Exhibit 1-A(4)
AGREEMENT BETWEEN FRANKLIN FINANCIAL SERVICES CORPORATION AND THE
AMERICAN FRANKLIN LIFE INSURANCE COMPANY
THIS AGREEMENT dated March 31, 1994 by and between The American Franklin
Life Insurance Company, an Illinois legal reserve stock life insurance
corporation, having its principal office at Xxxxxxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxx (the "Company"), and Franklin Financial Services Corporation, a
Delaware corporation, having its principal office at Franklin Square,
Springfield, Illinois ("Franklin Financial");
WITNESSETH:
WHEREAS, the Company is engaged in the issuance of life insurance
policies and annuity contracts, pursuant to insurance laws in several of the
states, territories and possessions of the United States except New York
through its licensed life insurance agents, and desires to issue and sell its
EquiBuilder III-TM- flexible premium variable life insurance policies (the
"Policies") through all or some of the said agents; and
WHEREAS, the Policies may be deemed to be securities under the Securities
Exchange Act of 1934 (the "Act"), and applicable state laws, and the sale of
such securities may be deemed to be through an instrumentality of interstate
commerce within the meaning of Section 15(a) of the Act; and
WHEREAS, Franklin Financial is an affiliate of the Company and Franklin
Financial is registered as a broker-dealer under Section 15(b) of the Act and
also is registered as a member of the National Association of Securities
Dealers, Inc. ("NASD"); and
WHEREAS, it is the desire of the parties to enter into an agreement
pursuant to which certain agents of the Company ("Agents") who are to be
authorized to sell the Policies will be registered representatives of
Franklin Financial, which will be responsible for selecting, training and
supervising them for that purpose, all as more particularly described herein;
NOW, THEREFORE, it is hereby agreed as follows:
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1. The Company will advise Franklin Financial of the names of the Agents
who are to be authorized by the Company to sell the Policies, Franklin
Financial will then select the Agents and train them in the sale of variable
life policies and will use its best efforts to qualify such agents under
applicable federal and state laws to engage in the sale of the Policies.
Agents so trained and qualified will be registered representatives of
Franklin Financial under applicable requirements of the NASD and, in addition
to all other requirements for such qualification, will be required to comply
with applicable examination requirements before being permitted to engage in
the sale of the Policies.
2. Franklin Financial will regularly advise the Company of the
qualifications of each Agent under applicable federal and state law.
3. Before any Agent will be authorized to offer or sell the Policies, the
Company, Franklin Financial and the Agent will enter into a mutually
satisfactory agreement pursuant to which the Agent will acknowledge that he
will be a registered representative of Franklin Financial in connection with
his selling activities related to the Policies, that such activities will be
under the supervision and control of Franklin Financial and the supervisor or
supervisors designated by Franklin Financial, and that the Agent's right to
continue to sell the Policies is subject to his continued compliance with
such agreement and all rules, procedures and standards established by
Franklin Financial.
4. Franklin Financial will maintain its registration under the Act and
its membership in the NASD and will fully comply with the requirements of the
NASD and of applicable law and will establish such rules and procedures as
may be necessary to adequately supervise the selling activities of the
Agents. Upon request by Franklin Financial, the Company will furnish or
require the Agents to furnish such appropriate records as may be necessary to
insure such supervision.
5. In the event any Agent fails or refuses to submit to such supervision
of Franklin Financial, or otherwise fails to meet the rules, procedures and
standards imposed by Franklin Financial on its registered representatives,
Franklin Financial shall promptly advise the Company
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thereof and shall notify such Agent that he is no longer authorized to offer
or sell the Policies, and Franklin Financial and the Company shall take
whatever additional action may be necessary to terminate the sales activities
of such Agent relating to the Policies.
6. It is contemplated that all or some of the home office supervisors,
Regional Managers, or General Agents of the Company will become qualified as
registered representatives of Franklin Financial and in that capacity will,
subject to the policies of Franklin Financial, supervise the selling
activities of Agents relating to the Policies. In the event any such person
shall fail or refuse to provide such supervision to Franklin Financial's
satisfaction, Franklin Financial (with the cooperation of the Company) shall
furnish a qualified person to perform such supervision or, if Franklin
Financial is unable to furnish such supervision, the authority of the
unsupervised Agents to sell the Policies shall be withdrawn forthwith.
7. Commissions payable to Agents in connection with sales of the Policies
shall be paid by the Company to the Agents through the General Agents or
otherwise under the Company's usual agency contracts and nothing contained
herein shall obligate Franklin Financial to pay any commissions or other
remuneration to the Agents or to reimburse any such Agents for expenses
incurred by them, nor shall Franklin Financial have any interest whatsoever
in any commissions or other remuneration payable to Agents by the Company.
All deductions from premiums for sales expenses and all contingent deferred
sales charges received by Franklin Financial under the Sales Agreement dated
the date hereof between Franklin Financial and Separate Account VUL-2 of The
American Franklin Life Insurance Company, a separate account established by
the Company pursuant to Article XIV-1/2 of the Illinois Insurance Code (the
"Fund"), in excess of amounts necessary to pay other sales or promotional
expenses incurred by Franklin Financial, shall be remitted to the Company to
the extent necessary to reimburse the Company for such commissions or other
remuneration to the Agents paid by the Company. The amount of such
commissions and other remuneration to the Agents not so reimbursed shall be
deemed to have been contributed to the capital of Franklin Financial and all
such commissions so
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paid by the Company shall be appropriately reflected in the books and records
maintained by or on behalf of Franklin Financial.
8. Franklin Financial will assume full responsibility for the sales
activities of the Agents relating to the Policies and for initial and
continued compliance by itself and the Agents with applicable rules of the
NASD and federal and state securities laws, and in connection therewith may
demand and receive such assurances from the Company as it deems appropriate
demonstrating compliance with the Act, the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended.
9. Franklin Financial may request that all or some of the notices and the
books and records required to be prepared, sent, and/or maintained by it, as
a registered broker-dealer or as a member of the NASD, in connection with the
sale of the Policies, be prepared, sent and/or maintained by the Company, at
the Company's expense, as agent for Franklin Financial. The Company agrees
that such books and records are the property of Franklin Financial, will be
made and preserved in accordance with Rules 17a-3 and 17a-4 under the Act,
and will be subject to examination by the Securities and Exchange Commission
in accordance with Section 17(a) of the Act.
10. Franklin Financial will provide such prospectuses and such other
material as the Company and Franklin Financial may mutually determine to be
necessary or desirable, and which are authorized by applicable law, for use
in connection with the offering or sale of the Policies. The Company, at its
own expense, will qualify or register the Policies in all jurisdictions where
such qualification or registration is required and will obtain all necessary
approvals of the offering and sale of the Policies in accordance with the
requirements of the NASD and applicable federal and state law.
11. This Agreement may not be assigned by either party except by mutual
consent and shall continue for a period of one year and from year to year
thereafter subject to termination by either party at any time upon 30 days'
written notice to the other party and to the Securities and Exchange
Commission.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
THE AMERICAN FRANKLIN LIFE
INSURANCE COMPANY
By:____________________________
Name: Xxxxxx X. Xxxxxxxxx
Title:
FRANKLIN FINANCIAL SERVICES
CORPORATION
By:______________________________
Name: Xxxxxx X. Xxxxxx
Title: President
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