EXHIBIT 3(b)(ii)
SELLING GROUP AGREEMENT
WM FUNDS DISTRIBUTOR, INC.
AND AMERICAN GENERAL LIFE INSURANCE COMPANY
This Selling Group Agreement ("Agreement") is made by and among WM Funds
Distributor, Inc. (formerly WM Fund Services, Inc.) a registered broker - dealer
and the distributor for the variable life insurance policies and/or annuity
contracts set forth in Schedule A ("Distributor"),
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("Selling Group Member")
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("Associated Agency")
and, as the fourth party, American General Life Insurance Company ("AGL").
Selling Group Member is registered with the Securities and Exchange Commission
("SEC") as a broker-dealer under the Securities Exchange Act of 1934 ("1934
Act"), as amended and under any appropriate regulatory requirements of state
law, and is a member in good standing of the National Association of Securities
Dealers, Inc. ("NASD"), unless Selling Group Member is exempt from the broker-
dealer registration requirements of the 1934 Act. Unless exempt, Selling Group
Member maintains a level of qualification with the NASD appropriate to enable it
to offer and sell the products set forth in Schedule A. Selling Group Member is
affiliated with Associated Agency, which is properly licensed under the
insurance laws of the state(s) in which Selling Group Member will act under this
Agreement.
This Agreement is for the purpose of providing for the distribution of certain
variable life insurance policies and/or annuity contracts set forth in Schedule
A and any successor or additional SEC registered insurance products (as
discussed in Part (1) "NEW PRODUCTS" of this Agreement) to be issued by AGL and
distributed through Distributor and sold by representatives who are state
insurance licensed and appointed agents of AGL and who are associated with
Associated Agency and are also NASD registered representatives of Selling Group
Member ("Sales Persons"). The policies and/or annuity contracts set forth in
Schedule A, along with any successor or additional SEC registered insurance
products, are referred to collectively herein as the "Contracts." American
General Securities Incorporated, a broker-dealer wholly owned by AGL, shall be
the principal underwriter of the Contracts, unless specifically otherwise so
stated.
In consideration of the mutual promises and covenants contained in this
Agreement, AGL and Distributor appoint Selling Group Member and those persons
associated with Associated Agency
who are NASD registered representatives of Selling Group Member and state
insurance licensed agents of AGL to solicit and procure applications for the
Contracts. These appointments are not deemed to be exclusive in any manner and
only extend to those jurisdictions where the Contracts have been approved for
sale. Selling Group Member is authorized to collect the first purchase payment
or premium (collectively "Premiums") on the Contracts and, unless Selling Group
Member and AGL have otherwise agreed, shall remit such premiums in full dollar
amount to AGL. Unless Selling Group Member and AGL have otherwise agreed,
applications shall be taken only on preprinted application forms supplied by
AGL. All completed applications and supporting documents are the sole property
of AGL and must be promptly delivered to AGL. All applications are subject to
acceptance by AGL at its sole discretion.
(1) NEW PRODUCTS
AGL and Distributor may propose, and AGL may issue additional or successor
products, in which event Selling Group Member will be informed of the product
and will be provided with a Concession Schedule for the new product(s). If
Selling Group Member does not agree to distribute the new product(s) on the
terms set forth, it must notify Distributor in writing within 30 days of receipt
of the Concession Schedule for such product(s). If Selling Group Member does
not provide such written notification, Selling Group Member will be deemed to
have thereby agreed to distribute such product(s) and agreed to the related
Concession Schedule which shall be attached to and made a part of this
Agreement.
(2) SALES PERSONS
Associated Agency is authorized to recommend Sales Persons for appointment by
AGL to solicit applications for the Contracts. Associated Agency warrants that
all such Sales Persons shall not commence solicitation nor aid, directly or
indirectly, in the solicitation of any application for any Contract until that
Sales Person is appropriately licensed for such product under applicable
insurance laws and is a currently NASD registered representative of Selling
Group Member. Associated Agency shall be responsible for all fees required to
obtain and/or maintain any licenses or registrations required by state or
federal law, for Associated Agency and its Sales Persons. From time to time,
AGL will provide Associated Agency and Selling Group Member with information
regarding the jurisdictions in which AGL is authorized to solicit applications
for the Contracts and any limitations on the availability of such Contracts in
any jurisdiction.
(3) SALES MATERIAL
Associated Agency and Selling Group Member shall not utilize in their efforts to
market the Contracts, any written brochure, prospectus, descriptive literature,
printed and published material, audio-visual material or standard letters unless
such material has been provided preprinted by AGL or Distributor or unless AGL
and Distributor have provided written approval for the use of such literature.
In accordance with the requirements of the laws of the several states,
Associated Agency and Selling Group Member shall maintain complete records
indicating the manner and extent of distribution of any such solicitation
material, shall make such records and files available to staffs of AGL and/or
Distributor in field inspections and shall make such material available to
personnel of
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state insurance departments, the NASD or other regulatory agencies, including
the SEC, which have regulatory authority over AGL or Distributor. Associated
Agency and Selling Group Member jointly and severally hold AGL, Distributor and
their affiliates, directors, officers and employees harmless from and indemnify
them for any liability arising from the use of any material which either (a) has
not been specifically approved in writing by AGL and Distributor, or (b)
although previously approved, has been disapproved by AGL or Distributor, in
writing for further use.
(4) PROSPECTUSES
Selling Group Member and Associated Agency warrant that solicitation of
applications for Contracts will be made by use of a currently effective
prospectus, that a prospectus will be delivered concurrently with each sales
presentation and that no statements shall be made to a client superseding or
controverting any statement made in the registration statement or prospectus.
AGL and Distributor shall furnish Selling Group Member and Associated Agency, at
no cost to Selling Group Member or Associated Agency, reasonable quantities of
prospectuses to aid in the solicitation of applications for Contracts.
(5) SELLING GROUP MEMBER COMPLIANCE
Selling Group Member shall be responsible for making suitability determinations
in compliance with federal and state securities laws and shall supervise
Associated Agency and Sales Persons in determining client suitability.
Selling Group Member shall fully comply with the requirements of the NASD and of
the 1934 Act and such other applicable federal and state laws and will establish
rules, procedures, and supervisory and inspection techniques necessary to
diligently supervise the activities of its NASD registered representatives who
are state insurance licensed agents or solicitors of AGL, in connection with
offers and sales of the Contracts. Such supervision shall include providing, or
arranging for, initial and periodic training in the provisions of and other
information regarding the Contracts. Upon request by Distributor or AGL,
Selling Group Member will furnish appropriate records as are necessary to
establish diligent supervision and client suitability.
Selling Group Member shall fully cooperate in any insurance or securities
regulatory examination, investigation, or proceeding or any judicial proceeding
with respect to AGL, Distributor, Selling Group Member, and/or Associated Agency
and their respective affiliates, agents and representatives to the extent that
such examination, investigation, or proceeding arises in connection with the
Contracts. Selling Group Member shall immediately notify Distributor and AGL if
its broker-dealer registration or the registration of any of its Sales Persons
is revoked, suspended, or terminated.
(6) ASSOCIATED AGENCY AND SALES PERSON COMPLIANCE
Associated Agency shall fully comply with the requirements of state insurance
laws and applicable federal laws and will establish rules and procedures
necessary to diligently supervise the activities
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of the Sales Persons. Upon request by Distributor or AGL, Selling Group Member
will furnish appropriate records as are necessary to establish such supervision.
Associated Agency and Sales Persons shall be responsible for making suitability
determinations in compliance with federal and state securities laws.
Associated Agency shall fully cooperate in any insurance or securities
regulatory examination, investigation, or proceeding or any judicial proceeding
with respect to AGL, Distributor, Selling Group Member, and/or Associated Agency
and their respective affiliates, agents and representatives to the extent that
such examination, investigation, or proceeding arises in connection with the
Contracts. Associated Agency shall immediately notify Distributor and AGL if
its insurance license or the license of any of its Sales Persons is revoked,
suspended, or terminated.
Associated Agency shall ensure that no Sales Person shall offer or sell the
Contracts in any state or other jurisdiction unless such Sales Person is duly
licensed and appointed as an agent of AGL, and appropriately licensed,
registered or otherwise qualified to offer and sell the Contracts to be offered
and sold by such Sales Person under the insurance laws of such state or
jurisdiction. All matters concerning the licensing of any Sales Persons
recommended for appointment by Associated Agency under any applicable state
insurance law shall be a matter directly between Associated Agency and such
Sales Person, and the Associated Agency shall furnish AGL, upon AGL's request,
with proof of proper licensing of such Sales Person or other proof, reasonably
acceptable to AGL, of satisfaction by such Sales Person of licensing or
appointment requirements including: (i) certificate by the Associated Agency of
the character and fitness of such Sales Person; (ii) a copy of the most recent
third party credit check or character report obtained pursuant to the licensing
requirements of applicable state insurance law prior to AGL's appointing any
such Sales Person as an agent of AGL; and (iii) a copy of such Sales Person's
state insurance license.
Associated Agency agrees to maintain documentation regarding the background
investigation of Sales Persons conducted prior to appointment during the period
the Sales Person is appointed by AGL and shall provide such information to AGL
as may be required by valid request of any regulatory authority.
(7) AGL COMPLIANCE
AGL represents that the prospectus(es) and registration statement(s) relating to
the Contracts contain no untrue statements of material fact or omission to state
a material fact, the omission of which makes any statement contained in the
prospectus and registration statement misleading. AGL agrees to indemnify
Distributor, Associated Agency and Selling Group Member from and against any
claims, liabilities and expenses which may be incurred by any of those parties
under the Securities Act of 1933, the 1934 Act, the Investment Company Act of
1940, common law or otherwise arising out of a breach of the representation in
this paragraph.
(8) COMPENSATION
AGL will remit to Associated Agency compensation as set forth in Schedule B
hereto.
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(9) COMPLAINTS, INVESTIGATIONS AND PROCEEDINGS
Associated Agency and Selling Group Member shall cooperate with AGL and
Distributor in any regulatory investigation or proceeding or judicial proceeding
relating to the solicitation of applications for, or servicing of, Contracts by
Associated Agency and/or Selling Group Member and their Sales Persons. Further,
Associated Agency and Selling Group Member shall promptly provide AGL and
Distributor with a copy of any of the following relating to the le or servicing
of any Contract: (i) any notice of claim against AGL or Distributor, (ii) any
notice of regulatory investigation or proceeding or judicial proceeding, and
(iii) all legal documents pertaining to the foregoing.
(10) INDEMNIFICATION
Selling Group Member and Associated Agency agree to, jointly and severally, hold
harmless and indemnify AGL and Distributor and any of their respective
affiliates, employees, officers, agents and directors (collectively,
"Indemnified Persons") against any and all claims, liabilities and expenses
(including, without limitation, losses occasioned by an rescission of any
Contract pursuant to a "free look" provision or by any return of initial
purchase payment in connection with an incomplete application), and including
without limitation reasonable attorneys' fees and expenses and any loss
attributable to the investment experience under a Contract, that any Indemnified
Person may incur from liabilities resulting or arising out of or based upon (a)
any untrue or alleged untrue statement other than statements contained in the
registration statement or prospectus relating to any Contract, (b) (i) any
inaccurate or misleading, or allegedly inaccurate or misleading sales material
used in connection with any marketing or solicitation relating to any Contract,
other than sales material provided preprinted by AGL or Distributor, and (ii)
any use of any sales material that either has not been specifically approved in
writing by AGL and Distributor or that, although previously approved in writing
by AGL and Distributor, has been disapproved, in writing by either of them, for
further use, or (c) any act or omission of a Sales Person, director, officer or
employee of Selling Group Member and Associated Agency, including without
limitation any failure of Selling Group Member, Associated Agency or any Sales
Person to be registered as required as a broker-dealer under the 1934 Act, or
licensed in accordance with the rules of any applicable self regulatory
organization or insurance regulator.
AGL shall indemnify and hold harmless Selling Group Member, Associated Agency
and Distributor and their employees, officers, agents and directors against any
losses, claims, damages or liabilities, joint or several, including but not
limited to reasonable attorneys' fees and court costs, to which Selling Group
Member, Associated Agency or Distributor or such employee, officer, agent or
director, becomes subject under the Securities Act of 1933 or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue
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or alleged statement in any registration statement or any post-effective
amendment or any supplement to the prospectus for a Contract, or in any sales
material preprinted by AGL and not subsequently disapproved by AGL, in writing,
for further use, or the omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein not misleading.
(11) FIDELITY BOND
Associated Agency represents that all directors, officers, employees and Sales
Persons of Associated Agency licensed pursuant to this Agreement or who have
access to funds of AGL are and will continue to be covered by a blanket fidelity
bond including coverage for larceny, embezzlement and other defalcation, issued
by a reputable bonding company. This bond shall be maintained at Associated
Agency's expense. Such bond shall be at least equivalent to the minimal
coverage required under the NASD Rules of Fair Practice, and endorsed to extend
coverage to life insurance and annuity transactions. Associated Agency
acknowledges that AGL may require evidence that such coverage is in force and
Associated Agency shall promptly give notice to AGL of any notice of
cancellation or change of coverage.
Associated Agency assigns any proceeds received from the fidelity bond company
to AGL to the extent of AGL's loss due to activities covered by the bond. If
there is any deficiency, Associated Agency will promptly pay AGL that amount on
demand. Associated Agency indemnifies and holds harmless AGL from any
deficiency and from the cost of collection.
(12) LIMITATIONS OF AUTHORITY
The Contract forms are the sole property of AGL. No person other than AGL has
the authority to make, alter or discharge any policy, Contract, certificate,
supplemental contract or form issued by AGL. No party has the right to waive
any provision with respect to any Contract or policy. No person has the
authority to enter into any proceeding in a court of law or before a regulatory
agency in the name of or on behalf of AGL.
(13) ARBITRATION
The parties agree that any controversy between or among them arising out of
their business or pursuant to this Agreement that cannot be settled by agreement
shall be taken to arbitration as set forth herein. Such arbitration will be
conducted in the forum, and according to the securities arbitration rules then
in effect, of the American Arbitration Association, NASD, or any registered
national securities exchange. Arbitration may be initiated by serving or
mailing a written notice. The notice must specify which forum and rules will
apply to the arbitration. This specification will be binding on all parties.
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Any award the arbitrator makes will be final, and judgment on it may be entered
in any court having jurisdiction. Any party to the arbitration may request that
the arbitrator's award include findings of fact and conclusions of law. Each
party shall bear its own costs of arbitration. This arbitration agreement shall
be enforced and interpreted exclusively in accordance with applicable federal
law, including the Federal Arbitration Act.
(14) CONFIDENTIALITY
(A) Each party agrees that, during the term of this Agreement and at all
times thereafter, neither party will disclose to any unaffiliated
person, firm, corporation or other entity, nor use for its own account,
any of the other party's trade secrets or confidential information,
including, without limitation, the terms of this Agreement, non-public
program materials; member or customer lists; proprietary information;
information as to the other party's business methods, operations or
affairs, or the processes and systems used in its operations and
affairs; or the processes and systems used in any aspect of the
operation of its business; all whether now known or subsequently
learned by it. Nothing in this Agreement shall require either party to
keep confidential any information that:
(i) The party can prove was known to it prior to any disclosure by the
other;
(ii) Is or becomes publicly available through no fault of the party;
(iii) The party can prove was independently developed by it outside the
scope of this Agreement and with no access to any confidential or
proprietary information of the other party;
(iv) Is required to be produced pursuant to judicial or administrative
process or subpoena; and/or
(v) Is mutually agreed upon by both parties to this Agreement.
(B) If this Agreement expires or is terminated, each party within sixty
(60) days after such termination will return to the other party any
and all copies, in whatever form or medium, of any material disclosing
any of the other party's trade secrets or confidential information as
described above, then in its possession or control. No such materials
shall be used for any purpose outside the performance or enforcement
of this Agreement except to the extent required by law or order of a
court, by order of a regulatory or administrative agency, or by order
of an arbitrator appointed under this Agreement
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(15) GENERAL PROVISIONS
(A) Waiver
Failure of any of the parties to promptly insist upon strict
compliance with any of the obligations of any other party under this
Agreement will not be deemed to constitute a waiver of the right to
enforce strict compliance.
(B) Independent Contractors
Distributor, Selling Group Member and Associated Agency are
independent contractors and not employees or subsidiaries of AGL;
Selling Group Member and Associated Agency are independent contractors
and not employees or subsidiaries of Distributor.
(C) Independent Assignment
No assignment of this Agreement or of commissions or other payments
under this Agreement shall be valid without prior written consent of
AGL and Distributor.
(D) Notice
Any notice pursuant to this Agreement may be given electronically
(other than vocally by telephone) or by mail, postage paid,
transmitted to the last address communicated by the receiving party to
the other parties to this Agreement.
(E) Severability
To the extent this Agreement may be in conflict with any applicable
law or regulation, this Agreement shall be construed in a manner
consistent with such law or regulation. The invalidity or illegality
of any provisions of this Agreement shall not be deemed to affect the
validity or legality of any other provision of this Agreement.
(F) Amendment
This Agreement may be amended only in writing and signed by all
parties. No amendment will impair the right to receive commissions as
accrued with respect to Contracts issued and applications procured
prior to the amendment.
(G) Termination
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This Agreement may be terminated by any party upon 30 days' prior
written notice. It may be terminated, for cause, by any party
immediately. Termination of this Agreement shall not impair the right
to receive commissions accrued with respect to applications procured
prior to the termination except as otherwise specifically provided in
Schedule B.
(H) GOVERNING LAW
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA.
(I) This Agreement replaces and supersedes any other agreement or
understanding related to the Contracts, between or among the parties
to this Agreement.
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By signing below, the undersigned agree to have read and be bound by the terms
and conditions of this Agreement.
Date: _______________________________________________
Selling Group Member:_____________________________________
(The broker-dealer)
Address: _______________________________________________
_______________________________________________
Signed By: _______________________________________________
Associated Agency: _______________________________________
(The broker-dealer's primary insurance agency affiliation)
Address: _______________________________________________
_______________________________________________
Signed By: _______________________________________________
WM FUNDS DISTRIBUTOR, INC.
Signed By: _______________________________________________
Name and Title
American General Life Insurance Company
▇▇▇▇-▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Signed By: _______________________________________________
Name and Title
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Schedule A
AMERICAN GENERAL LIFE INSURANCE COMPANY
CONTRACTS COVERED BY THIS AGREEMENT
REGISTRATION FORMS SEPARATE
CONTRACT NAME AND NUMBERS ACCOUNT
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WM Strategic Asset Manager Variable Annuity Form N-4 D
Nos. 811-2441
333-25549
SCHEDULE B - WM STRATEGIC ASSET MANAGER VARIABLE ANNUITY
CONTROL DATE - SEPTEMBER 1, 1999
WM FUNDS DISTRIBUTOR, INC.
AND AMERICAN GENERAL LIFE INSURANCE COMPANY
This Schedule B is attached to and made a part of the Selling Group Agreement
("Agreement") to which it is attached. It is subject to the terms and
conditions of the Agreement. In no event shall AGL be liable for the payment of
any commission with respect to any solicitation made, in whole or in part, by
any person not appropriately licensed and appointed prior to the commencement of
such solicitation.
For Contracts listed on Schedule A, a commission will be paid to Associated
Agency in the amount of either: (1) 6.25% of the aggregate Purchase Payments
received and accepted by AGL with a properly completed application or as
subsequent Purchase Payments under the Contracts after the Contract is in force;
(2) 5.50% of such aggregate Purchase Payments, plus a 0.25% trail commission
commencing at the end of the 12th month after receipt of the Purchase Payments;
or (3) 3.50% of such aggregate Purchase Payments, plus a 0.50% trail commission
commencing at the end of the 3rd month after receipt of the Purchase Payments.
"Trail commission" refers to an amount equal to an annual percentage of the
Contract Account Value. Trail commissions shall be computed at each quarterly
contract anniversary (upon the stated commencement period) by multiplying
0.0625% (0.25% annually) or 0.125% (in the case of a 0.50% trail commission) by
the Contract Account Value computed on each quarterly contract anniversary.
Trail commissions shall be paid at the end of the calendar quarter which follows
the computation of the trail commission. Trail commissions shall continue until
annuitization, surrender, or death which requires distribution of the Contract
Account Value.
Commission Reductions:
(a) FREE LOOK. If a Contract is returned to AGL pursuant to the "Free Look"
provision of the Contract, the full commission paid by AGL will be returned
to AGL or, in the absence of such return, charged back to Associated
Agency.
(b) CHARGEBACKS FOR WITHDRAWALS. The following commission chargebacks shall
apply on full or partial withdrawals (excluding withdrawals made pursuant
to the Systematic Withdrawal Program that are within the Free Withdrawal
Privilege, as defined in the Contract):
. 50% for full or partial withdrawal of a Purchase Payment made during
the first twelve months following its receipt.
In no event shall any commission adjustment or chargeback be assessed for
termination of a Contract because of the death of the Annuitant or Owner
during the periods specified above.
(c) NO COMPENSATION PAYABLE. No compensation shall be payable:
. if AGL, in its sole discretion, determines not to issue the Contract
applied for or rescinds the Contract;
. if AGL refunds all or any portion of Purchase Payments as a result of
a complaint or grievance; or
. if AGL determines that Purchase Payments made within 60 days following
a prior partial withdrawal, including systematic withdrawals, is
reasonably believed to be a reinvestment of part or all of the prior
partial withdrawal.
Associated Agency agrees to promptly deliver Contracts and holds AGL harmless
from and against any claim arising from market loss to the owner of the Contract
resulting from late delivery by Associated Agency.
Unless otherwise agreed, Associated Agency shall forward to AGL the first full
payment collected by Associated Agency, without deduction for compensation.