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EXHIBIT 3(b)
INVESTORS BROKERAGE SERVICES, INC. REGISTERED REPRESENTATIVE AGREEMENT
This Agreement is entered into as of the _______ date of
______________, ________ by and between INVESTORS BROKERAGE SERVICES, INC.
(hereinafter referred to as "Broker-Dealer") and _____________________________
(hereinafter referred to as "Registered Rep").
WHEREAS, Broker-Dealer is a securities broker-dealer registered and
qualified to transact business pursuant to rules and regulations promulgated by
the Securities and Exchange Commission (the "SEC") and the National Association
of Securities Dealers, Inc. (The "NASD") and certain securities regulators;
WHEREAS, Registered Rep is duly qualified and licensed to sell variable
life insurance policies and variable annuity policies (together, "Variable
Products"); and
WHEREAS, the parties mutually desire to enter into this Agreement so
that Registered Rep may sell and service Variable Products on behalf of
Broker-Dealer;
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions as hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
AUTHORIZATION
Broker-Dealer hereby authorizes Registered Rep to become one of its
registered representatives and to execute securities transactions, including
Variable Products sales, exclusively through it. Registered Rep hereby accepts
that authorization.
ARTICLE II
REGISTERED REP'S OBLIGATIONS
SECTION 2.1 GENERAL. Registered Rep will solicit applications for
insurance, collect premiums, fees and charges, countersign and deliver policies,
reinstate and transfer insurance, assist policy holders and cooperate in
reporting and handling claims, avoid conflicts of interest, comply with all laws
and regulations, and cooperate with and advance the interests of Broker-Dealer,
the registered representatives, and the policyholders.
SECTION 2.2 COMPLIANCE WITH LAWS, RULES, REGULATIONS, ETC. All
Registered Rep's activities in connection with the offer and sale of Variable
Products shall conform to the requirements of state and federal securities laws,
rules, regulations and interpretive guidance, the Conduct Rules of the NASD, and
state insurance laws, rules, regulations and interpretive guidance.
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SECTION 2.3 LICENSING AND REGISTRATION. Registered Rep shall remain:
a. registered with the NASD and, if necessary, any applicable state
securities regulatory authority; and
b. Licensed as an insurance agent with authority to sell Variable
Products in any State in which Registered Rep will sell such
Variable Products.
Registered Rep shall take all steps necessary to keep all such registrations and
licenses in force during the term of this Agreement.
SECTION 2.4 COMPLIANCE MANUAL. Registered Rep(s) will familiarize and
comply with, all the requirements set forth in the INVESTORS BROKERAGE SERVICES,
INC. Compliance and Procedures Manual (the "Compliance Manual"), as it may be
amended from to time and supplemented by addendums, attachments or compliance
memoranda from Broker-Dealer. Without limiting the generality of the preceding
sentence, Registered Rep shall comply with the customer compliant procedures and
the filing and recordkeeping requirements set forth in the Compliance Manual.
SECTION 2.5 MATERIAL STATEMENTS OR OMISSIONS. Registered Rep will
not:
a. make any material statements, either oral or written, regarding
Variable Products which are untrue or misleading; or
b. omit a material fact necessary in order to make any oral or
written statements regarding Variable Products, in the light of
the circumstances under which they were made, not misleading.
SECTION 2.6 VARIABLE PRODUCTS OFFERED. Registered Rep shall offer,
sell, and service only those Variable Products offered by Broker-Dealer, and
shall not engage in any private securities transactions without prior written
approval from Broker-Dealer. A "private securities transaction" would include,
among other things, offering variable products or other securities that are not
offered by Broker-Dealer, including any privately placed securities that are not
registered with the Securities and Exchange Commission.
SECTION 2.7 OUTSIDE ACTIVITIES AND SECURITIES DISCLOSURE FORM.
Registered Rep shall complete the "Outside Activities and Securities Disclosure
Form" attached hereto as Exhibit A, and will update this form as requested by
Broker-Dealer promptly when any significant additions or changes to the
information disclosed on the form arise, including new employers or sources of
income, or significant changes in the amount of income from a previously
specified source. Broker-Dealer may amend the form from time to time, and
Registered Rep's obligations hereunder shall apply with equal force to any such
amended form.
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SECTION 2.8 CHANGES TO FORM U-4. Registered Rep shall immediately
notify Broker-Dealer of any changes of information in Registered Rep's
registration on Form U-4 including any changes to Registered Rep's address.
SECTION 2.9 EDUCATION AND TRAINING MEETINGS. Registered Rep shall
attend all mandatory educational and/or training meetings sanctioned by
Broker-Dealer, including but not limited to the annual compliance meeting,
scheduled by Broker-Dealer.
SECTION 2.10 SUPERVISION OF EMPLOYEES. Registered Rep shall take such
steps as necessary to ensure that none of Registered Rep's employees, whether
registered or unregistered, engage in any activities that are not authorized
under applicable law.
SECTION 2.11 NOTIFICATION REQUIRED. Registered Rep shall immediately
notify Broker-Dealer of:
a. any action or fact which comes to Registered Rep's knowledge which
may possibly constitute a violation of any law;
b. any investigations or inquiries by governmental agencies;
c. any judicial proceeding related to Registered Rep;
e. any other events as required under the Compliance Manual.
SECTION 2.12 PERSONAL SERVICES REQUIRED. The fulfillment of this
Agreement required Registered Rep's personal services, and Registered Rep will
not directly or indirectly write or service insurance for any other company,
other than Broker-Dealer's parent or affiliated companies or through any
governmental or insurance industry plan or facility, or for any agent or broker,
except in accordance with the terms of any written consent Broker-Dealer may
give Registered Rep.
SECTION 2.13 PREMIUM ACCOUNT. All funds collected on behalf of the
issuing insurance company shall be held in trust by Registered Rep as the
absolute property of the issuing insurance company, and Registered Rep will be
responsible for these funds until they are safely transmitted to the issuing
company. Registered Rep agrees to maintain a premium fund account for the
issuing insurance company's benefit in a bank or similar financial institution,
which the issuing insurance company may audit at any time, in which Registered
Rep will promptly deposit all funds collected for the issuing insurance
company's premiums, fees, or charges. Registered Rep further agrees to transmit
all such funds and all insurance applications promptly as directed by
Broker-Dealer.
SECTION 2.14 ADVERTISING. Broker-Dealer and the issuing insurance
company will advertise, provide promotional materials, and participate in the
cost of Registered Rep's advertising, in accordance with policies determined
from time to time by Broker-Dealer and the
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issuing insurance company. Registered Rep will not use advertisements or sales
literature relating to Variable Products unless the advertisements or sales
literature have been provided by Broker-Dealer.
SECTION 2.15 EXPENSES. The expense of any office, including rental,
furniture, and equipment; signs; supplies not furnished by Broker-Dealer; the
salaries of Registered Rep's employees; telephone; postage; advertising; and all
other charges or expense incurred by Registered Rep in the performance of this
Agreement shall be incurred at Registered Rep's discretion and paid by
Registered Rep.
SECTION 2.16 OFFICE LOCATION. Registered Rep agrees that in the
location or relocation of Registered Rep's office, Registered Rep will not
unduly infringe on the established office location of any other registered
representative. Registered Rep agrees that Registered Rep will not make any
commitment to change office location without reasonable, at least 30 days, prior
written notice to Broker-Dealer or establish any office in addition to
Registered Rep's principal office without the prior approval of Broker-Dealer.
ARTICLE III
NATURE OF THE RELATIONSHIP
SECTION 3.1 INDEPENDENT CONTRACTOR. As a registered representative,
Registered Rep is obliged to follow Broker-Dealer procedures and processes and
to provide prompt, friendly, accurate, and cost effective service. Registered
Rep is an independent contractor for all purposes. Registered Rep has full
control of Registered Rep's daily activities, subject only to Broker-Dealer's
obligation to supervise Registered Rep under the securities laws, with the right
to exercise independent judgment as to time, place and manner of soliciting
insurance, servicing policyholders, and other carrying out the provisions of
this Agreement.
ARTICLE IV
COMPENSATION
SECTION 4.1 COMPENSATION SCHEDULE. Registered Rep's sole compensation
as a registered representative from Broker-Dealer shall be in the form of
compensation earned from Variable Product sales and service. The Schedule of
Payments attached hereto as Exhibit B sets forth the compensation to be paid to
Registered Rep for Variable Product sales and service while this Agreement is in
force.
SECTION 4.2 WAIVER UNTIL BROKER-DEALER IN RECEIPT OF COMPENSATION.
Registered Rep waives any right to compensation until Broker-Dealer is in
receipt of such compensation from the issuing insurance company. Compensation
will be payable by Broker-Dealer or its parent or affiliated companies.
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SECTION 4.3 BONUSES, AWARDS, PRIZES, AND ALLOWANCES. Broker-Dealer
reserves the right to fix and determine the amount, extent, and conditions of
any bonuses, prizes and allowances.
ARTICLE V
TERMINATION PAYMENTS
SECTION 5.1 PAYMENT AFTER TERMINATION. If this Agreement is terminated
and Registered Rep is subject to "disqualification," as that term is defined in
the NASD's bylaws, then no termination payments will be paid to a Registered Rep
who is subject to "disqualification," termination payments will be paid to
Registered Rep or Registered Rep's legal representative in accordance with the
provisions of Section 5.2.
SECTION 5.2 TERMINATION PAYMENTS. If this Agreement is terminated and
Registered Rep is not subject to "disqualification," Broker-Dealer will pay
Registered Rep or Registered Rep's legal representative:
a. on business written by Registered Rep under the Schedule of
Payments attached hereto as Exhibit B.
(i) any remaining writing compensation for the first through
fifth policy years as would have been due and payable to
Registered Rep if this Agreement had not been terminated;
and
(ii) if on the date of termination Registered Rep had five (5)
or more years of combined service as an agent under the
Farmers Agent's Agreement or Local Agent's Appointment,
any remaining writing compensation for the sixth through
fifteenth policy years as would have been due and payable
to Registered Rep if this Agreement had not been
terminated; and
b. If the date of termination of this agreement coincides with the
date of termination of the Farmers Agent's Agreement, and if on
the date of termination Registered Rep has twenty five (25) or
more years of combined service as an agent under the Farmers
Agent's Agreement or Local Agent's Appointment, on business
credited to Registered Rep's account on which service
compensation is being paid to Registered Rep.
(i) On Variable Deferred Annuity policies a monthly amount
equal to three-fourths of one percent () ( ) of an
average monthly premium of any such policy; and
(ii) On Variable Universal Life policies a monthly amount equal
to one and one-half percent () ( ) of an average
monthly premium of any such
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policy beginning on the last day of the month next
following the month of termination of this Agreement and
until the last day of the month in which Registered Rep's
death occurs' except that no amount shall be paid on any
policy made available for assignment by the termination of
an Investors Brokerage Services, Inc. Registered
Representative Agreement or by a release of policies
pursuant to article X of this Agreement or Article _____
of any other Investors Brokerage Services, Inc. Registered
Representative Agreement, and except that if Registered
Rep is less than sixty five (65) years of age on the date
of termination of this Agreement, amounts shall be reduced
actuarially based on Registered Rep's lower age.
c. The "average monthly premium" of a policy shall be calculated by
dividing the total premium paid on the policy by the number of
full months elapsed between its Policy date and termination of
this Agreement, except that the "average monthly premium" for a
policy in force less than ( ) months shall be no greater than:
(i) For a Variable Universal Life policy, ( ) of
the total Primary Compensation Premium paid on the base
policy and any increases to base and added riders, and
(ii) For a Variable Deferred Annuity policy, ________ dollars
( ).
d. After Registered Rep and any spouse (if accepted as a payee) have
died, or at any time Broker-Dealer owes, for each of three (3)
consecutive periodic payments in this Section, less than
__________ dollars ( ), Broker-Dealer may, in its sole discretion,
change the frequency and amount of the periodic payments to
payment or payments less frequent and of greater amount or
amounts, but of equal present value.
e. After Registered Rep and any spouse (if accepted as a payee) have
died, or at any time Broker-Dealer owes, for each of three (3)
consecutive periodic payments in this Section, less than dollars ,
Broker-Dealer may, in its sole discretion, change the frequency
and amount of the periodic payments to payment or payments less
frequent and of greater amount or amounts, but of equal present
value. Any new amount or amounts shall reasonably consider the
time value of money and any influence of policy persistency, agent
mortality and other factors relevant to the payment frequency and
amounts otherwise provided herein.
ARTICLE VI
CONFIDENTIALITY; PROPRIETARY MATERIALS
SECTION 6.1 CONFIDENTIALITY. Information regarding names, addresses,
and ages of issuing insurance company policyholders; and the expiration of
renewal dates of policies acquired or coming into Registered Rep's possession
during the effective period of this
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Agreement, or any prior Agreement, except information and records of
policyholders insured by the issuing insurance company pursuant to any
governmental or insurance industry plan or facility, are trade secrets and
confidential business information wholly owned by Broker-Dealer or its parent or
affiliated companies. All forms, computer-related and electronic files, and
other materials, whether furnished by Broker-Dealer or its parent or affiliated
companies or purchased by Registered Rep, upon which this information is
recorded shall be the sole and exclusive property of Broker-Dealer or its parent
or affiliated companies. Registered Rep's possession of this information is only
for use in carrying out Registered Rep's duties and responsibilities under this
Agreement. Registered Rep shall take all reasonable steps to maintain the value
and confidentiality of such information, including informing Registered Rep's
employees of this responsibility, and assuring their compliance.
SECTION 6.2 MANUALS, ETC. Broker-Dealer will furnish Registered Rep,
without charge, manuals, forms, records, computer-related and electronic files,
equipment, and such other materials, supplies and services as Broker-Dealer may
specify from time to time. All such property furnished by Broker-Dealer shall
remain the property of Broker-Dealer. In addition, Broker-Dealer will offer at
Registered Rep's expense additional equipment, materials, supplies and services.
ARTICLE VII
TERM, TERMINATION AND SURVIVABILITY
SECTION 7.1 EFFECTIVE DATE AND TERM. This Agreement shall be effective
on the date set out above on Page 1 hereof and shall continue until terminated
as herein provided.
SECTION 7.2. TERMINATION. This Agreement will terminate upon the death
of Registered Rep. Either Registered Rep or Broker-Dealer has the right to
terminate this Agreement by written notice delivered to the other or mailed to
the other's last known address. The date of termination shall be the date
specified in the notice, but in the event no date is specified, the date of
termination shall be the date of delivery if the notice is delivered, or the
date of the postmark, if the notice is mailed. Either Registered Rep or
Broker-Dealer can accelerate the date of termination specified by the other by
giving written notice of termination in accordance with this paragraph. This
Agreement shall also terminate effective immediately upon the termination of the
Farmers Agent's Agreement to which Registered Rep is a party.
SECTION 7.3. RESTRICTIONS ON POST TERMINATION ACTIVITY. For a period of
one year following termination of this Agreement, Registered Rep will not either
personally or through any other person, agency, or organization:
a: induce or advise any issuing insurance company policyholder
credited to Registered Rep's account at the date of termination to
lapse, surrender, or cancel any issuing insurance company
coverage; or
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b: solicit any such policyholder to purchase any insurance coverage
competitive with the insurance coverages sold by Broker-Dealer. In
the event the "period of one year" conflicts with any statutory
provision, such period shall be the period permitted by statute.
After termination of this Agreement Registered Rep agrees not to act or
represent himself or herself in any way as an agent or representative of
Broker-Dealer.
SECTION 7.4 RETURN OF MATERIALS. Within ten days after the termination
of this Agreement, all property belonging to Broker-Dealer shall be returned or
made available for return to Broker-Dealer or its authorized representative.
Without limiting the foregoing, Registered Rep shall promptly deliver to
Broker-Dealer, without retaining any copies or excerpts thereof, the Compliance
Manual, any other manuals, compliance memoranda, prospectuses, statements of
additional information, advertising, sales materials, business cards and
letterhead.
SECTION 7.5 SURVIVABILITY. The agreements in Sections 5.1, 5.2, 6.1,
6.2, 7.3, 7.4, 9.11 and Article VIII shall survive the termination of this
Agreement.
ARTICLE VIII
DISPUTE RESOLUTION
Any controversy between Broker-Dealer and Registered Rep arising out
of, or relating to, this Agreement or the breach thereof may be settled by
arbitration in accordance with the rules then in effect with the NASD at
( , ). Any arbitration hereunder and award of the arbitrators, or of
a majority of them, shall be final, and judgment may be entered in any court,
state or federal, having jurisdiction.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 ASSIGNMENT. Since Broker-Dealer is relying on Registered
Rep to carry out the provisions of this Agreement, neither the Agreement nor any
interest thereunder can be sold, assigned, or pledged without prior written
consent of Broker-Dealer.
SECTION 9.2 ENTIRE AGREEMENT. This Agreement constitutes the sole and
entire Agreement between the parties hereto, and no change, alteration, or
modification of the terms of this Agreement may be made except by agreement in
writing signed by an authorized representative of the Broker-Dealer and accepted
by Registered Rep. This Agreement supersedes all prior commitments, inducements,
promises, negotiations, representations, obligations, conditions, or agreements,
oral or written, between Broker-Dealer, its representatives, and Registered Rep,
except with respect to compensation owing to Registered Rep under Schedules of
Payment under Registered Rep's immediately preceding Investors Brokerage
Services, Inc. Registered Representative Agreement, if any, and with respect to
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compensation overpayments or any other amounts owed Broker-Dealer or its parent
or affiliated companies by Registered Rep. All payments for termination by death
or for termination other than by death which otherwise might have become payable
to Registered Rep under the terms of prior agreements with Broker-Dealer are
hereby waived by Registered Rep.
SECTION 9.3 WAIVER. Failure of any party to enforce any provision of
this Agreement will not constitute a course or waiver in the future of the right
to enforce the same or any other provision.
SECTION 9.4 SEVERABILITY. The parties to this Agreement desire and
intend that the terms and conditions of this Agreement be enforced to the
fullest extent permissible under the laws and public policies applied in each
state or jurisdiction in which enforcement is sought. The parties agree
specifically that, if any particular term or condition of this Agreement is
adjudicated, or becomes by operation of law, invalid or unenforceable, this
Agreement will be deemed amended to delete the portion that is adjudicated, or
that becomes by operation of law, invalid or unenforceable. The deletion or
reduction will apply only with respect to the operation of the term or
condition, and the remainder of the Agreement will remain in full force and
effect. A deletion or reduction resulting from any adjudication will apply only
with respect to the operation of that term in the particular jurisdiction in
which the adjudication is made.
SECTION 9.5 NOTICE.
a. To Broker-Dealer
Investors Brokerage Services, Inc.
0 Xxxxxx Xxxxx
Xxxx Xxxxx, XX 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to Registered Rep's Regional Agency Resources Department.
b. To Registered Rep:
Registered Rep's Office Address.
SECTION 9.6 GOVERNING LAW. The validity, enforceability, and
interpretation of this Agreement shall be construed according to the laws of the
State of _________.
SECTION 9.7 HEADINGS. The headings in this Agreement are inserted for
convenience only and will not constitute a part hereof.
SECTION 9.8 SET OFF. Any amount (exclusive of premiums due on
Registered Rep's personal policies with the issuing insurance company) at any
time owning by Registered Rep to
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Broker-Dealer or its parent or affiliated companies shall be a first lien on any
payment due or thereafter becoming due Registered Rep under any of the
provisions of this Agreement, and Broker-Dealer is authorized to deduct such
indebtedness from any such payment due or thereafter becoming due to Registered
Rep from Broker-Dealer.
SECTION 9.9 CHARGEBACKS. If any application is rejected or any policy
is surrendered or canceled, in whole or in part, for any reason, before the
expiration of the policy period, or if any premium is reduced or an overpayment
made to Registered Rep, the compensation paid to Registered Rep on the amount
returned or credited to the policyholder or the amount overpaid to Registered
Rep shall be charged to Registered Rep and shall constitute an indebtedness of
Registered Rep to Broker-Dealer.
SECTION 9.10 RIGHT TO PRESCRIBE. Broker-Dealer and the issuing
insurance company retain the right to prescribe: all policy forms and
provisions; premiums, fees, and charges for insurance and services; rules
governing the binding, acceptance, renewal, rejection, or cancellation of risks,
and adjustments and payment of losses; and limitations on the submission of
applications by individual registered representatives, by market area, by line
of coverage, by policy type, by company, or by other means.
SECTION 9.11 REPRESENTATION. Registered Rep will not represent
Registered Rep as having any powers except those authorized by this Agreement
and subject to any applicable law. Without limiting the foregoing, Registered
Rep shall not have the authority to extend the times of payment of any premium,
or to alter, waive, or forfeit any of the issuing insurance company's rights,
requirements, or conditions in any policy of insurance, or otherwise obligate
Broker-Dealer or issuing insurance company in any way except as stated in this
Agreement or expressly authorized under the rules and regulations of
Broker-Dealer or as otherwise authorized in writing by Broker-Dealer.
SECTION 9.12 TRANSFER OF POLICIES. Broker-Dealer will leave in
Registered Rep's account all policies credited to Registered Rep's account so
long as the policyholder resides within a ( ) mile radius of Registered Rep's
principal place of business and within a State in which Registered Rep is duly
licensed, except that Broker-Dealer may:
a. if service compensation is suspended, reduced or eliminated
pursuant to Section IV. G, Section IV. H and/or Section IV. I of
the Schedule of Payments attached hereto as Exhibit B, transfer
the Variable Products credited to Registered Rep's account to the
accounts of other registered representatives or to Broker-Dealer
for servicing; and
b. after prior written notice to Registered Rep, transfer any policy
to the account of another registered representative when the
policyholder makes a bona fide request in writing.
Registered Rep will respect the rights and interests of Registered Rep's fellow
registered representatives in policies credited to their accounts by refraining
from raiding or otherwise
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diverting policies from their accounts to Registered Rep's account. Registered
Rep shall neither directly nor indirectly attempt to divert policies to
Registered Rep's own account from unassigned accounts or from those of other
registered representatives, or from Registered Rep's own account to the accounts
of other registered representatives.
ARTICLE X
RELEASE OF POLICIES
In the event of a release of policies pursuant to Section VI of the
Farmers Agent's Agreement or Section _____ of another Farmers Agent's Agreement,
the Variable Products held by policyholders and members of the household of such
policyholders whose automobile insurance policies are released shall likewise be
released, and Broker-Dealer will pay with respect to the Variable Products
released by Registered Rep the termination payments in accordance with Section
5.2 of this Agreement, as those provisions may be applicable.
IN WITNESS WHEREOF, Broker-Dealer has caused this Agreement to be
executed on its behalf by its authorized representative, to be effective on the
date above set out on Page 1 hereof, upon its acceptance in writing by
Registered Rep on Form RRAA98(AA97), Registered Rep's Acceptance of Agreement,
transmitted to Broker-Dealer.
INVESTORS BROKERAGE SERVICES, INC.
By:
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Authorized Representative
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