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EXHIBIT 1.A.(3)(b)
SELECTED BROKER AGREEMENT
This Agreement, dated__________________________,19____, is made by and between
AFSG Securities Corporation ("Distributor"), a Pennsylvania corporation,
Western Reserve Life Assurance Co. of Ohio ("Company"), an Ohio 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
Western Reserve Life Assurance Co. of Ohio and for which Distributor
has been appointed the principal underwriter pursuant to Distribution
Agreements, copies of which have been furnished to Broker.
(2) Account--A separate account established and maintained by Company
pursuant to the laws of ___________, 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 Account in connection
with the sale of the Contracts, as described in the Prospectus for
the Contracts.
(4) Registration Statement--The registration statement and amendments
thereto relating to the Contracts, the Account, and the Funds,
including financial statements and all exhibits.
(5) Prospectus--The prospectuses included within the Registration
Statement.
(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. If an
agent or representative ceases to be a registered representative of
Broker, is disqualified from continued NASD registration or has his or
her registration suspended by the NASD or otherwise fails to meet the
rules and standards imposed by this Agreement or by Broker, Broker
shall immediately notify such agent or representative that he or she
is no longer authorized to solicit applications for the sale of the
Contracts. Broker shall immediately notify Distributor of such
termination or suspension or failure to abide by the rules and
standards.
(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.
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(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.
(d) Broker shall adopt, abide by, and enforce the principles set forth
in the Principles and Code of Ethical market Conduct of the Insurance
Marketplace Standards Association as adopted by the Company and
provided to Broker with this Agreement.
(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 "Western Reserve Life Assurance Co.
of Ohio." 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 a Contract elects to
return such Contract pursuant to the free look right, the purchaser
will receive a refund of either premium payments or the value of the
invested portion of such premiums as set forth in the Contract and
according to applicable state law. 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 Company procedures, ethical principles
and manuals, and 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 shall provide, from time to time as requested by
Distributor, copies of insurance licenses for all states in which the
Broker holds the licenses and/or insurance licenses for any states in
which the Broker's affiliated insurance agency holds the licenses.
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 who are 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
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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 relating to contract owner transactions which Broker is
required to maintain in order to comply with applicable federal, NASD,
and state regulation. 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 any regulatory authority
or court of competent jurisdiction. Broker acknowledges that
information regarding the Contracts is proprietary information and
that in connection with the offer and sale of the Contracts, Broker
may be required to execute confidentiality agreements with third
parties. Broker acknowledges and agrees that monetary damages would
not be a sufficient or adequate remedy for breach of the
confidentiality provisions of this Section C(8) and that Company or
Distributor shall be entitled to specific performance or injunctive
relief, in addition to any other legal or equitable remedy which may
be available. The confidentiality provisions of this Section C(8)
shall survive the termination of this Agreement.
D. Compensation
(1) Pursuant to the Principal Underwriting Agreement between Distributor
and Company, Distributor shall cause Company to arrange for the
payment of compensation for the sale of each Contract sold by an agent
or representative of Broker in accordance with the Company's agreement
with the agent or representative, as the case may be, and the
commission schedules attached thereto. Such amounts shall be paid to
Broker, or if state insurance law requires, to an affiliated insurance
agency, provided, that with respect to payments to an affiliated
insurance agency, the Broker (a) has obtained a letter from the staff
of the SEC that the staff will not recommend enforcement action if the
affiliated insurance agency is not registered as a broker-dealer with
the SEC; or (b) has obtained from counsel a representation, which
shall be provided to Distributor, that (i) Broker is entitled to rely
on a no-action letter issued by the staff, a copy of which shall be
provided to Distributor, which granted no action relief to a
broker-dealer with respect to the distribution activities of the
broker-dealer's affiliated insurance agency when the insurance agency
was not registered as a broker-dealer with the SEC and (ii) such
no-action letter has not been rescinded or modified. All terms and
conditions of the Company's agreement with the agent or
representative, as the case may be, shall be incorporated by reference
herein to the extent such terms and conditions do not conflict with
this Agreement. 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.
(2) Broker shall report promptly in writing to Distributor all customer
complaints or inquiries relating to the offer and sale of the
Contracts or made by or on behalf of any owner of a Contract, whether
written or oral, and shall assist Distributor and Company in resolving
those complaints to the satisfaction of all parties.
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. This Agreement shall
automatically terminate without notice upon (a) the bankruptcy or
dissolution of Broker; (b) any fraud or gross negligence by Broker in
the performance of any duties imposed by this Agreement or if Broker
wrongfully withholds or misappropriates, for Broker's own use, funds
of Company, its policyholders or applicants; (c) any material
breaches by Broker of this Agreement; (d) any material violation of
any applicable state or federal law and/or administrative regulation
in a jurisdiction where Broker transacts business; or (e) any failure
to maintain a
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necessary license in any jurisdiction, but only as to that
jurisdiction and only until Broker reinstates its license in such
jurisdiction.
(2) Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except (a) the agreements contained in
Sections C(8) and 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 applicable law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any allegedly untrue statement, or alleged
omission, of a material fact, when it would be necessary to include a
true statement of such fact in the 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 in order to make the statements
contained therein not misleading.
(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 (i) breach by Broker of any representation, warranty, covenant
or agreement contained in this Agreement; (ii) negligent act or
omission or willful misconduct by Broker or any of its agents,
employees, representatives or affiliates with respect to this
Agreement; (iii) failure by Broker or any of its agents, employees, or
affiliates to comply with applicable law; (iv) unauthorized use of
sales material or any verbal or written misrepresentations or any
unlawful sales practice concerning the Contracts by Broker, agents,
employees, representatives or affiliates; 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.
(4) Any request for indemnification against a party (the "Indemnitor")
arising out of a claim from a third party must be made in writing
within a reasonable time after notice of a claim or receipt of a claim
from a third party ("Claim") has been received by the party seeking
indemnification (the "Indemnitee"). At any time after such request,
Indemnitor may deliver to the Indemnitee its written acknowledgment
that Indemnitee is entitled to indemnification. The Indemnitor shall
thereafter be entitled to assume the defense of the Claim and shall
bear all expenses associated therewith, including without limitation,
payment on a current basis of all previous expenses incurred by the
Indemnitee in relation to the Claim from the date the Claim was
brought. Until such time as Indemnitee receives notice of an
Indemnitor's election to assume the defense of any Claim, Indemnitee
may defend itself against the Claim and may hire counsel and other
experts of its choice and Indemnitor shall be liable for payment of
counsel and other expert fees on a current basis as the same are
billed. Indemnitor and Indemnitee shall cooperate with one another in
the defense of any such Claim and if either party becomes aware of any
significant developments, it shall notify the other party as soon as
practical. Neither party shall agree to any settlement of a Claim
unless the other party agrees in writing.
(5) The provisions of this Section shall survive the termination of this
Agreement.
H. Assignability
This Agreement shall not be assigned by either party without the
written consent of the other.
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I. Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of Iowa without regard to its law concerning
conflicts of law.
J. Notices
All communications under the Agreement shall be in writing and shall
be deemed delivered on the third business day after being mailed by
certified mail, postage prepaid. Alternatively, communications shall
be deemed delivered on the first business day after being transmitted
timely, 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:
If to Broker, to: if to the Distributor or Company, to:
--------------------------------------------
Company WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
C/O LIFE INVESTORS INSURANCE COMPANY OF AMERICA
-------------------------------------------- EXTRAORDINARY MARKETS, INDIVIDUAL DIVISION
Street address 0000 XXXXXXXX XXXX XX
XXXXX XXXXXX, XXXX 00000
-------------------------------------------- Telephone: (000) 000-0000
City, State, Zip Telecopy: (000) 000-0000
--------------------------------------------
Attention
--------------------------------------------
Telephone
--------------------------------------------
Telecopy
K. Arbitration
Any disagreement, dispute, claim or controversy solely between Broker
and Distributor arising out of or relating to this Agreement shall be
subject to mandatory arbitration under the auspices, rules and bylaws
of the NASD, to the full extent applicable and as may be amended from
time to time.
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:
---------------------------------------------
AFSG SECURITIES CORPORATION
(Distributor)
By:
------------------------------------------------
Title:
---------------------------------------------
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
(Company)
By:
------------------------------------------------
Title:
---------------------------------------------
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EXHIBIT A
GENERAL LETTER OF RECOMMENDATION
BROKER-DEALER ("we," "our" or "us") 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.
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SCHEDULE A
Advantage IV Variable Adjustable Life Insurance Policy
