Exhibit 1(A)(3)(c)
Form of Broker/Dealer Supervisory and Service Agreement
[LOGO]
AFSG SECURITIES CORPORATION, MEMBER NASD
PRINCIPAL UNDERWRITER FOR WRL VARIABLE
LIFE AND VARIABLE ANNUITY PLANS
BROKER-DEALER SUPERVISORY AND SERVICE AGREEMENT
This Broker-Dealer Supervisory and Service Agreement (the "Agreement") is
made this ____ day of __________ ,19__ , by and between Western Reserve Life
Assurance Co. of Ohio ("WRL"), AFSG Securities Corporation , formerly known as
IDEX Distributors, Inc. , a broker-dealer registered with the Securities and
Exchange Commission ("SEC") under the Securities Exchange Act of 1934 ("1934
Act") and a member of the National Association of Securities Dealers, Inc.
("NASD"), and ("Broker-Dealer"), also a broker-dealer registered with the SEC
under the 1934 Act and a member of the NASD, and any and all insurance agency
affiliates ("Agencies") of this broker-dealer, (hereinafter Broker/Dealer and
Agencies are collectively referred to as "Producers"). Such affiliates are named
in the Appendix of this Agreement. The Appendix lists any assumed names used by
Broker-Dealer in any state in order to comply with state insurance licensing
requirements.
RECITALS
WHEREAS, WRL offers for sale certain variable life insurance policies and
variable annuity contracts (hereinafter referred to as the "Plans");
WHEREAS, AFSG Securities Corporation is the principal underwriter of the
Plans;
WHEREAS, AFSG Securities Corporation proposes to have Broker-Dealer's
registered representatives ("Representatives") who are also licensed and
appointed as life insurance agents of WRL solicit and sell the Plans, which are
deemed to be securities under the Securities Act of 1933; and
WHEREAS, WRL and AFSG Securities Corporation propose to have Producers
provide certain supervisory and administrative services in connection with the
distribution of the Plans.
NOW THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. APPOINTMENT. WRL and AFSG Securities Corporation hereby appoint Agency
under the insurance laws and authorize Broker-Dealer under the
securities laws to supervise Representatives in connection with the
distribution of the Plans and to provide certain services as described
herein.
2. SUPERVISION OF REPRESENTATIVES. Broker-Dealer shall have full
responsibility for the training and supervision of all Representatives
associated with Broker-Dealer who are engaged directly or indirectly in
the offer or sale of the Plans 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 Plans.
Broker-Dealer will establish rules, procedures and supervisory and
inspection techniques necessary to diligently supervise the activities
of its Representatives.
Producers will cause the Representatives to be trained in the sale of
the Plans; will use their best efforts to cause such Representatives to
qualify under applicable federal and state laws to engage in the sale
of the Plans; and will cause such Representatives to be registered
representatives of Broker-Dealer before such Representatives engage in
the solicitation of applications for the Plans and will cause such
Representatives to limit solicitation of applications for the Plans to
jurisdictions where WRL has authorized such solicitation. Broker-Dealer
has full responsibility in connection with the training, supervision
and control of the Representatives as contemplated by Section
15(b)(4)(E) of the Securities Exchange Act of 1934. Broker-Dealer shall
certify Representatives' qualifications to the satisfaction of AFSG
Securities Corporation, including certifying a General Letter of
Recommendation set forth in Exhibit A hereto. Producers shall ensure
that the Plans are offered, sold and serviced only through
Representatives who comply with all appropriate state insurance
licensing requirements.
Administrative Xxxxxx X.X. Xxx 0000 x Xxxxxxxxxx Xxxxxxx 00000-0000
Home Office Columbus, OH
3. REPRESENTATIVE'S APPLICATION. Producers shall cause each such
Representative to execute a Registered Representative's Agent
Application with WRL before a Representative shall be permitted to
solicit applications for the sale of the Plans. WRL shall furnish
Producers with copies of Registered Representative's Agent Application
for execution by the Representatives.
4. NOTICE OF REPRESENTATIVE'S NONCOMPLIANCE. In the event a Representative
fails or refuses to submit to supervision of Broker-Dealer, ceases to
be a registered representative of Broker-Dealer, or fails to meet the
rules and standards imposed by Producers on their Representatives,
Producers shall certify such fact to WRL and shall immediately notify
such Representative that he or she is no longer authorized to sell the
Plans, and Producers shall take whatever additional action may be
necessary to terminate the sales activities of such Representative
relating to the Plans.
5. COMPLIANCE WITH NASD RULES OF FAIR PRACTICE AND FEDERAL AND STATE
SECURITY AND INSURANCE LAWS. Producers shall fully comply with the
requirements of the 1934 Act and all other applicable federal or state
laws applicable to the solicitation and service of the Plans and will
establish such rules and procedures as may be necessary to cause
diligent supervision of the securities and insurance activities of
Representatives. Producers agree to maintain appropriate books and
records concerning the activities of their Representatives as required
by the SEC, NASD or other regulatory agencies having jurisdiction, or
under applicable state insurance laws or regulations. Upon request by
WRL or AFSG Securities Corporation, Producers shall furnish such
appropriate records as may be necessary to establish such diligent
supervision.
6. PROSPECTUS, SALES PROMOTION MATERIAL AND ADVERTISING. Producers shall
be provided with, and Producers shall forward to Representatives,
prospectuses relating to the Plans and such other material as AFSG
Securities Corporation determines to be necessary or desirable for use
in connection with sales of the Plans. Producers shall ensure that no
sales promotion materials or advertising related to the Plans shall be
used by Representatives unless the specific item has been approved by
AFSG Securities Corporation in writing.
7. APPLICATIONS. Producers shall cause all applications for Plans to be
made on application forms supplied by WRL and all payments collected by
Producers or any Representative to be remitted promptly in full,
together with such application forms and any other documentation,
directly to WRL at the address indicated on such application. Producers
shall review all such applications for completeness. Checks or money
orders in payment on any such Plan shall be drawn to the order of WRL.
All applications are subject to acceptance or rejection by WRL at its
sole discretion. Producers agree to remit in full to WRL immediately
upon receipt all premiums received on such applications, forms and any
other required documentation obtained in respect of participants in the
Plans.
8. COMPENSATION. Broker-Dealer or Agency shall serve as Paymaster for
amounts due Representatives. Such amounts shall be paid to
Broker-Dealer or Agency, whichever is authorized to receive insurance
commissions under applicable insurance laws, by WRL acting on behalf of
AFSG Securities Corporation in accordance with the Service Fee and
Commission Schedule attached hereto as Exhibit C. Broker-Dealer or
Agency shall, in turn, pay Representatives amounts due them in
connection with the sales of the Plans and Representatives shall solely
look to Broker-Dealer or Agency for payment of such amounts.
Broker-Dealer or Agency shall be compensated for the services provided
hereunder in accordance with the Service Fee and Commission Schedule.
Such amounts payable to Representatives and Broker-Dealer or Agency
will be paid in cash or other legal tender based upon Plans accepted by
WRL on applications obtained by the Representatives. Upon termination
of this Agreement, all compensation to Broker-Dealer or Agency and
Representatives hereunder shall cease; however, (i) Broker-Dealer or
Agency shall continue to be liable for chargebacks pursuant to the
provisions of Service Fee and Commission Schedule or for any other
amounts advanced by or otherwise due WRL hereunder, and (ii)
Broker-Dealer or Agency shall receive any commissions due under such
Schedule (continuing or otherwise) arising out of a Plan sold by a
Representative prior to termination of this Agreement, provided that
the obligation to pay such commissions shall cease after the tenth year
following the date of issue of the Plan. Broker-Dealer or Agency shall
have no interest in any surrender charges, deductions or other fees
payable to WRL.
9. INVESTIGATIONS. Producers, AFSG Securities Corporation and WRL agree to
cooperate fully in any investigation or proceeding with respect to any
Representative or other agent or the Producers to the extent that such
investigation or proceeding is in connection with the Plans. Without
limiting the foregoing:
a. AFSG Securities Corporation and WRL will promptly notify Producers
of any substantive customer complaint or notice of any regulatory
investigation or proceeding or judicial proceeding received by it
with respect to Producers or any Representative or other agent of
Producers or with respect to AFSG Securities Corporation or WRL
which may affect the issuance of the Plans marketed under this
Agreement.
b. Producers will promptly notify AFSG Securities Corporation and WRL
of any substantive customer complaint or notice of any regulatory
investigation or proceeding or judicial proceeding received by
Producers with respect to
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Producers or to any Representative or other agent of Producers in
connection with the Plans or any activity in connection therewith.
In the case of a substantive customer complaint in connection with the
Plans, AFSG Securities Corporation, WRL and Producers will cooperate in
investigating such complaint, but any response to such complaint will
be the sole responsibility of AFSG Securities Corporation or WRL, as
appropriate.
10. INDEPENDENT CONTRACTORS. Producers in performing their duties hereunder
shall be acting as an independent contractors, and not as agents or
employees of WRL or AFSG Securities Corporation.
11. INDEMNIFICATION. Producers shall indemnify and hold harmless AFSG
Securities Corporation and WRL from any claims, damages, expenses,
liabilities or causes of action, asserted or brought by anyone,
resulting from any negligent, fraudulent, or intentional acts,
omissions, or errors of Producers, their employees, registered
representatives, other representatives, or agents in the offering for
sale, solicitation, or servicing of the Plans, and from any negligent,
fraudulent, or intentional acts, omissions, or errors of Producers,
their employees, registered representatives, other representatives, or
agents in violation of Federal or State laws or regulations and NASD
rules of any nature, applicable to the offering for sale, solicitation,
or servicing of the Plans.
Broker-Dealer shall assume full responsibility for the activities of
all persons associated with it who are engaged directly or indirectly
in the sales and securities operations of Broker-Dealer. Broker-Dealer
shall indemnify and hold harmless AFSG Securities Corporation and WRL
from any claims, damages, expenses, liabilities or causes of action,
asserted or brought by anyone, resulting from any private business
transactions of any associated persons which are the subject of this
paragraph.
AFSG Securities Corporation and WRL shall indemnify and hold harmless
Producers from any claims, damages, expenses, liabilities or causes of
action, asserted or brought by anyone, resulting from any negligent,
fraudulent, or intentional acts, omissions, or errors of AFSG
Securities Corporation or WRL or their employees in the offering for
sale, solicitation, or servicing of the Plans, and from any negligent,
fraudulent, or intentional acts, omissions, or errors of AFSG
Securities Corporation or WRL or their employees in violation of
Federal or State laws or regulations and NASD rules of any nature,
applicable to the offering for sale, solicitation, or servicing of the
Plans.
12. TERMINATION. AFSG Securities Corporation may terminate this Agreement
immediately and without notice if the Broker-Dealer fails to maintain
its registration as a Broker-Dealer or a member of the NASD. AFSG
Securities Corporation may terminate this Agreement immediately upon
providing written notice to Broker-Dealer or Agency if Broker-Dealer or
Agency violates this Agreement or fails to perform to AFSG Securities
Corporation's satisfaction under the terms and conditions of this
Agreement, or if Broker-Dealer or Agency becomes insolvent. AFSG
Securities Corporation and Broker-Dealer or Agency shall each have the
right, upon thirty days' written notice to the other, to terminate this
agreement for whatever reason deemed appropriate by such party.
Notwithstanding the termination of this Agreement, AFSG Securities
Corporation, Broker-Dealer and Agency acknowledge that each of them
shall be individually and respectively liable, responsible and
accountable for any and all actions undertaken prior to the effective
date of the termination of this Agreement.
13. FIDELITY BOND. Broker-Dealer shall secure and maintain a fidelity bond
in at least the amounts prescribed under Article III, Section 32 of the
NASD Rules of Fair Practice. Broker-Dealer shall provide AFSG
Securities Corporation with a copy of said bond within thirty days
after executing this Agreement.
14. MISCELLANEOUS. AFSG Securities Corporation and WRL reserve the right,
without notice to Producers, to suspend, withdraw, or modify the
offering of the Plans or to change the conditions of their offering
with respect to anyone. Producers are not authorized to market any Plan
until notified by AFSG Securities Corporation or WRL of an effective
registration statement therefor with the Securities and Exchange
Commission.
The right is reserved to WRL and AFSG Securities Corporation to
contract separately with any employee, representative or agent of
Producers in connection with the Plans, provided that the terms of any
such contract do not conflict with the provisions of this Agreement.
Nothing contained herein shall prevent or restrict (i) WRL or AFSG
Securities Corporation from marketing said Plans through other stock
brokerage firms, insurance agents and brokers, and through its own
organization, or (ii) Producers from acting as agents and/or brokers
for other insurance companies, whether or not affiliated with
Producers, in any jurisdiction with respect to any insurance or
securities product, including securities products similar or identical
to those of WRL or AFSG Securities Corporation.
Any manuals, guides, books, tapes, programs and other materials, if
any, developed by AFSG Securities Corporation or WRL, which may be
delivered to Producers from time to time will be owned solely by AFSG
Securities Corporation or WRL, as the case may be; however, during such
time as this Agreement is in effect between the parties hereto, if the
Producers elect to do so, Representatives may use any such manuals,
guides, books, programs and other materials which
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may have been delivered to the Producers but may use them solely in the
Producers' business hereunder, and upon such terms and conditions as
AFSG Securities Corporation or WRL may establish at the time of such
delivery. Upon termination of this Agreement, such items will be
returned promptly to AFSG Securities Corporation.
Attached hereto as Exhibit B is a list of jurisdictions in which
Broker-Dealer or Agency is duly authorized to sell the Plans and
receive commissions thereon.
Certain of the Representatives may, from time to time, request access
to certain account information with respect to the Plans (the "Account
Information") via downloading of such Account Information to an
electronic mailbox which will be accessed by the Representatives
through their personal computers. The Account Information will be
accessed by the Representatives via software purchased from an outside
vendor to whom WRL and AFSG Securities Corporation provide access to
the Account Information. In exchange for the cooperation of WRL and
AFSG Securities Corporation in providing access to the Account
Information for the convenience of the Representatives, Broker-Dealer
agrees to assume sole responsibility to oversee and supervise the
Representatives in the utilization of such Account Information,
including verification of the accuracy of all written material produced
by a Representative from the Account Information. Further,
Broker-Dealer is solely responsible for ensuring that all NASD, SEC and
other regulations are fully complied with by the Representatives in
connection with the utilization of and preparation of any written or
oral material from, the Account Information. Broker-Dealer shall fully
indemnify and hold harmless WRL and AFSG Securities Corporation from
any and all claims made against them by any party with respect to the
Representatives' use of such Account Information.
Broker-Dealer agrees to comply with the concepts in WRL's Code of
Professional Conduct and agrees to maintain policies and procedures to
reasonably assure that its Representatives comply with those concepts.
15. GOVERNING LAW. This Agreement shall be interpreted in accordance with
the laws of the State of Florida. The parties hereto agree that the
Circuit Court for Pinellas County, Florida shall have jurisdiction and
be the appropriate venue for any required judicial interpretation and
enforcement of this Agreement.
16. BINDING EFFECT. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule, or otherwise, the
remainder of this Agreement shall not be affected thereby.
This Agreement shall be effective as of the date it is fully executed by
all parties. This Agreement constitutes the entire Agreement between the parties
hereto. However, WRL and AFSG Securities Corporation reserve the right to modify
the Service Fee and Commission Schedule ("Schedule") under this Agreement by
publishing from time to time a revised schedule; such revised schedule will
govern only new business applications written on or after the effective date of
the revised schedule. WRL and AFSG Securities Corporation further reserve the
right to amend from time to time this Agreement, other than its schedule, by
providing thirty (30) days written notice to the Broker-Dealer; Broker-Dealer
shall be deemed to have accepted all terms and conditions set forth in such
amendment if no objections are received in writing by WRL and AFSG Securities
Corporation within fifteen (15) days after notification is mailed. This
Agreement supersedes in its entirety any and all previous agreements among the
parties hereto with respect to the Plans; provided, however, any former
agreement shall survive with respect to any Plans offered or sold during the
term thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officials thereunto duly authorized, as of the day
and year first above written.
WESTERN RESERVE LIFE
ASSURANCE CO. OF OHIO AFSG SECURITIES CORPORATION
By: By:
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Title: Title:
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BROKER-DEALER
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(Name of Broker Dealer)
By:
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(Signature)
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(Print Full Name)
Title:
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Contact Person:
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(Print Full Name)
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APPENDIX TO BROKER-DEALER SUPERVISORY AND SERVICE AGREEMENT
The Agencies herein are affiliates of the Broker-Dealer named in Paragraph
1 of this Agreement.
Broker-Dealer:
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Affiliate Name:
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Federal Tax ID:
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States in which this affiliate is insurance licensed: ----------------
Officers:
Name: Title:
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Name: Title:
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Officer's Signature:
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Affiliate Name:
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Federal Tax ID:
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States in which this affiliate is insurance licensed: ----------------
Officers:
Name: Title:
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Name: Title:
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Officer's Signature:
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Affiliate Name:
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Federal Tax ID:
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States in which this affiliate is insurance licensed: ----------------
Officers:
Name: Title:
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Name: Title:
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Officer's Signature:
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APPENDIX TO BROKER-DEALER SUPERVISORY AND SERVICE AGREEMENT
The Broker-Dealer named in this Agreement has adopted the use of the following
assumed names and is doing business under such names in the states listed: 1) as
required by State Departments of Insurance for the purpose of obtaining
insurance licenses in those states; or 2) in compliance with NASD Rules of Fair
Practice Art III, Sec. 35. These are not and cannot be considered to be
"Agencies" as defined in Paragraph 1 of this Agreement. Assumed Name ("DBA"):
STATE:
Assumed Name ("DBA"): STATE:
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Assumed Name ("DBA"): STATE:
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Assumed Name ("DBA"): STATE:
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Assumed Name ("DBA"): STATE:
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Assumed Name ("DBA"): STATE:
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Assumed Name ("DBA"): STATE:
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Assumed Name ("DBA"): STATE:
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Assumed Name ("DBA"): STATE:
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Assumed Name ("DBA"): STATE:
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Assumed Name ("DBA"): STATE:
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Assumed Name ("DBA"): STATE:
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EXHIBIT A
GENERAL LETTER OF RECOMMENDATION
BROKER-DEALER hereby certifies to WRL that all the following requirements will
be fulfilled in conjunction with the submission of licensing/appointment papers
for all applicants as agents of WRL submitted by BROKER-DEALER. BROKER-DEALER
will, upon request, forward proof of compliance with same to WRL 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 WRL to hold himself out in good faith
to the general public.
2. We have on file a U-4 form which was completed 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, and 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.
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 WRL 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
WRL 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 as an agent
until duly licensed therefore. 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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EXHIBIT B
TO
BROKER-DEALER SUPERVISORY AND SERVICE AGREEMENT
1. The following is a list of jurisdictions in which Broker-Dealer is duly
registered or licensed as a dealer or broker and is fully authorized to
sell the securities described in the Agreement:
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(OR) All states of the United States except:
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2. Notices permitted or required to be given to Broker-Dealer shall be given
to:
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Name
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Address
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City, State and Zip Code
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Telephone Number
3. Broker-Dealer's Taxpayer Identification Number:
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