EXHIBIT 1(A)(3)(b)(ii)
Form of Broker/Dealer Supervisory and Service Agreement
Principal Underwriter for
The AUSA Series Life Account
BROKER-DEALER SUPERVISORY AND SERVICE AGREEMENT
This Broker-Dealer Supervisory and Service Agreement (the "Agreement") is
made this Day day of Month, Year, by and between AUSA Life Insurance Company,
Inc. ("AUSA") , InterSecurities , Inc. ("ISI") , formerly known as IDEX
Distributors, Inc., a broker-dealer registered with the Securities and Exchange
Commission ("SEC") under the Securities Exchange Act of 1934 ("1934 Act") and a
member of the National Association of Securities Dealers, Inc. ("NASD"), and
BrokerDealer ("Broker-Dealer"), also a broker-dealer registered with the SEC
under the 1934 Act and a member of the NASD, and any and all insurance agency
subsidiaries ("Agencies") of this broker-dealer, (hereinafter Broker/Dealer and
Agencies are collectively referred to as "Producers"). Such subsidiaries are
named in the Appendix of this Agreement. The Appendix lists any assumed names
used by Broker-Dealer in any state in order to comply with state insurance
licensing requirements.
RECITALS
WHEREAS, AUSA offers for sale certain variable life insurance policies and
variable annuity contracts (hereinafter referred to as the "Plans");
WHEREAS, ISI is the principal underwriter of the Plans;
WHEREAS, ISI proposes to have Broker-Dealer's registered representatives
("Representatives") who are also licensed and appointed as life insurance agents
of AUSA solicit and sell the Plans, which are deemed to be securities under the
Securities Act of 1933; and
WHEREAS, AUSA and ISI propose to have Producers provide certain supervisory
and administrative services in connection with the distribution of the Plans.
NOW THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. Appointment. AUSA and ISI hereby appoint Agency under the insurance
laws and authorize Broker-Dealer under the securities laws to supervise
Representatives in connection with the distribution of the Plans and to
provide certain services as described herein.
2. Supervision of Representatives. Broker-Dealer shall have full
responsibility for the training and supervision of all Representatives
associated with Broker-Dealer who are engaged directly or indirectly
in the offer or sale of the Plans and all such persons shall be subject
to the control of Broker-Dealer with respect to such persons'
securities-regulated activities in connection with the Plans.
Broker-Dealer will establish rules, procedures and supervisory and
inspection techniques necessary to diligently supervise the activities
of its Representatives.
Producers will cause the Representatives to be trained in the sale of
the Plans; will use their best efforts to cause such Representatives to
qualify under applicable federal and state laws to engage in the sale
of the Plans; and will cause such Representatives to be registered
representatives of Broker-Dealer before such Representatives engage in
the solicitation of applications for the Plans and will cause such
Representatives to limit solicitation of applications for the Plans to
jurisdictions where AUSA has authorized such solicitation.
Broker-Dealer has full responsibility in connection with the training,
supervision and control of the Representatives as contemplated by
Section 15(b)(4)(E) of the Securities Exchange Act of 1934.
Broker-Dealer shall certify Representatives' qualifications to the
satisfaction of ISI , including certifying a General Letter of
Recommendation set forth in Exhibit A hereto. Producers shall ensure
that the Plans are offered , sold and serviced only through
Representatives who comply with all appropriate state insurance
licensing requirements.
3. Representative's Application. Producers shall cause each such
Representative to execute a Registered Representative's Agent
Application with AUSA before a Representative shall be permitted to
solicit applications for the sale of the Plans. AUSA shall furnish
Producers with copies of Registered Representative's Agent Application
for execution by the Representatives.
4. Notice of Representative's Noncompliance. In the event a
Representative fails or refuses to submit to supervision of
Broker-Dealer, ceases to be a registered representative of
Broker-Dealer, or fails to meet the rules and standards imposed by
Producers on their Representatives, Producers shall certify such fact
to AUSA and shall immediately notify such Representative that he or
she is no longer authorized to sell the Plans, and Producers shall
take whatever additional action may be necessary to terminate the sales
activities of such Representative relating to the Plans.
5. Compliance with NASD Rules of Fair Practice and Federal and State
Security and Insurance Laws. Producers shall fully comply with the
requirements of the 1934 Act and all other applicable federal or state
laws applicable to the solicitation and service of the Plans and will
establish such rules and procedures as may be necessary to cause
diligent supervision of the securities and insurance activities
of Representatives. Producers agree to maintain appropriate books and
records concerning the activities of their Representatives as required
by the SEC, NASD or other regulatory agencies having jurisdiction,
or under applicable state insurance laws or regulations. Upon request
by AUSA or ISI, Producers shall furnish such appropriate records as may
be necessary to establish such diligent supervision.
6. Prospectus, Sales Promotion Material and Advertising. Producers shall
be provided with, and Producers shall forward to Representatives,
prospectuses relating to the Plans and such other material as ISI
determines to be necessary or desirable for use in connection with
sales of the Plans. Producers shall ensure that no sales promotion
materials or advertising related to the Plans shall be used by
Representatives unless the specific item has been approved by ISI in
writing.
7. Applications. Producers shall cause all applications for Plans to be
made on application forms supplied by AUSA and all payments collected
by Producers or any Representative to be remitted promptly in full,
together with such application forms and any other documentation,
directly to AUSA at the address indicated on such application.
Producers shall review all such applications for completeness. Checks
or money orders in payment on any such Plan shall be drawn to the order
of AUSA. All applications are subject to acceptance or rejection by
AUSA at its sole discretion. Producers agree to remit in full to AUSA
immediately upon receipt all premiums received on such applications,
forms and any other required documentation obtained in respect of
participants in the Plans.
8. Compensation. Broker-Dealer or Agency shall serve as Paymaster for
amounts due Representatives. Such amounts shall be paid to
Broker-Dealer or Agency , whichever is authorized to receive
insurance commissions under applicable insurance laws, by AUSA acting
on behalf of ISI in accordance with the Service Fee and Commission
Schedule attached hereto as Exhibit C. Broker-Dealer or Agency shall,
in turn, pay Representatives amounts due them in connection with the
sales of the Plans and Representatives shall solely look to
Broker-Dealer or Agency for payment of such amounts. Broker-Dealer or
Agency shall be compensated for the services provided hereunder in
accordance with the Service Fee and Commission Schedule. Such amounts
payable to Representatives and Broker-Dealer or Agency will be paid
in cash or other legal tender based upon Plans accepted by AUSA on
applications obtained by the Representatives. Upon termination of this
Agreement , all compensation to Broker-Dealer or Agency and
Representatives hereunder shall cease; however, (i) Broker-Dealer or
Agency shall continue to be liable for chargebacks pursuant to the
provisions of Service Fee and Commission Schedule or for any other
amounts advanced by or otherwise due AUSA hereunder, and (ii)
Broker-Dealer or Agency shall receive any commissions due under such
Schedule (continuing or otherwise) arising out of a Plan sold by a
Representative prior to termination of this Agreement, provided that
the obligation to pay such commissions shall cease after the tenth year
following the date of issue of the Plan. Broker-Dealer or Agency shall
have no interest in any surrender charges, deductions or other fees
payable to AUSA.
9. Investigations. Producers, ISI and AUSA agree to cooperate fully in any
investigation or proceeding with respect to any Representative or other
agent or the Producers to the extent that such investigation or
proceeding is in connection with the Plans. Without limiting the
foregoing:
a. ISI and AUSA will promptly notify Producers of any substantive
customer complaint or notice of any regulatory investigation or
proceeding or judicial proceeding received by it with respect to
Producers or any Representative or other agent of Producers or
with respect to ISI or AUSA which may affect the issuance of the
Plans marketed under this Agreement.
b. Producers will promptly notify ISI and AUSA of any substantive
customer complaint or notice of any regulatory investigation or
proceeding or judicial proceeding received by Producers with
respect to Producers or to any Representative or other agent of
Producers in connection with the Plans or any activity in
connection therewith.
In the case of a substantive customer complaint in connection
with the Plans, ISI, AUSA and Producers will cooperate in
investigating such complaint, but any response to such complaint
will be the sole responsibility of ISI or AUSA, as appropriate.
10. Independent Contractors. Producers in performing their duties hereunder
shall be acting as an independent contractors, and not as agents or
employees of AUSA or ISI.
11. Indemnification. Producers shall indemnity and hold harmless ISI and
AUSA from any claims, damages, expenses, liabilities or causes of
action, asserted or brought by anyone, resulting from any negligent,
fraudulent, or intentional acts, omissions, or errors of Producers,
their employees, registered representatives, other representatives, or
agents in the offering for sale, solicitation, or servicing of the
Plans, and from any negligent, fraudulent, or intentional acts,
omissions, or errors of Producers , their employees , registered
representatives, other representatives, or agents in violation of
Federal or State laws or regulations and NASD rules of any nature,
applicable to the offering for sale, solicitation, or servicing of the
Plans.
Broker-Dealer shall assume full responsibility for the activities of
all persons associated with it who are engaged directly or indirectly
in the sales and securities operations of Broker-Dealer. Broker-Dealer
shall indemnify and hold harmless ISI and AUSA from any claims,
damages, expenses, liabilities or causes of action, asserted or brought
by anyone, resulting from any private business transactions of any
associated persons which are the subject of this paragraph.
ISI and AUSA shall indemnify and hold harmless Producers from any
claims, damages, expenses, liabilities or causes of action, asserted or
brought by anyone, resulting from any negligent, fraudulent, or
intentional acts, omissions, or errors of ISI or AUSA or their
employees in the offering for sale, solicitation, or servicing of the
Plans, and from any negligent, fraudulent, or intentional acts,
omissions, or errors of ISI or AUSA or their employees in violation of
Federal or State laws or regulations and NASD rules of any nature,
applicable to the offering for sale, solicitation, or servicing of the
Plans.
12. Termination. ISI may terminate this Agreement immediately and without
notice if the Broker-Dealer fails to maintain its registration as a
Broker-Dealer or a member of the NASD. ISI may terminate this Agreement
immediately upon providing written notice to Broker-Dealer or Agency if
Broker-Dealer or Agency violates this Agreement or fails to perform to
ISI's satisfaction under the terms and conditions of this Agreement, or
if Broker-Dealer or Agency becomes insolvent. ISI and Broker-Dealer or
Agency shall each have the right, upon thirty days' written notice to
the other, to terminate this agreement for whatever reason deemed
appropriate by such party. Notwithstanding the termination of this
Agreement, ISI, Broker-Dealer and Agency acknowledge that each of them
shall be individually and respectively liable, responsible and
accountable for any and all actions undertaken prior to the effective
date of the termination of this Agreement.
13. Fidelity Bond. Broker-Dealer shall secure and maintain a fidelity bond
in at least the amounts prescribed under Article III, Section 32 of the
NASD Rules of Fair Practice. Broker-Dealer shall provide ISI with a
copy of said bond within thirty days after executing this Agreement.
14. Miscellaneous. ISI and AUSA reserve the right, without notice to
Producers, to suspend, withdraw, or modify the offering of the Plans or
to change the conditions of their offering with respect to anyone.
Producers are not authorized to market any Plan until notified by ISI
or AUSA of an effective registration statement therefor with the
Securities and Exchange Commission.
The right is reserved to AUSA and ISI to contract separately with any
employee, representative or agent of Producers in connection with the
Plans, provided that the terms of any such contract do not conflict
with the provisions of this Agreement. Nothing contained herein shall
prevent or restrict (i) AUSA or ISI from marketing said Plans through
other stock brokerage firms, insurance agents and brokers, and through
its own organization, or (ii) Producers from acting as agents and/or
brokers for other insurance companies, whether or not affiliated with
Producers, in any jurisdiction with respect to any insurance or
securities product, including securities products similar or identical
to those of AUSA or ISI.
Any manuals, guides, books, tapes, programs and other materials, if
any, developed by ISI or AUSA, which may be delivered to Producers from
time to time will be owned solely by ISI or AUSA, as the case may be;
however, during such time as this Agreement is in effect between the
parties hereto, if the Producers elect to do so, Representatives may
use any such manuals, guides, books, programs and other materials which
may have been delivered to the Producers but may use them solely in the
Producers' business hereunder , and upon such terms and conditions as
ISI or AUSA may establish at the time of such delivery. Upon
termination of this Agreement, such items will be returned promptly to
ISI.
Attached hereto as Exhibit B is a list of jurisdictions in which
Broker-Dealer or Agency is duly authorized to sell the Plans and
receive commissions thereon.
Certain of the Representatives may, from time to time, request access
to certain account information with respect to the Plans (the "Account
Information") via downloading of such Account Information to an
electronic mailbox which will be accessed by the Representatives
through their personal computers. The Account Information will be
accessed by the Representatives via software purchased from an outside
vendor to whom AUSA and ISI provide access to the Account Information.
In exchange for the cooperation of AUSA and ISI in providing access to
the Account Information for the convenience of the Representatives,
Broker-Dealer agrees to assume sole responsibility to oversee and
supervise the Representatives in the utilization of such Account
Information, including verification of the accuracy of all written
material produced by a Representative from the Account Information.
Further, Broker-Dealer is solely responsible for ensuring that all
NASD, SEC and other regulations are fully complied with by the
Representatives in connection with the utilization of and preparation
of any written or oral material from, the Account Information.
Broker-Dealer shall fully indemnify and hold harmless AUSA and ISI from
any and all claims made against them by any party with respect to the
Representatives' use of such Account Information.
15. Governing Law. This Agreement shall be interpreted in accordance with
the laws of the State of Florida. The parties hereto agree that the
Circuit Court for Pinellas County, Florida shall have jurisdiction and
be the appropriate venue for any required judicial interpretation and
enforcement of this Agreement.
16. Binding Effect. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule, or otherwise, the
remainder of this Agreement shall not be affected thereby.
This Agreement shall be effective as of the date it is fully executed by
all parties. This Agreement constitutes the entire Agreement between the parties
hereto. However, AUSA and ISI reserve the right to modify the Service Fee and
Commission Schedule ("Schedule") under this Agreement by publishing from time to
time a revised schedule; such revised schedule will govern only new business
applications written on or after the effective date of the revised schedule.
AUSA and ISI further reserve the right to amend from time to time this
Agreement, other than its schedule, by providing thirty (30) days written notice
to the Broker-Dealer; Broker-Dealer shall be deemed to have accepted all terms
and conditions set forth in such amendment if no objections are received in
writing by AUSA and ISI within fifteen (15) days after notification is mailed.
This Agreement supersedes in its entirety any and all previous agreements among
the parties hereto with respect to the Plans; provided, however, any former
agreement shall survive with respect to any Plans offered or sold during the
term thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officials thereunto duly authorized, as of the day
and year first above written.
AUSA LIFE INSURANCE COMPANY, INC. INTERSECURITIES, INC.
By: _________________________________ By: ______________________________
Title: Vice President Title: ____________________________
BROKER-DEALER
Broker-Dealer~
By: _______________________________
(Signature)
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(Print Full Name)
Title: ____________________________
Contact Person ____________________
(Print Full Name)
APPENDIX TO BROKER-DEALER SUPERVISORY AND SERVICE AGREEMENT
The Agencies herein are wholly-owned subsidiaries of the Broker-Dealer named in
Paragraph 1 of this Agreement.
Broker-Dealer: Broker-Dealer~
Subsidiary Name: _______________________________________________________________
Federal Tax ID: _______________________________
States in which this Subsidiary is insurance licensed: ____________________
Officers:
Name: __________________________ Title: _________________________
Name: __________________________ Title: _________________________
Officers Signature: _______________________________________________________
Subsidiary Name: _______________________________________________________________
Federal Tax ID: _______________________________
States in which this Subsidiary is insurance licensed: ____________________
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Officers:
Name: _________________________ Title: _________________________
Name: _________________________ Title: _________________________
Officer's Signature: ______________________________________________________
Subsidiary Name: _______________________________________________________________
Federal Tax ID: _______________________________
States in which this Subsidiary is insurance licensed: ____________________
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Officers:
Name: __________________________ Title: ________________________
Name: __________________________ Title: ________________________
Officer's Signature: ___________________________________________________________
APPENDIX TO BROKER-DEALER SUPERVISORY AND SERVICE AGREEMENT
The Broker-Dealer named in this Agreement has adopted the use of the following
assumed names and is doing business under such names in the states listed: 1) as
required by State Departments of Insurance for the purpose of obtaining
insurance licenses in those states; or 2) in compliance with NASD Rules of Fair
Practice Art III, Sec. 35. These are not and cannot be considered to be
"Agencies" as defined in Paragraph 1 of this Agreement.
Assumed Name ("DBA"): _________________________________ STATE: _____________
Assumed Name ("DBA"): _________________________________ STATE: _____________
Assumed Name ("DBA"): _________________________________ STATE: _____________
Assumed Name ("DBA"): _________________________________ STATE: _____________
Assumed Name ("DBA"): _________________________________ STATE: _____________
Assumed Name ("DBA"): _________________________________ STATE: _____________
Assumed Name ("DBA"): _________________________________ STATE: _____________
Assumed Name ("DBA"): _________________________________ STATE: _____________
Assumed Name ("DBA"): _________________________________ STATE: _____________
Assumed Name ("DBA"): _________________________________ STATE: _____________
Assumed Name ("DBA"): _________________________________ STATE: _____________
EXHIBIT A
General Letter of Recommendation
BROKER-DEALER hereby certifies to AUSA that all the following
requirements will be fulfilled in conjunction with the submission of
licensing/appointment papers for all applicants as agents of AUSA
submitted by BROKER-DEALER. BROKER-DEALER will, upon request, forward
proof of compliance with same to AUSA in a timely manner.
1. We have made a thorough and diligent inquiry and investigation
relative to each applicant's identity, residence and business
reputation and declare that each applicant is personally known
to us, has been examined by us, is known to be of good moral
character, has a good business reputation, is reliable, is
financially responsible and is worthy of a license. Each
individual is trustworthy, competent and qualified to act as an
agent for AUSA to hold himself out in good faith to the general
public.
2. We have on file a U-4 form which was completed by each
applicant. We have fulfilled all the necessary investigative
requirements for the registration of each applicant as a
registered representative through our NASD member firm, and each
applicant is presently registered as an NASD registered
representative.
The above information in our files indicates no fact or
condition which would disqualify the applicant from receiving a
license and all the findings of all investigative information is
favorable.
3. We certify that all educational requirements have been met for
the specified state each applicant is requesting a license in,
and that all such persons have fulfilled the appropriate
examination, education and training requirements.
4. If the applicant is required to submit his picture, his
signature, and securities registration in the state in which he
is applying for a license, we certify that those items forwarded
to AUSA are those of the applicant and the securities
registration is a true copy of the original.
5. We hereby warrant that the applicant is not applying for a
license with AUSA in order to place insurance chiefly and solely
on his life or property, or lives or property of his relatives,
or property or liability of his associates.
6. We will not permit any applicant to transact insurance as an
agent until duly licensed therefore. No applicants have been
given a contract or furnished supplies, nor have any applicants
been permitted to write, solicit business, or act as an agent in
any capacity, and they will not be so permitted until the
certificate of authority or license applied for is received.
EXHIBIT B
TO
BROKER-DEALER SUPERVISORY AND SERVICE AGREEMENT
1.The following is a list of jurisdictions in which Broker-Dealer is duly
registered or licensed as a dealer or broker and is fully authorized to
sell the securities described in the Agreement:
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(OR) All states of the United States except: __________________________
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2.Notices permitted or required to be given to Broker-Dealer shall be
given to:
Name: Name
Address: Address
City, State and Zip Code: City_State_Zip
Telephone Number: _____________________________
3.Broker-Dealer's Taxpayer Identification Number:
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