EXHIBIT (3)(b)
--------------
FORM OF BROKER/DEALER SUPERVISION AND SALES AGREEMENT
BY AND BETWEEN AEGON USA SECURITIES, INC.
AND THE BROKER/DEALER.
SELECTED BROKER AGREEMENT
AGREEMENT dated__________________________,19____, by and between AEGON USA
Securities, Inc.
(Distributor), an Iowa corporation and ________________________________________
(Broker), a __________________________________corporation. This Agreement
supersedes and replaces any prior Selected Broker Agreement regarding the
subject matter between the parties hereto.
WITNESSETH:
In consideration of the mutual promises contained herein, the parties
hereto agree as follows:
A. Definitions
-----------
(1) Contracts--Variable life insurance contracts and/or variable annuity
contracts described in Schedule A attached hereto and issued by AUSA
Life Insurance Company, Inc. ("Company") and for which Distributor
has been appointed the principal underwriter pursuant to Distribution
Agreements, copies of which have been furnished to Broker.
(2) Accounts--Separate accounts established and maintained by Company
pursuant to the laws of New York, as applicable, to fund the benefits
under the Contracts.
(3) The Funds--, open-end management investment companies registered
under the 1940 Act, shares of which are sold to the Accounts in
connection with the sale of the Contracts, as described in the
Prospectus for the Contracts.
(4) Registration Statement--The registration statements and amendments
thereto relating to the Contracts, the Accounts, and the Funds,
including financial statements and all exhibits.
(5) Prospectus--The prospectuses included within the Registration
Statements.
(6) 1933 Act--The Securities Act of 1933, as amended.
(7) 1934 Act--The Securities Exchange Act of 1934, as amended.
(8) 1940 Act--The Investment Company Act of 1940, as amended.
(9) SEC--The Securities and Exchange Commission.
(10) NASD--The National Association of Securities Dealers, Inc.
B. Agreements of Distributor
-------------------------
(1) Pursuant to the authority delegated to it by Company, Distributor
hereby authorizes Broker during the term of this Agreement to solicit
applications for Contracts from eligible persons provided that there
is an effective Registration Statement relating to such Contracts and
provided further that Broker has been notified by Distributor that
the Contracts are qualified for sale under all applicable securities
and insurance laws of the state or jurisdiction in which the
application will be solicited. In connection with the solicitation of
applications for Contracts, Broker is hereby authorized to offer
riders that are available with the Contracts in accordance with
instructions furnished by Distributor or Company.
(2) Distributor, during the term of this Agreement, will notify Broker of
the issuance by the SEC of any stop order with respect to the
Registration Statement or any amendments thereto or the initiation of
any proceedings for that purpose or for any other purpose relating to
the registration and/or offering of the Contracts and of any other
action or circumstance that may prevent the lawful sale of the
Contracts in any state or jurisdiction.
(3) During the term of this Agreement, Distributor shall advise Broker of
any amendment to the Registration Statement or any amendment or
supplement to any Prospectus.
C. Agreements of Broker
--------------------
(1) It is understood and agreed that Broker is a registered broker/dealer
under the 1934 Act and a member of the NASD and that the agents or
representatives of Broker who will be soliciting applications for the
Contracts also will be duly registered representative of Broker.
(2) Commencing at such time as Distributor and Broker shall agree upon,
Broker agrees to use commercially reasonable efforts to find
purchasers for the Contracts acceptable to Company. In meeting its
obligation to use its commercially reasonable efforts to solicit
applications for Contracts, Broker shall, during the term of this
Agreement, engage in the following activities:
(a) Regularly utilize only training, sales and promotional materials
relating to the Contracts which have been approved by Company.
(b) Establish and implement reasonable procedures for periodic
inspection and supervision of sales practices of its agents or
representatives and submit periodic reports to Distributor as may be
requested on the results of such inspections and the compliance with
such procedures.
(c) Broker shall take reasonable steps to ensure that the various
representatives appointed by it shall not make recommendations to an
applicant to purchase a Contract in the absence of reasonable grounds
to believe that the purchase of the Contract is suitable for such
applicant. While not limited to the following, a determination of
suitability shall be based on information furnished to a
representative after reasonable inquiry of such applicant concerning
the applicant's insurance and investment objectives, financial
situation and needs, and, if applicable, the likelihood that the
applicant will make the premium payments contemplated by the
Contract.
(3) All payments for Contracts collected by agents or representatives of
Broker shall be held at all times in a fiduciary capacity and shall
be remitted promptly in full together with such applications, forms
and other required documentation to an office of the Company
designated by Distributor. Checks or money orders in payment of
initial premiums shall be drawn to the order of "AUSA Life Insurance
Company, Inc." Broker acknowledges that the Company retains the
ultimate right to control the sale of the Contracts and that the
Distributor or Company shall have the unconditional right to reject,
in whole or part, any application for the Contract. In the event
Company or Distributor rejects an application, Company immediately
will return all payments directly to the purchaser and Broker will be
notified of such action. In the event that any purchaser of an
Contract elects to return such Contract pursuant to the free look
right, the purchaser will receive a refund of the greater of premium
payments or the value of the invested portion of such premiums. The
Broker will be notified of any such action.
(4) Broker shall act as an independent contractor, and nothing herein
contained shall constitute Broker, its agents or representatives, or
any employees thereof as employees of Company or Distributor in
connection with solicitation of applications for Contracts. Broker,
its agents or representatives, and its employees shall not hold
themselves out to be employees of Company or Distributor in this
connection or in any dealings with the public.
(5) Broker agrees that any material, including material it develops,
approves or uses for sales, training, explanatory or other purposes
in connection with the solicitation of applications for Contracts
hereunder (other than generic advertising materials which do not make
specific reference to the Company or the Contracts) will only be used
after receiving the written consent of Distributor to such material
and, where appropriate, the endorsement of Company to be obtained by
Distributor.
(6) Solicitation and other activities by Broker shall be undertaken only
in accordance with applicable laws and regulations. No agent or
representative of Broker shall solicit applications for the contracts
until duly licensed and appointed by Company (such appointment not to
be unreasonably withheld by the Company) as a life insurance and
variable contract broker or agent of Company in the appropriate
states or other jurisdictions. Broker shall ensure that such agents
or representatives fulfill any training requirements necessary to be
licensed and that such agents or representatives are properly
supervised and controlled pursuant to the rules and regulations of
the SEC and the NASD. Broker shall certify agents' and
representatives' qualifications to the satisfaction of Distributor,
including certifying a General Letter of Recommendation set forth in
Exhibit A hereto. Broker understands and acknowledges that neither it
nor its agents or representatives is authorized by Distributor or
Company to give any information or make any representation in
connection with this Agreement or the offering of the Contracts other
than those contained in the Prospectus or other solicitation material
authorized in writing by Distributor or Company.
(7) Broker shall not have authority on behalf of Distributor or Company
to: make, alter or discharge any Contract or other form; waive any
forfeiture, extend the time of paying any premium; receive any monies
or premiums due, or to become due, to Company, except as set forth in
Section C(3) of this Agreement. Broker shall not expend, nor contract
for the expenditure of the funds of Distributor, nor shall Broker
possess or exercise any authority on behalf of Broker by this
Agreement.
(8) Broker shall have the responsibility for maintaining the records of
its representatives licensed, registered and otherwise qualified to
sell the Contracts. Broker shall maintain such other records as are
required of it by applicable laws and regulations. The books,
accounts and records of the Company, the Account, Distributor and
Broker relating to the sale of the Contracts shall be maintained so
as to clearly and accurately disclose the nature and details of the
transactions. All records maintained by the Broker in connection with
this Agreement shall be the property of the Company and shall be
returned to the Company upon termination of this Agreement, free from
any claims or retention of rights by the Broker. Nothing in this
Section C(8) shall be interpreted to prevent the Broker from
retaining copies of any such records which the Broker, in its
discretion, deems necessary or desirable to keep. The Broker shall
keep confidential any information obtained pursuant to this Agreement
and shall disclose such information only if the Company has
authorized such disclosure or if such disclosure is expressly
required by applicable federal or state regulatory authorities.
D. Compensation
------------
(1) Pursuant to the Distribution Agreement between Distributor and
Company, Distributor shall cause Company to arrange for the payment
of commissions to Broker as compensation for the sale of each
contract sold by an agent or representative of Broker. Such amounts
shall be paid to Broker or its subsidiary insurance agency, whichever
is authorized to receive insurance commissions under applicable
insurance laws, in accordance with
the schedules attached hereto, the General Agent Agreement, and the
commission schedules attached thereto. All terms and conditions of
the General Agent Agreement not otherwise conflicting with the terms
herein, shall be incorporated by reference herein. Company shall
identify to Broker with each such payment the name of the agent or
representative of Broker who solicited each Contract covered by the
payment.
(2) Neither Broker nor any of its agents or representatives shall have
any right to withhold or deduct any part of any premium it shall
receive for purposes of payment of commission or otherwise. Neither
Broker nor any of its agents or representatives shall have an
interest in any compensation paid by Company to Distributor, now or
hereafter, in connection with the sale of any Contracts hereunder.
E. Complaints and Investigations
-----------------------------
(1) Broker and Distributor jointly agree to cooperate fully in any
insurance or securities regulatory investigation or proceeding or
judicial proceeding arising in connection with the Contracts marketed
under this Agreement. Broker, upon receipt, will notify Distributor
of any customer complaint or notice of any regulatory investigation
or proceeding or judicial proceeding in connection with the
Contracts. Broker and Distributor further agree to cooperate fully in
any securities regulatory investigation or proceeding or judicial
proceeding with respect to Broker, Distributor, their affiliates and
their agents or representatives to the extent that such investigation
or proceeding is in connection with Contracts marketed under this
Agreement. Broker shall furnish applicable federal and state
regulatory authorities with any information or reports in connection
with its services under this Agreement which such authorities may
request in order to ascertain whether the Company's operations are
being conducted in a manner consistent with any applicable law or
regulation. Each party shall bear its own costs and expenses of
complying with any regulatory requests, subject to any right of
indemnification that may be available pursuant to Section G of this
Agreement.
F. Term of Agreement
-----------------
(1) This Agreement shall continue in force for one year from its
effective date and thereafter shall automatically be renewed every
year for a further one year period; provided that either party may
unilaterally terminate this Agreement upon thirty (30) days' written
notice to the other party of its intention to do so.
(2) Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except (a) the agreements contained in
Section E hereof; (b) the indemnity set forth in Section G hereof;
and (c) the obligations to settle accounts hereunder, including
commission payments on premiums subsequently received for Contracts
in effect at the time of termination or issued pursuant to
applications received by Broker prior to termination.
(3) Distributor and Company reserve the right, without notice to Broker,
to suspend, withdraw or modify the offering of the Contracts or to
change the conditions of their offering.
G. Indemnity
---------
(1) Broker shall be held to the exercise of reasonable care in carrying
out the provisions of this Agreement.
(2) Distributor agrees to indemnify and hold harmless Broker and each
officer or director of Broker against any losses, claims, damages or
liability, joint or several, to which Broker or such officer or
director become subject, under the 1933 Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact, required to be stated
therein or necessary to make the statements therein not misleading,
contained in any Registration Statement or any post-effective
amendment thereto or in the Prospectus or any amendment or supplement
to the Prospectus, or any sales literature provided by the Company or
by the Distributor.
(3) Broker agrees to indemnify and hold harmless Company and Distributor
and each of their current and former directors and officers and each
person, if any, who controls or has controlled Company or Distributor
within the meaning of the 1933 Act or the 1934 Act, against any
losses, claims, damages or liabilities to which Company or
Distributor and any such director or officer or controlling person
may become subject, under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon: (a) Any unauthorized use of
sales materials or any verbal or written misrepresentations or any
unlawful sales practices concerning the Contracts by Brokers, its
agents, employees or representatives; or (b) Claims by agents or
representatives or employees of Broker for commissions, service fees,
development allowances or other compensation or remuneration of any
type; (c) The failure of Broker, its officers, employees, or agents
to comply with the provisions of this Agreement; and Broker will
reimburse Company and Distributor and any director or officer or
controlling person of either for any legal or other expenses
reasonably incurred by Company, Distributor, or such director,
officer of controlling person in connection with investigating or
defending any such loss, claims, damage, liability or action. This
indemnity agreement will be in addition to any liability which Broker
may otherwise have.
H. Assignability
-------------
This Agreement shall not be assigned by either party without the
written consent of the other.
I. Governing Law
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Iowa.
J. Notices
-------
All communications under the Agreement shall be in writing and shall
be deemed delivered when mailed by certified mail, postage prepaid.
Alternatively, communications shall be deemed delivered by timely
transmission of the writing, delivery charges prepaid, to a third
party company or governmental entity providing delivery services in
the ordinary course of business, which guarantees delivery to the
other party on the next business day. Notices shall be sent to the
following addresses unless and until the addressee notifies the other
party of a change in address according to the terms of this Section:
(1) if to Broker, to: (2) if to the Distributor, to:
AEGON USA Securities, Inc.
--------------------------------------------------------- 0000 Xxxxxxxx Xxxx XX
----------------------------------------------- Xxxxx Xxxxxx, Xxxx 00000-0000
(street address) (000) 000-0000 (telephone no.)
----------------------------------------------- (000) 000-0000 (fax no.)
(telephone no.) Attention: Xxxxx X Xxxxxxxx,
----------------------------------------------- President
(fax no.)
-----------------------------------------------
Attention:
-------------------------------------
-------------------------------------
In Witness Whereof, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
------------------------------------
(Broker Name)
By:
---------------------------------
Title:
------------------------------
AEGON USA SECURITIES, INC.
(Distributor)
By:
---------------------------------
President
EXHIBIT A
General Letter of Recommendation
BROKER-DEALER hereby certifies to the Company that all the following
requirements will be fulfilled in conjunction with the submission of
licensing/appointment papers for all applicants as agents of the Company
submitted by BROKER-DEALER. BROKER-DEALER will, upon request, forward proof of
compliance with same to the Company 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 the Company to hold himself out
in good faith to the general public.
2. We have on file a U-4 form which was completed (and has been amended,
as required) 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, including
but not limited to: (i) checking for and investigating criminal
arrest and conviction records available to Broker-Dealer on the CRD
system; and (ii) communicating with each employer of the applicant
for 3 years prior to the applicant's registration with our firm. 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.
At the time of application, in those states required by the Company,
we shall provide the Company with a copy of the entire U-4 form, or
designated pages, thereof, completed by each applicant, including any
amendments or updates thereto, and we certify those items are true
copies of the original.
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 the Company 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 the Company 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 in a state as
an agent until duly licensed and appointed therefor with the
appropriate State Insurance Department. 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.
