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Exhibit 3(d)
VARIABLE CONTRACT
DISTRIBUTION AGREEMENT
Agreement among and between Ohio National Equities, Inc. ("ONEQ"), The Ohio
National Life Insurance Company ("ONLI"), Ohio National Life Assurance
Corporation ("ONLAC") and __________________________________________ ("DEALER")
effective as of the __________ day of __________ , 19__ .
WHEREAS, ONEQ is the principal underwriter for variable annuity contracts issued
by ONLI and variable life insurance policies issued by ONLAC (collectively, the
"variable contracts"); and
WHEREAS, Dealer is a member of the National Association of Securities Dealers,
Inc. ("NASD") and has obtained all necessary and appropriate registrations and
licensing to enable it and its registered representatives to solicit variable
contracts in the jurisdictions in which Dealer proposes to do so;
NOW, THEREFORE, it is agreed as follows:
1. Applications for Contracts. Dealer is hereby authorized to solicit
applications for variable contracts through its registered representatives
who are duly licensed or appointed with ONLI and ONLAC (the
"REPRESENTATIVES"). Applications, together with any and all purchase
payments thereon, shall be submitted by Dealer to ONLI or ONLAC, as the
case may be, in accordance with the insurer's customary rules for the
acceptance of contracts. All applications submitted to Dealer by
Representatives shall in turn be promptly transmitted to ONLI or ONLAC.
Dealer shall cause the Representatives to comply with all procedures
established by ONEQ, ONLI or ONLAC for soliciting, completing and
transmitting applications and orders and shall comply with ONLI's or
ONLAC's rules and practices in regards to insurance underwriting and
acceptance of risks. Dealer's authority to solicit applications for
variable contracts is limited to those contracts described in the
Compensation Supplement or Supplements added to and made a part of this
agreement.
2. Right to Reject Applications. ONLI and ONLAC each reserves the right, in
its sole discretion, to reject any application or payment remitted to it,
and to refund any payments to the payor.
3. Territory. Dealer's Representatives must reside in the geographic locations
(the "TERRITORY") specified in Appendix A. Dealer does not have exclusive
rights in the Territory. ONLI and ONLAC each reserves the right to appoint
other representatives within the Territory and to do all other things
attendant to the proper furtherance of its
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business in the Territory. This agreement is made subject to the condition
that ONEQ, ONLI and ONLAC are, and shall continue to be, legally authorized
to transact business in the Territory; and each of them reserves the right
to withdraw from all or any part of the Territory at any time. Designation
of a particular state as part of the Dealer's territory does not imply
approval by that state of all of the variable contracts listed in the
Compensation Supplement to this agreement. No variable contract may be sold
in a state until the policy form has been approved by the state insurance
department if and to the extent required by state law.
4. Purchase Payments. All funds or checks received by Dealer to be applied as
purchase payments for variable contracts shall be promptly remitted to ONLI
or ONLAC by Dealer. A payment made to Dealer, or Dealer's receipt of a
check or other negotiable instrument payable to ONLI or ONLAC, shall not
constitute payment to, or receipt by, ONLI or ONLAC, except for Dealer's
receipt of the initial payment necessary to place in force or to reinstate
a policy or contract or to effect its delivery. Dealer shall not make any
representations to policy owners, contract owners or premium payors
contrary to the foregoing.
5. Limits on Authority. Dealer, its officers, employees and Representatives
have no authority:
(a) to make, modify or discharge any variable contract;
(b) to waive any forfeiture under any variable contract;
(c) to transmit a payment to ONEQ, ONLI or ONLAC other than by means
of an electronic transfer or negotiable instrument acceptable to
the payee;
(d) to extend the time for any payment due ONEQ, ONLI or ONLAC;
(e) to accept any past due payment on behalf of ONEQ, ONLI or ONLAC;
(f) to approve evidence of insurability for ONLI or ONLAC;
(g) to bind ONEQ, ONLI or ONLAC by making or receiving any promises,
representations or notices contrary to or inconsistent with the
terms and provisions of the variable contracts, the prospectuses
therefor or any sales literature developed or approved by ONEQ,
ONLI or ONLAC; nor
(h) to obligate ONEQ, ONLI or ONLAC to any indebtedness. health and
insurable condition as represented in the application therefor.
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6. Delivery of Contracts. Dealer and its Representatives shall promptly
deliver variable contracts to purchasers within the delivery period
established by the insurer and pursuant to written instructions provided by
the insurer with respect to each policy. No variable life insurance policy
shall be delivered unless and until the minimum premium payment required to
place the policy in effect has been paid by the purchaser, nor unless
Dealer, through its Representatives, is reasonably satisfied, based upon
its own knowledge and upon reasonable inquiry to the proposed insured, that
the proposed insured is, at the time of policy delivery, in the same health
and insurable condition as represented in the application for the policy.
7. State Licensing of Representatives. ONLI and ONLAC will only accept
applications for variable contracts from Dealer's Representatives who are
duly licensed under state law to represent ONLI or ONLAC for the
solicitation of such contracts in the state in which the applicant resides
and in which the solicitation occurs. Dealer's Representatives may not
represent, nor hold themselves out as representing, ONLI, ONLAC or ONEQ for
any other purpose, except as may be specifically authorized by written
agreement. Dealer shall be responsible for payment of all state insurance
licensing fees and costs except to the extent that ONLI, ONLAC or ONEQ, by
practice, may otherwise pay for such fees and costs.
8. Supervision of Representatives. Dealer shall recommend to ONLI and ONLAC
for licensing or appointment as insurance agents Representatives who
satisfy all requirements for such licensing or appointment under state law.
Dealer shall provide ONLI and ONLAC with all information and certifications
required by ONLI and ONLAC to license or appoint each Representative.
Dealer shall have full and sole responsibility for the training and
supervision of its Representatives with regard to the solicitation, sale
and servicing of variable contracts. Dealer shall immediately notify ONEQ
of the termination of a Representative's employment or contract with
Dealer. ONLI and ONLAC reserve the right, at the sole discretion of each,
to process, to not process or to cancel the state insurance license or
appointment with ONLI or ONLAC of any of Dealer's Representatives whose
license or appointment would authorize the Representative to act or to
continue to act on behalf of ONLI or ONLAC. Cancellation may be made at any
time by ONLI and ONLAC, with or without cause and with or without stating a
reason. Simultaneous written notice of the cancellation will be provided to
Dealer by ONLI or ONLAC.
9. Dealer Licensing. Dealer, or an agency subsidiary or other person
controlled by Dealer and designated by dealer and approved by ONEQ to
receive compensation hereunder ("DEALER'S AGENCY"), shall acquire all state
insurance licenses or appointments required in order to receive such
compensation. Dealer shall fully control and be fully responsible for the
activities and business of Dealer's Agency and for full compliance by
Dealer's Agency with the terms and conditions of this agreement. Payment of
compensation by ONEQ, ONLI and ONLAC to Dealer's Agency shall fully satisfy
all obligations hereunder for payment of compensation to Dealer.
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10. Confirmations. Confirmations of the purchase of variable contracts shall be
sent directly by ONLI or ONLAC to the purchaser, with copies to Dealer.
Contemporaneous confirmations are not provided on variable universal life
insurance policies for purchase payments made by automatic bank drafts,
payroll deduction or other automated and regularly scheduled methods of
payment pre-authorized by the purchaser. Confirmation of such payments
appears on the annual statement for the policy provided to the policy owner
on the occasion of each policy anniversary.
11. Prospectuses. All solicitations of variable contracts shall be made
pursuant to currently applicable prospectuses and statements of additional
information for the variable contracts and for any mutual funds underlying
the contracts. ONEQ will furnish Dealer with reasonable quantities of
current prospectuses required by Dealer for the solicitation of the
variable contracts.
12. Sales Literature. Only sales literature authorized by ONEQ shall be used in
connection with any offer or sale of the variable contracts. No cards,
letterheads, forms, scripts, advertisements or marketing materials of any
kind, or any other items utilizing ONEQ's, ONLI's or ONLAC's name or logo
or promoting its products or services or the services of Representatives in
its behalf, shall be printed, published, electronically displayed or used
in any way by Dealer or its Representatives unless the same shall have been
first approved in writing by ONEQ, ONLI or ONLAC as the case may be.
13. Suitability. Dealer shall be responsible for determining and approving the
suitability of each customer's purchase of a variable contract. Dealer
shall review all applications for completeness and compliance with the
requirements of the insurer.
14. Books and Records. Dealer agrees to account promptly, according to the
instructions of ONEQ, ONLI and ONLAC, for all variable contracts, purchase
payments, receipts, monies, prospectuses, instruction manuals, computer
disks or tapes and software of any kind received by Dealer from ONEQ, ONLIC
or ONLAC. Dealer and its Representatives shall keep regular and accurate
accounts of all written sales materials used, of all presentations or
proposals made, of all applications taken, of all collections made, of all
variable contracts delivered and of all service to contract owners. All
such accounts and records, including checking account, banking and
financial records, shall be open to inspection by ONLI, ONLAC and ONEQ or
their authorized representatives at all reasonable times. Dealer shall, at
all reasonable times during regular business hours, at any offices of
Dealer, permit one or more officers or representatives of ONLI, ONLAC or
ONEQ to visit such offices of Dealer in order to interview Dealer's
officers, employees and Representatives and to inspect the books and
records of Dealer, its Representatives and Dealer's Agency with respect to
business conducted by Dealer, its Representatives or Dealer's Agency
pursuant to this agreement.
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15. Compliance with Laws and Regulations; Indemnity. Dealer and its
Representatives will comply with all applicable requirements of federal and
state law and the rules of the NASD, including, without limitation, the
NASD's Conduct Rules. Dealer shall be responsible for all compliance
matters relating to Dealer's Agency and Representatives with respect to all
aspects of this agreement. Dealer shall hold ONEQ, ONLI and ONLAC each
harmless and indemnify each of them against any adverse consequences
resulting from the conduct and activities of Dealer, Dealer's Agency or its
Representatives in connection with the offer and sale of variable
contracts, including, but not limited to, damages, liabilities, fines or
levies and the reasonable costs of defending against the foregoing. ONEQ
shall hold Dealer, Dealer's Agency and its Representatives harmless and
indemnify each of them against any adverse consequences, including, but not
limited to, damages, liabilities, fines or levies and the reasonable costs
of defending against the foregoing, arising out of or based upon any untrue
statement of a material fact or any failure to state a material fact
required to be stated or necessary to make the statements made not
misleading in a currently-effective registration statement (including any
prospectus or statement of additional information thereunder) for the
variable contracts or the underlying Ohio National Fund, Inc.
16. Bond and E & O Insurance; Form B.D. Dealer shall furnish ONEQ, upon ONEQ's
request, with evidence to ONEQ's satisfaction that Dealer carries for
itself, its employees and its Representatives fidelity bond coverage and
professional liability (errors and omissions) insurance in form and amount
satisfactory to ONEQ as shown in Appendix A. Failure of Dealer to maintain
coverage in at least the amount shown in Appendix A shall give any party to
this agreement the right to immediately terminate the agreement as to such
party. Dealer shall also furnish ONEQ with a copy of its current NASD
registration on Form BD and with all amendments to Form BD filed with the
NASD during the continuance of this agreement.
17. Dealer Compensation. In consideration of sales of variable contracts
solicited by Representatives of Dealer, so long as this agreement remains
in effect, Dealer or Dealer's Agency shall be compensated by ONEQ as shown
in Appendix B attached hereto and incorporated herein by reference, except
for any purchase payments resulting from an exchange offer for which no
sales charge is assessed. Compensation will be paid by ONLI and ONLAC as
agents for and on behalf of ONEQ. ONLI or ONLAC will make payment of
compensation to Dealer or to Dealer's Agency within 5 business days
following the close of each commission accounting period established by
ONLI or ONLAC (currently semi-monthly) based on premiums recorded as
received by ONLI or ONLAC during the commission accounting period on
policies produced by Dealer's Representatives. ONEQ shall have no
obligation or liability to pay compensation to Dealer or to Dealer's Agency
prior to the scheduled payments thereof by ONLI or ONLAC. Dealer agrees to
hold harmless and indemnify ONEQ, ONLI and ONLAC from and against any and
all claims made by its Representatives for payment of compensation relating
to sales under this agreement.
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18. Changes in Compensation Provisions and Schedules. ONEQ, ONLI and ONLAC
reserve the right to change the rates of compensation, the products on
which payable, and any other compensation elements or factors set forth in
this agreement, by giving notice in writing of the change. A change shall
be prospective only and shall not affect compensation with respect to any
sales made prior to the date when the change becomes effective. ONEQ, ONLI
and ONLAC further reserve the right to withdraw from sale any form of
contract and to establish compensation due on variable contracts not listed
in this agreement which are now, or may hereafter be, issued by them.
19. Application of Current Rules and practices. The then-current rules and
practices of ONEQ, ONLI and ONLAC shall govern the payment and adjustment
of compensation under the following circumstances:
(a) if a variable contract is issued in exchange for or, in the judgment
of the insurer, to take the place of another policy or contract
previously issued by the insurer with respect to the same person, or
if a premium is paid in whole or in part from other ONLI or ONLAC
contract values or funds;
(b) if the applicant or proposed insured resides outside the Territory
applicable to this agreement;
(c) if issuance of the variable contract is based on any modification of
the insurer's rules;
(d) if the variable contract issued causes the total insurance for the
insured or the total contract value for the annuitant to exceed the
insurer's retention limit;
(e) if any premium or cost of insurance is waived on account of
disability;
(f) if any temporary, extra premium or any extra premium on account of
travel, residence or aviation is paid on a variable contract; or
(g) if no other applicable provision of this agreement controls.
20. Advance Premiums, Interest and Temporary Term Insurance. Compensation will
not be paid on any premium paid in advance until its due date. When paid,
compensation shall be based on the full premium without any discount. No
compensation will be paid on interest or on temporary term insurance
premiums.
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21. Compensation Chargebacks. If ONEQ, ONLI or ONLAC refunds to the policy
owner or premium payor any premium paid or purchase payment made on a
variable contract sold under this agreement, whether the refund is made by
reason of the terms of the variable contract or otherwise, Dealer or
Dealer's Agency shall be charged with, and shall then repay to ONEQ, ONLI
or ONLAC, any and all compensation paid in respect of the premium or
payment so refunded. ONEQ, ONLI and ONLAC each reserves the right, in its
sole discretion when settling disputes, claims or complaints of variable
contract owners, to refund any premium paid or payment made on a variable
contract sold under this agreement. Premium refunds or credits which are
included as part of the death proceeds of any insurance or annuity contract
will not result in a charge-back of compensation already paid hereunder.
22. Medical And Inspection Fees. ONLAC will pay all medical examiners and
inspection fees relating to insurance policy applications, but fees will be
charged to Dealer or Dealer's Agency on policies issued as applied for
which do not become paid for and on applications written by Representatives
which do not comply with ONLAC's published rules. Dealer, for itself and
for Dealer's Agency, agrees to pay to ONLAC, within 30 days, all fees so
charged. Amounts not so paid may be deducted from subsequent compensation
due hereunder.
23. Expenses. ONEQ, ONLI and ONLAC shall not, by virtue of this agreement, have
or assume any responsibility for the expenses incurred by Dealer or by
Dealer's Agency or Representatives in furtherance of this agreement,
including but not limited to office expenses, transportation, staffing,
postage, advertising, telephone or other expenses incidental to the
solicitation of business hereunder.
24. Charges for Supplies. In the event Dealer or its Representatives requests
ONEQ, ONLI or ONLAC to furnish sales materials supplies or similar items,
ONEQ, ONLI or ONLAC may, at its discretion, charge reasonable costs for
said items. Dealer agrees to pay all such charges within 30 days after such
charges are made. Amounts not so paid may be deducted from subsequent
compensation due hereunder.
25. Right of Set Off. Compensation payable to Dealer or to Dealer's Agency is
subject to the right of ONEQ, ONLI and ONLAC to set off against such
compensation all obligations and liabilities, including indebtedness, of
Dealer or Dealer's Agency to ONEQ, ONLI or ONLAC, arising under Sections 21
through 24, inclusive, of this agreement. Any indebtedness owed by Dealer
or Dealer's Agency to ONEQ, ONLI or ONLAC shall be first lien and charge
against any compensation due under this agreement. Dealer, for itself and
for Dealer's Agency, hereby assigns, transfers and sets over to ONEQ, ONLI
and ONLAC, any monies that may from time to time become due it under this
agreement in order to secure any indebtedness owed to ONEQ, ONLI or ONLAC.
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26. Non-Competition. Neither Dealer, Dealer's Agency nor its Representatives
shall, while this Agreement is in effect or thereafter, engage directly or
indirectly in any conduct or activity which seeks to influence or persuade
owners of variable contracts or of other insurance or annuity contracts
issued by ONLI or ONLAC to cancel such policies or contracts with ONLI or
ONLAC, provided that nothing herein shall be construed so as to prevent or
prohibit Dealer from fulfilling its obligations to its customers in keeping
with applicable regulatory or legal standards or requirements.
27. Waiver. No act, forbearance or failure to insist upon the strict
performance of any of the conditions of this agreement, whether express or
implied, shall be construed as a waiver by any party of its rights
hereunder. Payments by ONEQ, ONLI or ONLAC of any compensation to which
Dealer or Dealer's Agency is not entitled hereunder shall not waive the
rights of ONEQ, ONLI or ONLAC to discontinue or recover such payments at
any time.
28. Assignment. No party may assign, sell or otherwise transfer its interests
or duties under this agreement without the written consent of the other
parties.
29. Arbitration. Any dispute arising out of, or relating in any way to, this
agreement shall be resolved by arbitration under the then applicable Code
of Arbitration Procedure of the National Association of Securities Dealers
Inc. However, nothing herein shall preclude either party from filing and
litigating any cross-claim or third party complaint against the other party
in an action brought by a third party. The foregoing arbitration provision
shall not be applicable to such cross-claim or third party complaint.
30. Termination. This agreement may be terminated for cause at any time or it
may be terminated by any party upon giving thirty days advance written
notice to the last known business address of the other parties. Upon
termination of this agreement, Dealer's authority and duties hereunder
shall cease. Dealer shall then make a final accounting and turn over to
ONEQ, ONLI and ONLAC all monies, receipts, notes, reports, contract owner
records, manuals, stationery, blank forms, prospectuses, computer disks or
tapes and software of any kind and any other property of ONEQ, ONLI or
ONLAC which Dealer, Dealer's Agency or any of its Representative possesses
or controls. No further compensation of any kind shall be paid to Dealer or
to Dealer's Agency after termination of this agreement, except as may be
expressly provided in Appendix B.
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31. Entire Agreement. This agreement represents the entire agreement between
and among the parties relating to the subject matters herein. No
modification of this agreement shall bind any party unless made in writing
signed by an officer or other person authorized to bind such party.
32. Applicable Law. This agreement shall be construed in accordance with the
laws of Ohio.
Signed as of the dates shown below.
OHIO NATIONAL EQUITIES, INC. DEALER
By__________________________________ By______________________________________
Title_______________________________ Title___________________________________
Date:_______________________________ Date____________________________________
X X Xxx 000 Xxxxxxx_________________________________
Xxxxxxxxxx Xxxx 00000 ________________________________________
(000) 000-0000 Telephone_______________________________
Dealer's Taxpayer Identification Number
________________________________________
THE OHIO NATIONAL LIFE OHIO NATIONAL LIFE
INSURANCE COMPANY ASSURANCE CORPORATION
By__________________________________ By______________________________________
Title_______________________________ Title___________________________________
Date:_______________________________ Date____________________________________
X X Xxx 000 X X Xxx 000
Xxxxxxxxxx Xxxx 00000-0000 Xxxxxxxxxx Xxxx 00000-0000
(513) 794-6100 (513) 794-6100
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APPENDIX A
Territory
Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware,
Florida, Georgia, Louisiana, Maine, Maryland, Massachusetts, Mississippi,
Montana, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina,
Oklahoma, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont,
Virginia, Washington, and Wyoming
Fidelity Bond Coverage
Dealer shall at all times carry fidelity bond coverage for itself and each of
its employees and Representatives in the following amount (s): $1,000,000
Professional Liability (Errors and Omissions) Insurance
Minimum amount of coverage for Dealer's employees and those Representatives who
are licensed with ONLI/ONLAC under this agreement: $1,000,000
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APPENDIX B
COMPENSATION SUPPLEMENT
1. VARIABLE ANNUITIES
Compensation to Dealer for variable annuity contracts produced by
Representatives of Dealer shall be paid as a percentage of the purchase
payments received by ONLI in the first annuity contract year and in later
annuity contract years as shown below:
Compensation %
-------------------------
Annuity Issue First Later
Contract Age Year Years
-------- --- ---- -----
Top Tradition All ages 6.50% 5.25%
Top Spectrum to age 75 6.50% 5.25%
76 - 85 3.25% 2.75%
Top Explorer to age 75 6.20% 4.95%
76 - 85 3.10% 2.48%
Top Plus All ages 5.00%
Compensation to Dealer for any Retirement Advantage group annuity contract
produced by Representatives of Dealer will be paid equal to 4.5% of all
Contract Contributions received by ONLI.
2. VARIABLE UNIVERSAL LIFE INSURANCE.
Compensation to Dealer for variable universal life insurance policies
produced by Representatives of Dealer shall be as set forth below.
Tables showing the Maximum Commissionable Premium ("MCP") and the SEC
Guideline Premium ("SECGP"), for each $1,000 of stated amount of insurance
and at varying issue ages, are attached to and made a part of this
Supplement.
(A) FIRST YEAR COMMISSIONS
VARI-VEST II
For Vari-Vest II policies issued up to and including age 65, First Year
Commissions shall be paid equal to 90% of the premiums received by ONLAC
during the policy's first contract year up to the MCP. For issue ages after
age 65, the rates of First Year Commissions on such premiums up to the MCP
shall be a follows.
Issue
Ages Rates
------ -----
66 - 70 80%
71 - 75 55%
76 - 80 28%
First Year Commissions shall also be paid for Vari-Vest II policies at the
rate of 12% of the premiums received by ONLAC during the policy's first
contract year to the extent such premiums are in excess of the MCP but not
in excess of the SECGP plus 6% of such premiums in excess of the SECGP.
VARI-VEST IV AND VARI-VEST V
For Vari-Vest IV policies issued up to and including age 65, and for
Vari-Vest V policies at all issue ages, First Year Commissions shall be
paid equal to 92.5% of the premiums received by ONLAC during the policy's
first contract year up to the MCP. For Vari-Vest IV policies issued
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after age 65, the rates of First Year Commissions on such premiums up to
the MCP shall be as follows:
VARI-VEST IV
------------------------------------------
Issue Issue
Age Rate Age Rate
--- ---- --- ----
66 89.0% 73 55.4%
67 85.7 74 48.7
68 82.3 75 42.0
69 79.0 76 37.0
70 75.6 77 31.9
71 68.9 78 26.9
72 60.5 79 21.8
80 16.8
First Year Commissions shall also be paid for Vari-Vest IV and Vari-Vest V
policies equal to 4.5% of such premiums in excess of the MCP.
(B) RENEWAL COMMISSIONS AND SERVICE FEES. For Vari-Vest II, Vari-Vest IV and
Vari-Vest V policies, Renewal Commissions and Service Fees shall be paid
equal to the percentages shown in the table below of premiums received by
ONLAC during the policy's second and later contract years:
RENEWAL COMMISSIONS
-------------------
Renewal Contract
Commission Years
Policy Rate (inclusive)
------ ---- -----------
Vari-Vest II 6.0% 2-10
Vari-Vest IV 4.5 2-10
Vari-Vest V 4.5 2-5
3.0 6-10
SERVICE FEES
------------
Service
Fee Contract
Policy Rate Years
Vari-Vest II 6.0% 11 and later
------------ ---- ------------
Vari-Vest IV 4.5 11 and later
Vari-Vest V 3.0 11 and later
(C) TRAIL COMMISSIONS. Trail Commissions shall be paid equal to 0.225% of the
total qualified cash values (monthly average) on Vari-Vest IV policies and
.50% of the total qualified cash values (monthly average) on Vari-Vest V
policies. Qualified cash values (monthly average) are determined at the end
of each calendar year and are the sum of the cash values, less loans, on
each policy's monthiversary, divided by the number of monthiversaries in
the calendar year. Only cash values from monthiversaries after a policy's
first anniversary are included.
Trail Commissions are paid annually in January for the preceding calendar
year but only so long as a duly appointed Representative of Dealer is
servicing the policies to ONLAC's satisfaction.
(D) RIDERS. If an extra benefit rider is included in or added to the policy,
the MCP and SECGP for the policy shall be increased by twelve times the
minimum monthly premium for any such rider.
(E) INCREASES IN STATED AMOUNT. A portion of the premiums received after an
increase in stated amount is allocated to the increased portion of the
policy. The amount of premiums so allocated is based upon the ratio of
SECGP for the increased portion of the stated amount divided by the SECGP
for the entire policy (including the increased amount). A First Year
Commission
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shall be paid to Dealer as provided in Subsection (A) above on the amount
of premium allocated to the increased portion of the policy and received
during the first 12 months after the increase takes effect.
(F) DECREASES IN STATED AMOUNT AND CANCELLATION OF RIDERS. If the stated amount
is decreased or if a rider is canceled within the first contract year of
any Vari-Vest II, Vari-Vest IV or Vari-Vest V policy, the policy shall be
treated as having been reissued and the MCP and SECGP shall be
recalculated. Any First Year Commission previously paid on such policy or
rider based upon the higher MCP or SECGP prior to recalculation shall be
charged back against Dealer.
(G) PLAN TYPE CHANGES. A change in plan type shall not affect compensation due
hereunder.
(H) SUBSTANDARD RISKS. For substandard insurance risks, the per $1,000 portion
of the factors shown in the MCP table for standard risks shall be
multiplied by a factor which equals one plus 90% of any extra mortality
multiple up to and including substandard table F. Any substandard rating
greater than table F shall be treated as though it were table F for MCP
purposes. Flat extra mortality charges will not increase the standard rate
MCP factors.
3. CHANGE OF DEALER AUTHORIZATION.
Compensation to Dealer with respect to a variable annuity or variable
universal life insurance policy will cease if ONEQ receives and accepts a
change of dealer authorization signed by the contract owner or policy owner
which authorizes another broker-dealer with whom ONEQ has a valid selling
agreement to serve as the broker-dealer of record for the contract owner or
policy owner.
4. COMPENSATION AFTER TERMINATION
Following the termination of this agreement, Dealer shall have no
entitlement, as a matter of right, to compensation of any kind with respect
to any variable annuity contract or variable universal life insurance
policy sold by Dealer's Representatives. Compensation shall continue to be
paid to Dealer after termination of this agreement only if, and only to the
extent that, ONEQ continues to recognize Dealer as the broker-dealer of
record for one or more such annuity contracts or life insurance policies.
Continued recognition of Dealer as the broker-dealer of record will in all
events require that Dealer assign a qualified Representative to provide
continuing service to annuity contractholders and insurance policyholders.
Such service must be provided to the satisfaction of ONEQ and to the
satisfaction of ONLI or ONLAC as the issuing company. Notwithstanding the
quality or satisfactory level of continuing service being provided by
Dealer, ONEQ reserves the right, in its sole and complete discretion, for
itself and for ONLI or ONLAC as the issuing company, to reassign one or
more or all of such annuity contracts or life insurance policies for
servicing to another broker-dealer with whom ONEQ has a selling agreement
in effect or to elect to have one or more or all of such annuity contracts
or life insurance policies serviced directly by ONEQ and by ONLI or ONLAC,
thereby causing Dealer not to be recognized as the broker-dealer of record
and thereby causing all compensation to Dealer to cease with respect to the
reassigned contracts or policies.
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VARIABLE CONTRACT
DISTRIBUTION AGREEMENT
Agreement among and between Ohio National Equities, Inc. ("ONEQ"), The Ohio
National Life Insurance Company ("ONLI"), Ohio National Life Assurance
Corporation ("ONLAC") and __________________________________________ ("DEALER")
effective as of the __________ day of __________, 19__.
WHEREAS, ONEQ is the principal underwriter for variable annuity contracts issued
by ONLI and variable life insurance policies issued by ONLAC (collectively, the
"variable contracts"); and
WHEREAS, Dealer is a member of the National Association of Securities Dealers,
Inc. ("NASD") and has obtained all necessary and appropriate registrations and
licensing to enable it and its registered representatives to solicit variable
contracts in the jurisdictions in which Dealer proposes to do so;
NOW, THEREFORE, it is agreed as follows:
1. Applications for Contracts. Dealer is hereby authorized to solicit
applications for variable contracts through its registered representatives
who are duly licensed or appointed with ONLI and ONLAC (the
"REPRESENTATIVES"). Applications, together with any and all purchase
payments thereon, shall be submitted by Dealer to ONLI or ONLAC, as the
case may be, in accordance with the insurer's customary rules for the
acceptance of contracts. All applications submitted to Dealer by
Representatives shall in turn be promptly transmitted to ONLI or ONLAC.
Dealer shall cause the Representatives to comply with all procedures
established by ONEQ, ONLI or ONLAC for soliciting, completing and
transmitting applications and orders and shall comply with ONLI's or
ONLAC's rules and practices in regards to insurance underwriting and
acceptance of risks. Dealer's authority to solicit applications for
variable contracts is limited to those contracts described in the
Compensation Supplement or Supplements added to and made a part of this
agreement.
2. Right to Reject Applications. ONLI and ONLAC each reserves the right, in
its sole discretion, to reject any application or payment remitted to it,
and to refund any payments to the payor.
3. Territory. Dealer's Representatives must reside in the geographic locations
(the "TERRITORY") specified in Appendix A. Dealer does not have exclusive
rights in the Territory. ONLI and ONLAC each reserves the right to appoint
other representatives within the Territory and to do all other things
attendant to the proper furtherance of its
Page 1
15
business in the Territory. This agreement is made subject to the condition
that ONEQ, ONLI and ONLAC are, and shall continue to be, legally authorized
to transact business in the Territory; and each of them reserves the right
to withdraw from all or any part of the Territory at any time. Designation
of a particular state as part of the Dealer's territory does not imply
approval by that state of all of the variable contracts listed in the
Compensation Supplement to this agreement. No variable contract may be sold
in a state until the policy form has been approved by the state insurance
department if and to the extent required by state law.
4. Purchase Payments. All funds or checks received by Dealer to be applied as
purchase payments for variable contracts shall be promptly remitted to ONLI
or ONLAC by Dealer. A payment made to Dealer, or Dealer's receipt of a
check or other negotiable instrument payable to ONLI or ONLAC, shall not
constitute payment to, or receipt by, ONLI or ONLAC, except for Dealer's
receipt of the initial payment necessary to place in force or to reinstate
a policy or contract or to effect its delivery. Dealer shall not make any
representations to policy owners, contract owners or premium payors
contrary to the foregoing.
5. Limits on Authority. Dealer, its officers, employees and Representatives
have no authority:
(a) to make, modify or discharge any variable contract;
(b) to waive any forfeiture under any variable contract;
(c) to transmit a payment to ONEQ, ONLI or ONLAC other than by means
of an electronic transfer or negotiable instrument acceptable to
the payee;
(d) to extend the time for any payment due ONEQ, ONLI or ONLAC;
(e) to accept any past due payment on behalf of ONEQ, ONLI or ONLAC;
(f) to approve evidence of insurability for ONLI or ONLAC;
(g) to bind ONEQ, ONLI or ONLAC by making or receiving any promises,
representations or notices contrary to or inconsistent with the
terms and provisions of the variable contracts, the prospectuses
therefor or any sales literature developed or approved by ONEQ,
ONLI or ONLAC; nor
(h) to obligate ONEQ, ONLI or ONLAC to any indebtedness. health and
insurable condition as represented in the application therefor.
Page 2
16
6. Delivery of Contracts. Dealer and its Representatives shall promptly
deliver variable contracts to purchasers within the delivery period
established by the insurer and pursuant to written instructions provided by
the insurer with respect to each policy. No variable life insurance policy
shall be delivered unless and until the minimum premium payment required to
place the policy in effect has been paid by the purchaser, nor unless
Dealer, through its Representatives, is reasonably satisfied, based upon
its own knowledge and upon reasonable inquiry to the proposed insured, that
the proposed insured is, at the time of policy delivery, in the same health
and insurable condition as represented in the application for the policy.
7. State Licensing of Representatives. ONLI and ONLAC will only accept
applications for variable contracts from Dealer's Representatives who are
duly licensed under state law to represent ONLI or ONLAC for the
solicitation of such contracts in the state in which the applicant resides
and in which the solicitation occurs. Dealer's Representatives may not
represent, nor hold themselves out as representing, ONLI, ONLAC or ONEQ for
any other purpose, except as may be specifically authorized by written
agreement. Dealer shall be responsible for payment of all state insurance
licensing fees and costs except to the extent that ONLI, ONLAC or ONEQ, by
practice, may otherwise pay for such fees and costs.
8. Supervision of Representatives. Dealer shall recommend to ONLI and ONLAC
for licensing or appointment as insurance agents Representatives who
satisfy all requirements for such licensing or appointment under state law.
Dealer shall provide ONLI and ONLAC with all information and certifications
required by ONLI and ONLAC to license or appoint each Representative.
Dealer shall have full and sole responsibility for the training and
supervision of its Representatives with regard to the solicitation, sale
and servicing of variable contracts. Dealer shall immediately notify ONEQ
of the termination of a Representative's employment or contract with
Dealer. ONLI and ONLAC reserve the right, at the sole discretion of each,
to process, to not process or to cancel the state insurance license or
appointment with ONLI or ONLAC of any of Dealer's Representatives whose
license or appointment would authorize the Representative to act or to
continue to act on behalf of ONLI or ONLAC. Cancellation may be made at any
time by ONLI and ONLAC, with or without cause and with or without stating a
reason. Simultaneous written notice of the cancellation will be provided to
Dealer by ONLI or ONLAC.
9. Dealer Licensing. Dealer, or an agency subsidiary or other person
controlled by Dealer and designated by dealer and approved by ONEQ to
receive compensation hereunder ("DEALER'S AGENCY"), shall acquire all state
insurance licenses or appointments required in order to receive such
compensation. Dealer shall fully control and be fully responsible for the
activities and business of Dealer's Agency and for full compliance by
Dealer's Agency with the terms and conditions of this agreement. Payment of
compensation by ONEQ, ONLI and ONLAC to Dealer's Agency shall fully satisfy
all obligations hereunder for payment of compensation to Dealer.
Page 3
17
10. Confirmations. Confirmations of the purchase of variable contracts shall be
sent directly by ONLI or ONLAC to the purchaser, with copies to Dealer.
Contemporaneous confirmations are not provided on variable universal life
insurance policies for purchase payments made by automatic bank drafts,
payroll deduction or other automated and regularly scheduled methods of
payment pre-authorized by the purchaser. Confirmation of such payments
appears on the annual statement for the policy provided to the policy owner
on the occasion of each policy anniversary.
11. Prospectuses. All solicitations of variable contracts shall be made
pursuant to currently applicable prospectuses and statements of additional
information for the variable contracts and for any mutual funds underlying
the contracts. ONEQ will furnish Dealer with reasonable quantities of
current prospectuses required by Dealer for the solicitation of the
variable contracts.
12. Sales Literature. Only sales literature authorized by ONEQ shall be used in
connection with any offer or sale of the variable contracts. No cards,
letterheads, forms, scripts, advertisements or marketing materials of any
kind, or any other items utilizing ONEQ's, ONLI's or ONLAC's name or logo
or promoting its products or services or the services of Representatives in
its behalf, shall be printed, published, electronically displayed or used
in any way by Dealer or its Representatives unless the same shall have been
first approved in writing by ONEQ, ONLI or ONLAC as the case may be.
13. Suitability. Dealer shall be responsible for determining and approving the
suitability of each customer's purchase of a variable contract. Dealer
shall review all applications for completeness and compliance with the
requirements of the insurer.
14. Books and Records. Dealer agrees to account promptly, according to the
instructions of ONEQ, ONLI and ONLAC, for all variable contracts, purchase
payments, receipts, monies, prospectuses, instruction manuals, computer
disks or tapes and software of any kind received by Dealer from ONEQ, ONLIC
or ONLAC. Dealer and its Representatives shall keep regular and accurate
accounts of all written sales materials used, of all presentations or
proposals made, of all applications taken, of all collections made, of all
variable contracts delivered and of all service to contract owners. All
such accounts and records, including checking account, banking and
financial records, shall be open to inspection by ONLI, ONLAC and ONEQ or
their authorized representatives at all reasonable times. Dealer shall, at
all reasonable times during regular business hours, at any offices of
Dealer, permit one or more officers or representatives of ONLI, ONLAC or
ONEQ to visit such offices of Dealer in order to interview Dealer's
officers, employees and Representatives and to inspect the books and
records of Dealer, its Representatives and Dealer's Agency with respect to
business conducted by Dealer, its Representatives or Dealer's Agency
pursuant to this agreement.
Page 4
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15. Compliance with Laws and Regulations; Indemnity. Dealer and its
Representatives will comply with all applicable requirements of federal and
state law and the rules of the NASD, including, without limitation, the
NASD's Conduct Rules. Dealer shall be responsible for all compliance
matters relating to Dealer's Agency and Representatives with respect to all
aspects of this agreement. Dealer shall hold ONEQ, ONLI and ONLAC each
harmless and indemnify each of them against any adverse consequences
resulting from the conduct and activities of Dealer, Dealer's Agency or its
Representatives in connection with the offer and sale of variable
contracts, including, but not limited to, damages, liabilities, fines or
levies and the reasonable costs of defending against the foregoing. ONEQ
shall hold Dealer, Dealer's Agency and its Representatives harmless and
indemnify each of them against any adverse consequences, including, but not
limited to, damages, liabilities, fines or levies and the reasonable costs
of defending against the foregoing, arising out of or based upon any untrue
statement of a material fact or any failure to state a material fact
required to be stated or necessary to make the statements made not
misleading in a currently-effective registration statement (including any
prospectus or statement of additional information thereunder) for the
variable contracts or the underlying Ohio National Fund, Inc.
16. Bond and E & O Insurance; Form B.D. Dealer shall furnish ONEQ, upon ONEQ's
request, with evidence to ONEQ's satisfaction that Dealer carries for
itself, its employees and its Representatives fidelity bond coverage and
professional liability (errors and omissions) insurance in form and amount
satisfactory to ONEQ as shown in Appendix A. Failure of Dealer to maintain
coverage in at least the amount shown in Appendix A shall give any party to
this agreement the right to immediately terminate the agreement as to such
party. Dealer shall also furnish ONEQ with a copy of its current NASD
registration on Form BD and with all amendments to Form BD filed with the
NASD during the continuance of this agreement.
17. Dealer Compensation. In consideration of sales of variable contracts
solicited by Representatives of Dealer, so long as this agreement remains
in effect, Dealer or Dealer's Agency shall be compensated by ONEQ as shown
in Appendix B attached hereto and incorporated herein by reference, except
for any purchase payments resulting from an exchange offer for which no
sales charge is assessed. Compensation will be paid by ONLI and ONLAC as
agents for and on behalf of ONEQ. ONLI or ONLAC will make payment of
premium-based or deposit-based compensation to Dealer or to Dealer's Agency
within 5 business days following the close of each accounting period
established by ONLI or ONLAC (currently semi-monthly) based on premiums or
deposits recorded as received by ONLI or ONLAC during the commission
accounting period on policies for which Dealer is to be compensated
hereunder. Payment of Trail Commissions will be made at the times set forth
in the Compensation Supplement (Appendix B). ONEQ shall have no obligation
or liability to pay compensation to Dealer or to Dealer's Agency prior to
the scheduled payments thereof by ONLI or ONLAC. Dealer agrees to hold
harmless and indemnify ONEQ, ONLI and ONLAC from and against any and all
claims made by its Representatives for payment of compensation relating to
sales under this agreement.
Page 5
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18. Changes in Compensation Provisions and Schedules. ONEQ, ONLI and ONLAC
reserve the right to change the rates of compensation, the products on
which payable, and any other compensation elements or factors set forth in
this agreement, by giving notice in writing of the change. A change shall
be prospective only and shall not affect compensation with respect to any
sales made prior to the date when the change becomes effective. ONEQ, ONLI
and ONLAC further reserve the right to withdraw from sale any form of
contract and to establish compensation due on variable contracts not listed
in this agreement which are now, or may hereafter be, issued by them.
19. Application of Current Rules and practices. The then-current rules and
practices of ONEQ, ONLI and ONLAC shall govern the payment and adjustment
of compensation under the following circumstances:
(a) if a variable contract is issued in exchange for or, in the judgment
of the insurer, to take the place of another policy or contract
previously issued by the insurer with respect to the same person, or
if a premium is paid in whole or in part from other ONLI or ONLAC
contract values or funds;
(b) if the applicant or proposed insured resides outside the Territory
applicable to this agreement;
(c) if issuance of the variable contract is based on any modification of
the insurer's rules;
(d) if the variable contract issued causes the total insurance for the
insured or the total contract value for the annuitant to exceed the
insurer's retention limit;
(e) if any premium or cost of insurance is waived on account of
disability;
(f) if any temporary, extra premium or any extra premium on account of
travel, residence or aviation is paid on a variable contract; or
(g) if no other applicable provision of this agreement controls.
20. Advance Premiums, Interest and Temporary Term Insurance. Compensation will
not be paid on any premium paid in advance until its due date. When paid,
compensation shall be based on the full premium without any discount. No
compensation will be paid on interest or on temporary term insurance
premiums.
Page 6
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21. Compensation Chargebacks. If ONEQ, ONLI or ONLAC refunds to the policy
owner or premium payor any premium paid or purchase payment made on a
variable contract sold under this agreement, whether the refund is made by
reason of the terms of the variable contract or otherwise, Dealer or
Dealer's Agency shall be charged with, and shall then repay to ONEQ, ONLI
or ONLAC, any and all compensation paid in respect of the premium or
payment so refunded. ONEQ, ONLI and ONLAC each reserves the right, in its
sole discretion when settling disputes, claims or complaints of variable
contract owners, to refund any premium paid or payment made on a variable
contract sold under this agreement. Premium refunds or credits which are
included as part of the death proceeds of any insurance or annuity contract
will not result in a charge-back of compensation already paid hereunder.
22. Medical And Inspection Fees. ONLAC will pay all medical examiners and
inspection fees relating to insurance policy applications, but fees will be
charged to Dealer or Dealer's Agency on policies issued as applied for
which do not become paid for and on applications written by Representatives
which do not comply with ONLAC's published rules. Dealer, for itself and
for Dealer's Agency, agrees to pay to ONLAC, within 30 days, all fees so
charged. Amounts not so paid may be deducted from subsequent compensation
due hereunder.
23. Expenses. ONEQ, ONLI and ONLAC shall not, by virtue of this agreement, have
or assume any responsibility for the expenses incurred by Dealer or by
Dealer's Agency or Representatives in furtherance of this agreement,
including but not limited to office expenses, transportation, staffing,
postage, advertising, telephone or other expenses incidental to the
solicitation of business hereunder.
24. Charges for Supplies. In the event Dealer or its Representatives requests
ONEQ, ONLI or ONLAC to furnish sales materials supplies or similar items,
ONEQ, ONLI or ONLAC may, at its discretion, charge reasonable costs for
said items. Dealer agrees to pay all such charges within 30 days after such
charges are made. Amounts not so paid may be deducted from subsequent
compensation due hereunder.
25. Right of Set Off. Compensation payable to Dealer or to Dealer's Agency is
subject to the right of ONEQ, ONLI and ONLAC to set off against such
compensation all obligations and liabilities, including indebtedness, of
Dealer or Dealer's Agency to ONEQ, ONLI or ONLAC, arising under Sections 21
through 24, inclusive, of this agreement. Any indebtedness owed by Dealer
or Dealer's Agency to ONEQ, ONLI or ONLAC shall be first lien and charge
against any compensation due under this agreement. Dealer, for itself and
for Dealer's Agency, hereby assigns, transfers and sets over to ONEQ, ONLI
and ONLAC, any monies that may from time to time become due it under this
agreement in order to secure any indebtedness owed to ONEQ, ONLI or ONLAC.
Page 7
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26. Non-Competition. Neither Dealer, Dealer's Agency nor its Representatives
shall, while this Agreement is in effect or thereafter, engage directly or
indirectly in any conduct or activity which seeks to influence or persuade
owners of variable contracts or of other insurance or annuity contracts
issued by ONLI or ONLAC to cancel such policies or contracts with ONLI or
ONLAC, provided that nothing herein shall be construed so as to prevent or
prohibit Dealer from fulfilling its obligations to its customers in keeping
with applicable regulatory or legal standards or requirements.
27. Waiver. No act, forbearance or failure to insist upon the strict
performance of any of the conditions of this agreement, whether express or
implied, shall be construed as a waiver by any party of its rights
hereunder. Payments by ONEQ, ONLI or ONLAC of any compensation to which
Dealer or Dealer's Agency is not entitled hereunder shall not waive the
rights of ONEQ, ONLI or ONLAC to discontinue or recover such payments at
any time.
28. Assignment. No party may assign, sell or otherwise transfer its interests
or duties under this agreement without the written consent of the other
parties.
29. Arbitration. Any dispute arising out of, or relating in any way to, this
agreement shall be resolved by arbitration under the then applicable Code
of Arbitration Procedure of the National Association of Securities Dealers
Inc. However, nothing herein shall preclude either party from filing and
litigating any cross-claim or third party complaint against the other party
in an action brought by a third party. The foregoing arbitration provision
shall not be applicable to such cross-claim or third party complaint.
30. Termination. This agreement may be terminated for cause at any time or it
may be terminated by any party upon giving thirty days advance written
notice to the last known business address of the other parties. Upon
termination of this agreement, Dealer's authority and duties hereunder
shall cease. Dealer shall then make a final accounting and turn over to
ONEQ, ONLI and ONLAC all monies, receipts, notes, reports, contract owner
records, manuals, stationery, blank forms, prospectuses, computer disks or
tapes and software of any kind and any other property of ONEQ, ONLI or
ONLAC which Dealer, Dealer's Agency or any of its Representative possesses
or controls. No further compensation of any kind shall be paid to Dealer or
to Dealer's Agency after termination of this agreement, except as may be
expressly provided in Appendix B.
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31. Entire Agreement. This agreement represents the entire agreement between
and among the parties relating to the subject matters herein. No
modification of this agreement shall bind any party unless made in writing
signed by an officer or other person authorized to bind such party.
32. Applicable Law. This agreement shall be construed in accordance with the
laws of Ohio.
Signed as of the dates shown below.
OHIO NATIONAL EQUITIES, INC. DEALER
By___________________________________ By_____________________________________
Title________________________________ Title__________________________________
Date:________________________________ Date___________________________________
X X Xxx 000 Xxxxxxx________________________________
Xxxxxxxxxx Xxxx 00000 _______________________________________
(000) 000-0000 Telephone______________________________
Dealer's Taxpayer Identification Number
_______________________________________
THE OHIO NATIONAL LIFE OHIO NATIONAL LIFE
INSURANCE COMPANY ASSURANCE CORPORATION
By___________________________________ By_____________________________________
Title________________________________ Title__________________________________
Date_________________________________ Date___________________________________
X X Xxx 000 X X Xxx 000
Xxxxxxxxxx Xxxx 00000-0000 Xxxxxxxxxx Xxxx 00000-0000
(513) 794-6100 (513) 794-6100
Page 9
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APPENDIX A
Territory
Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware,
Florida, Georgia, Louisiana, Maine, Maryland, Massachusetts, Mississippi,
Montana, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina,
Oklahoma, Oregon, Rhode Island South Carolina, Tennessee, Texas, Utah, Vermont,
Virginia, Washington, and Wyoming
Fidelity Bond Coverage
Dealer shall at all times carry fidelity bond coverage for itself and each of
its employees and Representatives in the following amount(s): $1,000,000
Professional Liability (Errors and Omissions) Insurance
Minimum amount of coverage for Dealer's employees and those Representatives who
are licensed with ONLI/ONLAC under this agreement: $1,000,000
Page 10
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APPENDIX B
COMPENSATION SUPPLEMENT
1. VARIABLE ANNUITIES
Compensation to Dealer for variable annuity contracts produced by
Representatives of Dealer shall be paid as follows:
FIRST YEAR COMMISSIONS shall be paid at the rates shown in the table
below as a percentage of the purchase payments received by ONLI in the
first annuity contract year; and
RENEWAL COMMISSIONS shall be paid at the rates shown in the table
below as a percentage of the purchase payments received by ONLI in the
second and later annuity contract years (the renewal years); and
TRAIL COMMISSIONS shall be paid at the end of each completed annuity
contract year at the rates shown in the table below as a percentage of
the average monthly cash values of the annuity contract during the
annuity contract year. Average monthly cash values equal one-twelfth
of the sum of the cash values at the end of each contract month in the
annuity contract year. A Trail Commission is not payable for the
annuity contract year in which the annuity contract terminates.
Dealer shall select the compensation option under which commission payments
will be made to Dealer. Dealer may select a single option which will apply
to all annuity contracts solicited by all of Dealer's Representatives, or
Dealer may select a different option for each Representative. If a
different option is selected for each Representative, the option selected
for a particular Representative will then apply to all annuity contracts
solicited by that Representative. Dealer must notify ONLI in writing of the
option which will apply to annuity contracts solicited by all of its
Representatives or of the option selected for each Representative as the
case may be. If no other option is selected, Dealer will be compensated
under Option I below. Once selected, an option may not be changed unless
ONLI, in its sole discretion, approves the change. Any such change will be
prospective only and will apply solely to annuity contracts issued on and
after the date the requested change is accepted and approved by ONLI.
Option Option
I II
--------------------------------------------------------------
Dealer Selection [ ] [ ]
--------------------------------------------------------------
Commission %
------------------------
Tradition First Year 6.50 5.50
& Renewal Years 5.25 4.25
Spectrum* Trail 0 .20
--------------------------------------------------------------
Explorer* First Year 6.20 5.20
Renewal Years 4.95 3.95
Trail 0 .20
--------------------------------------------------------------
Top Plus First Year 5.00 4.00
Trail 0 .20
--------------------------------------------------------------
Option Option
III IV
--------------------------------------------------------------
Dealer Selection [ ] [ ]
--------------------------------------------------------------
Commission %
------------------------
Tradition First Year 4.50 3.50
& Renewal Years 3.25 2.25
Spectrum* Trail .40 .60
--------------------------------------------------------------
Explorer* First Year 4.20 3.20
Renewal Years 2.95 1.95
Trail .40 .60
--------------------------------------------------------------
Top Plus First Year 3.00 2.00
Trail .40 .60
--------------------------------------------------------------
Page 1
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Option Option
V VI
--------------------------------------------------------------
Dealer Selection [ ] [ ]
--------------------------------------------------------------
Commission %
------------------------
Tradition First Year 2.50 1.50
& Renewal Years 1.25 0.25
Spectrum* Trail .80 1.00
--------------------------------------------------------------
Explorer* First Year 2.20 1.20
Renewal Years 0.95 0
Trail .80 1.00
--------------------------------------------------------------
Top Plus First Year 1.00 1.00
Trail .80 .80
--------------------------------------------------------------
*For issue ages 76-85 the compensation is equal to 50% of the indicated
rate.
Compensation to Dealer for any Retirement Advantage group annuity contract
produced by Representatives of Dealer will be paid equal to 4.5% of all
Contract Contributions received by ONLI.
2. VARIABLE UNIVERSAL LIFE INSURANCE
Compensation to Dealer for variable universal life insurance policies
produced by Representatives of Dealer shall be as set forth below.
Tables showing the Maximum Commissionable Premium ("MCP") and the SEC
Guideline Premium ("SECGP"), for each $1,000 of stated amount of insurance
and at varying issue ages, are attached to and made a part of this
Supplement.
(A) FIRST YEAR COMMISSIONS
VARI-VEST II
For Vari-Vest II policies issued up to and including age 65, First
Year Commissions shall be paid equal to 90% of the premiums received
by ONLAC during the policy's first contract year up to the MCP. For
issue ages after age 65, the rates of First Year Commissions on such
premiums up to the MCP shall be a follows.
Issue
Ages Rates
------ -----
66 - 70 80%
71 - 75 55%
76 - 80 28%
First Year Commissions shall also be paid for Vari-Vest II policies at
the rate of 12% of the premiums received by ONLAC during the policy's
first contract year to the extent such premiums are in excess of the
MCP but not in excess of the SECGP plus 6% of such premiums in excess
of the SECGP.
VARI-VEST IV AND VARI-VEST V
For Vari-Vest IV policies issued up to and including age 65, and for
Vari-Vest V policies at all issue ages, First Year Commissions shall be
paid equal to 92.5% of the premiums received by ONLAC during the
policy's first contract year up to the MCP. For Vari-Vest IV policies
issued after age 65, the rates of First Year Commissions on such
premiums up to the MCP shall be as follows:
VARI-VEST IV
------------------------------------------
Issue Issue
Age Rate Age Rate
--- ---- --- ----
66 89.0% 73 55.4%
67 85.7 74 48.7
68 82.3 75 42.0
69 79.0 76 37.0
70 75.6 77 31.9
71 68.9 78 26.9
72 60.5 79 21.8
80 16.8
Page 2
26
First Year Commissions shall also be paid for Vari-Vest IV and Vari-Vest V
policies equal to 4.5% of such premiums in excess of the MCP.
(B) RENEWAL COMMISSIONS AND SERVICE FEES. For Vari-Vest II, Vari-Vest IV and
Vari-Vest V policies, Renewal Commissions and Service Fees shall be paid
equal to the percentages shown in the table below of premiums received by
ONLAC during the policy's second and later contract years:
RENEWAL COMMISSIONS
-------------------
Renewal Contract
Commission Years
Policy Rate (inclusive)
------ ---- -----------
Vari-Vest II 6.0% 2-10
Vari-Vest IV 4.5 2-10
Vari-Vest V 4.5 2-5
3.0 6-10
SERVICE FEES
------------
Service
Fee Contract
Policy Rate Years
------ ---- -----
Vari-Vest II 6.0% 11 and later
Vari-Vest IV 4.5 11 and later
Vari-Vest V 3.0 11 and later
(C) TRAIL COMMISSIONS. Trail Commissions shall be paid equal to 0.225% of the
total qualified cash values (monthly average) on Vari-Vest IV policies and
.50% of the total qualified cash values (monthly average) on Vari-Vest V
policies. Qualified cash values (monthly average) are determined at the end
of each calendar year and are the sum of the cash values, less loans, at
the end of each policy month divided by the number of such months in the
calendar year. Only cash values from policy months after a policy's first
anniversary are included.
Trail Commissions are paid annually in January for the preceding calendar
year but only so long as a duly appointed Representative of Dealer is
servicing the policies to ONLAC's satisfaction.
(D) RIDERS. If an extra benefit rider is included in or added to the policy,
the MCP and SECGP for the policy shall be increased by twelve times the
minimum monthly premium for any such rider.
(E) INCREASES IN STATED AMOUNT. A portion of the premiums received after an
increase in stated amount is allocated to the increased portion of the
policy. The amount of premiums so allocated is based upon the ratio of
SECGP for the increased portion of the stated amount divided by the SECGP
for the entire policy (including the increased amount). A First Year
Commission shall be paid to Dealer as provided in Subsection (A) above on
the amount of premium allocated to the increased portion of the policy and
received during the first 12 months after the increase takes effect.
(F) DECREASES IN STATED AMOUNT AND CANCELLATION OF RIDERS. If the stated amount
is decreased or if a rider is canceled within the first contract year of
any Vari-Vest II, Vari-Vest IV or Vari-Vest V policy, the policy shall be
treated as having been reissued and the MCP and SECGP shall be
recalculated. Any First Year Commission previously paid
Page 3
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on such policy or rider based upon the higher MCP or SECGP prior to
recalculation shall be charged back against Dealer.
(G) PLAN TYPE CHANGES. A change in plan type shall not affect compensation
due hereunder.
(H) SUBSTANDARD RISKS. For substandard insurance risks, the per $1,000
portion of the factors shown in the MCP table for standard risks shall
be multiplied by a factor which equals one plus 90% of any extra
mortality multiple up to and including substandard table F. Any
substandard rating greater than table F shall be treated as though it
were table F for MCP purposes. Flat extra mortality charges will not
increase the standard rate MCP factors.
3. CHANGE OF DEALER AUTHORIZATION
Compensation to Dealer with respect to a variable annuity or variable
universal life insurance policy will cease if ONEQ receives and accepts a
change of dealer authorization signed by the contract owner or policy owner
which authorizes another broker-dealer with whom ONEQ has a valid selling
agreement to serve as the broker-dealer of record for the contract owner or
policy owner.
4. COMPENSATION AFTER TERMINATION
Following the termination of this agreement, Dealer shall have no
entitlement, as a matter of right, to compensation of any kind with respect
to any variable annuity contract or variable universal life insurance
policy sold by Dealer's Representatives. Compensation shall continue to be
paid to Dealer after termination of this agreement only if, and only to the
extent that, ONEQ continues to recognize Dealer as the broker-dealer of
record for one or more such annuity contracts or life insurance policies.
Continued recognition of Dealer as the broker-dealer of record will in all
events require that Dealer assign a qualified Representative to provide
continuing service to annuity contractholders and insurance policyholders.
Such service must be provided to the satisfaction of ONEQ and to the
satisfaction of ONLI or ONLAC as the issuing company. Notwithstanding the
quality or satisfactory level of continuing service being provided by
Dealer, ONEQ reserves the right, in its sole and complete discretion, for
itself and for ONLI or ONLAC as the issuing company, to reassign one or
more or all of such annuity contracts or life insurance policies for
servicing to another broker-dealer with whom ONEQ has a selling agreement
in effect or to elect to have one or more or all of such annuity contracts
or life insurance policies serviced directly by ONEQ and by ONLI or ONLAC,
thereby causing Dealer not to be recognized as the broker-dealer of record
and thereby causing all compensation to Dealer to cease with respect to the
reassigned contracts or policies.
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