EXHIBIT 99.A3B
Exhibit 3(b)
Form of Broker-Dealer Supervisory and Service Agreement
ISI LETTERHEAD
PRINCIPAL UNDERWRITER FOR
THE 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 day of Month, Year , by and between Western Reserve Life Assurance
Co. of Ohio ("WRL"), InterSecurities, Inc. ("ISI"), 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
BrokerDealer ("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
subsidiaries ("Agencies") of this broker-dealer, (hereinafter Broker/Dealer and
Agencies are collectively referred to as "Producers"). Such subsidiaries 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, ISI is the principal underwriter of the Plans;
WHEREAS, ISI 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 ISI 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 ISI 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 ISI, 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.
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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 ISI, 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 ISI
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 ISI 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 ISI 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, ISI 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. ISI 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 ISI or WRL which may affect the issuance of the Plans
marketed under this Agreement.
b. Producers will promptly notify ISI and WRL of any substantive
customer complaint or notice of any regulatory investigation or
proceeding or judicial proceeding received by Producers with respect
to Producers or to any Representative or other agent of Producers in
connection with the Plans or any activity in connection therewith.
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In the case of a substantive customer complaint in connection with
the Plans, ISI, WRL and Producers will cooperate in investigating
such complaint, but any response to such complaint will be the sole
responsibility of ISI 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 ISI.
11. INDEMNIFICATION. Producers shall indemnity and hold harmless ISI 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 ISI 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.
ISI 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 ISI 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 ISI 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. ISI 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. ISI 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
ISI's satisfaction under the terms and conditions of this Agreement, or
if Broker-Dealer or Agency becomes insolvent. ISI 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, ISI,
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 ISI with a copy of
said bond within thirty days after executing this Agreement.
14. MISCELLANEOUS. ISI 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 ISI or
WRL of an effective registration statement therefor with the Securities
and Exchange Commission.
The right is reserved to WRL and ISI 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 ISI 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
ISI.
Any manuals, guides, books, tapes, programs and other materials, if any,
developed by ISI or WRL, which may be delivered to Producers from time to
time will be owned solely by ISI 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 may have been
delivered to the Producers but may use them solely in the Producers'
business hereunder, and upon such terms and conditions as ISI or WRL may
establish at the time of such delivery. Upon termination of this
Agreement, such items will be returned promptly to ISI.
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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 ISI provide access to the Account Information. In exchange for the
cooperation of WRL and ISI 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 ISI from any and all claims made against them by any party with
respect to the Representatives' use of such Account Information.
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 ISI 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 ISI 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 ISI 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 INTERSECURITIES, INC.
By: _____________________________ By: ______________________________
Title: Vice President Title:____________________________
BROKER-DEALER
BROKER-DEALER-
By: ______________________________
(Signature)
__________________________________
(Print Full Name)
Title: ___________________________
Contact Person ____________________
Print Full Name)
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APPENDIX TO BROKER-DEALER SUPERVISORY AND SERVICE AGREEMENT
The Agencies herein are wholly-owned subsidiaries of the Broker-Dealer named in
Paragraph 1 of this Agreement.
Broker-Dealer: Broker-Dealer~
Subsidiary Name:_______________________________________________________________
Federal Tax ID: _______________________________
States in which this Subsidiary is insurance licensed:______________________
____________________________________________________________________________
Officers:
Name: _______________________ Title: _______________________
Name: _______________________ Title _______________________
Officers Signature:_________________________________________________________
Subsidiary Name: ______________________________________________________________
Federal Tax ID: ________________
States in which this Subsidiary is insurance licensed:______________________
____________________________________________________________________________
Officers:
Name: _______________________ Title: _______________________
Name: _______________________ Title _______________________
Officer's Signature:________________________________________________________
Subsidiary Name: ______________________________________________________________
Federal Tax ID: ________________
States in which this Subsidiary is insurance licensed:______________________
____________________________________________________________________________
Officers:
Name: _______________________ Title: _______________________
Name: _______________________ Title _______________________
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: __________________
Assumed Name ("DBA"): ______________________________ STATE: __________________
Assumed Name ("DBA"): _______________________________ STATE: __________________
Assumed Name ("DBA"): _______________________________ STATE: __________________
Assumed Name ("DBA"): _______________________________ STATE: __________________
Assumed Name ("DBA"): _______________________________ STATE: __________________
Assumed Name ("DBA"): _______________________________ STATE: __________________
Assumed Name ("DBA"): _______________________________ STATE: __________________
Assumed Name ("DBA"): _______________________________ STATE: __________________
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:
_________________________ _________________________ ______________________
_________________________ _________________________ ______________________
_________________________ _________________________ ______________________
_________________________ _________________________ ______________________
(OR) All states of the United States except: ______________________________
______________________________________________________________________________
______________________________________________________________________________
2. Notices permitted or required to be given to Broker-Dealer shall be
given to:
Name: Name
Address: Address
City, State and Zip Code: City_State_Zip
Telephone Number: _____________________________
3. Broker-Dealer's Taxpayer Identification Number:
_________________________________
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