EXHIBIT 1(A)(3)(b)(i)
Form of Master Service and Distribution Compliance Agreement
MASTER SERVICE AND DISTRIBUTION COMPLIANCE AGREEMENT
This Agreement, made this 1st day of March, 1995, by and among
InterSecurities, Inc.("ISI")and AUSA Life Insurance Company, Inc.("AUSA Life"),
on its own behalf and on behalf of AUSA Series Life Account (the "Series
Account"), a separate account of AUSA Life.
WHEREAS, AUSA Life offers for sale certain variable life insurance policies
(the "Policies") funded by the Series Account, unit investment trusts registered
under the Investment Company Act of 1940, as amended ("1940 Act"), pursuant to
effective registration statements filed with the Securities and Exchange
Commission under the Securities Act of 1933 ("Securities Act"); and
WHEREAS, ISI is registered as a broker-dealer with the Securities and
Exchange Commission ("SEC") under the Securities Exchange Act of 1934 ("1934
Act") and is a member of the National Association of Securities Dealers, Inc.
("NASD"); and
WHEREAS, AUSA Life desires to engage ISI in connection with the
distribution of the Policies to maintain certain books and records, perform
certain administrative and marketing services, and to fulfill certain regulatory
requirements as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
I. SERVICES OF ISI
A. APPOINTMENT. AUSA Life hereby appoints ISI, and ISI accepts the
appointment as, Master Servicer and Distributor of the Policies.
B. DUTIES. ISI shall perform certain administrative, regulatory and other
services with respect to the distribution of the Policies as described herein.
ISI agrees to use its best efforts in performing such activities.
C. WRITTEN AGREEMENTS. ISI shall enter into Agreements with broker-dealer
firms ("Broker-Dealers") whose registered representatives have been or shall be
licensed and appointed as life insurance agents of AUSA Life. AUSA Life shall
pay all fees associated with the appointment of such registered representatives
as insurance agents of AUSA Life. Such written Agreements with Broker-Dealers
shall provide that such Broker-Dealers' properly licensed registered
representatives shall be authorized to solicit applications for the purchase of
the Policies. Such Agreements shall include such terms and conditions as ISI may
determine not inconsistent with this Agreement. Provided, however, any such
Agreement shall provide in substance:
1. Broker-Dealer shall ensure that the Policies will be offered, sold
and serviced only through persons who comply with all appropriate
state insurance licensing requirements.
2. Broker-Dealer shall agree that in performing its duties under the
Policies, Broker-Dealer shall be acting as an independent
contractor, and not as an agent or employee of AUSA Life or ISI.
3. Broker-Dealer shall indemnify and hold harmless AUSA Life and ISI
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 Broker-
Dealer, its employees, registered representatives, other
representatives, or agents in the offering for sale, solicitation,
or servicing of the Policies, and from any negligent, fraudulent,
or intentional acts, omissions, or errors of Broker-Dealer, its
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 Policies.
4. 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 Life 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.
In obtaining and entering into written Agreements with Broker-Dealers,
ISI will in all respects conform to the requirements of all state and Federal
law, and the Rules of Fair Practice of the NASD.
D. RECORDKEEPING. ISI shall maintain and preserve, or cause to be
maintained and preserved, such accounts, books, and other documents as are
required of it by the 1940 Act, the 1934 Act and any other applicable laws and
regulations, including without limitation Rules 17a-3 and 17a-4 under the 1934
Act. The books, accounts and records of ISI as to services provided hereunder
shall be maintained so as to disclose clearly and accurately the nature and
details of the transactions.
The payment of premiums, purchase payments, commissions and other fees
and payments in connection with the Policies shall be reflected on the books,
records and accounts of ISI as required under applicable NASD regulations and
Federal and state securities law requirements. AUSA Life and ISI, from time to
time during the term of this Agreement, shall agree as to the ministerial
responsibility for maintaining and preserving the books, records and accounts
kept in connection with the Policies; provided, however, in the case of books,
records and accounts kept pursuant to a requirement of applicable law or
regulation, the ultimate and legal responsibility for maintaining and preserving
such books, records and accounts shall be that of the party which is required to
maintain or preserve such books, records and accounts under the applicable law
or regulation, and such books, records and accounts shall be maintained and
preserved under the supervision of that party.
E. PROMOTIONAL PROGRAM. ISI shall prepare a sales promotional program for
the Policies and assist agents in utilizing the program. In addition, ISI shall
provide Broker-Dealers and agents with sufficient quantities of sales
promotional materials, prospectuses, sample Policies, applications and any
necessary service forms.
F. SALES MATERIAL AND OTHER DOCUMENTS.
1. ISI'S RESPONSIBILITIES. ISI shall be responsible for:
(a) the design, preparation and printing of promotional material
to be used in the distribution of the Policies, subject to
AUSA Life's approval; and
(b) the approval of promotional material by the SEC and the NASD,
where required.
2. AUSA LIFE'S RESPONSIBILITIES.
(a) AUSA Life shall provide ISI with sufficient quantities of
prospectuses regarding the Policies and the Series Account.
(b) AUSA Life shall be responsible for the approval of promotional
material by state and other local insurance regulatory
authorities, if required.
G. PAYMENTS TO BROKER-DEALERS. Commissions or other fees due to the
Broker-Dealer or its representatives in connection with the sale of the Policies
shall be paid by AUSA Life acting on behalf of and as a ministerial duty for ISI
to the persons entitled thereto in accordance with the applicable agreement
between each such Broker-Dealer or representative and ISI and/or AUSA Life. ISI
shall assist AUSA Life in the payment of such amounts as AUSA Life shall
reasonably request, provided that ISI shall not be required to perform any acts
that would subject it to registration under the insurance laws of any state. The
responsibility of ISI shall include the performance of all activities by ISI
necessary in order that the payment of such amounts fully complies with all
applicable state and Federal securities laws. Unless otherwise agreed to by AUSA
Life in writing, neither ISI nor any representatives shall have an interest in
any surrender charges, deductions or other fees payable to AUSA Life as set
forth herein.
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H. COMPLIANCE. ISI shall, at all times, when performing its functions under
this Agreement, be registered as a securities broker-dealer with the SEC and be
a member of the NASD and licensed or registered as a securities broker-dealer in
those jurisdictions where the performance of the duties contemplated by this
Agreement would require such licensing or registration. ISI represents and
warrants that it shall otherwise comply with provisions of Federal and state law
in performing its duties hereunder.
I. PAYMENT OF EXPENSES BY AUSA LIFE. AUSA Life shall pay the costs incurred
in connection with ISI's provision of services hereunder and the distribution of
the Policies, including those expenses incurred in connection with the printing
of the prospectuses of the Series Account and for WRL Series Fund, Inc. (the
"Fund") to be used in connection with the distribution of the Policies (to the
extent that the Fund does not incur such expenses), and the preparation of sales
literature and promotional materials for the Policies. AUSA Life shall furnish
ISI with copies of all documents that ISI reasonably requests for use in
connection with the distribution of the Policies.
II. GENERAL PROVISIONS
A. INSPECTION OF BOOKS AND RECORDS. ISI and AUSA Life agree that all
records relating to services provided hereunder shall be subject to reasonable
periodic, special or other audit or examination by the SEC, NASD, or any state
insurance commissioner or any other regulatory body having jurisdiction. ISI and
AUSA Life agree to cooperate fully in any securities, insurance or judicial
regulatory investigation, inspection, inquiry or proceeding arising in
connection with the services provided under this Agreement, or with respect to
ISI or AUSA Life or their affiliates, to the extent related to the distribution
of the Policies. ISI and AUSA Life will notify each other promptly of any
substantive customer complaint or notice of regulatory proceeding, and, in the
case of customer complaint, will cooperate in arriving at a mutually
satisfactory response. AUSA Life and ISI shall each cause the other to be
furnished with such reports as it may reasonably request for the purpose of
meeting its reporting and recordkeeping requirements.
B. COMPENSATION. Unless otherwise agreed to by the parties hereto, ISI will
receive no compensation for the services ISI performs hereunder. ISI
acknowledges the receipt of good and valid consideration in connection with this
Agreement in that ISI and AUSA Life are each a wholly-owned indirect subsidiary
of AEGON USA, Inc. and ISI recognizes that it is beneficial to it to perform the
duties required of it hereunder.
C. TERMINATION. Subject to termination as hereinafter provided, the
Agreement shall remain in full force and effect until terminated as herein
provided.
1. This Agreement may be terminated by either partner hereto upon
60 days written notice to the other party.
2. This Agreement may be terminated upon written notice of one party
hereto in the event of the bankruptcy or insolvency of such part
to which the notice is given.
3. This Agreement may be terminated at any time upon the mutual written
consent of the parties hereto.
4. This Agreement shall automatically be terminated in the event of its
assignment.
5. Upon termination of this Agreement, all authorizations, rights,
and obligations shall cease except the obligations to settle
accounts hereunder, including payments of premiums subsequently
received for Policies in effect at the time of termination or
issued pursuant to applications received by AUSA Life prior to
termination.
D. REGISTRATION. AUSA Life agrees to use its best efforts to effect and
maintain the registration of the Policies under the Securities Act and the
Series Account under the 1940 Act, and to qualify the Policies under the state
securities and insurance laws. AUSA Life will pay or cause to be paid expenses
(including the fees and disbursements of its own counsel) of the registration
and maintaining of the Policies under the Securities
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Act and the Series Account under the 1940 Act, and to qualify the Policies under
the state securities and insurance laws.
E. EXCLUSIVITY. The services of ISI to the Series Account hereunder are not
to be deemed exclusive and ISI shall be free to render similar services to
others so long as its services hereunder are not impaired or interfered with
hereby.
F. AUTHORITY. ISI shall have authority hereunder only as expressly granted
in this Agreement.
G. 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 constitutes the entire
Agreement between the parties hereto and may not be modified except in written
instrument executed by all parties hereto. This Agreement supersedes in its
entirety any and all previous agreements among the parties hereto with respect
to the Policies; provided, however, any former agreement shall survive with
respect to any Policies offered or sold during the term thereof.
H. MISCELLANEOUS. This Agreement shall be subject to the provisions of the
1940 Act and the 1934 Act and the rules, regulations, and rulings thereunder and
of the NASD, from time to time in effect, including such exemptions from the
1940 Act as the SEC may grant, and the terms hereof shall be interpreted and
construed in accordance therewith. Without limiting the generality of the
foregoing, the term "assignment" shall not include any transaction exempted from
Section 15(b)(2) of the 1940 Act.
I. GOVERNING LAW. This Agreement shall be governed by and continued in
accordance with the laws of the State of New York.
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.,
on its own behalf and on behalf of
AUSA SERIES LIFE ACCOUNT
By: ____________________________________
Title: ___________________________________
INTERSECURITIES, INC.
By: ____________________________________
Title: PRESIDENT
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