WHOLESALING AGREEMENT
This Agreement dated this _______ day of ___________________, ________ is
by and among EquiTrust Life Insurance Company, an Iowa corporation ("Insurer"),
EquiTrust Marketing Services, Inc. ("Distributor") a Delaware corporation which
is a registered broker-dealer with the Securities and Exchange Commission
("SEC") under the Securities Exchange Act of 1934 (the "Exchange Act") and a
member of the National Association of Securities Dealers, Inc. ("NASD");
____________________________________ ("Wholesaler"), also a registered
broker-dealer with the SEC under the Exchange Act and a member of the NASD; and
__________________________________, a licensed insurance agency associated with
Wholesaler ("Agency"); and each additional insurance agency, if any, signatory
hereto (all such insurance agencies referred to collectively as "Agency").
WITNESSETH:
WHEREAS, Insurer has appointed Distributor as the principal underwriter
and distributor of the variable insurance contracts issued by Insurer, and
has agreed with Distributor that Distributor shall be responsible for the
recruitment of third parties who will promote the offer and sale of these
variable contracts; and
WHEREAS, Insurer and Distributor on the one hand, and Wholesaler, on the
other hand, desire to establish an arrangement whereby Wholesaler will
recommend to Distributor and Insurer certain third parties (the "Retailers")
who will promote the offer and sale of the variable life insurance and
variable annuities issued by Insurer (collectively the "Policies").
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. APPOINTMENT OF WHOLESALER
Subject to the terms and conditions of this Agreement, Insurer and
Distributor hereby authorize and appoint Wholesaler, on a non-exclusive
basis, to recommend to Insurer and Distributor Retailers who will promote the
offer and sale of Policies. Wholesaler hereby accepts such authorization and
appointment on a non-exclusive basis and agrees to use its best efforts to
find Retailers acceptable to Insurer who will promote the offer and sale of
Policies. Wholesaler acknowledges that no territory is exclusively assigned
to Wholesaler hereby, and that Distributor and Insurer may enter into
agreements with other third party wholesalers and broker-dealers providing
for the sale of the Policies. Further, Wholesaler acknowledges that Insurer
and Distributor may enter into agreements with other representatives of a
Retailer previously dealing with Wholesaler if such
representatives are contracted by other third-party Wholesalers. Further,
any compensation as provided for in Section 7 hereof, shall only be based and
paid on those Policies written by Retailers during the period that such
Retailer is recognized by Insurer as appointed through Wholesaler and during
which there is outstanding a valid, binding and enforceable selling agreement
between such Retailer, Distributor and Insurer. Without limiting any
provision otherwise contained in this Agreement, Wholesaler shall conduct its
business in accordance with generally accepted customs and practices of the
life insurance industry.
2. THE POLICIES
The Policies issued by Insurer to which this Agreement applies are listed in
Exhibit A, which by this reference is incorporated herein. Exhibit A may be
amended from time to time by Insurer. Insurer in its sole discretion and
without notice to Wholesaler, may suspend sales of any Policies or may amend
any contracts or policies evidencing such Policies if, in Insurer's opinion,
such suspension or amendment is: (1) necessary for compliance with federal,
state, or local laws, regulations, or administrative order(s); or, (2)
necessary to prevent administrative or financial hardship to Insurer. In all
other situations, Insurer shall provide 30 days notice to Wholesaler prior to
suspending sales of any Policies or amending any contracts or policies
evidencing such Policies.
3. SECURITIES REGISTRATION AND LICENSING
Wholesaler shall, at all times when performing its functions under this
Agreement, be either registered as, or a registered representative in good
standing with, a securities broker-dealer in good standing with the SEC and
NASD and licensed or registered as a securities broker-dealer, or
representative, in the states and other local jurisdictions that require such
licensing or registration in connection with variable insurance contract
sales activities. Any personnel through which Wholesaler acts shall be
registered and licensed individually as required. Wholesaler hereby
represents and warrants to Distributor it is not currently under
investigation, formal or informal, by any securities or insurance regulatory
authority.
4. INSURANCE LICENSING
Wholesaler shall, at all times when performing its functions under this
Agreement, be validly licensed as an insurance agent or agency in the states
and other local jurisdictions that require such licensing or registration in
connection with the Wholesaler's variable life insurance and variable annuity
contract sales activities; or, in those states in which Wholesaler cannot or
does not obtain a corporate agent's license, shall maintain an ownership
interest in, or contractual relationship with, Agency, which shall be validly
licensed as an insurance agency in such jurisdiction or jurisdictions. Such
contractual relationship shall be set forth in an agreement substantially
equivalent to that set forth as Exhibit B. Any personnel through which
Wholesaler acts shall be licensed individually as required. Wholesaler shall
provide Insurer with a list of all licensed insurance agencies
relied upon by Wholesaler to comply with this paragraph and covenants to
maintain the completeness and accuracy of such list, and to cause each such
agency to become a signatory hereto.
5. RECOMMENDATION AND ACCEPTANCE OF RETAILERS
Wholesaler will recruit and recommend potential Retailers to sell the
Policies. Insurer shall have sole discretion to accept or reject any such
recommendation. Acceptance shall occur only upon and by way of execution of a
selling agreement between Retailer, Distributor and Insurer.
6. WHOLESALING SERVICES
Wholesaler shall use its best efforts to provide certain services and support
to Retailers to facilitate the offering and selling of Policies. Such
activities shall include, but not be limited to, assistance in the
appointment of agents; distribution of sales material, newsletters and field
service bulletins (subject to Section 12, hereof); assistance with the sales
promotional activities with Retailers; and training of sales staff and
registered representatives of Retailers with respect to the features of the
Policies.
7. COMPENSATION
Compensation for the services performed in accordance with Section 6 above,
will be, pursuant to the terms and conditions in Exhibit C, a percentage of
purchase payments made to Insurer on account of Policies issued upon
applications procured through Retailers in accordance with this Agreement.
Compensation shall be paid to Wholesaler unless applicable state insurance
law requires that compensation be paid to Agency. Upon the termination of
this Agreement all compensation payable to Wholesaler hereunder shall cease,
except that compensation will be paid on premiums accompanying applications
obtained by Retailers recruited by Wholesaler and dated prior to such
termination. Exhibit C may be amended by Insurer by providing written notice
to Wholesaler. Such amendment shall apply only to applications dated after
the effective date of such amendment, provided, however, that Insurer
reserves the right to apply such amendment with respect to all subsequent
premiums and renewal premiums received after the effective date of such
amendment. In the event Wholesaler is disqualified from continued
registration with the NASD, Insurer shall not be obligated to pay
commissions, fees or additional compensation pursuant to this Agreement, the
payment of which would represent a violation of NASD rules.
8. SUPERVISION OF REGISTERED REPRESENTATIVES
Wholesaler, and not Distributor, shall have full responsibility for the
training and supervision of all of its own registered persons who are engaged
directly or indirectly in the offer or sale of the variable insurance
contract hereunder, and all such persons shall be subject to the control of
and supervision of Wholesaler with respect to such person's
securities-regulated activities, and to the control of Agency with respect to
such person's insurance-regulated activities, in connection with the
solicitation and sale of and other communication with respect to variable
insurance and annuity contracts hereunder. Wholesaler and Agency shall not,
solely by virtue of this Agreement, be obligated to supervise the registered
representative of any Retailer.
9. COMPLIANCE WITH NASD CONDUCT RULES AND FEDERAL AND STATE SECURITIES LAWS
Wholesaler shall fully comply with the rules and requirements of the NASD and
of the Exchange Act and all other applicable federal or state laws and will
establish such rules and procedures as may be necessary to cause diligent
supervision of the securities activities of its registered persons. Upon
request by Distributor, Wholesaler shall furnish such appropriate records as
may be necessary to establish such diligent supervision.
10. REGULATIONS
All parties agree to observe and comply with the existing laws and rules or
regulations of applicable local, state, or federal regulatory authorities and
with those which may be enacted or adopted during the term of this Agreement
regulating the business contemplated hereby in any jurisdiction in which the
business described herein is to be transacted, and to provide information or
reports with respect to their duties hereunder pursuant to request by any
regulatory authority having jurisdiction with respect thereto.
11. INVESTIGATIONS; CUSTOMER COMPLAINTS
Wholesaler agrees to fully cooperate in any insurance, securities or other
regulatory or judicial investigation or proceeding arising in connection with
the Policies, Insurer, Distributor, Wholesaler, Agency and/or any of the
Retailers recruited by Wholesaler. Wholesaler and Agency shall permit
appropriate federal and state insurance and other regulatory authorities to
audit their records and shall furnish the foregoing authorities with any
information which such authorities may request in order to ascertain whether
Wholesaler or Agency is complying with all applicable laws and/or
regulations. Wholesaler and Agency agree to cooperate with Insurer in
resolving all customer complaints with respect to the Policies, Wholesaler,
Agency or any Retailer.
12. PROSPECTUSES, SALES PROMOTION MATERIAL AND ADVERTISING
Wholesaler shall be provided, without any expense to Wholesaler, with
prospectuses relating to the Policies ("Prospectuses") and such other
material as Distributor determines to be necessary or desirable for use in
connection with sales of the Policies or the recruitment of Retailers. No
materials or any advertising relating to the recruitment of Retailers, or the
Policies shall be used by Wholesaler unless the specific item has been
approved in writing by Distributor prior to such use. In addition, Wholesaler
shall not print, publish or distribute any advertisement, circular or any
document relating to
Insurer, Distributor or the Policies unless such advertisement, circular, or
document shall have been approved in writing by Insurer and Distributor prior
to such use. No representations in connection with the recruitment of
Retailers, or the sale of the Policies, other than those contained in the
currently effective registration statements and Prospectuses for the Policies
filed with the SEC, or in the aforesaid approved materials, shall be made by
Wholesaler. Wholesaler shall only recruit Retailers who are licensed in
states where Policies have been approved by state authorities. Upon
termination of this Agreement, all Prospectuses, sales promotion material,
advertising, circulars, and documents relating to the recruitment of
Retailers, or the sales of the Policies shall be promptly turned over to
Insurer free from any claim or retention of rights by the Wholesaler.
13. BOOKS AND RECORDS
Wholesaler shall maintain the books, accounts, and records as required by
applicable laws and regulations. The books, accounts and records of
Wholesaler shall clearly and accurately disclose the nature and details of
Wholesaler's activities related hereto. Wholesaler shall keep confidential
all information obtained pursuant to this Agreement (including, without
limitation, names of purchasers of Policies) and shall disclose such
information only if Insurer has authorized such disclosure in writing, or if
such disclosure is expressly required by applicable federal or state
authorities. Distributor shall have access to all books, accounts and
records of Wholesaler pertaining to the Policies.
14. RIGHT OF OFFSET, LIABILITY OF WHOLESALER, AND LEGAL PROCEEDINGS
Wholesaler hereby authorizes Insurer to set off from all amounts otherwise
payable to Wholesaler all liabilities of Wholesaler or Retailers to Insurer.
Wholesaler shall be jointly and severally liable with Retailers for the
payment of all monies due to Insurer which may arise out of this Agreement or
any other agreement between Wholesaler, Retailer and Insurer including, but
not limited to, any liability for any chargebacks or for any amounts advanced
by or otherwise due Insurer hereunder. The determination of the amount of any
liabilities shall be at the sole discretion of Insurer. The parties agree
Insurer retains the absolute and unilateral right to settle and resolve all
claims or causes of action, in its sole discretion, raised or asserted by any
person concerning the actions of Wholesaler or Retailers. Wholesaler's joint
and several liability shall not be contingent on input by Wholesaler in any
such settlements or resolutions. A first lien is hereby reserved to Insurer
upon any sums due to Wholesaler from Insurer for the satisfaction of any
liability arising pursuant to this Agreement. Insurer and Distributor do not
waive any of its other rights to pursue collection of any indebtedness owed
by Wholesaler or Retailers to Insurer. In the event Insurer initiates legal
action to collect any indebtedness of Wholesaler or Retailers, or their
agents, Wholesaler shall reimburse Insurer for reasonable attorney fees and
expenses in connection therewith. As used in this Section 14, "Insurer"
shall be deemed to refer to, and shall include, all affiliates of Insurer.
15. INDEMNIFICATION
Insurer and Distributor hereby agrees to indemnify and hold harmless Agency,
Wholesaler and each of its affiliates, officers or directors against any
losses, expenses (including reasonable attorneys' fees), claims, damages or
liabilities to which Agency, Wholesaler or such affiliates, officers or
directors becomes subject insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
Insurer's performance, non-performance or breach of this Agreement, or are
based upon any untrue statement contained in any registration statement (or
any post-effective amendment thereof) or in the Prospectus or any amendment
or supplement to the Prospectus.
Wholesaler and Agency hereby agree, jointly and severally, to indemnify and
hold harmless Insurer and Distributor and each of their current and former
affiliates, directors and officers and each person, if any, who controls or
has controlled Insurer or Distributor within the meaning of the federal
securities laws, against any losses, expenses (including reasonable
attorneys' fees), claims (including, but not limited to, claims for
commissions or other compensation), damages or liabilities to which Insurer
and Distributor and any such affiliates, director or officer or controlling
person may become subject insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
Wholesaler's or Retailer's recruited by Wholesaler, performance,
non-performance, or breach of this Agreement or any other agreement between
Wholesaler, Retailer and Insurer including, but not limited to, any
unauthorized use of sales materials, any misrepresentations, or any sales
practices concerning the Policies.
16. INTEREST
Any unpaid obligation of Wholesaler to Insurer or Distributor under this
Agreement shall accrue interest at the lesser of the rate of fifteen percent
per annum, or the maximum interest rate otherwise permitted by applicable law.
17. LIMITATIONS
Nothing in this Agreement shall be construed as authorizing Wholesaler to
incur any indebtedness on behalf of Insurer or Distributor or any of its
affiliates. No party other than Insurer and Distributor shall have the
authority on behalf of Insurer or Distributor to enter into any selling
agreement, or to make, alter, waive or discharge any policy, contract, or
certificate issued by Insurer, to waive any forfeiture or to grant, permit,
nor extend the time for making any payments nor to guarantee earnings or
rates, nor to alter the forms which Insurer may prescribe or substitute other
forms in place of those prescribed by Insurer, nor to enter into any
proceeding in a court of law or before a regulatory agency in the name of or
on behalf of Insurer.
18. INDEPENDENT CONTRACTORS
Wholesaler, Agency and Retailers are independent contractors with respect to
Insurer and Distributor. Nothing contained within this Agreement shall be
construed as creating a partnership between the parties hereto. Wholesaler,
Agency and their respective agents, representatives, and employees shall not
at any time hold themselves out to the public to be employees of Insurer or
Distributor.
19. NOTICES
All notices or communications shall be sent to the address shown below or to
such other address as the party may request by giving written notice to the
other parties:
Insurer:
EquiTrust Life Insurance Company
Suite 440
0000 Xxxxxxx Xxxxxxx
Xxxx Xxx Xxxxxx, Xxxx 00000
Distributor:
EquiTrust Marketing Services, Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxxx Xxx Xxxxxx XX 00000
Wholesaler:
(b) For purpose of communications pertaining to compliance and
supervision, Wholesaler hereby designates the following person and address to
receive such communications and notices at the following address:
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Wholesaler covenants to promptly notify Insurer and Distributor of any change
in such designated person or address.
20. ENTIRE AGREEMENT
This Agreement is the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings among such parties with respect to such subject
matter. No course of dealing, course of performance and no parole evidence
of any nature shall be used to supplement or modify any terms hereof,
provided, however, any obligation of Wholesaler to Insurer or any of its
affiliates pursuant to a prior agreement of any type shall continue as an
obligation thereunder.
21. SEVERABILITY
Any provision of this Agreement which is found to be invalid, void or illegal
shall in no way affect, impair or invalidate any other provision hereof, and
such other provisions shall remain in full force and effect.
22. AMENDMENT OF AGREEMENT
Insurer and Distributor reserve the right to amend this Agreement at any
time, and the receipt of compensation on any Policy written by any Retailer
recruited by Wholesaler after notice of any such amendment has been sent to
Wholesaler shall constitute the Wholesaler's agreement to any such amendment.
23. ASSIGNMENT
This Agreement may not be assigned except upon the written consent of all
parties; provided, however, that the rights, obligations, duties and
responsibilities of Distributor hereunder may be assigned to a properly
qualified affiliate of Insurer upon the written consent of Insurer and
Distributor.
24. WAIVER
Failure of any party to insist upon strict compliance with any of the
conditions of this Agreement shall not be construed as a waiver of any of the
conditions, but the same shall remain in full force and effect. No waiver of
any of the provisions of this Agreement shall be deemed, or shall constitute
a waiver of any other provisions, whether or not similar, nor shall any
waiver constitute a continuing waiver.
25. BINDING EFFECT
This Agreement shall be binding on and shall inure to the benefit of the
parties to hereto and their respective successors and assigns; provided that
Wholesaler may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of Insurer.
26. GOVERNING LAW
This Agreement shall be construed in accordance with and governed by the laws
of the state of Iowa.
27. TERMINATION
This Agreement may be terminated, without cause, by any party upon thirty
(30) days prior written notice; and may be terminated for failure to perform
satisfactorily or other cause by any party immediately; and shall be
terminated if Insurer or Wholesaler shall cease to be broker-dealers, or a
registered representative of such a registered broker-dealer, under the
Exchange Act or members in good standing with the NASD. Without limiting the
foregoing, Insurer or Distributor may terminate this Agreement if it is
determined by Insurer or Distributor, in their sole and absolute discretion,
that Wholesaler is not adequately recruiting Retailers or promoting or
providing services to facilitate the solicitations for and sales of the
Policies. Upon termination of this Agreement, the terms of Sections 8, 11,
12, 13,14, 15, 16, 17 and 26 shall survive and be binding upon the parties
hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
INSURER:
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
DISTRIBUTOR:
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
WHOLESALER:
By:
--------------------------------
Name:
------------------------------
Title:
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AGENCY
By:
--------------------------------
Name:
------------------------------
Title:
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EXHIBIT A
THE POLICIES
EquiTrust Life Annuity Account
EquiTrust Life Variable Account
EXHIBIT B
ADMINISTRATIVE SERVICES AGREEMENT
BETWEEN
[INSERT BROKER/DEALER].
AND
[INSERT INSURANCE AGENCY]
This Administrative Services Agreement, made as of the _____
day of __________, 199___, by and between ___________________.
("Broker/Dealer"), a corporation organized and existing under the laws of the
State of ___________, and _________________________. ("Insurance Agency"), a
corporation organized and existing under the laws of the State of ______.
WITNESSETH:
WHEREAS, Broker/Dealer is a broker/dealer registered with the
Securities and Exchange Commission ("SEC");
WHEREAS, Broker/Dealer desires to market variable insurance
product in (_______);
WHEREAS; variable insurance products may be sold in (_______) only
by persons that are licensed insurance agencies;
WHEREAS; (________) imposes requirements relating to domestic
incorporation of insurance agencies that Broker/Dealer cannot satisfy;
WHEREAS; Insurance Agency is a licensed insurance agency and is
associated with Broker/Dealer through stock ownership or contractual
arrangement; and
WHEREAS; Broker/Dealer and Insurance Agency desire to enter
into an arrangement for the offer and sale of variable insurance products
through common employees and representatives of Broker/Dealer and Insurance
Agency that complies with the terms and conditions of the First of America
Brokerage Service, Inc. no-action letter issued by the SEC staff (pub. avail
Sept. 28, 1995) so that neither Insurance Agency nor its unregistered
employees (defined below) will be required to register separately with the
SEC as broker/dealers pursuant to Section 15(b) of the Securities Exchange
Act of 1934 (the "1934 Act");
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties set forth below, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 DUAL REPRESENTATIVES. Individuals who are registered principals
or representatives of Broker/Dealer and licensed insurance agents associated
with Insurance Agency.
1.2 EFFECTIVE DATE. The date as of which this Agreement is executed.
1.3 UNREGISTERED EMPLOYEES. Individuals associated with Broker/Dealer
or Insurance Agency that do not hold all of the required registrations, licenses
and qualifications to sell Variable Products.
1.4 VARIABLE PRODUCTS. The variable life insurance policies and
variable annuity contracts offered from time to time by Broker/Dealer and
Insurance Agency in (__________).
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1 ORGANIZATION AND GOOD STANDING. Each party hereto represents and
warrants that it is a corporation duly organized, validly existing and in good
standing under the laws of that jurisdiction set forth on page one (1) of this
Agreement; has all requisite corporate power to carry on its business as it is
now being conducted and is qualified to do business in each jurisdiction in
which such qualification is necessary under applicable law.
2.2 REGISTRATION OF BROKER/DEALER. Broker/Dealer represents and
warrants that, at all times when performing its functions and fulfilling its
obligations under this Agreement, it is or will be registered as a broker/dealer
with the SEC and in each state or other jurisdiction in which Broker/Dealer
intends to perform its functions and fulfill its obligations hereunder, if
required, and is or will be a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD").
2.3 LICENSING AND APPOINTMENT OF INSURANCE AGENCY. Insurance Agency
represents and warrants that, at all times when performing its functions and
fulfilling its obligations under this Agreement, it is or will be: (a) licensed
to sell Variable Products in each state or other jurisdiction in which Insurance
Agency intends to perform its functions and fulfill its obligations hereunder;
and (b) appointed by the insurance company issuing the Variable Products.
2.4 AUTHORIZATION. Each party hereto represents and warrants that the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein have been duly authorized by all necessary
corporate action, and when so executed and delivered this Agreement will be the
valid and binding obligation of such party enforceable in accordance with its
terms.
2.5 NO CONFLICTS. Each party hereto represents and warrants that the
consummation of the transactions contemplated herein, and the fulfillment of the
terms of this Agreement, will not conflict with, result in any breach of any of
the terms and provisions of, or constitute (with or without notice or lapse of
time) a default under, the articles of incorporation or bylaws of such party, or
any indenture, agreement, mortgage, deed of trust, or other instrument to which
such party is a party or by which it is bound, or violate any law, or, to the
best of such party's knowledge, any order, rule or regulation applicable to such
party of any court or of any federal or state regulatory body, administrative
agency or any other governmental instrumental having jurisdiction over such
party or any of its properties.
ARTICLE 3
RESPONSIBILITIES AND OBLIGATIONS OF BROKER/DEALER
3.1 REGISTRATION OF DUAL REPRESENTATIVES: ASSOCIATED PERSONS.
Broker/Dealer shall ensure that each Dual Representative will be registered and
qualified as necessary with the NASD and any appropriate state regulatory
authority, and will be deemed an associated person of Broker/Dealer within the
meaning of Section 3(a)(18) of the 0000 Xxx.
3.2 TRAINING AND SUPERVISION. Broker/Dealer, through its designated
principals or members of its staff authorized to supervise employees, shall
train, supervise, control, and assume responsibility for all of the securities
activities of the Dual Representatives in connection with the offer and sale of
Variable Products.
3.3 CONDUCT MANUALS TO UNREGISTERED EMPLOYEES. Broker/Dealer shall
provide conduct manuals to be given to Unregistered Employees of Insurance
Agency that specify the limitations on their permissible activities, as set
forth below in Section 4.4. Insurance Agency shall provide such conduct manuals
to its Unregistered Employees. A form of such manual is attached hereto as
EXHIBIT A.
3.4 SUPERVISORY PROCEDURES TO DUAL REPRESENTATIVES. Broker/Dealer
shall require Dual Representatives to adhere to the policies and procedures
contained in Broker/Dealer's written Supervisory Procedures for registered
representatives, and Broker/Dealer shall monitor their compliance in this
regard.
3.5 COMPLIANCE WITH APPLICABLE LAW. Broker/Dealer shall comply, and
shall require that the Dual Representatives comply, with all applicable
statutory and regulatory requirements of the federal and state securities laws,
rules, regulations and regulatory policies and all applicable NASD rules and
regulatory policies.
3.6 ADVERTISEMENTS AND PROMOTIONAL MATERIALS. Neither Broker/Dealer
nor Insurance Agency shall use any advertisements or promotional materials
unless a designated principal of Broker/Dealer shall have approved such
advertisements and promotional materials prior to their distribution to ensure
that they are in compliance with federal and state securities laws and NASD
rules. Broker/Dealer shall assume full responsibility for all such
advertisements and promotional materials, and all such materials shall be deemed
to be Broker/Dealer's materials.
3.7 MAINTENANCE OF BOOKS AND RECORDS. Broker/Dealer shall maintain
books and records relating to transactions in Variable Products in its home
office in _________________> Where state insurance law mandates, duplicate
books and records relating to the sales of Variable Products may be maintained
by Insurance Agency, as stated below in Section 4.6. Such books and records
will be deemed books and records of Broker/Dealer and will be readily accessible
for examination by the SEC, the NASD, and other self-regulatory organizations of
which Broker/Dealer may become a member and other governmental authorities.
ARTICLE 4
RESPONSIBILITIES AND OBLIGATIONS OF INSURANCE AGENCY
4.1 ASSOCIATED PERSON. Insurance Agency shall be deemed an associated
person of Broker/Dealer within the meaning of Section 3(a)(18) of the 1934 Act.
4.2 DUAL REPRESENTATIVES. All securities services in connection with
the sale of Variable Products will be provided by the Insurance Agency only
through the Dual Representatives. Insurance Agency shall ensure that the Dual
Representatives will effect securities transactions and provide securities
services related to variable insurance products.
4.3 SUSPENSION. Insurance Agency shall terminate or suspend from all
Variable Products activities conducted by Insurance Agency any Dual
Representative whom the SEC, the NASD or any other self-regulatory organization
bars or suspends from association with Broker/Dealer or any other broker/dealer.
4.4 UNREGISTERED EMPLOYEES. Insurance Agency shall ensure that its
Unregistered Employees shall not: (a) engage in any securities activities; or
(b) receive any compensation based on transactions in securities or the
provision of securities advice. Insurance Agency shall further ensure that
its Unregistered Employees will not recommend any security, give investment
advice with respect to securities, discuss the merits of any security or type of
security, or handle any question that might require familiarity with the
securities industry. Insurance Agency shall require all Unregistered Employees
to refer all Variable Products-related questions to Dual Representatives.
Insurance Agency shall further ensure that Unregistered Employees will not
handle or maintain customer funds in connection with securities transactions
other than providing clerical or ministerial assistance. These obligations
concerning Unregistered Employees are included in Broker/Dealer's conduct manual
for Unregistered Employees, which will be provided to Unregistered Employees of
Insurance Agency, as stated in Sections 3.3 and 4.5, and is attached hereto as
Exhibit A.
4.5 MONITORING UNREGISTERED EMPLOYEES. Insurance Agency shall monitor
the activities of its Unregistered Employees, and ensure their compliance with
the limitations on their permissible activities as set forth in Broker/Dealer's
conduct manual for Unregistered Employees.
4.6 MAINTENANCE OF BOOKS AND RECORDS. Where state insurance law
mandates, duplicates of those books and records maintained by Broker/Dealer
relating to the sales of Variable Products will be maintained by Insurance
Agency, although such books and records will be deemed books and records will be
deemed books and records of Broker/Dealer. Insurance Agency shall ensure that
such books and records will be readily accessible for examination by the SEC,
and NASD, any other self-regulatory organization of which Broker/Dealer may
become a member, and other governmental authorities.
ARTICLE 5
PAYMENTS FOR VARIABLE PRODUCTS
5.1 CUSTOMER CHECKS: HANDLING CUSTOMER FUNDS. Broker/Dealer and
Insurance Agency shall take all necessary and appropriate steps to ensure that
the following procedures are observed:
(a) Initial checks and applications for the purchase of Variable
Products shall be forwarded by Broker/Dealer by noon of the
following business day to the insurance company issuing the
Variable Products and shall bear the initials of a principal of
the Broker/Dealer indicating that the application has been
reviewed by such principal for suitability, completeness and
accuracy;
(b) any subsequent payments will be sent directly by the customer to
the insurance company issuing the Variable Products;
(c) if any checks or applications are received by Broker/Dealer or
Insurance Agency, such checks and applications will be forwarded
to the insurance company issuing the Variable Products by
Broker/Dealer, or its Dual Representatives, by noon of the next
business day following such receipt;
(d) if the insurance company issuing the Variable Products receives
customer checks and applications directly, Broker/Dealer shall
request from such insurance company copies necessary to make any
required suitability determinations; and
(e) only Dual Representatives (and no Unregistered Employees) will:
(i) handle checks routed through Broker/Dealer and Insurance
Agency; and (ii) receive or handle customer funds in connection
with the sale of Variable Products.
Neither Broker/Dealer, Insurance Agency, nor any of their employees shall
cash premium checks, or use any portion of a premium check for a commission,
if any, or for any other purpose other than as a premium.
ARTICLE 6
COMPENSATION
6.1 COMPENSATION. (INSERT COMPENSATION TERMS OR REFER TO
SCHEDULE.) Insurance Agency shall pay to Broker/Dealer as compensation for
Broker/Dealer's services hereunder one hundred (100) percent of the
compensation it receives for the sale of Variable Products, net of any
payments made to Dual Representatives, so that such compensation can be
included in the revenues of the Broker/Dealer for purposes of complying with
applicable laws, rules, regulations, and regulatory policies. Any
compensation paid to Dual Representatives for securities transactions shall
be determined solely by Broker/Dealer and such payments shall be paid as
directed by, and on behalf of, Broker/Dealer and shall be included in the
revenues of the Broker/Dealer.
ARTICLE 7
GENERAL PROVISIONS
7.1 TERM OF AGREEMENT: TERMINATION. This Agreement will become
effective as of the Effective Date and will remain in effect for a period of one
year, and will automatically continue in effect for one-year periods thereafter.
This Agreement may be terminated earlier by agreement in writing by all the
parties hereto. After termination takes effect, Insurance Agency shall not hold
itself out as being authorized or able to sell Variable Products or as being
associated with Broker/Dealer. Furthermore, upon termination of this Agreement,
all authorizations, rights, and obligations shall cease except: (a) the
agreements contained in Sections 4.6 and 7.10 hereof; and (b) the obligation to
settle accounts hereunder.
7.2 ASSIGNMENT SUCCESSION. This Agreement will not be assignable by
any party hereto except that each party may assign its rights (but not its
obligations) hereunder to any affiliated company, provided that such company is
properly licensed and registered. This Agreement will insure to the benefit of
and be binding upon the parties and each of their successors.
7.3 ENTIRE AGREEMENT: MODIFICATION. This Agreement contains the
entire agreement and understanding of the parties with respect to the subject
matter hereof, and supersedes all prior agreements, arrangements and
understandings, written or oral, between the parties, and no waiver,
modification or change of any of its provisions will be valid unless in writing
and signed by the parties hereto, or in the case of a waiver, by the party
waiving compliance.
7.4 WAIVER OF BREACH. Failure of any party to enforce any provision
of this Agreement will not constitute a course of conduct or waiver in the
future of the right to enforce the same or any other provision.
7.5 SEVERABILITY: PARTIAL INVALIDITY. The parties to this Agreement
desire and intend that the terms and conditions of this Agreement be enforced to
the fullest extent permissible under the laws and public policies applied in
each jurisdiction in which enforcement is sought. The parties agree
specifically that, if any particular term or condition of this Agreement is
adjudicated, or becomes by operation or law, invalid or unenforceable, this
Agreement will be deemed amended to delete the portion that is adjudicated, or
that becomes by operation of law, invalid or unenforceable, the deletion or
reduction to apply only with respect to the operation of the term or condition,
and the remainder of the Agreement to remain in full force and effect. A
deletion or reduction resulting from any adjudication will apply only with
respect to the operation of that term in the particular jurisdiction in which
the adjudication is made.
7.6 NOTICES. Any notice, request, demand or other communication
required or permitted hereunder will be in writing and will be delivered in one
of the following manners: by personal delivery, which will be effective on the
day so delivered; by registered or certified mail, which will be effective three
days after mailing; by telecopier, which will be effective when receipt is
acknowledged; and by courier guaranteeing next day delivery, which will be
effective on the earlier of the second business day after timely delivery to the
courier or the day of actual delivery by the courier. All notices to a party
will be sent to the following addresses or to such other address or person as
such party may designate by notice to each other party hereunder:
(a) TO BROKER/DEALER:
(b) TO INSURANCE AGENCY:
7.7 GOVERNING LAW. This Agreement will be governed by and construed
in accordance with the internal laws of the State of (__________) without regard
to the conflict of law provisions thereof.
7.8 COUNTERPARTS. This Agreement may be executed simultaneously in
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.
7.9 HEADINGS. The headings in the sections of this Agreement are
inserted for convenience only and will not constitute a part hereof.
7.10 COMPLAINTS AND INVESTIGATIONS. The parties will notify each other
promptly if either receives any customer complaint or notice of any regulatory
investigation or proceeding or judicial proceeding with respect to their
respective activities or the activities of any Dual Representative. The parties
will cooperate fully in investigating any such complaint and in responding to
any such proceeding.
IN WITNESS HEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date and year first above written.
[Broker/Dealer].
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
[Insurance Agency]
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
EXHIBIT A
CONDUCT MANUAL
CONDUCT MANUAL RELATING TO
ACTIVITIES OF UNREGISTERED EMPLOYEES OF
[INSURANCE AGENCY]
IN CONNECTION WITH THE SALE OF VARIABLE INSURANCE PRODUCTS
Since you are not licensed or qualified to sell variable insurance
products ("Variable Products"), you must be very careful not to perform any
activities or provide any information to customers that could confuse a customer
as to your role in the sale of Variable Products. Under federal and state
securities laws, and state insurance laws, only properly licensed registered,
and qualified persons may solicit customers or recommend or discuss insurance or
investment products with a customer.
In sum, this means that you should provide only "clerical" and
"ministerial" services. The permissible activities for employees of
______________________. ("Insurance Agency") who do not hold all the required
securities registrations and insurance licenses (hereinafter "Unregistered
Employees") shall be limited to:
(a) referring prospective customers to an individual who holds
all the requisite insurance and securities qualifications
(a "Dual Representative");
(b) arranging an appointment with or taking a message for a
Dual Representative if a Dual Representative is absent or
unavailable;
(c) referring telephone calls and other written and oral
communications to a Dual Representative; and
(d) referring all Variable Products-related questions to a Dual
Representative.
When engaging in any of the foregoing permissible activities,
Unregistered Employees shall limit his or her discussion of the Variable
Products to statements advising customers of the availability of information
about the Variable Products from the broker/dealer affiliated with Insurance
Agency, i.e., _________________-, and the referral of such customer to a Dual
Representative. Such Unregistered Employees shall not offer investment advice,
make recommendations, discuss the features, merits, investment options, or
suitability of any Variable Product or handle any question that might require
familiarity with the securities industry. Such Unregistered Employees shall not
handle or maintain customer funds in connection with securities transactions,
handle or maintain securities, or have any involvement in securities
transactions other than providing clerical or ministerial advice. Nothing in
this Conduct Manual shall limit the ability of Insurance Agency or its employees
to provide administrative or clerical services to _________________________.
EXHIBIT C
COMPENSATION
