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EXHIBIT 3.2
INVESTORS BROKERAGE SERVICES, INC.
FORM OF SELLING GROUP AGREEMENT
THIS AGREEMENT ("Agreement") is made by and between Investors Brokerage
Services, Inc. ("IBS") and Broker-Dealer.
RECITALS:
A. IBS, pursuant to the provisions of Distribution Agreements
("Distribution Agreements") between it and Zurich Life Insurance Company of
America ("Zurich"), acts as the principal underwriter of certain variable
annuity contracts and variable life insurance policies (the "variable products"
or "Contracts") issued by Zurich. Such Contracts, and the investment options
available thereunder, are identified in Schedule 1 to this Agreement at the
time that this Agreement is executed, and such other Contracts that may be
added to Schedule 1 from time to time in accordance with Section 1.5 of this
Agreement. IBS desires that Broker-Dealer distribute such variable products in
those states or jurisdictions in which Broker-Dealer, IBS, Zurich and the
Contracts are appropriately licensed, qualified or approved, and Broker-Dealer
desires to sell such Contracts, through its agents in such states or
jurisdictions, on the terms and conditions set forth hereinafter. Zurich has
authorized IBS to enter into separate written agreements with broker-dealers
pursuant to which such broker-dealers would be authorized to participate in the
distribution of the Contracts and would agree to use their best efforts to
solicit applications for the Contracts to the general public.
B. Zurich, pursuant to General Agent Agreements, has authorized
Broker-Dealer or an affiliate to act as a general agent ("General Agent") for
the solicitation of applications for the Contracts and to engage in the
distribution activities contemplated by this Agreement and such General Agent
Agreements.
C. The parties to this Agreement desire that Broker-Dealer be authorized
to solicit applications for the sale of the Contracts to the general public
subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
promises and covenants hereinafter set forth, the parties agree as follows:
Section 1: Representations and Warranties; Authorizations
1.1 Broker-Dealer agrees to use its best efforts on behalf of IBS while
performing the functions set forth herein. Broker-Dealer shall be free to
exercise its own judgment as to whom to solicit and the time, place, and manner
of solicitation. Broker-Dealer shall pay all expenses incurred by it hereunder
and shall comply with all applicable federal and state laws, ordinances and
regulations relating thereto.
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1.2 Broker-Dealer is authorized, except as hereinafter specifically
provided, to cause its representatives ("Registered Representatives") to sell
such Contracts in the states and jurisdictions in which Broker-Dealer and its
Registered Representatives are appropriately licensed, registered or otherwise
qualified and in which the Contracts are duly authorized. Broker-Dealer shall
not have the authority nor shall it grant such authority to any of its
Registered Representatives, on behalf of IBS and Zurich: to make, alter or
discharge any Contract or other contract entered into pursuant to a Contract;
to waive any Contract's forfeiture provisions; to extend the time of paying any
premiums; or to receive any monies or premiums from applicants for or
purchasers of the Contracts (except for the sole purpose of forwarding monies
or premiums to Zurich). IBS, in its sole discretion, may reject any
application for a Contract submitted to it by the Broker-Dealer or any of its
Registered Representatives.
1.3 IBS, subject to the terms and conditions contained herein, hereby
authorizes Broker-Dealer as an independent contractor, on a non- exclusive
basis, to make sales of such Contracts for which IBS acts as distributor.
Broker-Dealer agrees to direct the sales activities of its Registered
Representatives and to enforce written supervisory procedures to assure strict
compliance with applicable rules and regulations under the Securities Exchange
Act of 1934 ("1934 Act"), the National Association of Securities Dealers, Inc.
("NASD") rules, and other applicable federal and state statutes and
regulations.
1.4 Nothing herein contained shall constitute Broker-Dealer or any of its
Registered Representatives as employees of IBS or Zurich in connection with the
solicitation of applications for the Contracts.
1.5 Schedule 1 to this Agreement may be amended by IBS at its sole
discretion from time to time to include other Contracts (or investment options)
distributed by IBS pursuant to the Distribution Agreements or other
distribution agreements with Zurich, or to delete Contracts (or investment
options) from the Schedule. The provisions of this Agreement shall be equally
applicable to each Contract listed on Schedule 1 unless the context otherwise
requires.
Section 2: Representations and Warranties:
Registration, Licensing and Compliance
2.1 Broker-Dealer represents, warrants and covenants that:
a. It is and will remain at all times during the terms of this
Agreement a member in good standing of the NASD and a
broker-dealer duly registered with the Securities and Exchange
Commission ("SEC") under the 1934 Act and licensed as a
broker-dealer in each state or other jurisdiction in which
Broker-Dealer intends to perform its functions and fulfill its
obligations under this Agreement.
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b. It is in compliance, and during the term of this Agreement, will
remain in compliance, with all applicable federal and state
security laws and regulations and the requirements of the NASD
and any applicable securities exchanges of which it is a member.
c. It is a corporation organized, existing and in good standing
under applicable state law and is qualified to do business as a
corporation in those states or jurisdictions where it is or will
be doing business.
d. Only Registered Representatives of Broker-Dealer who are agents
of Zurich, and who are licensed, registered, or otherwise
qualified to offer and sell the variable products, may do so
under this Agreement and as permitted under the applicable
insurance laws of such state or jurisdiction under which the
Registered Representatives are authorized to perform their
activities.
e. It is in compliance with all applicable insurance laws and
regulations, including without limitation state insurance laws
and regulations imposing insurance licensing requirements.
f. It shall carry out its sales and administrative obligations
under this Agreement in continued compliance with federal and
state laws and regulations, including those governing securities
and/or insurance-related activities or transactions, as
applicable.
g. It has blanket bond insurance coverage. Broker-Dealer has the
affirmative duty to maintain its blanket bond insurance
coverage. Broker-Dealer will notify IBS immediately in the
event a determination is made to cancel, terminate or
substantially modify its blanket bond insurance coverage.
2.2 Broker-Dealer will be responsible for the training, supervision and
control of its Registered Representatives engaged in the offer and sale of the
Contracts and will supervise strict compliance with applicable federal and
state securities laws and NASD rules. IBS shall have no responsibility in
connection with such program of supervision and compliance.
2.3 If General Agent is an Affiliate of the same person as Broker-Dealer
as reflected in
Recital B. to this Agreement, then by engaging in the distribution activities
contemplated by this Agreement, Broker-Dealer represents and warrants that:
a. Broker-Dealer
(i) has obtained a letter from the Staff of the SEC
advising Broker-Dealer that the Staff will not recommend
enforcement action if General Agent is not registered as a
broker-dealer with the SEC; or
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(ii) It is relying upon a no-action letter issued by the Staff
of the SEC at the request of a broker-dealer that, also,
was a licensed insurance agent engaged in distribution
activities similar to those contemplated by this Agreement,
and where the Staff did not recommend enforcement action if
the insurance agent was not registered as a broker-dealer
with the SEC; and
(iii) It is complying and will continue to comply with the
conditions set forth in such letters at all times while
this Agreement is in effect; or
b. that at the time that this Agreement becomes effective and
during the term of this Agreement:
(i) General Agent is wholly-owned by Broker-Dealer or is
wholly-owned by one or more associated persons of
Broker-Dealer;
(ii) General Agent and its personnel will be "associated
persons" of Broker-Dealer within the meaning of Section
3(a)(18) of the 1934 Act;
(iii) General Agent will engage in the offer or sale of the
Contracts only through persons who are also Registered
Representatives of Broker-Dealer;
(iv) General Agent will not receive or handle customer funds or
securities;
(v) Broker-Dealer will be responsible for the training,
supervision and control of its Registered Representatives
engaged in the offer or sale of the Contracts on behalf of
General Agent, as required under the 1934 Act, the NASD
rules and other applicable federal and state statutes and
regulations, and will also be responsible for the
supervision and control of any of its associated persons
who are owners, directors, or executive officers of General
Agent;
(vi) Broker-Dealer will, in the offer and sale of the Contracts
by it or General Agent, comply with all applicable
requirements of the 1934 Act and the NASD, including the
requirement to maintain and preserve books and records
under Section 17(a) of the 1934 Act and the rules
thereunder; and
(vii) Commissions and fees relating to the Contracts will be
reflected in the quarterly FOCUS reports and the fee
assessment reports filed by Broker-Dealer with the NASD.
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2.4 Broker-Dealer shall notify IBS and Zurich immediately in writing if
Broker-Dealer fails to comply with any of the applicable provisions set forth
above.
2.5 IBS represents and warrants that all Contracts are legally issued,
registered and filed as required by applicable federal securities and state
insurance laws.
Section 3: Sales Materials
3.1 Broker-Dealer shall submit to IBS, for written approval in advance of
use, all promotional, sales, and advertising material and signs involving the
use of IBS's and Zurich's name and/or pertaining to the sale of any Contract.
3.2 IBS will file such materials or will cause such materials to be filed
with the SEC, the NASD, and with any state securities regulatory authorities,
as appropriate.
Section 4: Compensation
4.1 Except as otherwise stated herein, Broker-Dealer shall be entitled to
commissions with respect to sales of such Contracts it shall make in accordance
with the Schedule of Commissions under the General Agent Agreement with Zurich.
Commissions are payable by Zurich through IBS or as otherwise permitted by law
or regulations. Any obligation of IBS to pay such commissions will occur only
following receipt of such amounts by IBS from Zurich.
Section 5: Term and Exclusivity of Agreement
5.1 No relationship of principal and agent or partnership or joint
venture between the parties hereto is intended to be established and neither
party shall hold itself out as the agent, partner or joint venturer of or with
the other party in any respect whatsoever. Except for this Agreement and the
General Agent Agreement, no other legal relationship is intended between the
parties.
5.2 This Agreement may be terminated at any time by either party upon
thirty (30) days written notice to the other, and may be terminated immediately
by IBS for cause. For purposes of this Section, "cause" shall mean failure to
return money to clients where appropriate, failure to account for any money
received from or on behalf of IBS, any fraud, misrepresentation or dishonesty
in any relationship with IBS, its affiliates, or any past, present or proposed
client, violation of any federal or state law or regulation, or violation of
any of the terms of this Agreement.
5.3 Notice of termination shall be deemed to be given on the day mailed
or delivered by hand to an officer of either party. If mailed to IBS, such
notice shall be addressed to the principal office of IBS, and if mailed to the
Broker-Dealer, shall be addressed to the last known address as shown on the
records of IBS.
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Section 6: Complaints and Investigations
6.1 Broker-Dealer shall cooperate fully in any securities or insurance
regulatory investigation or proceeding or judicial proceeding with respect to
IBS and Zurich, and/or Broker-Dealer and its Registered Representatives or any
Affiliate, to the extent that such investigation or proceeding is in connection
with the Contracts marketed under this Agreement.
Section 7: Assignment
7.1 Broker-Dealer may not assign this Agreement without the prior written
approval of IBS.
7.2 This Agreement is exclusively for and shall inure to the benefit of
the parties hereto, their respective heirs, legal representatives, successors
and assigns and shall not be deemed to create any rights for the benefit of
third parities.
Section 8: Confidentiality
8.1 Each party will keep confidential information it may acquire as a
result of this Agreement regarding IBS, its affiliates' and subsidiaries'
affairs, including any customer list or other propriety information that it may
acquire in the performance of this Agreement, and shall not use such customer
list or information without the prior written consent of the other party which
requirement shall survive the termination of this Agreement.
Section 9: Modification of Agreement
9.1 This Agreement supersedes all prior agreements, either oral or
written, between the parties relating to the Contracts and, except for any
amendment of Schedule 1 pursuant to the terms of Section 1.5 hereof or of the
Schedule of Commissions pursuant to the terms of Section 4 hereof, may not be
modified in any way unless by written agreement signed by all of the parties.
Section 10: Indemnification
10.1 Broker-Dealer shall be responsible and liable for any damages arising
out of the acts or omissions of Broker-Dealer, its Registered Representatives,
and/or its employees and does hereby agree to indemnify and hold IBS harmless
against any loss or expense arising out of any of its Registered
Representatives, any Affiliate and/or employees failure to carry out fully and
without negligence the duties and responsibilities assigned to it herein.
10.2 If any action or proceeding shall be brought against Broker-Dealer
relating to a Contract sold pursuant to this Agreement, Broker- Dealer shall
give prompt written notice to IBS.
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10.3 In the event of any dispute with a Contract owner, IBS shall have the
right to take such action as IBS may in its sole discretion deem necessary to
promptly effect a mitigation of damages or limitation of losses without
obtaining the prior consent of Broker-Dealer and without waiving or electing to
relinquish any rights or remedies IBS may have against Broker-Dealer.
10.4 IBS shall have the right to settle with any Contract owner engaged in
a dispute with IBS or Broker-Dealer without the prior consent of Broker-Dealer
and without waiving or electing to relinquish any rights or remedies IBS may
have against Broker-Dealer.
10.5 The indemnification provisions of this Agreement shall remain
operative and in full force and effect, regardless of the termination of this
Agreement and shall survive any such termination.
10.6 Without limiting the foregoing indemnities, IBS and Broker-Dealer
each agree to indemnify and hold harmless the other against any breach of
representation, warranty or covenant herein by the indemnifying party.
Section 11: Right, Remedies, etc. are Cumulative
11.1 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws. Failure of either 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.
Section 12: Notices
12.1 All notices hereunder are to be made in writing and shall be either
hand delivered or transmitted by registered or certified United States mail
with return receipt requested to the principal office of the party and shall be
effective upon delivery, except as otherwise provided in Section 5.2 of this
Agreement.
Section 13: Interpretation, Jurisdiction, etc.
13.1 This Agreement constitutes the whole agreement between the parties
hereto with respect to the subject matter hereof, and supersedes all prior oral
or written understandings, agreements or negotiations between the parties with
respect to the subject matter hereof. No prior writings by or between the
parties hereto with respect to the subject matter hereof shall be used by
either party in connection with the interpretation of any provisions of this
Agreement.
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13.2 This Agreement is made in the State of Illinois, and all questions
concerning its validity, construction or otherwise shall be determined under
the laws of Illinois without giving effect to principles of conflict of laws.
Section 14: Headings
14.1 The headings in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
Section 15: Counterparts
15.1 This Agreement may be executed in two or more counterparts, each of
which taken together shall constitute one and the same instrument.
Section 16: Severability
16.1 This is a severable Agreement. In the event that any provisions of
this Agreement would require a party to take action prohibited by applicable
federal or state law or prohibit a party from taking action required by
applicable federal or state law, then it is the intention of the parties hereto
that such provisions shall be enforced to the extent permitted under the law,
and, in any event, that all other provisions of this Agreement shall remain
valid and duly enforceable as if the provision at issue had never been a part
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year indicated below.
INVESTORS BROKERAGE __________________________________
SERVICES, INC. ("Broker-Dealer")
BY_______________________________ BY________________________________
Print Name_______________________ Print Name________________________
Title____________________________ Title_____________________________
Date_____________________________ Date______________________________
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