EXHIBIT 3(a)(ii)
MASTER MARKETING AND DISTRIBUTION AGREEMENT
BY AND AMONG
AMERICAN GENERAL LIFE INSURANCE COMPANY,
AMERICAN GENERAL SECURITIES INCORPORATED,
AND SIERRA INVESTMENT SERVICES CORPORATION
TABLE OF CONTENTS
DESCRIPTION PAGE
SECTION 1. AVAILABLE CONTRACTS..................................... 2
1.1 Availability...................................... 2
1.2 Modification of Contracts......................... 2
1.3 Suspension or Restriction of Sales. .............. 2
1.4 Reinsurance of Contracts.......................... 2
SECTION 2. CONTRACT DISTRIBUTION.................................... 2
2.1 Exclusive Appointment. ........................... 2
2.2 Best Efforts...................................... 3
2.3 Selling Groups. ................................. 3
2.4 Suitability Determinations........................ 3
2.5 Sales Persons/Associated Agencies................. 3
2.6 Insurance Agent Licensing......................... 3
2.7 Selection of Selling Group Members................ 4
2.8 Supervision by Selling Group Members.............. 4
2.9 Marketing Materials............................... 4
2.10 Marketing Services................................ 5
2.11 Non-Marketing Materials........................... 6
2.12 Information About AGL and DISTRIBUTOR............ 6
2.13 Complaints........................................ 7
2.14 Limitations on Authority.......................... 7
2.15 Independent Contractor............................ 8
SECTION 3. ADMINISTRATION.......................................... 8
3.1 Contract Administration........................... 8
3.2 Performance Standards............................. 8
SECTION 4. REPRESENTATIONS AND WARRANTIES.......................... 8
4.1 By AGL............................................ 8
4.2 By AGSI........................................... 9
4.3 By DISTRIBUTOR ...................................10
SECTION 5. COMPENSATION; COSTS AND EXPENSES........................11
5.1 Compensation......................................11
5.2 Each Party To Bear Own Costs......................11
SECTION 6. INDEMNIFICATION.........................................11
6.1 Indemnification by AGL and AGSI...................11
6.2 Indemnification by DISTRIBUTOR....................12
6.3 Limitation on Liability...........................14
6.4 Injunctive Relief.................................14
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SECTION 7. TERM AND TERMINATION....................................14
7.1 Term..............................................14
7.2 Events of Termination.............................14
7.3 Remedy of Events of Default.......................15
7.4 Parties to Cooperate Respecting Termination.......16
SECTION 8. ASSIGNMENT..............................................16
SECTION 9. CONTRACT LAPSE, TERMINATION, SURRENDER, ETC.............16
9.1 Responsibilities of DISTRIBUTOR...................16
9.2 Responsibilities of AGL and AGSI..................16
SECTION 10. CONFIDENTIALITY........................................16
SECTION 11. ARBITRATION OF DISPUTES................................17
11.1 Arbitration Binding. ............................17
11.2 Initiation of Arbitration. ......................17
11.3 Selection of Arbitrators..........................17
11.4 Impartiality......................................18
11.5 Hearing Date and Time.............................18
SECTION 12. TRADEMARKS.............................................18
12.1 DISTRIBUTOR Trademarks............................18
12.2 AGL Trademarks....................................18
12.3 Grant of License..................................18
12.4 Prior Approval....................................19
12.5 Sample Materials..................................19
12.6 Trademarks Valid and Enforceable. ................19
SECTION 13. BONDING AND INSURANCE..................................19
SECTION 14. NOTICES................................................20
14.1 Manner of Notices.................................20
14.2 Notice of Regulatory Proceedings..................20
SECTION 15. MISCELLANEOUS..........................................21
15.1 Amendment.........................................21
15.2 Governing Law.....................................21
15.3 Survival of Provisions............................21
15.4 Severability......................................21
15.5 Waiver............................................21
15.6 Force Majeure.....................................21
15.7 Parties to Cooperate..............................21
15.8 Entire Agreement..................................21
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MASTER MARKETING AND DISTRIBUTION AGREEMENT
This Master Marketing and Distribution Agreement (the "Agreement") is
made on this ________ day of ___________________, 1996, by and among AMERICAN
GENERAL LIFE INSURANCE COMPANY, a Texas insurance company ("AGL"), on behalf
of itself and each of its separate accounts listed on Schedule A hereto, as
the same may be amended from time to time (each, an "Account"), AMERICAN
GENERAL SECURITIES INCORPORATED, a Texas corporation ("AGSI"), and SIERRA
INVESTMENT SERVICES CORPORATION, a Delaware corporation ("DISTRIBUTOR") (each,
a "Party," collectively, the "Parties").
RECITALS
WHEREAS, The Parties are jointly engaged in distribution of variable
annuity contracts described in Schedule A attached hereto ("Contract"), which
are issued by AGL and are funded through AGL's Separate Account D's ("Separate
Account D");
WHEREAS, AGL and DISTRIBUTOR (including certain affiliates of
DISTRIBUTOR) may in the future jointly develop other annuity and/or life
insurance contracts (collectively referred to, together with the Contract and
any certificates under any group contract, as the "Contracts") to be issued
through one or more separate accounts established by AGL for such purposes
(collectively referred to, together with Separate Account D, as the
"Accounts");
WHEREAS, AGL has appointed AGSI the principal underwriter of the Sierra
Advantage Variable Annuity Contract and currently intends to appoint AGSI the
principal underwriter of all Contracts described in Schedule A;
WHEREAS, AGL and AGSI have previously retained DISTRIBUTOR, on an
exclusive basis, to market and distribute the Contracts and DISTRIBUTOR
desires to provide such services;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and of the mutual expectations of benefit occurring from the
activities herein contemplated, the Parties hereto agree as follows:
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SECTION 1. AVAILABLE CONTRACTS
1.1 AVAILABILITY. AGL shall make the Contracts available to
Distributor for distribution pursuant to the terms and conditions of this
Agreement, as the Parties may amend from time to time by mutual agreement.
1.2 MODIFICATION OF CONTRACTS. AGL, in its sole discretion, may
modify or delete the terms of any Contract, to the extent permitted by the
Contracts and applicable law. DISTRIBUTOR may, from time to time, propose
modifications to the terms of any Contract, and AGL agrees to consider any
such proposed modification in good faith, provided, however, that any
implementation of such proposed modification shall remain in AGL's sole
discretion.
1.3 SUSPENSION OR RESTRICTION OF SALES. AGL, in its sole discretion,
may suspend or restrict the sale of any Contract in any state or other
jurisdiction upon 30 days' prior written notice to DISTRIBUTOR or upon such
shorter notice period as may be required by applicable law, without incurring
any liability or obligation to DISTRIBUTOR. Upon such notice, DISTRIBUTOR
agrees to immediately cease, and shall instruct all Selling Group Members (as
defined below) to immediately cease, all solicitation activity with respect to
the Contracts in those states or other jurisdictions where AGL has suspended
or restricted the sale of Contracts. In addition, notwithstanding any
provision herein to the contrary, AGL may refuse to sell any Contract to any
applicant for any reason.
1.4 REINSURANCE OF CONTRACTS. AGL may reinsure any of the Contracts with
a reinsurer of its choice at any time, to the extent permitted by applicable
law.
SECTION 2. CONTRACT DISTRIBUTION
2.1 EXCLUSIVE APPOINTMENT.
(a) AGL, as the issuer of the Contracts, and AGSI, as the principal
underwriter of the Contracts, hereby appoint DISTRIBUTOR the exclusive
distributor, during the term of this Agreement, for the marketing and
distribution of the Contracts.
(b) The foregoing appointment shall be limited to those states and other
jurisdictions in which the Contracts may lawfully be offered and sold and in
which DISTRIBUTOR and any Associated Agency (as defined below) are properly
licensed as provided in Section 2.5 below, registered or otherwise qualified
to offer and sell the Contracts under the applicable federal securities laws
and the applicable insurance and other laws and regulations of each such state
or other jurisdiction. AGL shall periodically provide DISTRIBUTOR with notice
pursuant to Section 14 hereof of all states and other jurisdictions in which
the Contracts may lawfully be offered and sold.
(c) As exclusive distributor for the Contracts, DISTRIBUTOR, along with
AGL, shall enter into agreements ("selling group agreements") with other
persons ("Selling Group Members"), pursuant to which such Selling Group
Members will offer, sell, and service Contracts in those states and other
jurisdictions where they and their Associated Agencies (as defined below) are
properly licensed, registered or otherwise qualified to offer and sell the
Contracts under the applicable insurance and other laws of each such state or
other jurisdiction.
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2.2 BEST EFFORTS. DISTRIBUTOR shall use its best efforts to recruit
Selling Group Members to offer, sell, and service Contracts.
2.3 SELLING GROUPS. Each Selling Group Member shall be registered with
the Securities and Exchange Commission ("SEC") as a broker-dealer under the
Securities Exchange Act of 1934 ("1934 Act") and shall be a member in good
standing of the National Association of Securities Dealers, Inc. ("NASD"),
unless the Selling Group Member is exempt from the broker-dealer registration
requirements of the 1934 Act. In addition, each Selling Group Member, if
applicable, and Associated Agency (as defined below) shall have received an
appropriate appointment or license by or through AGL and, unless exempt, a
level of qualification with the NASD appropriate to enable it to offer and
sell Contracts. Each Selling Group Member shall enter into a selling group
agreement the form of which shall be as agreed to by the Parties from time to
time. The Parties shall not enter into any selling group agreement unless and
until AGL has given written approval of the Selling Group Member, which
approval shall be provided within ten calendar days after DISTRIBUTOR has
given notice of its intent to enter into the agreement.
2.4 SUITABILITY DETERMINATIONS. The Parties wish to ensure that the
Contracts, the applications for which will be solicited by Selling Group
Members and their respective registered sales representatives (Selling Group
Members and registered sales representatives may be referred to collectively
as "Sales Persons"; if the context so warrants, registered sales
representatives may be referred to as "Sales Persons.") will be issued to
persons for whom the Contracts will be suitable. Each Selling Group Member
shall take reasonable steps to ensure that neither it nor any other Sales
Person makes recommendations to an applicant to purchase any of the Contracts,
or to select any investment option thereunder, in the absence of reasonable
grounds to believe that the purchase of the Contracts or selection of that
option is suitable for such applicant in compliance with federal securities
law requirements governing suitability obligations. While not limited to the
following, a determination of suitability shall be based on information
furnished to Sales Persons after reasonable inquiry of such applicant
concerning the applicant's insurance and investment objectives and financial
situation and needs, including the likelihood that the applicant will make
sufficient premium payments to derive the benefits thereof, and tax status.
The responsibility of Sales Persons to take such reasonable steps and make
such determinations of suitability shall be a requirement of each selling
group agreement entered into by the Parties.
2.5 SALES PERSONS/ASSOCIATED AGENCIES. DISTRIBUTOR and AGL shall enter
into a separate selling agreement whereby Selling Group Members will represent
that such Selling Group Member and its Sales Persons are duly registered and
qualified pursuant to the 1934 Act, NASD regulations, and any other securities
regulatory requirements. DISTRIBUTOR shall assist in ensuring that any
insurance agency associated with DISTRIBUTOR and to whom it may assign certain
rights or obligations under this Agreement pursuant to Section 8 of this
Agreement is and remains properly licensed under the applicable insurance laws
and regulations of each state or jurisdiction in which the Associated Agency
is engaged in the offer or sale of the Contracts.
2.6 INSURANCE AGENT LICENSING.
(a) Neither DISTRIBUTOR nor any of its Sales Persons shall engage in any
activities with respect to the offer or sale of Contracts that would require
insurance agent licensing in the state or jurisdiction where such activities
are performed, unless and until such Sales Persons are properly licensed to
perform such services in the particular state or other jurisdiction.
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(b) DISTRIBUTOR shall immediately notify AGL if its license is revoked,
suspended, or terminated or if the license of any of its Sales Persons has
been revoked, suspended, or terminated.
(c) AGL agrees to take all actions necessary to effect the appointment of
the Sales Persons of Selling Group Members or their Associated Agency(ies) as
insurance agents of AGL, and to effect renewals thereof, all as required for
the business of this Agreement.
(d) DISTRIBUTOR shall, from time to time, advise AGL of the Sales Persons
of DISTRIBUTOR that DISTRIBUTOR wishes AGL to appoint as AGL insurance agents.
AGL shall forward all approved agent appointment forms that it receives in a
timely manner to the appropriate state insurance departments.
(e) DISTRIBUTOR and AGL shall cooperate in making arrangements with each
Selling Group Member in order to help to keep costs associated with the
appointment of Sales Persons at reasonable levels.
(f) Notwithstanding the foregoing, AGL, in its sole discretion, may
refuse to appoint or renew the appointment of any Sales Person, or may revoke
such appointment for any reason. AGL shall consult with DISTRIBUTOR prior to
refusing to appoint, renew appointment, or revoking an appointment, as to the
reasons for such decision. Neither AGL nor AGSI shall incur any obligation to
compensate or reimburse any expenses of DISTRIBUTOR as a result of any such
refusal to appoint or renew an appointment of a Sales Person.
2.7 SELECTION OF SELLING GROUP MEMBERS. DISTRIBUTOR shall exercise care
and diligence in selecting and recommending to AGL broker-dealers to serve as
Selling Group Members and in the marketing and distribution of the Contracts.
2.8 SUPERVISION BY SELLING GROUP MEMBERS. Selling Group Members shall be
responsible for the supervision of the Sales Persons in their solicitation of
applications for the Contracts and all of their activities relating to this
Agreement and that are provided for under the Selling Group Agreement.
2.9 MARKETING MATERIALS.
(a) DISTRIBUTOR, at its sole cost, shall be responsible for developing
(with the assistance of AGL), printing and distributing all marketing
materials to be used in connection with the offer and sale of the Contracts,
except for (i) any prospectus for the Contracts (for which responsibility is
described in Section 2.9(b), below), including any related statement of
additional information ("SAI"), and any amendments or supplements to the
foregoing (collectively, as the context requires, "Contract Prospectus") and
(ii) any annual or semi-annual reports for an Account ("Account Reports"), the
preparation of which shall be the sole responsibility of AGL. As used herein,
"marketing materials" shall mean any "advertisement" or "sales literature," as
those terms are defined in Section 35(a) of the NASD's Rules of Fair Practice,
as amended from time to time, including, without limitation, any so-called
"dealer only" materials.
(b) The responsibility for (i) printing and distributing Contract
Prospectuses (including any related SAI) and Account Reports used as marketing
materials and (ii) the costs of printing and distributing such Contract
Prospectuses and Account Reports is set forth in the Participation
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Agreement by and among AGL, DISTRIBUTOR, and other parties thereto
("Participation Agreement").
(c) AGL and DISTRIBUTOR shall submit by telecopy or overnight delivery
definitive copies of all marketing materials to the other for its approval,
which approval shall be provided within at least ten (10) business days of
receipt or such period to which the Parties may agree from time to time.
(d) DISTRIBUTOR shall, to the extent required, file in a timely manner
all marketing materials with the NASD, the SEC, and any other regulatory body
(other than state insurance regulatory bodies), as appropriate, and shall
obtain any necessary approval of these regulatory bodies of such marketing
materials. AGL shall, to the extent required, file in a timely manner all
marketing materials with the various state insurance regulatory bodies, as
appropriate, and shall obtain any necessary approval of these regulatory
bodies of such marketing materials.
(e) Notwithstanding the foregoing, AGL acknowledges that Selling Group
Members, at their own cost, may from time to time develop, print, and
distribute marketing materials that are not jointly developed by AGL and
DISTRIBUTOR ("supplemental marketing materials"). In no event shall
DISTRIBUTOR utilize, or give its consent to Selling Group Members to utilize,
any supplemental marketing materials unless AGL has provided its written
approval of such materials prior to their intended first use. The
responsibility of Selling Group Members to obtain AGL's prior written approval
of supplemental marketing materials shall be a requirement of each selling
group agreement entered into by the Parties.
2.10 MARKETING SERVICES. In connection with the offer and sale of
Contracts, DISTRIBUTOR agrees to:
(a) develop a marketing plan for the introduction and continuing sale of
the Contracts through Selling Group Members;
(b) provide AGL on an ongoing basis with information concerning the
marketability of the Contracts and the usefulness of the marketing materials
jointly prepared by AGL and DISTRIBUTOR or any other documents prepared by
AGL, and advise AGL with regard to the desirability of revising or redesigning
the same;
(c) provide AGL on an ongoing basis with comparative data regarding
products offered by other life insurance companies and mutual fund groups;
(d) initiate and maintain contact with existing and potential Selling
Group Members for purposes of advising AGL on the desirability of developing
and implementing new Contract features;
(e) receive written and oral inquiries from Selling Group Members with
respect to the Contracts and coordinate responses to the same with AGL;
(f) distribute to Selling Group Members copies of all marketing described
herein, that are approved or prepared by AGL pursuant to this Agreement;
(g) maintain a toll-free number and support and service unit to render
assistance to Selling Group Members in connection with the offer and sale of
Contracts;
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(h) provide such other marketing services and support as AGL may
reasonably request from time to time.
2.11 NON-MARKETING MATERIALS.
(a) AGL, at its sole cost, shall be responsible for preparing, printing
in quantity and delivering to Selling Group Members: (i) all Contract forms,
applications and related materials, (ii) all documents pertaining to the
processing of premium payments, refunds and other monies, and (iii) all
documents pertaining to transactions, claims, and other features available
under the Contracts, including, but not limited to, full or partial
surrenders, exchanges, transfers, loans, systematic purchases, death claims,
changes in premium allocations, and changes in beneficiary.
(b) AGL, at its sole cost, shall be responsible for preparing, printing,
and distributing all correspondence with Contract owners, except for
correspondence prepared, printed, and distributed by DISTRIBUTOR pursuant to
AGL's prior approval.
(c) The responsibility for printing and distributing Contract
Prospectuses to existing Contract owners shall be set forth in the
Participation Agreement.
(d) AGL, at its sole cost, shall be responsible for preparing, printing,
distributing to existing Contract owners, and, to the extent required, filing
with any appropriate regulatory body, in a timely manner, or causing the same
to be done: (i) all Contract owner account statements, (ii) Account Reports,
(iii) voting cards, as appropriate; and (iv) all reports, forms, and other
information necessary to comply with applicable federal and state tax law.
(e) AGL shall provide to DISTRIBUTOR or its designated agent at least one
complete copy of all SEC registration statements, Contract Prospectuses,
Account Reports, any preliminary and final voting instruction solicitation
material, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Account or the Contracts,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
(f) AGL, as agent for AGSI and Selling Group Members shall, upon or prior
to the completion of each Contract transaction for which a confirmation is
legally required, send a written confirmation to the Contract owner for each
such transaction, in a form and manner which complies with the requirements of
the 1934 Act, state laws and regulations, and the disclosure requirements of
the NASD. Such confirmations shall be furnished to all Contract owners in
accordance with securities laws, shall reflect the facts of the transaction,
and, if applicable, shall show that they are being sent by AGL on behalf of
AGSI and Selling Group Members.
2.12 INFORMATION ABOUT AGL AND DISTRIBUTOR
(a) Neither AGL nor any of its affiliates will give any information or
make any representations or statements on behalf of or concerning DISTRIBUTOR
or its affiliates in connection with the sale of the Contracts other than the
information or representations provided by or on behalf of DISTRIBUTOR and its
affiliates that are contained (i) in the registration statement, including the
Contract Prospectus contained therein, as such registration statement and
Prospectus may be amended from time to time; (ii) in Account Reports or voting
instruction solicitation materials for each Account; or (iii) marketing
materials prepared, except with the express written permission
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of DISTRIBUTOR. As used herein, the term "affiliate" shall have the same
meaning as defined in Section 2(a)(3) of the Investment Company Act of 1940
("1940 Act").
(b) Neither DISTRIBUTOR nor any of its affiliates will give any
information or make any representations or statements on behalf of or
concerning AGL, AGSI, or their respective affiliates in connection with the
sale of the Contracts other than the information or representations provided
by or on behalf of AGL, AGSI, or their respective affiliates that are
contained in (i) the registration statement, including the Contract Prospectus
contained therein, as such registration statement and Prospectus may be
amended from time to time; (ii) in Account Reports or voting instruction
solicitation materials for each Account; or (iii) in marketing material,
except with the express written permission of AGL.
2.13 COMPLAINTS.
In the case of an oral or written consumer or regulatory agency
complaint, AGL, AGSI, and Selling Group Member shall each promptly notify the
others and shall coordinate and fully cooperate in responding to such
complaints. AGL, AGSI, and Selling Group Member shall jointly develop
procedures to coordinate, investigate and respond to such complaints.
AGL, AGSI and Selling Group Member agree to consult with one another with
respect to the disposition of any complaints or grievances and Selling Group
Member shall use its best efforts to obtain the cooperation of any Sales
Person in the disposition thereof. AGSI and DISTRIBUTOR shall maintain
customer complaint files pursuant to applicable NASD rules.
2.14 LIMITATIONS ON AUTHORITY. DISTRIBUTOR and its Sales Persons shall
have no authority to, and shall not:
(a) alter or substitute AGL's Contract applications or forms in any
manner;
(b) guarantee the issuance of any Contract or the reinstatement of any
lapsed Contract (in the case of life insurance Contracts), or the reinvestment
of any Contract (in the case of annuity Contracts);
(c) add, alter, waive or discharge any Contract provision, including,
without limitation, any forfeiture provision, or represent that such can be
done by AGL;
(d) make any settlement of any claim or claims or bind AGL or any of its
affiliates in any way;
(e) extend the time of making any premium payments, or pay or allow any
inducement not specified in the Contracts to any Contract owner or applicant,
or rebate any portion of a premium payment, in any manner whatsoever;
(f) incur any indebtedness or liability on behalf of or expend or
contract for the expenditure of the funds by AGL;
(g) enter into legal proceedings in connection with any matter pertaining
to the business of AGL without the prior written consent of AGL, unless
DISTRIBUTOR or any Sales Person, as the case may be, is named in such
proceedings;
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(h) give or offer to give, on behalf of AGL, any tax or legal advice
related to the purchase of a Contract; or
(i) exercise any authority on behalf of AGL other than that expressly
conferred on DISTRIBUTOR or any Sales Person by this Agreement.
2.15 INDEPENDENT CONTRACTOR. DISTRIBUTOR shall at all times function as,
and be deemed to be, an independent contractor. Nothing contained herein shall
be construed as creating the relationship of employer and employee between or
among AGL, AGSI, and DISTRIBUTOR (or any Sales Person or Associated Agency
thereof).
SECTION 3. ADMINISTRATION
3.1 CONTRACT ADMINISTRATION. Each Party agrees to perform the
administrative duties assigned to such Party under Schedule B attached hereto
and incorporated by reference herein, as the Parties may amend from time to
time by mutual agreement. DISTRIBUTOR acknowledges that AGL may subcontract
its rights and responsibilities enumerated in Schedule B to one or more third
party vendors. Although such duties may be delegated, AGL agrees that it is
legally liable for the performance of the same.
3.2 PERFORMANCE STANDARDS. Each Party agrees to meet or exceed the
standards for performing the various administrative duties set out in Schedule
B attached hereto and incorporated by reference herein, as the Parties may
amend from time to time by mutual agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES
4.1 BY AGL.
AGL represents and warrants that:
(a) it is an insurance company duly organized, validly existing and in
good standing under the laws of the State of Texas and has full corporate
power, authority and legal right to execute, deliver and perform its duties
and comply with its obligations under this Agreement,
(b) it has legally and validly established and maintains each Account as
a segregated asset account under the Texas Insurance Code and the regulations
thereunder,
(c) the Contracts comply in all material respects with all other
applicable federal and state laws and regulations,
(d) interests in each Account pursuant to the Contracts will be
registered under the 1933 Act to the extent required by the 1933 Act,
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(e) the Contracts will be duly authorized for issuance and sold in
compliance with all applicable federal and state laws, including, without
limitation, the 1933 Act, the 1934 Act, the ▇▇▇▇ ▇▇▇, ▇▇▇▇▇ law, and the laws
of any other state in which the Contracts are offered and sold,
(f) each Account is and will remain registered under the 1940 Act, to the
extent required by the 1940 Act, and each Account does and will comply in all
material respects with the requirements of the 1940 Act and the rules
thereunder, to the extent required,
(g) each Account's 1933 Act registration statement relating to the
Contracts, together with any amendments thereto, will at all times comply in
all material respects with the requirements of the 1933 Act and the rules
thereunder,
(h) AGL will amend the registration statement for its Contracts under the
1933 Act and for its Accounts under the 1940 Act from time to time as required
in order to effect the continuous offering of its Contracts or as may
otherwise be required by applicable law, and
(i) each Contract Prospectus will at all times comply in all material
respects with the requirements of the 1933 Act and the rules thereunder, but
excluding information contained or omitted in reliance upon and in conformity
with information furnished to AGL or AGSI by or on behalf of DISTRIBUTOR.
AGL further represents that:
(a) the Contracts currently are and will be treated as annuity,
endowment, or life insurance contracts under applicable provisions of the
Internal Revenue Code of 1986, as amended ("Code"), that it will use its best
efforts to maintain such treatment, and that it will notify DISTRIBUTOR
immediately upon having a reasonable basis for believing that any of the
Contracts have ceased to be so treated or that they might not be so treated in
the future, and
(b) that each Account is a "segregated asset account," that interests in
the Account are offered exclusively through the purchase of or transfer into a
"variable contract," within the meaning of such terms under Section 817 of the
Code and the regulations thereunder, that it will use its best efforts to
continue to meet such definitional requirements, and that it will notify
DISTRIBUTOR immediately upon having a reasonable basis for believing that such
requirements have ceased to be met or that they might not be met in the
future.
4.2 BY AGSI.
AGSI represents and warrants that:
(a) it is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Texas and has full power, authority,
and legal right to execute, deliver, and perform its duties and comply with
its obligations under this Agreement,
(b) it is a member in good standing of the NASD and that it has obtained
all approvals necessary to offer the Contracts and otherwise enter into and
carry out all transactions contemplated by this Agreement, has obtained or
will obtain all approvals, licenses, authorizations, orders or consents, and
shall be duly registered or otherwise qualified under the securities laws of
any state or other jurisdiction where offers or sales of the Contracts may be
made,
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(c) it is bonded as required by all applicable laws and regulations and
that it will carry out its sales and underwriting obligations hereunder in
continued compliance with the NASD Rules of Fair Practice and federal and
state securities laws and regulations and state insurance laws and
regulations,
(d) it is duly registered with the SEC as a broker-dealer under the 1934
Act, and that the activities of DISTRIBUTOR and Sales Persons in connection
with the offer and sale of Contracts shall be in compliance with applicable
federal and state securities laws and regulations in all material respects,
(e) in its capacity as principal underwriter of the Contracts, it has
performed due diligence in order to discharge its obligations to all Selling
Group Members, and further that the Contracts are the subject of a bona fide
offering and that after a reasonable examination of the Contracts, it has
determined that the representations contained in the Contract prospectuses are
true and correct,
(f) it shall at all times provide appropriate supervision for those home
office employees of AGL who are registered representatives of AGSI and who are
required by AGL to execute duties on behalf of AGL which are related to the
Contracts, and
(g) it shall take all actions necessary to obtain and maintain all
regulatory approvals required to underwrite the Contracts for sale in all
states and jurisdictions in which the Contracts may be sold.
4.3 BY DISTRIBUTOR.
DISTRIBUTOR represents and warrants that:
(a) it is a corporation duly organized, validly existing, and in good
standing under the laws of the State of California and has full power,
authority, and legal right to execute, deliver, and perform its duties and
comply with its obligations under this Agreement,
(b) it is a member in good standing of the NASD and that it has obtained
all approvals necessary to offer the Contracts and otherwise enter into and
carry out all transactions contemplated by this Agreement, has obtained or
will obtain all approvals, licenses, authorizations, orders or consents, and
shall be duly registered or otherwise qualified under the securities and
insurance laws of any state or other jurisdiction where offers or sales of the
Contracts may be made,
(c) it is bonded as required by all applicable laws and regulations and
that it will carry out its sales and underwriting obligations hereunder in
continued compliance with the NASD Rules of Fair Practice and federal and
state securities laws and regulations and state insurance laws and
regulations,
(d) it is duly registered with the SEC as a broker-dealer under the 1934
Act, and that the activities of DISTRIBUTOR shall be in compliance with
applicable federal and state securities laws and regulations in all material
respects,
(e) neither it nor its Associated Agencies shall make any representations
concerning the Contracts, except those contained in or reasonably derived from
the Contract Prospectus, registration statements, annual or semi-annual
reports of each Account, or in other written materials prepared by or on
behalf of AGL, and
10
(f) to the extent that DISTRIBUTOR assigns rights or obligations under
this Agreement to an Associated Agency pursuant to Section 8 hereof,
DISTRIBUTOR represents and warrants that such Associated Agency will have and
maintain all governmental approvals, licenses, authorizations, orders or
consents that are necessary for it to be assigned such rights and perform any
such obligations. In addition, the representations and warranties made by
DISTRIBUTOR in this Section 4.3 shall be read to apply to the Associated
Agency where the context so requires.
SECTION 5. COMPENSATION; COSTS AND EXPENSES
5.1 COMPENSATION.
AGL agrees to compensate DISTRIBUTOR for its services hereunder in
accordance with Schedule C attached hereto and incorporated herein by
reference, as the Parties may amend from time to time by mutual agreement.
5.2 EACH PARTY TO BEAR OWN COSTS. Except as otherwise expressly provided,
each Party to this Agreement shall bear all expenses of fulfilling its duties
and obligations hereunder. To the extent one Party initially bears any costs
or expenses that are the responsibility of another Party, that other Party
shall reimburse the Party that initially bore such expenses promptly upon
request.
SECTION 6. INDEMNIFICATION
6.1 INDEMNIFICATION BY AGL AND AGSI.
(a) Except as limited by and in accordance with the provisions of
Sections 6.1(c) and 6.1(d) below, AGL and AGSI shall indemnify and hold
harmless DISTRIBUTOR against any loss, claim, damage or liability (including
amounts paid in settlement with the written consent of AGL and AGSI), or
litigation (including reasonable counsel fees and other costs of investigating
or defending any alleged loss, claim, damage, or liability) to which
DISTRIBUTOR may become subject under any statute, regulation, at common law or
otherwise, insofar as such losses, claims, damages, or liabilities are related
to the sale of the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the Contract, the
registration statement relating to the Contracts, the Contract
Prospectus, or in any published marketing materials or communications
with any Contract owner (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the alleged
omission to state therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not apply as
to any Indemnified Party, as defined below, if such statement or omission
or such alleged statement or omission was made in reliance upon and in
conformity with information furnished to AGL or AGSI by or on behalf of
DISTRIBUTOR or any Associated Agency of DISTRIBUTOR for use in the
foregoing materials; or
11
(ii) arise out of the failure of AGL, AGSI, or any of their
respective affiliates, officers, directors, or employees, to comply with
any applicable securities or other laws and regulations in connection
with its rendering of Contract issue, recordkeeping, confirmation or
other services under this Agreement; or
(iii) arise out of AGL's or AGSI's negligence or misconduct, or that
of their respective affiliates, officers, directors, or employees in the
performance of its duties hereunder; or
(iv) arise as a result of any failure by AGL or AGSI to
substantially provide the services and furnish the materials under the
terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation or warranty made by AGL or AGSI in this Agreement or arise
out of or result from any other material breach of this Agreement by AGL
or AGSI.
(b) The indemnities in this Section 6.1 shall, upon the same terms and
conditions, extend to and inure to the benefit of each director, officer, or
Sales Person of DISTRIBUTOR and any person controlling DISTRIBUTOR within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act (each an
"Indemnified Party").
(c) Neither AGL nor AGSI shall be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may arise
from such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations or duties under
this Agreement.
(d) Neither AGL or AGSI shall be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified AGL and AGSI, if appropriate, in
writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been served
upon such Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), but failure to
notify AGL and AGSI of any such claim shall not relieve AGL and AGSI from any
liability which it may have to the Indemnified Party against whom such action
is brought otherwise than on account of this indemnification provision. In
case any such action is brought against an Indemnified Party, AGL and AGSI
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from AGL and AGSI to such party of
AGL's and AGSI's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
AGL will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
6.2 INDEMNIFICATION BY DISTRIBUTOR.
(a) Except as limited by and in accordance with the provisions of
Sections 6.2(c) and 6.2(d) below, DISTRIBUTOR shall indemnify and hold
harmless AGL and AGSI against any loss, claim, damage or liability (including
amounts paid in settlement with the written consent of AGL and
12
AGSI), or litigation (including reasonable counsel fees and other costs of
investigating or defending any alleged loss, claim, damage, or liability) to
which AGL or AGSI may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, or liabilities are
related to the sale of the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the Contract, the
registration statement relating to the Contracts, the Contract
Prospectus, or in any published marketing materials or communications
with any Contract owner (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the alleged
omission to state therein or necessary to make the statements therein not
misleading, if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with information
furnished to AGL or AGSI by or on behalf of DISTRIBUTOR or any Associated
Agency thereof for use in the foregoing materials; or
(ii) arise out of the failure of DISTRIBUTOR or any Associated
Agency of DISTRIBUTOR, including affiliates, officers, directors, or
employees of the foregoing, to comply with any applicable securities or
other laws and regulations in connection with its rendering of Contract
marketing and distribution under this Agreement; or
(iii) arise out of the negligence or misconduct of DISTRIBUTOR or
any Associated Agency of DISTRIBUTOR, or that of any affiliate, officer,
director, or employee of the foregoing, in the performance of its duties
hereunder; or
(iv) arise as a result of any failure by DISTRIBUTOR to
substantially provide the services and furnish the materials under the
terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation or warranty made by DISTRIBUTOR in this Agreement or arise
out of or result from any other material breach of this Agreement by
DISTRIBUTOR.
(b) The indemnities in this Section 6.2 shall, upon the same terms and
conditions, extend to and inure to the benefit of each director, officer, and
affiliate of AGL or AGSI and any person controlling AGL or AGSI within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act (each an
"Indemnified Party").
(c) DISTRIBUTOR shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations or duties under this
Agreement.
(d) DISTRIBUTOR shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified DISTRIBUTOR in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify DISTRIBUTOR of
any such claim shall not relieve DISTRIBUTOR from any liability
13
which it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any such
action is brought against an Indemnified Party, DISTRIBUTOR shall be entitled
to assume the defense thereof, with counsel satisfactory to the party named in
the action. After notice from DISTRIBUTOR to such party of DISTRIBUTOR's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and DISTRIBUTOR
will not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
6.3 LIMITATION ON LIABILITY. In no event shall any Party under this
Agreement be liable for lost profits or for exemplary, special, punitive or
consequential damages alleged to have been sustained by the other Party, as
opposed to a third party.
6.4 INJUNCTIVE RELIEF. The Parties each agree that monetary damages may
be an inadequate remedy in the event of a breach by any Party of any of the
covenants in this Agreement, and that any such breach by a Party may cause the
other Parties great and irreparable injury and damage. Accordingly, the
Parties agree that the non-breaching Parties shall be entitled, without
waiving any additional rights or remedies otherwise available to it at law or
in equity or by statute, to injunctive and other equitable relief in the event
of a breach or intended or threatened breach by any other Party of any of said
covenants.
SECTION 7. TERM AND TERMINATION
7.1 TERM. This Agreement shall be effective as of the date first above
written and shall, unless earlier terminated pursuant to Section 7.2 or 7.3,
remain in full force and effect thereafter with respect to all Contracts of
each particular form type until no Contracts of that particular form type
remain outstanding.
7.2 EVENTS OF TERMINATION.
(a) This Agreement shall terminate at any Party's option, without
penalty:
(i) with or without cause, on not less than 180 days' written notice
to the other Parties;
(ii) upon the mutual written consent of the Parties;
(iii) upon written notice of one Party to the other Parties in the
event of bankruptcy or insolvency of such party to which notice is given;
or
(iv) in the event of an assignment of this Agreement, subject to the
provisions of Section 8.
(b) This Agreement shall terminate at the option of DISTRIBUTOR, subject
to Section 7.3, in the event of:
(i) fraud, misrepresentation, conversion or unlawful withholding of
funds by AGL or AGSI;
14
(ii) the dissolution or disqualification of AGL or AGSI to do
business under any applicable state or federal law where AGL or AGSI's
ability to perform is materially impaired; however, such termination
shall extend only to the jurisdiction(s) where AGL or AGSI is prohibited
from doing business;
(iii) the suspension or revocation of any material license or permit
held by AGL or AGSI by the appropriate governmental agency or authority;
however, such termination shall extend only to the jurisdiction(s) where
AGL or AGSI is prohibited from doing business;
(iv) the sale (without the prior written consent of DISTRIBUTOR,
which consent shall not be unreasonably withheld) of the AGL or AGSI
business relating to the Contracts, which sale is to an unaffiliated
person or entity, whether by merger, consolidation, or sale of
substantially all of AGL or AGSI's assets, during the term of, and any
extension of, this Agreement; or
(v) upon the institution of formal proceedings against AGL or AGSI
by the NASD, SEC, or any other regulatory body regarding AGL or AGSI's
duties under this Agreement, the sale of the Contracts, or the operation
of any Account, provided that such proceedings result in a finding of
material wrongdoing by AGL or AGSI.
(c) This Agreement shall terminate at the option of AGL or AGSI, subject
to Section 7.3, in the event of:
(i) fraud, misrepresentation, conversion or unlawful withholding of
funds by DISTRIBUTOR;
(ii) the dissolution or disqualification of DISTRIBUTOR to do
business under any applicable state or federal law where DISTRIBUTOR's
ability to perform is materially impaired; however, such termination
shall extend only to the jurisdiction(s) where DISTRIBUTOR is prohibited
from doing business;
(iii) the suspension or revocation of any material license or permit
held by DISTRIBUTOR by the appropriate governmental agency or authority;
however, such termination shall extend only to the jurisdiction(s) where
DISTRIBUTOR is prohibited from doing business;
(iv) the sale (without the prior written consent of AGL, which
consent shall not be unreasonably withheld) of DISTRIBUTOR's business to
an unaffiliated person or entity, whether by merger, consolidation, or
sale of substantially all of DISTRIBUTOR'S assets during the term of, and
any extension of, this Agreement; or
(v) upon the institution of formal disciplinary proceedings against
DISTRIBUTOR by the NASD, SEC, or any other regulatory body, regarding
DISTRIBUTOR's duties under this Agreement or the sale of the Contracts,
provided that such proceedings result in a finding of material wrongdoing
by DISTRIBUTOR.
7.3 REMEDY OF EVENTS OF DEFAULT. If any Party breaches this Agreement or
is in default in the performance of any of its duties and obligations
hereunder (the "defaulting Party"), including,
15
without limitation, a breach in any representation or warranty made by the
defaulting Party, the non-defaulting Parties may give written notice thereof
to the defaulting Party, and if such breach is not remedied within 30 days
after such written notice is given, then the non-defaulting Parties may
terminate this Agreement by giving 30 days' written notice of such termination
to the defaulting Party.
7.4 PARTIES TO COOPERATE RESPECTING TERMINATION. The Parties agree to
cooperate and give reasonable assistance to each other in effecting an orderly
transition following termination.
SECTION 8. ASSIGNMENT
This Agreement is not assignable by DISTRIBUTOR and shall terminate
automatically in the event of a purported assignment; provided, however, that
DISTRIBUTOR may, with the prior written consent of AGL (which shall not be
unreasonably withheld), assign its rights or obligations under this Agreement
to a company affiliated with DISTRIBUTOR.
SECTION 9. CONTRACT LAPSE, TERMINATION, SURRENDER, ETC.
9.1 RESPONSIBILITIES OF DISTRIBUTOR. During the term of this Agreement
and for five (5) years following the termination of this Agreement, neither
DISTRIBUTOR nor any of its Associated Agencies or Sales Persons, or any
affiliate, director, officer or employee of the foregoing, shall induce or
cause, or attempt to induce or cause, directly or indirectly, any Contract
owner (a) to lapse, terminate, surrender, exchange, or cancel his or her
Contract, (b) to cease or discontinue making premium payments thereunder, or
(c) to direct cash value or premium payments thereunder to any other financial
product without the prior written consent of AGL, unless such act is in
response to an enactment of federal or state legislation, order or decision of
any court or regulatory authority, or a change in circumstances that makes the
Contracts or insurance contracts of that type (E.G., annuity contracts or life
insurance contracts) an unsuitable investment for existing Contract owners.
9.2 RESPONSIBILITIES OF AGL AND AGSI. During the term of this Agreement
and for five (5) years following the termination of this Agreement, neither
AGL nor AGSI, or any affiliate, director, officer, employee or agent of the
foregoing, shall induce or cause, or attempt to induce or cause, directly or
indirectly, any Contract owner (a) to lapse, terminate, surrender, exchange,
or cancel his or her Contract, (b) to cease or discontinue making premium
payments thereunder, or (c) to direct cash value or premium payments
thereunder to any other financial product without the prior written consent of
DISTRIBUTOR, unless such act is in response to an enactment of federal or
state legislation, order or decision of any court or regulatory authority, or
a change in circumstances that makes the Contracts or insurance contracts of
that type (E.G., annuity contracts or life insurance contracts) an unsuitable
investment for existing Contract owners.
SECTION 10. CONFIDENTIALITY
Each Party to this Agreement shall keep confidential any information
about each other Party, or its operations obtained pursuant to this Agreement
or the transactions contemplated herein and
16
shall disclose such information only if such other Party has authorized such
disclosure, or if such disclosure is required by federal or state regulatory
bodies. If any Party hereto receives a request from such regulatory body
requiring such disclosure, that Party shall immediately notify the other
Parties of the request.
SECTION 11. ARBITRATION OF DISPUTES
11.1 ARBITRATION BINDING. Any controversy or claim arising out of or
relating to this Agreement, or the breach hereof, shall be settled by
arbitration under the rules of the NASD in effect at that time. If the NASD
refuses jurisdiction, or the Parties mutually agree in writing, the
arbitration procedure described herein shall be used. In either event, the
decision of the arbitrator(s) shall be final and judgment upon the award
rendered may be entered in any court having jurisdiction thereof.
11.2 INITIATION OF ARBITRATION. To initiate arbitration, the Party
seeking arbitration ("Claimant") shall notify the Party(ies) (each, a
"Respondent") in writing of its desire to arbitrate, stating the nature of its
dispute and the remedy sought. The Respondent(s) shall respond to the
notification in writing within 10 days of its receipt.
11.3 SELECTION OF ARBITRATORS.
(a) The arbitration hearing shall be before a panel of three arbitrators,
each of whom must be (i) a present or former officer of a life insurance or
reinsurance company and/or (ii) an officer and principal of a registered
broker-dealer. The panel must contain at least one representative from each of
(i) and (ii). An arbitrator may not be a present or former affiliate,
director, officer, employee, attorney, or consultant of AGL, AGSI, and
DISTRIBUTOR (or any Associated Agency or Sales Person thereof).
(b) Claimant and Respondent shall each name five (5) candidates to serve
as an arbitrator. Claimant and Respondent shall each choose one candidate from
the other Party's list, and these two candidates shall serve as the first two
arbitrators. Claimant and Respondent shall each present their initial lists of
five (5) candidates by written notification to the other Party within 25 days
of the date of the mailing of the notification initiating the arbitration. Any
subsequent additions to the list that are required shall be presented within
10 days of the date the naming Party receives notice that a candidate that has
been chosen declines to serve.
(c) The two arbitrators shall then select the third arbitrator from the
eight (8) candidates remaining on the lists of the Claimant and Respondent
within 14 days of the acceptance of their positions as arbitrators. If the two
arbitrators cannot agree on the choice of a third, then this choice shall be
referred back to the Parties. Claimant and Respondent shall take turns
striking the name of one of the remaining candidates from the initial eight
(8) candidates until only one candidate remains. If the candidate so chosen
shall decline to serve as the third arbitrator, the candidate whose name was
stricken last shall be nominated as the third arbitrator. This process shall
continue until a candidate has been chosen and accepted. This candidate shall
serve as the third arbitrator. The first turn at striking the name of a
candidate shall belong to the Respondent. Once chosen, the arbitrators are
empowered to decide all substantive and procedural issues by a majority of
votes.
17
11.4 IMPARTIALITY. The Parties agree that each of the three arbitrators
should be impartial regarding the dispute. Therefore, at no time will any
Party contact or otherwise communicate with any person who is to be or who has
been designated as a candidate to serve as an arbitrator concerning the
dispute, except upon the basis of jointly drafted communications provided by
the Parties to inform those candidates actually chosen as arbitrators of the
nature and facts of the dispute. Likewise, any written or oral arguments
provided to the arbitrators concerning the dispute shall be coordinated with
the other Party(ies) and shall be provided simultaneously to the other
Party(ies) or shall take place in the presence of the other Party(ies).
Further, at no time shall any arbitrator be informed that the arbitrator has
been named or chosen by one Party or another.
11.5 HEARING DATE AND TIME. The arbitration hearing shall be held on a
date fixed by the arbitrators. In no event shall this date be later than six
(6) months after the appointment of the third arbitrator. As soon as possible,
the arbitrators shall establish pre-arbitration procedures as warranted by the
facts and issues of the particular case. At least 10 days prior to the
arbitration hearing, each Party shall provide the other Party(ies) and the
arbitrators with a detailed statement of the facts and arguments that it will
present at the arbitration hearing. The arbitrators may consider any relevant
evidence; they shall give the evidence such weight as they deem it entitled to
after consideration of any objections raised concerning it. The Claimant shall
have the burden of proving its case by a preponderance of the evidence. Each
Party may examine any witnesses who testify at the arbitration hearing. Each
Party shall bear its own costs of arbitration, except that the arbitrators
shall apportion their own reasonable fees and expenses between or among the
Parties, as they deem appropriate.
SECTION 12. TRADEMARKS
12.1 DISTRIBUTOR TRADEMARKS. DISTRIBUTOR has filed for a service ▇▇▇▇ in
order to establish ownership to all right, title and interest in and to the
name, trademark and service ▇▇▇▇ "Sierra Advantage," and will file for a
service ▇▇▇▇ in order to establish ownership of all right, title, and interest
in the name, trademark and service ▇▇▇▇ "Sierra Asset Manager" and such other
tradenames, trademarks and service marks identified in Schedule D hereto, as
the Parties hereto may amend from time to time (the "DISTRIBUTOR licensed
marks" or the "licensor's licensed marks"). DISTRIBUTOR hereby grants to AGL
(including its affiliates) a non-exclusive license to use the DISTRIBUTOR
licensed marks in connection with AGL's performance of the services
contemplated under this Agreement, subject to the terms and conditions set
forth in this Section 12.
12.2 AGL TRADEMARKS. AGL owns all right, title and interest in and to the
tradename, trademarks and service ▇▇▇▇ "American General Life Insurance
Company," and such other tradenames, trademarks and service marks identified
in Schedule D hereto, as the Parties hereto may amend from time to time (the
"AGL licensed marks" or the "licensor's licensed marks"). AGL hereby grants to
DISTRIBUTOR (including its affiliates) a non-exclusive license to use the AGL
licensed marks in connection with DISTRIBUTOR's performance of the services
contemplated by this Agreement, subject to the terms and conditions set forth
in this Section 12.
12.3 GRANT OF LICENSE. The grant of license by DISTRIBUTOR and AGL (each,
a "licensor") to the other and affiliates thereof (the "licensees") shall
terminate automatically when the Contracts (or any particular form of
Contract) cease to be outstanding or by either Party at its election upon
termination of this Agreement. Upon automatic termination, each licensee shall
cease
18
to use a licensor's licensed marks. Upon AGL's elective termination of this
license, DISTRIBUTOR (including its affiliates) shall immediately cease to
distribute marketing material relating to any Contract and shall likewise
cease any activity that suggests that it has any right under the AGL licensed
marks or that it has any association with AGL or any affiliate of AGL in
connection with any such Contracts. Similarly, upon DISTRIBUTOR's elective
termination of this license, AGL (including its affiliates) shall cease to
issue as soon as reasonably practicable, any new Contracts bearing any of the
DISTRIBUTOR licensed marks and shall likewise cease any activity which
suggests that it has any right under any of the DISTRIBUTOR licensed marks or
that it has any association with DISTRIBUTOR or any affiliate of DISTRIBUTOR,
except that AGL shall have the right to continue to administer any outstanding
Contracts bearing any of the DISTRIBUTOR licensed marks and in connection
therewith to use the DISTRIBUTOR licensed marks.
12.4 PRIOR APPROVAL. Notwithstanding any provision in this Agreement to
the contrary, a licensee shall obtain the prior written approval of the
licensor for the public release by such licensee of any materials bearing the
licensor's licensed marks. The licensor's approval shall not be unreasonably
withheld.
12.5 SAMPLE MATERIALS. During the term of this grant of license, a
licensor may request that a licensee submit samples of any materials bearing
any of the licensor's licensed marks that were previously approved by the
licensor but, due to changed circumstances, the licensor may wish to
reconsider, or that were not previously approved in the manner set forth
above. If, on the reconsideration or on initial review, respectively, any such
samples fail to meet with the written approval of the licensor, then the
licensee shall immediately cease distributing such disapproved materials. The
licensor's approval shall not be unreasonably withheld. The licensee shall
obtain the prior written approval of the licensor for the use of any new
materials developed to replace the disapproved materials, in the manner set
forth above.
12.6 TRADEMARKS VALID AND ENFORCEABLE. Each licensee hereunder: (a)
acknowledges and stipulates that the licensor's licensed marks are valid and
enforceable trademarks and/or service marks and that such licensee does not
own the licensor's licensed marks and claims no rights therein other than as a
licensee under this Agreement; (b) agrees never to contend otherwise in legal
proceedings or in other circumstances; and (c) acknowledges and agrees that
the use of the licensor's licensed marks pursuant to this grant of license
shall inure to the benefit of the licensor.
SECTION 13. BONDING AND INSURANCE
Each Party shall maintain sufficient fidelity bond coverage (including
coverage for larceny and embezzlement) and errors and omissions insurance
coverage as may be required by applicable law or as such Party seems necessary
in light of its obligations under this Agreement. DISTRIBUTOR shall maintain
errors and omissions coverage from a reputable insurance company in an amount
and form acceptable to AGL at all times during the term of this Agreement.
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SECTION 14. NOTICES
14.1 MANNER OF NOTICES. Unless otherwise provided in this Agreement, any
notice required or permitted to be sent under this Agreement shall be given to
the following persons at the following addresses and facsimile numbers, or
such other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:
American General Life Insurance Company
▇▇▇▇-▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
American General Securities Incorporated
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: F. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Sierra Investment Services Corporation
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
14.2 NOTICE OF REGULATORY PROCEEDINGS.
(a) AGL and AGSI shall immediately notify DISTRIBUTOR of: (i) the
issuance by any court or regulatory body of any stop order, cease and desist
order, or other similar order with respect to any Contract or to any Account's
registration statement under the 1933 Act relating to the Contracts or any
Contract Prospectus, (ii) any request by the SEC or other regulatory body for
any amendment to such registration statement or Contract Prospectus, (iii) the
initiation of any proceeding for that purpose or for any other purpose
relating to the offering of any Contract, or the registration or offering of
the Account's interests pursuant to the Contracts, or (iv) any other action or
circumstances that may prevent or otherwise materially affect the lawful offer
or sale of said interests in any state or jurisdiction, including, without
limitation, any circumstances in which said interests are not registered and,
in all material respects, issued and sold in accordance with applicable state
and federal law. AGL and AGSI shall make every reasonable effort to prevent
the issuance of any such stop order, cease and desist order or similar order
and, if any such order is issued, to obtain the lifting thereof at the
earliest possible time.
(b) After DISTRIBUTOR becomes aware of any of the following, DISTRIBUTOR
shall immediately notify AGL of: (i) the issuance by any court or regulatory
body of any order having a material effect with respect to DISTRIBUTOR's
ability to perform its obligations hereunder, (ii) the initiation of any
proceeding for any purpose relating to the sale of the Contracts, and (iii)
any other actions or circumstances that may prevent the lawful offer or sale
of any of the Contracts in any state or jurisdiction. DISTRIBUTOR shall also
immediately notify AGL if any of its Sales Persons or Associated Agencies is
or becomes subject to any proceedings or is sanctioned or suspended (i) by
20
the SEC or NASD, (ii) by any court for securities law violations, or (iii) by
any state regulatory authority.
SECTION 15. MISCELLANEOUS
15.1 AMENDMENT. This Agreement may be amended at any time by a writing
executed by the parties.
15.2 GOVERNING LAW. This Agreement shall be interpreted in accordance
with and governed by the laws of the State of Texas.
15.3 SURVIVAL OF PROVISIONS. Upon termination of this Agreement, the
following provisions shall survive: Sections 2.4, 2.5, 2.6, , 2.11, 2.12,
2.13, 2.14, 3, 4, 5, 6, 8, 9, 10, 11, 12, 14, and 15.
15.4 SEVERABILITY. Should any provision of this Agreement be held or made
invalid by a court decision, statute, rule, or otherwise, the remainder of
this Agreement shall not be affected thereby.
15.5 WAIVER. Any failure or delay by any Party to enforce at any time any
of the provisions of this Agreement, or to exercise any right or option which
is herein provided, or to require at any time the performance of any of the
provisions hereof, shall in no way be construed to be a waiver of such
provision of this Agreement. If any Party waives the breach of any provision
of this Agreement by another Party, the waiving Party still has the right to
require performance of that provision and its conduct shall not be construed
to waive succeeding breaches of that provision or any breaches of any other
provision.
15.6 FORCE MAJEURE. No Party shall be liable for damages due to delay or
failure to perform any obligation under this Agreement where such delay or
failure results directly or indirectly from circumstances beyond the control
and without the fault or negligence of such Party.
15.7 PARTIES TO COOPERATE.
(a) The Parties shall cooperate fully in any insurance or securities
regulatory examination, investigation, or proceeding or any judicial
proceeding with respect to AGL, AGSI, DISTRIBUTOR, and their respective
affiliates, agents and representatives to the extent that such examination,
investigation, or proceeding arises in connection with Contracts distributed
under this Agreement. The Parties shall furnish applicable federal and state
regulatory authorities with any information or reports in connection with its
services under this Agreement that authorities may request in order to
ascertain whether AGL's operations are being conducted in a manner consistent
with any applicable law or regulations.
(b) DISTRIBUTOR shall execute such papers and do such acts and things as
shall from time to time be reasonably requested by AGL for the purpose of
qualifying and maintaining qualification of the Contracts for sale under the
applicable laws of any state, and maintaining the registration of the
Contracts under the 1933 Act and any Account under the 1940 Act.
15.8 ENTIRE AGREEMENT. This Agreement shall be the sole and only
agreement among the Parties regarding the marketing and distribution of
Contracts, and it supersedes all prior and
21
contemporaneous agreements. The Parties may be parties to other agreements,
the terms and conditions of which may pertain to their respective duties and
obligations under this Agreement. To the extent anything in those other
agreements contradicts the terms of this Agreement, this Agreement shall
control. This Agreement may not be amended, supplemented, or modified, except
as expressly permitted herein, without the written agreement of the Parties.
-------------------
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the day and year first written above.
AMERICAN GENERAL LIFE INSURANCE COMPANY
on behalf of itself and each Account
named in Schedule A hereto,
as amended from time to time
____________________________________
BY:
AMERICAN GENERAL SECURITIES INCORPORATED
____________________________________
BY:
SIERRA INVESTMENT SERVICES CORPORATION
____________________________________
BY:
22
SCHEDULE A
NAMES OF SEPARATE ACCOUNTS
American General Life Insurance Company Separate Account D
AVAILABLE CONTRACTS (IDENTIFIED BY FORM NUMBER)
Registration Form and Numbers: Form N-4
Nos. 811-2441
33-57730
1. Sierra Advantage Variable Annuity
Contract form numbers: 93010
93011
2. Sierra Asset Manager Variable Annuity
Contract form numbers: 97010
97011
A-1
SCHEDULE B
AGL ADMINISTRATIVE RESPONSIBILITIES
1. Contract Maintenance
(a) File and obtain state approvals for the Contracts being issued, and
any amendments thereof.
(b) Notify DISTRIBUTOR of the effective date for each state in which the
Contracts become available for issue.
(c) Customize and support state specific requirements where
administratively feasible.
2. Contract Servicing
(a) Issue and maintain master records for Contracts applied for and
accepted.
(b) Provide maintenance support for all Contract features:
(i) Purchase Payments (new issues, 1035 Exchanges, EFT, additions);
(ii) Withdrawals (systematic, partial, full, cancellations, and
death claims);
(iii) Exchanges among Divisions, change of allocations;
(iv) Title Changes (beneficiary, ownership, name, assignments);
(v) Dollar-Cost Averaging;
(vi) Annuitization.
3. Customer Correspondence
(a) Generate and provide various customer correspondence documents:
(i) Contract (with appropriate riders and endorsements);
(ii) Confirmations of financial transactions;
(iii) For Contracts issued prior to July 1, 1996, semi-annual
statements of account activity and balances;
(iv) For Contracts issued after June 30, 1996, quarterly statements
of account activity and balances;
(v) Billing forms, in a manner agreed to between Owner and AGL.
4. Customer Service Functions
(a) Provide a telephone staff or other medium to respond to customer
inquiries.
B-1
(b) Prepare and update service forms necessary to support the Contract.
(c) Respond to written inquiries from Contract owners.
(d) Coordinate complaint resolution (formal and informal).
5. Compliance
(a) Coordinate the printing and mailing of the following documents:
(i) Separate Account semiannual and annual reports;
(ii) Evergreen prospectus.
(b) Coordinate proxy solicitations as outlined in the Participation
Agreement.
(c) Prepare updates and regulatory filings as warranted.
(d) Generate tax reporting for Contract owners as warranted by account
activity.
(e) Maintain appropriate books and records.
6. Financial
(a) Calculate unit values on business days of the separate account.
(b) Place trades with corresponding Trust funds and settle such trades as
defined in the Participation Agreement.
(c) Prepare Separate Account semiannual and annual reports .
7. Licensing/Contracting and Compensation
(a) Establish the initial record and perform ongoing maintenance for
representatives appointed to sell the product.
(b) Maintain copies of all approved Selling Group Agreements.
(c) Arrange for payment of appointment fees.
(d) Pay compensation based on arrangements of marketing and Selling Group
Agreements.
8. Reporting
(a) Provide sales or other reports as mutually agreed upon by AGL and
Distributor or Selling Group Member.
9. Communications
(a) Provide review and feedback/approval for all marketing pieces
associated with the Contract.
B-2
DISTRIBUTOR ADMINISTRATIVE RESPONSIBILITIES
1. Distribution
(a) Solicit and obtain Selling Group Agreements.
(b) Assist in selecting Selling Group Members.
2. Marketing Support
(a) Provide wholesaling support to prospective and current Selling Group
Members.
(b) Draft and distribute approved marketing and product literature as
well as all forms associated with the Contract (applications, service
forms, etc.).
(c) Provide sales reporting data to wholesalers.
(d) Provide training on Contract features and procedures to Selling Group
Members.
(e) Provide hypothetical data and illustrations for Fund performance.
B-3
SCHEDULE C
CONTRACTS: SIERRA ADVANTAGE VARIABLE ANNUITY
EFFECTIVE DATE OF THIS SCHEDULE: MAY 1, 1997
This Schedule governs the compensation to be paid by AGL in connection
with the Contracts issued in accordance with the Agreement. The defined terms
used herein shall have the same meaning as in the Agreement to which this
Schedule C is attached or as in the Contracts, whichever is applicable.
1. DISTRIBUTION FEE TO DISTRIBUTOR.
AGL shall pay or cause to be paid to DISTRIBUTOR, each semi-monthly
period, a Distribution Fee ("Fee") equal to 0.50% of purchase payments
received by AGL, under the Contracts ("Purchase Payments") during such period
that are attributable to all Contracts issued by AGL, less any commission
reductions and chargebacks described in Section 3. All Purchase Payments upon
which the Fee may be based must be received by AGL in accordance with the
Selling Group Agreements and such other requirements that AGL and DISTRIBUTOR
may, from time to time, establish. The Fee shall constitute the sole and
exclusive payment by AGL to DISTRIBUTOR with respect to the Contracts
distributed pursuant to this Agreement and all services rendered under or in
contemplation of this Agreement.
2. COMPENSATION TO SELLING GROUP MEMBERS.
AGL shall remit, or cause to be remitted, Sales commissions in the amount
of 5.50% of all Purchase Payments, as compensation to the appropriate Selling
Group Members who have submitted applications for Contracts that AGL has
approved for issuance ("Sales Commissions").
Commissions shall be paid semi-monthly (unless otherwise agreed). As used
in the above schedules, the term "commission" refers to an amount equal to a
fixed percentage of Purchase Payments received by AGL during each semi-monthly
period that are attributable to Contracts solicited by Sales Persons. All
Purchase Payments upon which the commission may be based must be received by
AGL in accordance with the Selling Group Agreement and such other requirements
that AGL and DISTRIBUTOR may, from time to time, establish.
3. COMMISSION REDUCTIONS AND CHARGEBACKS.
Notwithstanding the foregoing, the following commission reductions shall
apply to all DISTRIBUTOR Fees and Selling Group Member Sales Commissions,
except as otherwise noted, under the circumstances described below.
a. REDUCTIONS FOR PURCHASE PAYMENTS AT AGE 81 AND LATER. A 50%
commission reduction shall apply with respect to Purchase Payments
made on or after the Annuitant's eighty-first birthday (regardless of
whether the Contract has a Contingent Annuitant).
b. CHARGEBACKS FOR WITHDRAWALS. The following commission chargebacks
shall apply with respect to full or partial withdrawals (excluding
withdrawals made pursuant to the Systematic Withdrawal Program that
are within the 10% Free Withdrawal Privilege):
C-1
o 100% of original commissions paid with respect to the amount
of Purchase Payments up to the amount of the full or partial
withdrawal of a Purchase Payment made during the first six
months following its receipt; and
o 50% of original commissions paid with respect to the amount of
Purchase Payments up to the amount of the full or partial
withdrawal of a Purchase Payment made during the next six
months following its receipt.
c. CHARGEBACK FOR ANNUITIZATION IN FIRST TWO YEARS. A commission
chargeback of 50% of original commissions paid will be assessed if
the Contract is annuitized in the first two Contract Years.
The foregoing chargebacks shall not apply in the event of the death of
the Annuitant or Owner during the periods specified above.
4. NO COMPENSATION PAYABLE.
Notwithstanding the foregoing, no compensation shall be payable with
respect to a Purchase Payment, and any compensation already paid by AGL
hereunder shall either be promptly returned by check payable to AGL on request
or will be deducted by AGL from future payments due under this Schedule C,
under each of the following conditions:
(a) if AGL, in its sole discretion, determines not to issue the Contract
applied for or rescinds the Contract;
(b) if the Contract owner returns the Contract pursuant to the "Free
Look" provision of the Contract;
(c) if a Purchase Payment is received within 60 days following a prior
partial withdrawal, and such Purchase Payment is reasonably believed to be a
reinvestment of the prior partial withdrawal;
(d) if AGL refunds the Purchase Payment as a result of a complaint or
grievance;
(e) if AGL or AGSI determines that any Sales Person signing an
application or any person or entity receiving compensation for soliciting
purchases of the Contracts is not duly licensed to sell the Contracts in the
state or jurisdiction of such attempted sale and registered or otherwise
qualified under the 1934 Act and rules thereunder and any applicable state
laws and rules governing broker-dealers and their related persons.
In addition, if AGL determines that any Contract applied for is a
replacement of any insurance or annuity product issued by AGL or any of its
affiliates, AGL reserves the right not to pay any compensation and to require
the return of any compensation already paid.
5. MISCELLANEOUS.
The Parties agree that AGL will directly pay Sales Commissions to the
appropriate Selling Group Member.
C-2
SCHEDULE C(1)
CONTRACTS: SIERRA ASSET MANAGER VARIABLE ANNUITY
EFFECTIVE DATE OF THIS SCHEDULE: MAY 1, 1997
This Schedule governs the compensation to be paid by AGL in connection
with the Contracts issued in accordance with the Agreement. The defined terms
used herein shall have the same meaning as in the Agreement to which this
Schedule C(1) is attached or as in the Contracts, whichever is applicable.
1. DISTRIBUTION FEE TO DISTRIBUTOR.
AGL shall pay or cause to be paid to DISTRIBUTOR, each semi-monthly
period, a Distribution Fee ("Fee") for all purchase payments received by AGL,
under the Contracts ("Purchase Payments") during such period that are
attributable to all Contracts issued by AGL, less any commission reductions
and chargebacks described in Section 3. The amount of the Fee that is payable
with respect to Purchase Payments made under a Contract sold by a Selling
Group Member is determined, as set forth below, in accordance with the Sales
Commission Schedule in effect for the Selling Group Member with respect to
such Contract.
SALES COMMISSION SCHEDULE DISTRIBUTION FEE
------------------------- ----------------
Schedules 1 and 3 0.75% of Purchase Payments received by AGL during such
period less any chargebacks described in Section 3.
Schedule 2 0.45%(1) of Purchase Payments
received by AGL during such period
less any chargebacks described in
Section 3.
(1) For all Contracts issued in 1997 under Commission Schedule #2 and
additional Purchase Payments made under the Contracts, the Fee will be 0.25%
of all Purchase Payments received by AGL during such period less any
chargebacks described in section 3.
All Purchase Payments upon which the Fee may be based must be received by AGL
in accordance with the Selling Group Agreements and such other requirements
that AGL and DISTRIBUTOR may, from time to time, establish. The Fee shall
constitute the sole and exclusive payment by AGL to DISTRIBUTOR with respect
to the Contracts distributed pursuant to this Agreement and all services
rendered under or in contemplation of this Agreement.
2. COMPENSATION TO SELLING GROUP MEMBERS.
AGL shall remit, or cause to be remitted, the amounts set out in the
schedules below as compensation to the appropriate Selling Group Members who
have submitted applications for Contracts that AGL has approved for issuance
("Sales Commissions"). The Parties agree that more than one schedule may be in
effect at a time with respect to a Selling Group Member.
Sales Commission Schedules
--------------------------
Schedule 1: 6.25% commission, 0% trail commission
C(1)-1
Schedule 2: 5.50% commission, plus 0.25% trail commission commencing
at the end of the twelfth(2) Contract month after receipt
of the Purchase Payment.
Schedule 3 3.50% commission plus 0.50% trail commission commencing at
the end of the third Contract month after receipt of the
Purchase Payment.
(2) For all Contracts issued in 1997 under Commission Schedule #2, trail
commissions will commence at the end of the third Contract month after receipt
of the Purchase Payment and will be paid quarterly thereafter. Any additional
Purchase Payments credited to Contracts issued in 1997 will be included in
trail calculations beginning three months after receipt of such premiums. All
other trail provisions match the general trail provisions specified in this
document.
Commissions except trail commissions shall be paid semi-monthly (unless
otherwise agreed). As used in the above Schedules, the term "commission"
refers to an amount equal to a fixed percentage of Purchase Payments received
by AGL during each semi-monthly period that are attributable to Contracts
solicited by Sales Persons. All Purchase Payments upon which the commission
may be based must be received by AGL in accordance with the Selling Group
Agreement and such other requirements that AGL and DISTRIBUTOR may, from time
to time, establish.
As used in the above Schedules, the term "trail commission" refers to an
amount equal to an annual percentage of that portion of Contract Account Value
attributable to Purchase Payments eligible for a trail commission. Trail
commissions shall be computed by multiplying 0.0625% (in the case of a 0.25%
trail commission) or 0.125% (in the case of a 0.50% trail commission) and such
portion of Contract Account Value at the end of the relevant three month
period following receipt of the Purchase Payment. Trail commissions shall be
paid at the end of the calendar quarter immediately following the computation
of the trail commission. Trail commissions shall begin as of the date
specified in the above Schedules, and shall continue until annuitization,
surrender, or death which requires distribution of the Contract Account Value.
3. COMMISSION REDUCTIONS AND CHARGEBACKS.
Notwithstanding the foregoing, the following reductions shall apply to
all DISTRIBUTOR Fees and Selling Group Member Sales Commissions, except as
otherwise noted, under the circumstances described below.
a. REDUCTIONS FOR PURCHASE PAYMENTS AT AGE 81 AND LATER. A 50%
commission reduction shall apply with respect to Purchase Payments
made on or after the Annuitant's eighty-first birthday (regardless of
whether the Contract has a Contingent Annuitant). Such commission
reduction is not applicable to trail commissions.
b. CHARGEBACKS FOR WITHDRAWALS. The following commission chargebacks
shall apply with respect to full or partial withdrawals (excluding
withdrawals made pursuant to the Systematic Withdrawal Program that
are within the 10% Free Withdrawal Privilege):
o 100% of original commissions paid with respect to the amount of
Purchase Payments up to the amount of the full or partial
withdrawal of a Purchase Payment made during the first six
months following its receipt; and
C(1)-2
o 50% of original commissions paid with respect to the amount of
Purchase Payments up to the amount of the full or partial
withdrawal of a Purchase Payment made during the next six
months following its receipt.
c. CHARGEBACK FOR ANNUITIZATION IN FIRST TWO YEARS. A commission
chargeback of 50% of original commissions paid will be assessed if
the Contract is annuitized in the first two Contract Years. Such
commission chargeback is not applicable to trail commissions.
The foregoing chargebacks shall not apply in the event of the death of the
Annuitant or Owner during the periods specified above.
4. NO COMPENSATION PAYABLE.
Notwithstanding the foregoing, no compensation shall be payable with
respect to a Purchase Payment, and any compensation already paid by AGL
hereunder shall either be promptly returned by check payable to AGL on request
or will be deducted by AGL from future payments due under this Schedule C(1),
under each of the following conditions:
(a) if AGL, in its sole discretion, determines not to issue the Contract
applied for or rescinds the Contract;
(b) if the Contract Owner returns the Contract pursuant to the "Free
Look" provision of the Contract;
(c) if a Purchase Payment is received within 60 days following a prior
partial withdrawal, and such Purchase Payment is reasonably believed to be a
reinvestment of the prior partial withdrawal;
(d) if AGL refunds the Purchase Payment as a result of a complaint or
grievance;
(e) if AGL or AGSI determines that any Sales Person signing an
application or any person or entity receiving compensation for soliciting
purchases of the Contracts is not duly licensed to sell the Contracts in the
state or jurisdiction of such attempted sale and registered or otherwise
qualified under the 1934 Act and rules thereunder and any applicable state
laws and rules governing broker-dealers and their related persons.
In addition, if AGL determines that any Contract applied for is a
replacement of any insurance or annuity product issued by AGL or any of its
affiliates, AGL reserves the right not to pay any compensation and to require
the return of any compensation already paid.
5. MISCELLANEOUS.
The Parties agree that AGL will directly pay Sales Commissions to the
appropriate Selling Group Member.
C(1)-3
SCHEDULE D
(AS OF NOVEMBER 11, 1996)
DISTRIBUTOR TRADEMARKS
The product names: "Sierra Advantage" and "Sierra Asset Manager"
AGL TRADEMARKS
The name "American General Corporation"
The name "American General Life Insurance Company"
The American General logo
D-1