SELLING AGREEMENT
AGREEMENT made this _____ day of _________________, 19__, by and
between ANNUITY INVESTORS LIFE INSURANCE COMPANY, an Ohio life insurance
company ("AILIC"), AAG SECURITIES, INC., an Ohio corporation ("AAGS") and
_____________________________________, a _________ corporation
("Broker/Dealer") and any and all insurance agency affiliates or subsidiaries
of Broker/Dealer ("Agencies"). Broker/Dealer and the Agencies are
hereinafter referred to as the "Producers." The Agencies are listed in
Appendix I to this Agreement, as may be amended from time to time.
WHEREAS, AILIC issues certain variable annuity and variable insurance
policies, and certificates thereunder in the case of group policies
("Contracts"), described in this Agreement, which are deemed securities under
the Securities Act of 1933, and
WHEREAS, AAGS is duly licensed as a broker-dealer with the National
Association of Securities Dealers, Inc. ("NASD") and the Securities and
Exchange Commission ("SEC"), and
WHEREAS, Broker/Dealer is duly licensed as a broker-dealer with the
NASD and SEC, and
WHEREAS, AILIC has appointed AAGS as the principal underwriter of the
Contracts, and
WHEREAS, AAGS proposes to have Broker/Dealer's registered
representatives ("Representatives") who are also duly licensed insurance
agents solicit sales of the Contracts, and
WHEREAS, AAGS delegates to Broker/Dealer and the Agencies, to the
extent legally permitted, training, supervisory and certain administrative
responsibilities and duties.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties agree as follows:
1. Appointment. AILIC and AAGS hereby appoint Broker/Dealer and the
Agencies under the securities and insurance laws to supervise Representatives
in connection with the distribution of the Contracts, solely in accordance
with the Contract and the then current Prospectus relating thereto, 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 Contracts and all such persons shall be subject to the
control of Broker/Dealer with respect to such persons' securities-related
activities in connection with the Contracts. Broker/Dealer will establish
rules, procedures and supervisory and inspection techniques necessary to
diligently supervise the activities of its Representatives. Included in
training will be federal and state statutes and regulations applicable to the
sale of Contracts, the Ethical Principles and related Codes of the Insurance
Marketplace Standards Association ("IMSA"), and any other topics about which
Representatives must have sufficient knowledge as required by their
individual agreements.
Producers will cause the Representatives to be trained in the sale of
the Contracts; Producers warrant that Representatives qualify under
applicable federal and state laws to engage in the sale of the Contracts; and
Producers will cause such Representatives to be registered representatives of
Broker/Dealer before such Representatives engage in the solicitation of
applications for the Contracts in jurisdictions where AILIC 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 (the "1934
Act"). By submitting to AAGS or AILIC a registered representative for
appointment, Broker/Dealer shall be deemed to have certified Representatives'
qualifications including those set forth in Appendix II hereto. Upon
request, Broker/Dealer shall confirm the foregoing by delivering a letter in
the form of Appendix II hereto. Producers shall ensure that the Contracts
are offered, sold and serviced only through Representatives who comply with
all appropriate state insurance licensing requirements and solely in
accordance with the Contract and the then current Prospectus relating thereto.
3. Appointment of Agents. With respect to each Representative to be
appointed, Broker/Dealer shall submit to AAGS an Agent Data Form, a copy of a
current NASD status sheet, a copy of the appropriate state insurance license
and such additional documents as requested by AILIC or AAGS and shall await
approval from AILIC before a Representative shall be permitted to solicit
applications for the sale of Contracts.
4. Notice of Representative's Noncompliance. In the event a
Representative fails or refuses to submit to supervision by Broker/Dealer,
ceases to be a registered representative of Broker/Dealer, or fails to meet
the rules and standards imposed by Broker/Dealer on its Representatives,
Broker/Dealer shall certify such fact to AILIC and shall immediately notify
such Representative that he or she is no longer authorized to sell the
Contracts, and Broker/Dealer shall take whatever additional action may be
necessary to terminate the sales activities of such Representative relating
to the Contracts.
5. Compliance with NASD Rules of Fair Practice and Federal and State
Security and Insurance Laws. Broker/Dealer shall and shall ensure that its
Representatives fully comply with the requirements of the 1934 Act and the
NASD and all other applicable federal or state laws applicable to the offer,
sale and service of the Contracts and will establish such rules and
procedures as may be necessary to cause diligent supervision of the
securities and insurance activities of Representatives. Broker/Dealer agrees
to fully comply with the Ethical Principles and related Codes of IMSA, and
further agrees to ensure that its Representatives fully comply with same.
Broker/Dealer agrees to maintain all transactions, 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 AILIC or AAGS,
Broker/Dealer shall furnish or make available for inspection, such
appropriate records as may be necessary to establish such diligent
supervision.
6. Prospectus, Sales Promotion Material and Advertising.
Broker/Dealer shall be provided with, and Broker/Dealer shall forward to
Representatives, prospectuses relating to the Contracts and such other
material as AILIC or AAGS determines to be necessary or desirable for use in
connection with sales of the Contracts. Broker/Dealer shall ensure that no
sales promotion materials or advertising related to AILIC, AAGS and/or the
Contracts shall be used by Representatives unless the specific item has first
been approved by AILIC or AAGS in writing. Producers and their
Representative shall discontinue the use of any item when notified by AILIC
or AAGS.
No Producer or any Representative shall in connection with the offer or
sale of Contracts use any advertising material, prospectus, proposal or
representation either in general or in relation to a Contract, AAGS or AILIC
unless furnished by AAGS or AILIC or until the consent of AAGS or AILIC is
first obtained. Neither Producers nor any Representative shall issue or
recirculate any illustration, circular, statement or memorandum of any sort,
misrepresenting the terms, benefits or advantages of any Contract, or make
any misleading statement as to benefits thereon or the financial position of
AILIC.
7. Applications. Producers shall cause all applications for
Contracts to be made on application forms supplied by AILIC and all payments
collected by Broker/Dealer or any Representative to be remitted promptly in
full, together with such application forms and any other documentation,
directly to AILIC at the address indicated on such application. Producers
shall review all such applications for completeness. Producers shall be
solely responsible for determining the suitability of Contracts for
purchasers. Checks or money orders for Purchase Payments shall be drawn to
the order of AILIC. All applications are subject to acceptance or rejection
by AILIC at its sole discretion. Producers agree to remit in full to AILIC
immediately upon receipt all Purchase Payments received on such applications,
forms and any other required documentation obtained in respect to the
Contracts.
8. Compensation.
(a) Commissions. Commissions payable in connection with the
Contracts for which Broker/Dealer is the broker of record shall be payable in
accordance with the Schedule(s) attached hereto and made a part hereof and
shall be paid by or on behalf of AAGS to one or more of the Producers in
accordance with applicable insurance and securities laws. Payment of
commissions to the Producer(s) shall be full and sole compensation for all
services and expenses and for the fulfillment of duties under this
Agreement. These commissions will be paid as a percentage of Purchase
Payments received in cash and accepted by AILIC on applications obtained by
the Representatives of Broker/Dealer provided a Contract is issued, delivered
to and accepted by the applicant. Upon termination of this Agreement, all
compensation to Broker/Dealer hereunder shall cease; however, Producers shall
continue to be liable for any chargebacks (as defined in Subsections (A), (B)
and (C) below). Producers shall have no interest in any surrender charges,
deductions or other fees payable to AILIC or AAGS. The Producers shall pay
the person(s) entitled thereto as provided in any agreement between Producers
and the Representatives, and AILIC and AAGS shall have no responsibility or
liability therefor.
(A) If AAGS has paid any compensation in advance,
Producers hereby agree that they are indebted to AAGS if the Purchase
Payment on which the compensation is based is not paid within the time
provided by the Contract, or allowed by AILIC, or, if the Purchase
Payment is paid, if Producers would not have been entitled to the
compensation when the Purchase Payment is paid. AAGS, in its sole
discretion, will determine whether or not Producers would have been
entitled to the compensation when the Purchase Payment is paid.
(B) Upon demand by AAGS, the Producers hereby agree to
return to AAGS any compensation paid to them based on refunds or
adjustments of Contract values, in whole or in part, including in the
event of termination, modification or rescission of a Contract. AILIC
may in its sole discretion, and at any time, terminate, modify or
rescind the sale of any Contract or contract issued by it, and
Producers are indebted to AAGS for the amount of compensation deemed
necessary to refund until Producers repay such amount.
(C) Any compensation which would be due Producers under
this Agreement shall not become due if any Producer is indebted to AAGS
or AILIC. In the case of such indebtedness, any compensation will be
applied by AAGS to reduce the indebtedness, regardless of any claim or
lien by Producers or by someone other than AAGS. Upon termination of
this Agreement, the Producers shall immediately pay to AAGS any and all
amounts which are owed.
The foregoing subsections A, B and C shall survive the termination of
this Agreement.
(b) Time of Payment. AAGS shall pay or cause to be paid any
compensation due Producers within fifteen (15) business days after the end of
the calendar month in which Purchase Payments upon which such compensation is
based are accepted by AILIC, and for which Contracts have been issued and
accepted by the applicant.
(c) Amendments of Schedules. AAGS may, upon at least ten (10)
business days prior written notice to Broker/Dealer, amend the attached
Schedule(s) made part hereof. Any such amendments shall be in writing and
shall apply to premiums received by AILIC after the effective date of such
written notice.
(d) Prohibition Against Rebates and Replacements. Except as
permitted by law, if any Producer or any Representative of Broker/Dealer
shall rebate or offer to rebate all or any part of a Purchase Payment or
commission on a Contract, or if any Producer or any Representative of
Broker/Dealer provides or offers to provide an applicant with other valuable
consideration or inducement in connection with a Contract, the same shall be
grounds for termination of this Agreement by AILIC or AAGS. If any Producer,
or any Representative of Broker/Dealer shall withhold any Purchase Payment on
a Contract, the same shall also be grounds for termination of this Agreement
by AILIC or AAGS. If any Producer, or any Representative of Broker/Dealer,
shall at any time induce or endeavor to induce any person paying Purchase
Payments on any Contract issued hereunder to discontinue Purchase Payments or
to relinquish any such Contract except under circumstances in which there are
reasonable grounds for believing the Contract is not suitable for such
person, any and all compensation due Producers shall cease and terminate.
(e) Indebtedness. Nothing in this Agreement shall be construed
as giving Broker/Dealer the right to incur an indebtedness on behalf of AILIC
or AAGS.
9. Investigations. Producers, AAGS and AILIC 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 Contracts. Without limiting the
foregoing:
(a) AILIC and AAGS 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 with respect to AILIC or AAGS
which may affect the issuance of the Contracts marketed under this Agreement.
(b) Producers will promptly notify AILIC and AAGS 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 Contracts or any activity in connection therewith.
In the case of a substantive complaint in connection with the
Contracts, AILIC, AAGS, and Producers will cooperate in investigating such
complaint. In connection therewith, Producers shall provide AILIC and AAGS
with all information reasonably requested. AILIC and AAGS shall respond to
and defend any such complaint.
10. Independent Contractors. Producers in performing their duties
hereunder shall be acting as independent contractors and not as agents or
employees of AILIC or AAGS. In addition, nothing contained herein shall be
construed as a partnership among AILIC, AAGS and Producers.
11. Indemnification. Producers shall indemnify and hold harmless
AILIC and AAGS from any claims, damages, expenses (including reasonable
attorneys' fees and 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 Contracts, 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 Contracts.
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 servicing operations of Broker/Dealer. Broker/Dealer shall
indemnify and hold harmless AILIC and AAGS 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.
AILIC and AAGS 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 AILIC or AAGS or their employees in the
offering for sale, solicitation, or servicing of the Contracts and from any
negligent, fraudulent, or intentional acts, omissions, or errors of AILIC or
AAGS 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 Contracts.
12. Termination. AAGS may terminate this Agreement immediately and
without notice if the Broker/Dealer fails to maintain its registration as a
broker/dealer under the 1934 Act or a member of the NASD. AAGS 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 AAGS's satisfaction under the terms and conditions of this Agreement or if
Broker/Dealer or Agency becomes insolvent or files a petition for bankruptcy,
reorganization or liquidation under applicable law. AAGS 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, AAGS,
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.
In furtherance of the foregoing, the provisions of Sections 8, 9, 10, 11 and
15 hereof shall survive termination.
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 AAGS with
a copy of said bond within thirty days after executing this Agreement.
14. Confirmations. Upon or prior to completion of each transaction
for which the issuance of a confirmation is legally required, a confirmation
reflecting the fact of the transaction and those items under SEC Rule 10b-10
will be promptly forwarded by AILIC on AAGS's behalf. A copy of such
confirmation will be made available to Broker/Dealer.
15. Scope of Authority for Processing Business. Broker/Dealer shall
be authorized to: (a) accept applications for Contracts, (b) receive for
forwarding to AILIC the Purchase Payments paid in connection with any such
applications, (c) deliver the Contracts issued to the applicants by AILIC,
and (d) collect Purchase Payments for forwarding to AILIC as specifically
directed by such applicants who have authorized Broker/Dealer to act on their
behalf.
Broker/Dealer is not authorized to: (a) alter any applications
or Contracts, (b) collect or in any manner receive premiums from applicants
in the form of checks, money orders or electronic funds transfers payable to
any person or entity other than AILIC, (c) waive any forfeiture, (d) make any
settlement of any claim or claims, or (e) perform any function other than as
expressly authorized in the preceding paragraph.
16. Miscellaneous. AAGS and AILIC reserve the right, without notice
to Producers, to suspend, withdraw, or modify the offering of the Contracts
or to change the conditions of their offering with respect to anyone.
Producers are not authorized to market any Contract until notified by AILIC
or AAGS of an effective registration statement therefor with the Securities
and Exchange Commission. AAGS will provide Broker/Dealer with a list, and
updates thereto which list the jurisdictions in which the Contracts may be
sold.
The right is reserved to AILIC and AAGS to contract separately with any
employee, representative or agent of Producers in connection with the
Contracts or otherwise, 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) AILIC or AAGS from marketing said Contracts
through other broker/dealers, insurance agents and brokers, and through its
own organization, or (ii) Producers from acting as agent and/or broker for
other insurance companies, whether or not affiliated with a Producer, in any
jurisdiction with respect to any insurance or securities product, including
securities products similar or identical to those of AILIC or AAGS. Neither
Producers nor their Representatives shall have any right of exclusivity to
market and sell Contracts in any geographical area.
Any manuals, guides, books, tapes, programs and other materials, if
any, developed by AILIC or AAGS, which may be delivered to Broker/Dealer from
time to time will be owned solely by AILIC or AAGS, 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 AILIC or AAGS may establish
at the time of such delivery. Upon termination of this Agreement, such items
will be returned promptly to AAGS.
Included on Appendix I is a list of jurisdictions in which
Broker/Dealer or Agency is duly authorized to sell the Contracts and receive
commissions thereon and Producers represent that this list is true and
complete.
All Field Bulletins issued by AILIC are hereby made a part of this
Agreement. In the event of a conflict between the terms of this Agreement
and the Field Bulletins, the terms of this Agreement shall control. All
changes or updates to Field Bulletins will be sent promptly to the
Broker/Dealer.
17. Notices, Etc. All notices, demands, xxxxxxxx, requests and other
written communications hereunder shall be deemed to have been properly given
to Producers when delivered by hand or sent by registered or certified United
States mail, postage prepaid and addressed to Producers at
. Any
communications to AILIC or AAGS shall be deemed properly given if delivered
by hand or sent by registered or certified United States mail, postage
prepaid and addressed to AILIC or AAGS, respectively, at 000 Xxxx Xxxxx
Xxxxxx, 00xx Xxxxx, Xxxxxxxxxx, Xxxx 00000, Attention: Xxxx X. Xxxxxxxx,
Esq. The address for notice hereunder may be changed by giving written
notice of such change to the other parties in accordance with the provisions
of this Section 17.
18. Governing Law. This Agreement shall be interpreted in accordance
with the laws of the State of Ohio. The parties hereto agree that any state
or federal court located in Xxxxxxxx County, Ohio shall have sole and
exclusive jurisdiction and be the appropriate venue for any required judicial
interpretation and enforcement of this Agreement.
19. 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.
20. No Assignment. This Agreement, and the rights and duties
hereunder, may not be assigned or delegated except as expressly provided for
herein. Commissions to be paid pursuant to this Agreement may not be
assigned without the consent of AAGS.
21. No Waiver. Any failure to enforce any right under this Agreement
or to object to any violations of its terms shall not operate as a waiver of
any rights.
This Agreement, as amended from time to time, constitutes the entire
agreement between the parties hereto and shall be effective as of the date it
is fully executed by all parties. However, AILIC and AAGS reserve the right
to modify the Schedule(s) as provided herein. AILIC and AAGS further reserve
the right to amend from time to time this Agreement, other than its
Schedule(s), 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 AILIC or AAGS 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 Contracts; provided,
however, any former agreements shall survive with respect to any Contracts
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.
ANNUITY INVESTORS LIFE
INSURANCE COMPANY AAG SECURITIES, INC.
BY: ---------------------------- BY: ------------------------------
Name: ---------------------------- Name:------------------------------
Title:---------------------------- Title:-----------------------------
BROKER/DEALER:
BY: ----------------------------
Name: ----------------------------
Title:----------------------------
APPENDIX I
[LIST OF AGENCIES]
States
Name of Agency in which Licensed Taxpayer I.D. No.
By executing below, the foregoing entities agree to join in this
Agreement as an Agency and be bound by all terms of such Agreement, as it may
be amended from time to time.
Name of Agency Name of Agency
By: ---------------------------- By: ----------------------------
Its:---------------------------- Its:----------------------------
Name of Agency Name of Agency
By: ---------------------------- By: ----------------------------
Its:---------------------------- Its:----------------------------
APPENDIX II
General Letter of Recommendation
BROKER/DEALER hereby certifies to AAGS and AILIC that all the following
requirements will be fulfilled in conjunction with the submission of
licensing/appointment papers for all applicants as agents of AILIC submitted
by BROKER/DEALER. BROKER/DEALER will, upon request, forward proof of
compliance with same to AAGS and AILIC 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 AILIC 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 AILIC 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 AILIC in order to place insurance chiefly and solely
on his life or property, or lives or property of his relatives,
or lives or property 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.
