BROKER-DEALER AGENCY SELLING AGREEMENT
FOR VARIABLE CONTRACTS
This Agreement is made among the following three parties:
1. RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
a New York domiciled stock life insurance company
(hereinafter "INSURER"); and,
2. WASHINGTON SQUARE SECURITIES, INC.
00 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
an affiliate of Insurer, registered as a broker-dealer with
the Securities and Exchange Commission ("SEC") and a member
of the National Association of Securities Dealers, Inc. ("NASD")
(hereinafter "GENERAL DISTRIBUTOR"); and,
3. __________________________________
Company's Full Name
__________________________________
Street
__________________________________
City State Zip
registered as a broker-dealer with the SEC and a member of the
NASD and licensed as an insurance agency (hereinafter
"BROKER-DEALER").
RECITALS:
WHEREAS, Broker-Dealer is licensed as an insurance agency in order to
satisfy state insurance law requirements with respect to the sale of variable
insurance products which are registered securities with the SEC.
WHEREAS, the parties wish to enter into an agreement for the distribution
of Variable Contracts by Broker-Dealer; and
WHEREAS, Insurer has appointed General Distributor as principal
underwriter and distributor (as those terms are defined by the Investment
Company Act of 1940) of the Variable Contracts and has authorized General
Distributor to enter into selling agreements with registered broker-dealers
for the solicitation and sale of Variable Contracts; and,
1
WHEREAS, Insurer and General Distributor propose to have Broker-Dealer's
registered representatives who are licensed as life insurance/
variable contract agents in appropriate jurisdictions ("Representatives")
solicit and sell Variable Contracts and,
WHEREAS, Insurer and General Distributor propose to have Broker-Dealer
provide certain supervisory and administrative services as hereinafter
described with respect to the solicitation and sales of Variable Contracts.
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties now agree as follows:
1. VARIABLE CONTRACTS
In this Agreement, the words "Variable Contract" shall mean those variable
life insurance policies and variable annuity contracts identified in Section
1 of the Compensation Schedule attached hereto, and as may hereafter be
amended.
Insurer may in its sole discretion and without notice to Broker-Dealer, suspend
sales of any Variable Contracts or amend any policies or contracts evidencing
such Variable Contracts 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 Broker-Dealer prior to suspending sales
of any Variable Contracts or amending any policies or contracts evidencing
such Variable Contracts.
Insurer may issue and propose additional or successor products, in which event
Broker-Dealer will be informed of the product and its related Commission
Schedule. If Broker-Dealer does not agree to distribute such product(s), it
must notify Insurer in writing within 30 days of receipt of the Commission
Schedule for such product(s). If Broker-Dealer does not indicate disapproval
of the new product(s) or the terms contained in the related Commission Schedule,
Broker-Dealer will be deemed to have thereby agreed to distribute such
product(s) and agreed to the related Commission Schedule which shall be attached
to and made a part of this Agreement.
2. AGENCY APPOINTMENT
On the effective date, Insurer and General Distributor appoint Broker-
Dealer and Broker-Dealer accepts the appointment to solicit sales of and to
sell Variable Contracts, pursuant to the terms of this Agreement.
2
3. DUTIES OF BROKER-DEALER
(a) SUPERVISION OF REPRESENTATIVES. Broker-Dealer shall have full
responsibility for the training and supervision of all
Representatives who are engaged directly or indirectly in the offer
or sale of the Variable Contracts, and all such persons shall be
subject to the control of Broker-Dealer with respect to such persons'
securities regulated activities in connection with the Variable
Contracts. Broker-Dealer will cause the Representatives to be
trained in the sale of the Variable Contracts, will cause such
Representatives to qualify under applicable federal and state laws to
engage in the sale of the Variable Contracts; will cause such
Representatives to be registered representatives of Broker-Dealer
before such Representatives engage in the solicitation of
applications for the Variable Contracts; and will cause such
Representatives to limit solicitation of applications for the
Variable Contracts to jurisdictions where Insurer has authorized
such solicitation. Broker-Dealer shall cause such Representatives'
qualifications to be certified to the satisfaction of General
Distributor and shall notify General Distributor if any Representative
ceases to be a registered representative of Broker-Dealer or ceases to
maintain the proper licensing required for the sale of the Variable
Contracts. All parties shall be liable for their own negligence and
misconduct under this paragraph.
(b) REPRESENTATIVES INSURANCE COMPLIANCE. Broker-Dealer, prior to allowing
its Representatives to solicit for sales or sell the Variable
Contracts, shall require such representatives to be validly insurance
licensed, registered and appointed by Insurer as a variable
contract/life insurance agent in accordance with the jurisdictional
requirements of the place where the solicitations and sales take place
as well as the solicited person's or entity's place of residence.
Broker-Dealer shall assist Insurer in the appointment of
Representatives under the applicable insurance laws to sell Variable
Contracts. Broker-Dealer shall fulfill all Insurer requirements
in conjunction with the submission of licensing/appointment papers for
all applicants as insurance agents of Insurer. All such licensing/
appointment papers shall be submitted to Insurer or its designee by
Broker-Dealer. Notwithstanding such submission, Insurer shall have
sole discretion to appoint, refuse to appoint, discontinue, or
terminate the appointment of any Representative as an insurance agent
of Insurer.
3
(c) COMPLIANCE WITH NASD RULES OF FAIR PRACTICE AND FEDERAL AND STATE
SECURITIES LAWS. Broker-Dealer shall fully comply with the requirements of
the National Association of Securities Dealers, Inc., the Securities
Exchange Act of 1934 and all other applicable federal and state laws. In
addition, Broker-Dealer will establish and maintain such rules and
procedures as may be necessary to cause diligent supervision of the
securities activities of the Representatives as required by applicable law
or regulation. Upon request by General Distributor, Broker-Dealer shall
furnish such records as may be necessary to establish such diligent
supervision.
(d) NOTICE OF REPRESENTATIVE'S NONCOMPLIANCE. In the event a Representative
fails or refuses to submit to supervision of Broker-Dealer or otherwise
fails to meet the rules and standards imposed by Broker-Dealer on its
Representatives, Broker-Dealer shall advise General Distributor of this
fact and shall immediately notify such Representative that he or she is no
longer authorized to sell the Variable Contracts and Broker-Dealer shall
take whatever additional action may be necessary to terminate the sales
activities of such Representative relating to such contracts and policies.
(e) PROSPECTUSES, SALES PROMOTION MATERIAL AND ADVERTISING. Broker-Dealer shall
be provided, without any expense to Broker-Dealer, with prospectuses
relating to the Variable Contracts and such other supplementary sales
material as General Distributor determines is necessary or desirable for
use in connection with sales of the Variable Contracts.
NO SALES PROMOTION MATERIALS OR ANY ADVERTISING RELATING TO THE VARIABLE
CONTRACTS, INCLUDING WITHOUT LIMITATION GENERIC ADVERTISING MATERIAL WHICH
DOES NOT REFER TO INSURER BY NAME, SHALL BE USED BY BROKER-DEALER UNLESS
THE SPECIFIC ITEM HAS BEEN APPROVED IN WRITING BY GENERAL DISTRIBUTOR PRIOR
TO SUCH USE.
In addition, Broker-Dealer shall not print, publish or distribute any
advertisement, circular or any document relating to Insurer unless such
advertisement, circular or document shall have been approved in writing by
Insurer prior to such use. Upon termination of this Agreement, all
prospectuses, sales promotion material, advertising, circulars, documents
and software relating to the sales of Insurer's contracts shall be promptly
turned over to Insurer free from any claim or retention of rights by the
Broker-Dealer.
4
Insurer represents that the prospectus and registration statement relating
to the Variable Contracts contain no untrue statements of material fact or
omission to state material fact, the omission of which makes any statement
contained in the prospectus and registration statement misleading. Insurer
agrees to indemnify Broker-Dealer from and against any claims, liabilities
and expenses which may be incurred under the Securities Act of 1933, the
Investment Company Act of 1940, common law or otherwise arising out of a
breach of the agreement in this paragraph.
Broker-Dealer agrees to hold harmless and indemnify Insurer and General
Distributor against any and all claims, liabilities and expenses which
Insurer or General Distributor may incur from liabilities arising out of or
based upon any alleged or untrue statement other than statements contained
in the registration statement, prospectus or approved sales material of any
Variable Contract.
In accordance with the requirements of the laws of the several states,
Broker-Dealer shall maintain complete records indicating the manner and
extent of distribution of any such solicitation material, shall make such
records and files available to staff of Insurer or its designated agent in
field inspections and shall make such material available to personnel of
state insurance departments, the NASD or other regulatory agencies,
including the SEC, which have regulatory authority over Insurer or General
Distributor. Broker-Dealer holds Insurer, General Distributor and their
affiliates harmless from any liability arising from the use of any material
which either (a) has not been specifically approved by Insurer in writing,
or (b) although previously approved, has been disapproved, in writing, for
further use.
(f) SECURING APPLICATIONS. All applications for Variable Contracts shall be
made on application forms supplied by Insurer and all payments collected by
Broker-Dealer or any Representative thereof shall be remitted promptly in
full, together with such application forms and any other required
documentation, directly to Insurer at the address indicated on such
application or to such other address as Insurer may, from time-to-time,
designate in writing. Broker-Dealer shall review all such applications for
accuracy and completeness. Checks or money orders in payment on any such
Variable Contract shall be drawn to the order of "ReliaStar Bankers
Security Life Insurance Company." All applications are subject to
acceptance or rejection by Insurer at its sole discretion. All records or
information obtained hereunder by Broker-Dealer shall not be disclosed or
used except as expressly authorized herein, and Broker-Dealer will keep
such records and information confidential, to be disclosed only as
5
authorized or if expressly required by federal or state regulatory
authorities.
(g) COLLECTION OF PURCHASE PAYMENTS. Broker-Dealer agrees that all money or
other consideration tendered with or in respect of any application for a
Variable Contract and the Variable Contract when issued is the property of
Insurer and shall be promptly remitted in full to Insurer without deduction
or offset for any reason, including by way of example but not limitation,
any deduction or offset for compensation claimed by Broker-Dealer.
(h) POLICY DELIVERY. Insurer will transmit Variable Contracts to Broker-Dealer
for delivery to Policyowners. Broker-Dealer hereby agrees to deliver all
such Variable Contracts to Policyowners within ten (10) days of their
receipt by Broker-Dealer from Insurer. Broker-Dealer agrees to indemnify
and hold harmless Insurer for any and all losses caused by Broker-Dealer's
failure to perform the undertakings described in this paragraph.
Broker-Dealer hereby authorizes Insurer to set off any amount it owes
Insurer under this paragraph against any and all amounts otherwise payable
to Broker-Dealer by Insurer.
(i) FIDELITY BOND. Broker-Dealer represents that all directors, officers,
employees and Representatives of Broker-Dealer who are licensed pursuant to
this Agreement as Insurer's agents for state insurance law purposes or who
have acccess to funds of Insurer, including but not limited to funds
submitted with applications for the Variable Contracts, or funds being
returned to owners, are and shall be covered by a blanket fidelity bond,
including coverage for larceny and embezzlement, issued by a reputable
bonding company. This bond shall be maintained by Broker-Dealer at
Broker-Dealer's expense. Such bond shall be, at least, of the form, type
and amount required under the NASD Rules of Fair Practice. Insurer may
require evidence, satisfactory to it, that such coverage is in force and
Broker-Dealer shall give prompt written notice to Insurer of any notice of
cancellation or change of coverage.
Broker-Dealer assigns any proceeds received from the fidelity bonding
company to Insurer to the extent of Insurer's loss due to activities
covered by the bond. If there is any deficiency amount, whether due to a
deductible or otherwise, Broker-Dealer shall promptly pay Insurer such
amount on demand and Broker-Dealer hereby indemnifies and holds harmless
Insurer from any such deficiency and from the costs of collection thereof
(including reasonable attorneys' fees).
6
(j) Broker Dealer will be governed strictly by all rules, regulations,
and instructions contained in the RBSL administrative handbook, together with
all other regulations instituted from time to time, and observe and comply with
the insurance laws and regulations of all states in which the Broker Dealer
operates.
4. COMPENSATION
(a) VARIABLE CONTRACTS. Insurer, on behalf of General Distributor,
shall pay a dealer concession to Broker-Dealer on all sales of Variable
Contracts through its Representatives, in accordance with the form of the
Compensation Schedule attached hereto, which is in effect when purchase payment
on such Variable Contracts are received by Insurer. Dealer concessions will be
paid as a percentage of premiums received in cash or other legal tender and
accepted by Insurer on applications obtained by Broker-Dealer's Representatives
unless otherwise indicated in Compensation Schedule A. Upon termination of this
Agreement, all compensation payable hereunder shall cease; however,
Broker-Dealer shall continue to be liable for any chargebacks or for any other
amounts advanced by or otherwise due Insurer hereunder.
Insurer will pay all such Compensation to the Broker-Dealer.
Broker-Dealer agrees to hold Insurer and General Distributor harmless from all
claims of its Representatives for compensation in respect of Representative's
sales of Variable Contracts.
(b) COMMISSION STATEMENTS. Broker-Dealer will be provided with copies of
its Representatives' commission statements together with Broker-Dealer's own
commission statement for each commission payment period in which commissions are
payable. Broker-Dealer agrees that, except as to clerical errors and material
undisclosed facts, if any, such statements constitutes a complete and accurate
statement of the commission account unless written notice is provided to Insurer
within 120 days after the date of the statement, which notice specifically sets
forth the objections or exceptions thereto.
(c) COMPENSATION SCHEDULES. The initial Compensation Schedule is
attached (see Table A). Insurer and General Distributor reserve the right to
change, amend, or cancel any Compensation Schedule as to business produced after
such change by mailing notice of such change in the form of a new Compensation
Schedule to Broker-Dealer. Such change shall be effective, unless otherwise
specified, ten (10) days after the notice is mailed.
7
(d) RIGHTS OF REJECTION AND SETTLEMENT. Insurer reserves the right to
reject any and all applications and collections submitted, to discontinue
writing any form of policy, to take possession of and cancel any policy and
return the premium or any part of it, and to make any compromise settlement in
respect of a policy. Broker-Dealer will not be entitled to receive or retain any
compensation on premiums or parts of premiums Insurer does not receive and
retain because of such rejection, discontinuance, cancellation, or compromise
settlement. If compensation has been paid to which Broker-Dealer is not
entitled, any amount credited will be charged back, and if the account balance
is insufficient to cover the credited amount, Broker-Dealer as applicable agrees
to promptly repay the credited amount.
5. 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 Broker-Dealer ceases to be registered as a Broker-Dealer under the
Securities Exchange Act of 1934 and a member of the NASD or, if Broker-Dealer
ceases to maintain its insurance agent license(s) in good standing in the
jurisdictions in which it conducts business.
6. ARBITRATION
Any dispute, claim or controversy arising out of or in connection
with this Agreement shall be submitted to arbitration pursuant to the NASD's
arbitration facilities. If the subject matter of the dispute, claim or
controversy is not within the scope of matters which may arbitrated through
the NASD arbitration facilities, then such dispute, claim or controversy shall,
upon the written request of any party, be submitted to three arbitrators, one to
be chosen by each party, and the third by the two so chosen. If either party
refuses or neglects to appoint an arbitrator within thirty (30) days after the
receipt of the written notice from the other party requesting it to do so, the
requesting party may appoint two arbitrators. If the two arbitrators fail to
agree in the selection of a third arbitrator within thirty (30) days of their
appointment, each of them shall name two, of whom the other shall decline one
and the decision shall be made by drawing lots. All arbitrators shall be active
or retired executive officers of insurance companies not under the control of
any party to this Agreement. Each party shall submit its case to the arbitrators
within thirty (30) days of the appointment of the third arbitrator. The
arbitration shall be held in Minneapolis, Minnesota at the times agreed upon by
the arbitrators. The decision in writing of any two arbitrators, when filed with
the parties hereto shall be final and binding on both parties. Judgment may be
entered upon the final decision of the arbitrators in
8
any court having jurisdiction. Each party shall bear the expense of its own
arbitrator and shall jointly and equally bear with the other party the expense
of the third arbitrator and of the arbitration.
7. GENERAL PROVISIONS
(a) ADDITIONS, AMENDMENTS, MODIFICATIONS & WAIVERS. This Agreement shall
not be effective until approved by Insurer and General Distributor. Insurer and
General Distributor reserve the right to amend this Agreement at any time, and
the submission of an application for the purchase of a Variable Contract by
Broker-Dealer after notice of any such amendment has been sent shall constitute
Broker-Dealer's agreement to any such amendment. No additions, amendments or
modifications of this Agreement or any waiver of any provision will be valid
unless approved, in writing, by one of Insurer's duly authorized officers. In
addition, no approved waiver of any default, or failure of performance by
Broker-Dealer will affect Insurer's or General Distributor's rights with respect
to any later default or failure of performance.
(b) INDEPENDENT CONTRACTOR RELATIONSHIP. This Agreement does not create
the relationship of employer and employee between the parties to this Agreement.
Insurer and General Distributor are independent contractors with respect to
Broker-Dealer and its Representatives.
(c) ASSIGNMENTS. Broker-Dealer will not assign or transfer, either
wholly or partially, this Agreement or any of the benefits accrued or to accrue
under it, without the written prior consent of a duly authorized officer of the
Insurer and General Distributor.
(d) SERVICE OF PROCESS. If Broker-Dealer receives or is served with
any notice or other paper concerning any legal action against Insurer or General
Distributor, Broker-Dealer agrees to notify Insurer immediately (in any event
not later than the first business day after receipt) by telephone and further
agrees to transmit any papers that are served or received by facsimile to (612)
342-7531 and by overnight mail to Insurer's Office of General Counsel.
(e) SEVERABILITY. It is understood and agreed by the parties to this
Agreement that if any part, term or provision of this Agreement is held to be
invalid or in conflict with any law or regulation, the validity of the remaining
portions or provisions will not be affected, and the parties' rights and
obligations will be construed and enforced as if this
9
Agreement did not contain the particular part, term or provision held to be
invalid.
(f) GOVERNING LAW. It is agreed by the parties to this Agreement that
the Agreement and all of its provisions will be governed by the laws of the
State of Minnesota.
(g) LIMITATIONS. No party other than Insurer shall have the authority on
behalf of the insurer to make, alter, discharge any policy, contract or
certificate issued by the 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, nor to open any bank account in the full legal name of Insurer, any
derivation thereof or any tradename thereof.
8. TERRITORY
Broker-Dealer's territory is limited geographically to those
jurisdictions in which the Variable Contracts may lawfully be offered, provided
that Broker-Dealer's right to solicit sales of and to sell the Variable
Contracts in such jurisdictions is not exclusive.
9. EFFECTIVE DATE:
IN WITNESS WHEREOF, we set our hands this _____ day of _____________,
199__.
BROKER-DEALER:
____________________________________________________________
By: ________________________________________________________
Title: _____________________________________________________
INSURER:
10
This Agreement shall be effective ___________________________, 199__.
RELIASTAR BANKERS SECURITY LIFE
INSURANCE COMPANY
By: _________________________________________________________
Title: ______________________________________________________
GENERAL DISTRIBUTOR:
WASHINGTON SQUARE SECURITIES, INC.
By: __________________________________________________________
Title: _______________________________________________________
11
TABLE A
----------------------------------------------------------------------------
DEALER'S CONCESSION
____________________________________________________________________________
Kind of Policy Total Concessions
____________________________________________________________________________
Individual Single Payment Deferred Annuity 6%
Contracts
Additional Purchase Payment Deferred Annuity 6%
Contract
Immediate Annuity Contract 2.5%
_____________________________________________________________________________
The Dealer hereby agrees that any commissions paid on a Variable Annuity
Contract that is canceled under the provisions of the Contract's right to
examine clause, a/k/a the "20-day free look" clause, will be repaid to ReliaStar
Bankers Security. ReliaStar Bankers Security may also charge such amounts
against the Dealer's account.
No commissions will be paid on purchases on Contracts resulting from
exchanges or transfers from Separate Accounts A through I or M sponsored by
ReliaStar Bankers Security or between Separate Accounts Q through NQ sponsored
by ReliaStar Bankers Security, or for transfers among investment media within
each such Separate Account Q or NQ.
12
