neither Promotional Agent nor its representatives, employees and
affiliated companies are authorized to give any information or make any
representations concerning Financial Services Products other than those
contained in any registration statements or related prospectuses and
statements of additional information filed with the Securities and
Exchange Commission relating thereto or in such sales literature as may
be specifically authorized in writing by Security Life or NASL
Financial (as applicable).
VIII. RECORDS
A. RECORD-KEEPING DUTIES
Promotional Agent, NASL Financial and Security Life agree to keep all
necessary records as are required of each by applicable federal and
state law and acceptable business practices and to render any necessary
assistance to one another for the accurate and timely preparation of
such records. The parties to this Agreement, their representatives and
the representatives of any regulatory body with jurisdiction, during
normal business hours and upon five (5) days written notice, shall have
access to any records pertaining to this Agreement maintained by the
other parties hereto for purposes of reviewing or copying same.
IX. CUSTOMER CONFIDENTIALITY
A. CONFIDENTIALITY
Promotional Agent agrees that the names and addresses of all customers
and prospective customers of NASL Financial and of any affiliated
company, which may come to the attention of Promotional Agent or any
company or person affiliated with Promotional Agent, are confidential.
Such customer information shall not be used without the prior written
consent of NASL Financial by Promotional Agent or any company or person
affiliated with Promotional Agent for any purposes whatsoever except as
may be necessary in connection with Financial Services Products covered
by this Agreement.
X. GENERAL PROVISIONS
A. WAIVER
Failure of any 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 to
be, or shall constitute, a waiver of any other provisions, whether or
not similar, nor shall any waiver constitute a continuing waiver.
B. BINDING EFFECT
This Agreement shall be binding on, and shall inure to the benefit of,
the parties to it and their respective successors and permitted
assigns, provided that this Agreement or any rights or obligations
hereunder may not be assigned without the prior written consent of the
parties hereto.
C. REGULATIONS
All parties agree to observe and comply with all laws, rules and
regulations applicable to the business contemplated by this Agreement.
6
D. GOVERNING LAW
This Agreement shall be construed in accordance with and governed by
the laws of the State of Connecticut.
E. COMPLAINTS AND INVESTIGATIONS
Promotional Agent, NASL Financial and Security Life agree to cooperate
fully in the event of any regulatory investigation, inquiry or
proceeding, judicial proceeding or customer complaint involving
Financial Services Products.
F. TERMINATION
(a) This Agreement shall be for a period of five (5) years from the
date first mentioned above renewable automatically for one year periods
thereafter unless terminated by any party at the end of the five year
period or thereafter at the end of any one year period.
(b) This Agreement will terminate automatically if either NASL
Financial (or any successor thereto) or Promotional Agent should cease
to be a registered broker-dealer under the 1934 Act or a member of the
NASD. Termination shall not affect the obligations of the parties under
Section IX of this Agreement or under paragraph D of this Section X.
(c) This Agreement may be terminated by mutual consent of all the
parties to the Agreement.
G. AMENDMENT
This Agreement or any schedule annexed hereto may be amended only in
writing signed by all the parties.
H. COUNTERPARTS
This Agreement may be signed by the parties in counterpart.
The parties hereby execute this Agreement effective the date first
mentioned above.
I. AMENDMENT
This Agreement or any schedule annexed hereto may be amended only in
writing signed by all the parties.
XXXX XXXXX ASSOCIATES, INC.
Date: January 1, 1996
------------------------------
By: /s/ A. XXXXX XXXXX, President
------------------------------
Name and Title
7
XXXX XXXXX DISTRIBUTORS, INC.
Date: January 1, 1996
-----------------------------
By: /s/ A. XXXXX XXXXX, President
-----------------------------
Name and Title
NASL FINANCIAL SERVICES, INC.
Date: /s/ XXXXXXX X. XXXXXX
-----------------------------
By: Xxxxxxx X. Xxxxxx, President
-----------------------------
Name and Title
NORTH AMERICAN SECURITY LIFE INSURANCE COMPANY
(with respect to Insurance Products only)
Date: /s/ XXXX XXXXXXX III
-----------------------------
By: Xxxx X. XxxXxxx III, President
-----------------------------
Name and Title
NAWL HOLDING COMPANY, INC.
Date: January 1, 1996
-----------------------------
By: /s/ H. XXXXXXX XXXX, President
-----------------------------
Name and Title
8
SCHEDULE A
(i) Variable Annuities
(ii) Variable Life Contracts
(iii) Fixed annuities and/or fixed accounts
(iv) Mutual funds
(V) Such other Financial Services Products as are from time to time agreed
by the parties to the foregoing Agreement and added to this Schedule A
in accordance therewith.
9
SCHEDULE B
Statement of Expenses and Compensation
1. FINANCIAL SERVICE PRODUCTS
Subject to the terms and conditions of this Agreement, NASL Financial
will pay to Promotional Agent compensation of 1% of the premiums, purchase
payments and sales proceeds received and accepted under all Financial Services
Products distributed through Broker-Dealers having a Selling Agreement with NASL
Financial as a direct result of Promotional Agent's efforts (the "Promotional
Agent Fee"). NASL Financial shall pay Promotional Agent said compensation on a
monthly basis. In addition, for the period January 1, 1996 through June 30,
1996, NASL Financial will pay to Promotional Agent a monthly fee of $1.5 million
and for the period July 1, 1996 through December 31, 1996, NASL Financial will
pay to Promotional Agent a monthly fee of $1.340 million. The monthly fee is
payable on the first of each month and the amount of such fee may be changed by
mutual agreement of the parties hereto.
2. EXCHANGES
No commission will be paid to Promotional Agent upon exchanges among
Financial Service Products.
3. COMMISSION CHARGE BACKS
Contract owner's exercise of "FREE LOOK":
In the event a contract is returned to Security Life pursuant to such
provision, the full Promotional Agent Fee paid thereon shall be charged
back to Promotional Agent.
Refund of premium, purchase payment or Sales Proceeds:
Should any premium or purchase payment on any contract issued by
Security Life or any sales proceeds invested in the North American
Funds be refunded, for any reason, Promotional Agent shall repay or
return Promotional Agent Fees received by, it with respect to
such-premium, purchase payment or sales proceeds.
4. INVESTMENT PRODUCTS
1. NASL Financial Distribution Expenses - NASL Financial shall be
entitled to xxxx to Promotional Agent, and Promotional Agent agrees to
reimburse NASL Financial, for NASL Financial's expenses for the distribution
of the North American Funds ("NAF") as follows:
(a) the expense of maintaining the NAF wire order desk, including
personnel and associated overhead costs;
(b) costs of printing additional NAF Prospectuses and Statements of
Additional Information for use in marketing activities;
(c) costs of printing additional NAF annual and semiannual reports for
use in marketing activities; and
(d) any other distribution expenses incurred with the prior consent of
Promotional Agent.
2. Promotional Agent Distribution Expenses - Promotional Agent shall
present a report at each regular meeting of the Trustees of NAF setting
forth its distribution expenses incurred during NAF's most recently
completed fiscal quarter. Such expenses may include the distribution
expenses reimbursed to NASL Financial pursuant to paragraph 1 hereof.
