EXHIBIT (3)(b)
SELLING AGREEMENT
AGREEMENT made this _______ day of _________________, 19__, by
and between ANNUITY INVESTORS LIFE INSURANCE COMPANY, an Ohio life
insurance company ("AILIC"), AAG SECURITIES, INC., an Ohio corporation
("AAGS") and _______________________________________, a ___________
corporation ("Broker/Dealer") and any and all insurance agency affiliates
or subsidiaries of Broker/Dealer ("Agencies"). Broker/Dealer and the
Agencies are hereinafter referred to as the "Producers." The Agencies are
listed in Appendix I to this Agreement, as may be amended from time to
time.
WHEREAS, AILIC issues certain variable annuity and variable
insurance policies, and certificates thereunder in the case of group
policies ("Contracts"), described in this Agreement, which are deemed
securities under the Securities Act of 1933, and
WHEREAS, AAGS is duly licensed as a broker-dealer with the
National Association of Securities Dealers, Inc. ("NASD") and the
Securities and Exchange Commission ("SEC"), and
WHEREAS, Broker/Dealer is duly licensed as a broker-dealer with
the NASD and SEC, and
WHEREAS, AILIC has appointed AAGS as the principal underwriter of
the Contracts, and
WHEREAS, AAGS proposes to have Broker/Dealer's registered
representatives ("Representatives") who are also duly licensed insurance
agents solicit sales of the Contracts, and
WHEREAS, AAGS delegates to Broker/Dealer and the Agencies, to the
extent legally permitted, training, supervisory and certain administrative
responsibilities and duties.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties agree as follows:
1. Appointment. AILIC and AAGS hereby appoint Broker/Dealer
and the Agencies under the securities and insurance laws to supervise
Representatives in connection with the distribution of the Contracts,
solely in accordance with the Contract and the then current Prospectus
relating thereto, 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 Contracts and all such persons
shall be subject to the control of Broker/Dealer with respect to such
persons' securities-related activities in connection with the Contracts.
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 Contracts; Producers warrant that Representatives qualify
under applicable federal and state laws to engage in the sale of the
Contracts; and Producers will cause such Representatives to be registered
representatives of Broker/Dealer before such Representatives engage in the
solicitation of applications for the Contracts in jurisdictions where
AILIC 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 (the "1934 Act"). By submitting to AAGS or
AILIC a registered representative for appointment, Broker/Dealer shall be
deemed to have certified Representatives' qualifications including those
set forth in Appendix II hereto. Upon request, Broker/Dealer shall confirm
the foregoing by delivering a letter in the form of Appendix II hereto.
Producers shall ensure that the Contracts are offered, sold and serviced
only through Representatives who comply with all appropriate state
insurance licensing requirements and solely in accordance with the
Contract and the then current Prospectus relating thereto.
3. Appointment of Agents. With respect to each Representa-
tive to be appointed, Broker/Dealer shall submit to AAGS an Agent Data
Form, a copy of a current NASD status sheet, a copy of the appropriate
state insurance license and such additional documents as requested by
AILIC or AAGS and shall await approval from AILIC before a Representative
shall be permitted to solicit applications for the sale of Contracts.
4. Notice of Representative's Noncompliance. In the event a
Representative fails or refuses to submit to supervision by Broker/Dealer,
ceases to be a registered representative of Broker/Dealer, or fails to
meet the rules and standards imposed by Broker/Dealer on its
Representatives, Broker/Dealer shall certify such fact to AILIC and shall
immediately notify such Representative that he or she is no longer
authorized to sell the Contracts, and Broker/Dealer shall take whatever
additional action may be necessary to terminate the sales activities of
such Representative relating to the Contracts.
5. Compliance with NASD Rules of Fair Practice and Federal
and State Security and Insurance Laws. Broker/Dealer shall and shall
ensure that its Representatives fully comply with the requirements of the
1934 Act and the NASD and all other applicable federal or state laws
applicable to the offer, sale and service of the Contracts and will
establish such rules and procedures as may be necessary to cause diligent
supervision of the securities and insurance activities of Representatives.
Broker/Dealer agrees to maintain all transactions, 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 AILIC or AAGS,
Broker/Dealer shall furnish or make available for inspection, such
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appropriate records as may be necessary to establish such diligent
supervision.
6. Prospectus, Sales Promotion Material and Advertising.
Broker/Dealer shall be provided with, and Broker/Dealer shall forward to
Representatives, prospectuses relating to the Contracts and such other
material as AILIC or AAGS determines to be necessary or desirable for use
in connection with sales of the Contracts. Broker/Dealer shall ensure that
no sales promotion materials or advertising related to AILIC, AAGS and/or
the Contracts shall be used by Representatives unless the specific item
has first been approved by AILIC or AAGS in writing. Producers and their
Representative shall discontinue the use of any item when notified by
AILIC or AAGS.
No Producer or any Representative shall in connection with the
offer or sale of Contracts use any advertising material, prospectus,
proposal or representation either in general or in relation to a Contract,
AAGS or AILIC unless furnished by AAGS or AILIC or until the consent of
AAGS or AILIC is first obtained. Neither Producers nor any Representative
shall issue or recirculate any illustration, circular, statement or
memorandum of any sort, misrepresenting the terms, benefits or advantages
of any Contract, or make any misleading statement as to benefits thereon
or the financial position of AILIC.
7. Applications. Producers shall cause all applications for
Contracts to be made on application forms supplied by AILIC and all
payments collected by Broker/Dealer or any Representative to be remitted
promptly in full, together with such application forms and any other
documentation, directly to AILIC at the address indicated on such
application. Producers shall review all such applications for
completeness. Producers shall be solely responsible for determining the
suitability of Contracts for purchasers. Checks or money orders for
Purchase Payments shall be drawn to the order of AILIC. All applications
are subject to acceptance or rejection by AILIC at its sole discretion.
Producers agree to remit in full to AILIC immediately upon receipt all
Purchase Payments received on such applications, forms and any other
required documentation obtained in respect to the Contracts.
8. Compensation.
(a) Commissions. Commissions payable in connection
with the Contracts for which Broker/Dealer is the broker of record shall
be payable in accordance with the Schedule(s) attached hereto and made a
part hereof and shall be paid by or on behalf of AAGS to one or more of
the Producers in accordance with applicable insurance and securities laws.
Payment of commissions to the Producer(s) shall be full and sole
compensation for all services and expenses and for the fulfillment of
duties under this Agreement. These commissions will be paid as a
percentage of Purchase Payments received in cash and accepted by AILIC on
applications obtained by the Representatives of Broker/Dealer provided a
Contract is issued, delivered to and accepted by the applicant. Upon
termination of this Agreement, all compensation to Broker/Dealer hereunder
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shall cease; however, Producers shall continue to be liable for any
chargebacks (as defined in Subsections (A), (B) and (C) below). Producers
shall have no interest in any surrender charges, deductions or other fees
payable to AILIC or AAGS. The Producers shall pay the person(s) entitled
thereto as provided in any agreement between Producers and the
Representatives, and AILIC and AAGS shall have no responsibility or
liability therefor.
A) If AAGS has paid any compensation in
advance, Producers hereby agree that they are indebted to AAGS if
the Purchase Payment on which the compensation is based is not
paid within the time provided by the Contract, or allowed by
AILIC, or, if the Purchase Payment is paid, if Producers would
not have been entitled to the compensation when the Purchase
Payment is paid. AAGS, in its sole discretion, will determine
whether or not Producers would have been entitled to the
compensation when the Purchase Payment is paid.
B) Upon demand by AAGS, the Producers
hereby agree to return to AAGS any compensation paid to them
based on refunds or adjustments of Contract values, in whole or
in part, including in the event of termination, modification or
recision of a Contract. AILIC may in its sole discretion, and at
any time, terminate, modify or rescind the sale of any Contract
or contract issued by it, and Producers are indebted to AAGS for
the amount of compensation deemed necessary to refund until
Producers repay such amount.
C) Any compensation which would be due
Producers under this Agreement shall not become due if any
Producer is indebted to AAGS or AILIC. In the case of such
indebtedness, any compensation will be applied by AAGS to reduce
the indebtedness, regardless of any claim or lien by Producers or
by someone other than AAGS. Upon termination of this Agreement,
the Producers shall immediately pay to AAGS any and all amounts
which are owed.
The foregoing subsections A, B and C shall survive the
termination of this Agreement.
(b) Time of Payment. AAGS shall pay or cause to be
paid any compensation due Producers within fifteen (15) business days
after the end of the calendar month in which Purchase Payments upon which
such compensation is based are accepted by AILIC, and for which Contracts
have been issued and accepted by the applicant.
(c) Amendments of Schedules. AAGS may, upon at least
ten (10) business days prior written notice to Broker/Dealer, amend the
attached Schedule(s) made part hereof. Any such amendments shall be in
writing and shall apply to premiums received by AILIC after the effective
date of such written notice.
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(d) Prohibition Against Rebates and Replacements.
Except as permitted by law, if any Producer or any Representative of
Broker/Dealer shall rebate or offer to rebate all or any part of a
Purchase Payment or commission on a Contract, or if any Producer or any
Representative of Broker/Dealer provides or offers to provide an applicant
with other valuable consideration or inducement in connection with a
Contract, the same shall be grounds for termination of this Agreement by
AILIC or AAGS. If any Producer, or any Representative of Broker/Dealer
shall withhold any Purchase Payment on a Contract, the same shall also be
grounds for termination of this Agreement by AILIC or AAGS. If any
Producer, or any Representative of Broker/Dealer, shall at any time induce
or endeavor to induce any person paying Purchase Payments on any Contract
issued hereunder to discontinue Purchase Payments or to relinquish any
such Contract except under circumstances in which there are reasonable
grounds for believing the Contract is not suitable for such person, any
and all compensation due Producers shall cease and terminate.
(e) Indebtedness. Nothing in this Agreement shall be
construed as giving Broker/Dealer the right to incur an indebtedness on
behalf of AILIC or AAGS.
9. Investigations. Producers, AAGS and AILIC 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 Contracts. Without
limiting the foregoing:
(a) AILIC and AAGS 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
with respect to AILIC or AAGS which may affect the issuance of the
Contracts marketed under this Agreement.
(b) Producers will promptly notify AILIC and AAGS 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 Contracts or any activity in connection
therewith.
In the case of a substantive complaint in connection with the
Contracts, AILIC, AAGS, and Producers will cooperate in investigating such
complaint. In connection therewith, Producers shall provide AILIC and AAGS
with all information reasonably requested. AILIC and AAGS shall respond to
and defend any such complaint.
10. Independent Contractors. Producers in performing their
duties hereunder shall be acting as independent contractors and not as
agents or employees of AILIC or AAGS. In addition, nothing contained
herein shall be construed as a partnership among AILIC, AAGS and
Producers.
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11. Indemnification. Producers shall indemnify and hold
harmless AILIC and AAGS from any claims, damages, expenses (including
reasonable attorneys' fees and 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 Contracts, 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 Contracts.
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 servicing operations of Broker/Dealer. Broker/Dealer
shall indemnify and hold harmless AILIC and AAGS 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.
AILIC and AAGS 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 AILIC or AAGS or their employees
in the offering for sale, solicitation, or servicing of the Contracts and
from any negligent, fraudulent, or intentional acts, omissions, or errors
of AILIC or AAGS 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 Contracts.
12. Termination. AAGS may terminate this Agreement immedi-
ately and without notice if the Broker/Dealer fails to maintain its
registration as a broker/dealer under the 1934 Act or a member of the
NASD. AAGS 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 AAGS's satisfaction under the terms and
conditions of this Agreement or if Broker/Dealer or Agency becomes
insolvent or files a petition for bankruptcy, reorganization or
liquidation under applicable law. AAGS 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, AAGS,
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. In furtherance of the foregoing, the provisions of
Sections 8, 9, 10, 11 and 15 hereof shall survive termination
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
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AAGS with a copy of said bond within thirty days after executing this
Agreement.
14. Confirmations. Upon or prior to completion of each
transaction for which the issuance of a confirmation is legally required,
a confirmation reflecting the fact of the transaction and those items
under SEC Rule 10b-10 will be promptly forwarded by AILIC on AAGS's
behalf. A copy of such confirmation will be made available to
Broker/Dealer.
15. Scope of Authority for Processing Business.
Broker/Dealer shall be authorized to: (a) accept applications for
Contracts, (b) receive for forwarding to AILIC the Purchase Payments paid
in connection with any such applications, (c) deliver the Contracts issued
to the applicants by AILIC, and (d) collect Purchase Payments for
forwarding to AILIC as specifically directed by such applicants who have
authorized Broker/Dealer to act on their behalf.
Broker/Dealer is not authorized to: (a) alter any applications
or Contracts, (b) collect or in any manner receive premiums from
applicants in the form of checks, money orders or electronic funds
transfers payable to any person or entity other than AILIC, (c) waive any
forfeiture, (d) make any settlement of any claim or claims, or (e) perform
any function other than as expressly authorized in the preceding
paragraph.
16. Miscellaneous. AAGS and AILIC reserve the right, without
notice to Producers, to suspend, withdraw, or modify the offering of the
Contracts or to change the conditions of their offering with respect to
anyone. Producers are not authorized to market any Contract until notified
by AILIC or AAGS of an effective registration statement therefor with the
Securities and Exchange Commission. AAGS will provide Broker/Dealer with a
list, and updates thereto which list the jurisdictions in which the
Contracts may be sold.
The right is reserved to AILIC and AAGS to contract separately
with any employee, representative or agent of Producers in connection with
the Contracts or otherwise, 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) AILIC or AAGS from marketing said
Contracts through other broker/dealers, insurance agents and brokers, and
through its own organization, or (ii) Producers from acting as agent
and/or broker for other insurance companies, whether or not affiliated
with a Producer, in any jurisdiction with respect to any insurance or
securities product, including securities products similar or identical to
those of AILIC or AAGS. Neither Producers nor their Representatives shall
have any right of exclusivity to market and sell Contracts in any
geographical area.
Any manuals, guides, books, tapes, programs and other materials,
if any, developed by AILIC or AAGS, which may be delivered to
Broker/Dealer from time to time will be owned solely by AILIC or AAGS, as
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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 AILIC or AAGS may establish at the time of such delivery.
Upon termination of this Agreement, such items will be returned promptly
to AAGS. Included on Appendix I is a list of jurisdictions in which
Broker/Dealer or Agency is duly authorized to sell the Contracts and
receive commissions thereon and Producers represent that this list is true
and complete.
17. Notices, Etc. All notices, demands, xxxxxxxx, requests
and other written communications hereunder shall be deemed to have been
properly given to Producers when delivered by hand or sent by registered
or certified United States mail, postage prepaid and addressed to
Producers at _________________________________________________________.
Any communications to AILIC or AAGS shall be deemed properly given if
delivered by hand or sent by registered or certified United States mail,
postage prepaid and addressed to AILIC or AAGS, respectively, at 000 Xxxx
Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxxx, Xxxx 00000, Attention: Xxxx X.
Xxxxxxxx, Esq. The address for notice hereunder may be changed by giving
written notice of such change to the other parties in accordance with the
provisions of this Section 17.
18. Governing Law. This Agreement shall be interpreted in
accordance with the laws of the State of Ohio. The parties hereto agree
that any state or federal court located in Xxxxxxxx County, Ohio shall
have sole and exclusive jurisdiction and be the appropriate venue for any
required judicial interpretation and enforcement of this Agreement.
19. 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.
20. No Assignment. This Agreement, and the rights and duties
hereunder, may not be assigned or delegated except as expressly provided
for herein. Commissions to be paid pursuant to this Agreement may not be
assigned without the consent of AAGS.
21. No Waiver. Any failure to enforce any right under this
Agreement or to object to any violations of its terms shall not operate as
a waiver of any rights.
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, AILIC and AAGS reserve the right to
modify the Schedules as provided herein. AILIC and AAGS 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
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in writing by AILIC or AAGS 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 Contracts;
provided, however, any former agreement shall survive with respect to any
Contracts offered or sold during the term thereof.
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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.
ANNUITY INVESTORS LIFE AAG SECURITIES, INC.
INSURANCE COMPANY
BY: ____________________________ BY: ___________________________
Name: __________________ Name: ________________
Title:__________________ Title: _______________
BROKER/DEALER:
_______________________________
BY: ___________________________
Name: ________________
Title: _______________
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APPENDIX I
[LIST OF AGENCIES]
States
Name of Agency in which Licensed Taxpayer I.D. No.
-------------- ----------------- -----------------
By executing below, the foregoing entities agree to join in this
Agreement as an Agency and be bound by all terms of such Agreement.
Name of Agency
_____________________________
By: _________________________
Its: ________________________
Name of Agency
_____________________________
By: _________________________
Its: ________________________
Name of Agency
_____________________________
By: _________________________
Its: ________________________
Name of Agency
_____________________________
By: _________________________
Its: ________________________
APPENDIX II
General Letter of Recommendation
BROKER/DEALER hereby certifies to AAGS and AILIC that all the
following requirements will be fulfilled in conjunction with the
submission of licensing/appointment papers for all applicants as agents of
AILIC submitted by BROKER/DEALER. BROKER/DEALER will, upon request,
forward proof of compliance with same to AAGS and AILIC in a timely
manner.
1. We have made a thorough and diligent inquiry and investi-
gation 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 AILIC 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 investi-
gative requirements for the registration of each appli-
cant 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 investi-
gative 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 AILIC 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 AILIC in order to place insurance chiefly
and solely on his life or property, or lives or property
of his relatives, or lines or property 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.
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