WHOLESALING AGREEMENT
This Agreement dated this _______ day of ___________________, ________ is
by and among American Equity Investment Life Insurance Company, an Iowa
corporation ("Insurer"), EquiTrust Marketing Services, Inc. ("Distributor") a
Delaware corporation which is a registered broker-dealer with the Securities and
Exchange Commission ("SEC") under the Securities Exchange Act of 1934 (the
"Exchange Act") and a member of the National Association of Securities Dealers,
Inc. ("NASD"); ____________________________________ ("Wholesaler"), also a
registered broker-dealer with the SEC under the Exchange Act and a member of the
NASD; and __________________________________, a licensed insurance agency
associated with Wholesaler ("Agency"); and each additional insurance agency, if
any, signatory hereto (all such insurance agencies referred to collectively as
"Agency").
WITNESSETH:
WHEREAS, Insurer has appointed Distributor as the principal underwriter and
distributor of the variable insurance contracts issued by Insurer, and has
agreed with Distributor that Distributor shall be responsible for the
recruitment of third parties who will promote the offer and sale of these
variable contracts; and
WHEREAS, Insurer and Distributor on the one hand, and Wholesaler, on the
other hand, desire to establish an arrangement whereby Wholesaler will recommend
to Distributor and Insurer certain third parties (the "Retailers") who will
promote the offer and sale of the variable life insurance and variable annuities
issued by Insurer (collectively the "Policies").
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. APPOINTMENT OF WHOLESALER
Subject to the terms and conditions of this Agreement, Insurer and Distributor
hereby authorize and appoint Wholesaler, on a non-exclusive basis, to recommend
to Insurer and Distributor Retailers who will promote the offer and sale of
Policies. Wholesaler hereby accepts such authorization and appointment on a
non-exclusive basis and agrees to use its best efforts to find Retailers
acceptable to Insurer who will promote the offer and sale of Policies.
Wholesaler acknowledges that no territory is exclusively assigned to Wholesaler
hereby, and that Distributor and Insurer may enter into agreements with other
third party wholesalers and broker-dealers providing for the sale of the
Policies. Further, Wholesaler acknowledges that Insurer and Distributor may
enter into agreements with other representatives of a Retailer previously
dealing with Wholesaler if such
representatives are contracted by other third-party Wholesalers. Further, any
compensation as provided for in Section 7 hereof, shall only be based and paid
on those Policies written by Retailers during the period that such Retailer is
recognized by Insurer as appointed through Wholesaler and during which there is
outstanding a valid, binding and enforceable selling agreement between such
Retailer, Distributor and Insurer. Without limiting any provision otherwise
contained in this Agreement, Wholesaler shall conduct its business in accordance
with generally accepted customs and practices of the life insurance industry.
2. THE POLICIES
The Policies issued by Insurer to which this Agreement applies are listed in
Exhibit A, which by this reference is incorporated herein. Exhibit A may be
amended from time to time by Insurer. Insurer in its sole discretion and
without notice to Wholesaler, may suspend sales of any Policies or may amend any
contracts or policies evidencing such Policies if, in Insurer's opinion, such
suspension or amendment is: (1) necessary for compliance with federal, state, or
local laws, regulations, or administrative order(s); or, (2) necessary to
prevent administrative or financial hardship to Insurer. In all other
situations, Insurer shall provide 30 days notice to Wholesaler prior to
suspending sales of any Policies or amending any contracts or policies
evidencing such Policies.
3. SECURITIES REGISTRATION AND LICENSING
Wholesaler shall, at all times when performing its functions under this
Agreement, be either registered as, or a registered representative in good
standing with, a securities broker-dealer in good standing with the SEC and NASD
and licensed or registered as a securities broker-dealer, or representative, in
the states and other local jurisdictions that require such licensing or
registration in connection with variable insurance contract sales activities.
Any personnel through which Wholesaler acts shall be registered and licensed
individually as required. Wholesaler hereby represents and warrants to
Distributor it is not currently under investigation, formal or informal, by any
securities or insurance regulatory authority.
4. INSURANCE LICENSING
Wholesaler shall, at all times when performing its functions under this
Agreement, be validly licensed as an insurance agent or agency in the states and
other local jurisdictions that require such licensing or registration in
connection with the Wholesaler's variable life insurance and variable annuity
contract sales activities; or, in those states in which Wholesaler cannot or
does not obtain a corporate agent's license, shall maintain an ownership
interest in, or contractual relationship with, Agency, which shall be validly
licensed as an insurance agency in such jurisdiction or jurisdictions. Such
contractual relationship shall be set forth in an agreement substantially
equivalent to that set forth as Exhibit B. Any personnel through which
Wholesaler acts shall be licensed individually as required. Wholesaler shall
provide Insurer with a list of all licensed insurance agencies
relied upon by Wholesaler to comply with this paragraph and covenants to
maintain the completeness and accuracy of such list, and to cause each such
agency to become a signatory hereto.
5. RECOMMENDATION AND ACCEPTANCE OF RETAILERS
Wholesaler will recruit and recommend potential Retailers to sell the Policies.
Insurer shall have sole discretion to accept or reject any such recommendation.
Acceptance shall occur only upon and by way of execution of a selling agreement
between Retailer, Distributor and Insurer .
6. WHOLESALING SERVICES
Wholesaler shall use its best efforts to provide certain services and support to
Retailers to facilitate the offering and selling of Policies. Such activities
shall include, but not be limited to, assistance in the appointment of agents;
distribution of sales material, newsletters and field service bulletins (subject
to Section 12, hereof); assistance with the sales promotional activities with
Retailers; and training of sales staff and registered representatives of
Retailers with respect to the features of the Policies.
7. COMPENSATION
Compensation for the services performed in accordance with Section 6 above, will
be, pursuant to the terms and conditions in Exhibit C, a percentage of purchase
payments made to Insurer on account of Policies issued upon applications
procured through Retailers in accordance with this Agreement. Compensation
shall be paid to Wholesaler unless applicable state insurance law requires that
compensation be paid to Agency. Upon the termination of this Agreement all
compensation payable to Wholesaler hereunder shall cease, except that
compensation will be paid on premiums accompanying applications obtained by
Retailers recruited by Wholesaler and dated prior to such termination. Exhibit
C may be amended by Insurer by providing written notice to Wholesaler. Such
amendment shall apply only to applications dated after the effective date of
such amendment, provided, however, that Insurer reserves the right to apply such
amendment with respect to all subsequent premiums and renewal premiums received
after the effective date of such amendment. In the event Wholesaler is
disqualified from continued registration with the NASD, Insurer shall not be
obligated to pay commissions, fees or additional compensation pursuant to this
Agreement, the payment of which would represent a violation of NASD rules.
8. SUPERVISION OF REGISTERED REPRESENTATIVES
Wholesaler, and not Distributor, shall have full responsibility for the training
and supervision of all of its own registered persons who are engaged directly or
indirectly in the offer or sale of the variable insurance contract hereunder,
and all such persons shall be subject to the control of and supervision of
Wholesaler with respect to such person's
securities-regulated activities, and to the control of Agency with respect to
such person's insurance-regulated activities, in connection with the
solicitation and sale of and other communication with respect to variable
insurance and annuity contracts hereunder. Wholesaler and Agency shall not,
solely by virtue of this Agreement, be obligated to supervise the registered
representative of any Retailer.
9. COMPLIANCE WITH NASD CONDUCT RULES AND FEDERAL AND STATE SECURITIES LAWS
Wholesaler shall fully comply with the rules and requirements of the NASD and of
the Exchange Act and all other applicable federal or state laws and will
establish such rules and procedures as may be necessary to cause diligent
supervision of the securities activities of its registered persons. Upon
request by Distributor, Wholesaler shall furnish such appropriate records as may
be necessary to establish such diligent supervision.
10. REGULATIONS
All parties agree to observe and comply with the existing laws and rules or
regulations of applicable local, state, or federal regulatory authorities and
with those which may be enacted or adopted during the term of this Agreement
regulating the business contemplated hereby in any jurisdiction in which the
business described herein is to be transacted, and to provide information or
reports with respect to their duties hereunder pursuant to request by any
regulatory authority having jurisdiction with respect thereto.
11. INVESTIGATIONS; CUSTOMER COMPLAINTS
Wholesaler agrees to fully cooperate in any insurance, securities or other
regulatory or judicial investigation or proceeding arising in connection with
the Policies, Insurer, Distributor, Wholesaler, Agency and/or any of the
Retailers recruited by Wholesaler. Wholesaler and Agency shall permit
appropriate federal and state insurance and other regulatory authorities to
audit their records and shall furnish the foregoing authorities with any
information which such authorities may request in order to ascertain whether
Wholesaler or Agency is complying with all applicable laws and/or regulations.
Wholesaler and Agency agree to cooperate with Insurer in resolving all customer
complaints with respect to the Policies, Wholesaler, Agency or any Retailer.
12. PROSPECTUSES, SALES PROMOTION MATERIAL AND ADVERTISING
Wholesaler shall be provided, without any expense to Wholesaler, with
prospectuses relating to the Policies ("Prospectuses") and such other material
as Distributor determines to be necessary or desirable for use in connection
with sales of the Policies or the recruitment of Retailers. No materials or any
advertising relating to the recruitment of Retailers, or the Policies shall be
used by Wholesaler unless the specific item has been approved in writing by
Distributor prior to such use. In addition, Wholesaler shall not print, publish
or distribute any advertisement, circular or any document relating to
Insurer, Distributor or the Policies unless such advertisement, circular, or
document shall have been approved in writing by Insurer and Distributor prior to
such use. No representations in connection with the recruitment of Retailers,
or the sale of the Policies, other than those contained in the currently
effective registration statements and Prospectuses for the Policies filed with
the SEC, or in the aforesaid approved materials, shall be made by Wholesaler.
Wholesaler shall only recruit Retailers who are licensed in states where
Policies have been approved by state authorities. Upon termination of this
Agreement, all Prospectuses, sales promotion material, advertising, circulars,
and documents relating to the recruitment of Retailers, or the sales of the
Policies shall be promptly turned over to Insurer free from any claim or
retention of rights by the Wholesaler.
13. BOOKS AND RECORDS
Wholesaler shall maintain the books, accounts, and records as required by
applicable laws and regulations. The books, accounts and records of Wholesaler
shall clearly and accurately disclose the nature and details of Wholesaler's
activities related hereto. Wholesaler shall keep confidential all information
obtained pursuant to this Agreement (including, without limitation, names of
purchasers of Policies) and shall disclose such information only if Insurer has
authorized such disclosure in writing, or if such disclosure is expressly
required by applicable federal or state authorities. Distributor shall have
access to all books, accounts and records of Wholesaler pertaining to the
Policies.
14. RIGHT OF OFFSET, LIABILITY OF WHOLESALER, AND LEGAL PROCEEDINGS
Wholesaler hereby authorizes Insurer to set off from all amounts otherwise
payable to Wholesaler all liabilities of Wholesaler or Retailers to Insurer.
Wholesaler shall be jointly and severally liable with Retailers for the payment
of all monies due to Insurer which may arise out of this Agreement or any other
agreement between Wholesaler, Retailer and Insurer including, but not limited
to, any liability for any chargebacks or for any amounts advanced by or
otherwise due Insurer hereunder. The determination of the amount of any
liabilities shall be at the sole discretion of Insurer. The parties agree
Insurer retains the absolute and unilateral right to settle and resolve all
claims or causes of action, in its sole discretion, raised or asserted by any
person concerning the actions of Wholesaler or Retailers. Wholesaler's joint
and several liability shall not be contingent on input by Wholesaler in any such
settlements or resolutions. A first lien is hereby reserved to Insurer upon any
sums due to Wholesaler from Insurer for the satisfaction of any liability
arising pursuant to this Agreement. Insurer and Distributor do not waive any of
its other rights to pursue collection of any indebtedness owed by Wholesaler or
Retailers to Insurer. In the event Insurer initiates legal action to collect any
indebtedness of Wholesaler or Retailers, or their agents, Wholesaler shall
reimburse Insurer for reasonable attorney fees and expenses in connection
therewith. As used in this Section 14, "Insurer" shall be deemed to refer to,
and shall include, all affiliates of Insurer.
15. INDEMNIFICATION
Insurer and Distributor hereby agrees to indemnify and hold harmless Agency,
Wholesaler and each of its affiliates, officers or directors against any losses,
expenses (including reasonable attorneys' fees), claims, damages or liabilities
to which Agency, Wholesaler or such affiliates, officers or directors becomes
subject insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon Insurer's performance,
non-performance or breach of this Agreement, or are based upon any untrue
statement contained in any registration statement (or any post-effective
amendment thereof) or in the Prospectus or any amendment or supplement to the
Prospectus.
Wholesaler and Agency hereby agree, jointly and severally, to indemnify and hold
harmless Insurer and Distributor and each of their current and former
affiliates, directors and officers and each person, if any, who controls or has
controlled Insurer or Distributor within the meaning of the federal securities
laws, against any losses, expenses (including reasonable attorneys' fees),
claims (including, but not limited to, claims for commissions or other
compensation), damages or liabilities to which Insurer and Distributor and any
such affiliates, director or officer or controlling person may become subject
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon Wholesaler's or Retailer's recruited by
Wholesaler, performance, non-performance, or breach of this Agreement or any
other agreement between Wholesaler, Retailer and Insurer including, but not
limited to, any unauthorized use of sales materials, any misrepresentations, or
any sales practices concerning the Policies.
16. INTEREST
Any unpaid obligation of Wholesaler to Insurer or Distributor under this
Agreement shall accrue interest at the lesser of the rate of fifteen percent per
annum, or the maximum interest rate otherwise permitted by applicable law.
17. LIMITATIONS
Nothing in this Agreement shall be construed as authorizing Wholesaler to incur
any indebtedness on behalf of Insurer or Distributor or any of its affiliates.
No party other than Insurer and Distributor shall have the authority on behalf
of Insurer or Distributor to enter into any selling agreement, or to make,
alter, waive or discharge any policy, contract, or certificate issued by
Insurer, to waive any forfeiture or to grant, permit, nor extend the time for
making any payments nor to guarantee earnings or rates, nor to alter the forms
which Insurer may prescribe or substitute other forms in place of those
prescribed by Insurer, nor to enter into any proceeding in a court of law or
before a regulatory agency in the name of or on behalf of Insurer.
18. INDEPENDENT CONTRACTORS
Wholesaler, Agency and Retailers are independent contractors with respect to
Insurer and Distributor. Nothing contained within this Agreement shall be
construed as creating a partnership between the parties hereto. Wholesaler,
Agency and their respective agents, representatives, and employees shall not at
any time hold themselves out to the public to be employees of Insurer or
Distributor.
19. NOTICES
All notices or communications shall be sent to the address shown below or to
such other address as the party may request by giving written notice to the
other parties:
Insurer:
American Equity Investment Life Insurance Company
Suite 440
0000 Xxxxxxx Xxxxxxx
Xxxx Xxx Xxxxxx, Xxxx 00000
Distributor:
EquiTrust Marketing Services, Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxxx Xxx Xxxxxx XX 00000
Wholesaler:
(b) For purpose of communications pertaining to compliance and
supervision, Wholesaler hereby designates the following person and address to
receive such communications and notices at the following address:
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Wholesaler covenants to promptly notify Insurer and Distributor of any change in
such designated person or address.
20. ENTIRE AGREEMENT
This Agreement is the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings among such parties with respect to such subject
matter. No course of dealing, course of performance and no parole evidence of
any nature shall be used to supplement or modify any terms hereof, provided,
however, any obligation of Wholesaler to Insurer or any of its affiliates
pursuant to a prior agreement of any type shall continue as an obligation
thereunder.
21. SEVERABILITY
Any provision of this Agreement which is found to be invalid, void or illegal
shall in no way affect, impair or invalidate any other provision hereof, and
such other provisions shall remain in full force and effect.
22. AMENDMENT OF AGREEMENT
Insurer and Distributor reserve the right to amend this Agreement at any time,
and the receipt of compensation on any Policy written by any Retailer recruited
by Wholesaler after notice of any such amendment has been sent to Wholesaler
shall constitute the Wholesaler's agreement to any such amendment.
23. ASSIGNMENT
This Agreement may not be assigned except upon the written consent of all
parties; provided, however, that the rights, obligations, duties and
responsibilities of Distributor hereunder may be assigned to a properly
qualified affiliate of Insurer upon the written consent of Insurer and
Distributor.
24. WAIVER
Failure of any party to insist upon strict compliance with any of the conditions
of this Agreement shall not be construed as a waiver of any of the conditions,
but the same shall remain in full force and effect. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute a waiver of
any other provisions, whether or not similar, nor shall any waiver constitute a
continuing waiver.
25. BINDING EFFECT
This Agreement shall be binding on and shall inure to the benefit of the parties
to hereto and their respective successors and assigns; provided that Wholesaler
may not assign this Agreement or any rights or obligations hereunder without the
prior written consent of Insurer.
26. GOVERNING LAW
This Agreement shall be construed in accordance with and governed by the laws of
the state of Iowa.
27. TERMINATION
This Agreement may be terminated, without cause, by any party upon thirty (30)
days prior written notice; and may be terminated for failure to perform
satisfactorily or other cause by any party immediately; and shall be terminated
if Insurer or Wholesaler shall cease to be broker-dealers, or a registered
representative of such a registered broker-dealer, under the Exchange Act or
members in good standing with the NASD. Without limiting the foregoing, Insurer
or Distributor may terminate this Agreement if it is determined by Insurer or
Distributor, in their sole and absolute discretion, that Wholesaler is not
adequately recruiting Retailers or promoting or providing services to facilitate
the solicitations for and sales of the Policies. Upon termination of this
Agreement, the terms of Sections 8, 11, 12, 13,14, 15, 16, 17 and 26 shall
survive and be binding upon the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
INSURER:
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
DISTRIBUTOR:
By:
--------------------------------
Name:
------------------------------
Title:
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WHOLESALER:
By:
--------------------------------
Name:
------------------------------
Title:
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AGENCY
By:
--------------------------------
Name:
------------------------------
Title:
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EXHIBIT A
THE POLICIES
American Equity Life Annuity Account
American Equity Life Variable Account
EXHIBIT B
ADMINISTRATIVE SERVICES AGREEMENT
BETWEEN
[INSERT BROKER/DEALER].
AND
[INSERT INSURANCE AGENCY]
This Administrative Services Agreement, made as of the _____ day
of __________, 199___, by and between ___________________. ("Broker/Dealer"), a
corporation organized and existing under the laws of the State of ___________,
and _________________________. ("Insurance Agency"), a corporation organized and
existing under the laws of the State of ______.
WITNESSETH:
WHEREAS, Broker/Dealer is a broker/dealer registered with the
Securities and Exchange Commission ("SEC");
WHEREAS, Broker/Dealer desires to market variable insurance
product in (_______);
WHEREAS; variable insurance products may be sold in (_______) only
by persons that are licensed insurance agencies;
WHEREAS; (________) imposes requirements relating to domestic
incorporation of insurance agencies that Broker/Dealer cannot satisfy;
WHEREAS; Insurance Agency is a licensed insurance agency and is
associated with Broker/Dealer through stock ownership or contractual
arrangement; and
WHEREAS; Broker/Dealer and Insurance Agency desire to enter into
an arrangement for the offer and sale of variable insurance products through
common employees and representatives of Broker/Dealer and Insurance Agency that
complies with the terms and conditions of the First of America Brokerage
Service, Inc. no-action letter issued by the SEC staff (pub. avail Sept. 28,
1995) so that neither Insurance Agency nor its unregistered employees (defined
below) will be required to register separately with the SEC as broker/dealers
pursuant to Section 15(b) of the Securities Exchange Act of 1934 (the "1934
Act");
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties set forth below, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 DUAL REPRESENTATIVES. Individuals who are registered principals
or representatives of Broker/Dealer and licensed insurance agents associated
with Insurance Agency.
1.2 EFFECTIVE DATE. The date as of which this Agreement is executed.
1.3 UNREGISTERED EMPLOYEES. Individuals associated with Broker/Dealer
or Insurance Agency that do not hold all of the required registrations, licenses
and qualifications to sell Variable Products.
1.4 VARIABLE PRODUCTS. The variable life insurance policies and
variable annuity contracts offered from time to time by Broker/Dealer and
Insurance Agency in (__________).
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1 ORGANIZATION AND GOOD STANDING. Each party hereto represents and
warrants that it is a corporation duly organized, validly existing and in good
standing under the laws of that jurisdiction set forth on page one (1) of this
Agreement; has all requisite corporate power to carry on its business as it is
now being conducted and is qualified to do business in each jurisdiction in
which such qualification is necessary under applicable law.
2.2 REGISTRATION OF BROKER/DEALER. Broker/Dealer represents and
warrants that, at all times when performing its functions and fulfilling its
obligations under this Agreement, it is or will be registered as a broker/dealer
with the SEC and in each state or other jurisdiction in which Broker/Dealer
intends to perform its functions and fulfill its obligations hereunder, if
required, and is or will be a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD").
2.3 LICENSING AND APPOINTMENT OF INSURANCE AGENCY. Insurance Agency
represents and warrants that, at all times when performing its functions and
fulfilling its obligations under this Agreement, it is or will be: (a) licensed
to sell Variable Products in each state or other jurisdiction in which Insurance
Agency intends to perform its functions and fulfill its obligations hereunder;
and (b) appointed by the insurance company issuing the Variable Products.
2.4 AUTHORIZATION. each party hereto represents and warrants that the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein have been duly authorized by all necessary
corporate action, and when so executed and delivered this Agreement will be the
valid and binding obligation of such party enforceable in accordance with its
terms.
2.5 NO CONFLICTS. Each party hereto represents and warrants that the
consummation of the transactions contemplated herein, and the fulfillment of the
terms of this Agreement, will not conflict with, result in any breach of any of
the terms and provisions of, or constitute (with or without notice or lapse of
time) a default under, the articles of incorporation or bylaws of such party, or
any indenture, agreement, mortgage, deed of trust, or other instrument to which
such party is a party or by which it is bound, or violate any law, or, to the
best of such party's knowledge, any order, rule or regulation applicable to such
party of any court or of any federal or state regulatory body, administrative
agency or any other governmental instrumental having jurisdiction over such
party or any of its properties.
ARTICLE 3
RESPONSIBILITIES AND OBLIGATIONS OF BROKER/DEALER
3.1 REGISTRATION OF DUAL REPRESENTATIVES: ASSOCIATED PERSONS.
Broker/Dealer shall ensure that each Dual Representative will be registered and
qualified as necessary with the NASD and any appropriate state regulatory
authority, and will be deemed an associated person of Broker/Dealer within the
meaning of Section 3(a)(18) of the 0000 Xxx.
3.2 TRAINING AND SUPERVISION. Broker/Dealer, through its designated
principals or members of its staff authorized to supervise employees, shall
train, supervise, control, and assume responsibility for all of the securities
activities of the Dual Representatives in connection with the offer and sale of
Variable Products.
3.3 CONDUCT MANUALS TO UNREGISTERED EMPLOYEES. Broker/Dealer shall
provide conduct manuals to be given to Unregistered Employees of Insurance
Agency that specify the limitations on their permissible activities, as set
forth below in Section 4.4. Insurance Agency shall provide such conduct manuals
to its Unregistered Employees. A form of such manual is attached hereto as
EXHIBIT A.
3.4 SUPERVISORY PROCEDURES TO DUAL REPRESENTATIVES. Broker/Dealer
shall require Dual Representatives to adhere to the policies and procedures
contained in Broker/Dealer's written Supervisory Procedures for registered
representatives, and Broker/Dealer shall monitor their compliance in this
regard.
3.5 COMPLIANCE WITH APPLICABLE LAW. Broker/Dealer shall comply, and
shall require that the Dual Representatives comply, with all applicable
statutory and regulatory requirements of the federal and state securities laws,
rules, regulations and regulatory policies and all applicable NASD rules and
regulatory policies.
3.6 ADVERTISEMENTS AND PROMOTIONAL MATERIALS. Neither Broker/Dealer
nor Insurance Agency shall use any advertisements or promotional materials
unless a designated principal of Broker/Dealer shall have approved such
advertisements and promotional materials prior to their distribution to ensure
that they are in compliance with federal and state securities laws and NASD
rules. Broker/Dealer shall assume full responsibility for all such
advertisements and promotional materials, and all such materials shall be deemed
to be Broker/Dealer's materials.
3.7 MAINTENANCE OF BOOKS AND RECORDS. Broker/Dealer shall maintain
books and records relating to transactions in Variable Products in its home
office in _________________> Where state insurance law mandates, duplicate
books and records relating to the sales of Variable Products may be maintained
by Insurance Agency, as stated below in Section 4.6. Such books and records
will be deemed books and records of Broker/Dealer and will be readily accessible
for examination by the SEC, the NASD, and other self-regulatory organizations of
which Broker/Dealer may become a member and other governmental authorities.
ARTICLE 4
RESPONSIBILITIES AND OBLIGATIONS OF INSURANCE AGENCY
4.1 ASSOCIATED PERSON. Insurance Agency shall be deemed an associated
person of Broker/Dealer within the meaning of Section 3(a)(18) of the 1934 Act.
4.2 DUAL REPRESENTATIVES. All securities services in connection with
the sale of Variable Products will be provided by the Insurance Agency only
through the Dual Representatives. Insurance Agency shall ensure that the Dual
Representatives will effect securities transactions and provide securities
services related to variable insurance products.
4.3 SUSPENSION. Insurance Agency shall terminate or suspend from all
Variable Products activities conducted by Insurance Agency any Dual
Representative whom the SEC, the NASD or any other self-regulatory organization
bars or suspends from association with Broker/Dealer or any other broker/dealer.
4.4 UNREGISTERED EMPLOYEES. Insurance Agency shall ensure that its
Unregistered Employees shall not: (a) engage in any securities activities; or
(b) receive any compensation based on transactions in securities or the
provision of securities advice. Insurance Agency shall further ensure that
its Unregistered Employees will not recommend any security, give investment
advice with respect to securities, discuss the merits of any security or type of
security, or handle any question that might require familiarity with the
securities industry. Insurance Agency shall require all Unregistered Employees
to refer all Variable Products-related questions to Dual Representatives.
Insurance Agency shall further ensure that Unregistered Employees will not
handle or maintain customer funds in connection with securities transactions
other than providing clerical or ministerial assistance. These obligations
concerning Unregistered Employees are included in Broker/Dealer's conduct manual
for Unregistered Employees, which will be provided to Unregistered Employees of
Insurance Agency, as stated in Sections 3.3 and 4.5, and is attached hereto as
Exhibit A.
4.5 MONITORING UNREGISTERED EMPLOYEES. Insurance Agency shall monitor
the activities of its Unregistered Employees, and ensure their compliance with
the limitations on their permissible activities as set forth in Broker/Dealer's
conduct manual for Unregistered Employees.
4.6 MAINTENANCE OF BOOKS AND RECORDS. Where state insurance law
mandates, duplicates of those books and records maintained by Broker/Dealer
relating to the sales of Variable Products will be maintained by Insurance
Agency, although such books and records will be deemed books and records will be
deemed books and records of Broker/Dealer. Insurance Agency shall ensure that
such books and records will be readily accessible for examination by the SEC,
and NASD, any other self-regulatory organization of which Broker/Dealer may
become a member, and other governmental authorities.
ARTICLE 5
PAYMENTS FOR VARIABLE PRODUCTS
5.1 CUSTOMER CHECKS: HANDLING CUSTOMER FUNDS. Broker/Dealer and
Insurance Agency shall take all necessary and appropriate steps to ensure that
the following procedures are observed:
(a) Initial checks and applications for the purchase of Variable
Products shall be forwarded by Broker/Dealer by noon of the
following business day to the insurance company issuing the
Variable Products and shall bear the initials of a principal of
the Broker/Dealer indicating that the application has been
reviewed by such principal for suitability, completeness and
accuracy;
(b) any subsequent payments will be sent directly by the customer to
the insurance company issuing the Variable Products;
(c) if any checks or applications are received by Broker/Dealer or
Insurance Agency, such checks and applications will be forwarded
to the insurance company issuing the Variable Products by
Broker/Dealer, or its Dual Representatives, by noon of the next
business day following such receipt;
(d) if the insurance company issuing the Variable Products receives
customer checks and applications directly, Broker/Dealer shall
request from such insurance company copies necessary to make any
required suitability determinations; and
(e) only Dual Representatives (and no Unregistered Employees) will:
(i) handle checks routed through Broker/Dealer and Insurance
Agency; and (ii) receive or handle customer funds in connection
with the sale of Variable Products.
Neither Broker/Dealer, Insurance Agency, nor any of their employees shall cash
premium checks, or use any portion of a premium check for a commission, if any,
or for any other purpose other than as a premium.
ARTICLE 6
COMPENSATION
6.1 COMPENSATION. (INSERT COMPENSATION TERMS OR REFER TO SCHEDULE.)
Insurance Agency shall pay to Broker/Dealer as compensation for Broker/Dealer's
services hereunder one hundred (100) percent of the compensation it receives for
the sale of Variable Products, net of any payments made to Dual Representatives,
so that such compensation can be included in the revenues of the Broker/Dealer
for purposes of complying with applicable laws, rules, regulations, and
regulatory policies. Any compensation paid to Dual Representatives for
securities transactions shall be determined solely by Broker/Dealer and such
payments shall be paid as directed by, and on behalf of, Broker/Dealer and shall
be included in the revenues of the Broker/Dealer.
ARTICLE 7
GENERAL PROVISIONS
7.1 TERM OF AGREEMENT: TERMINATION. This Agreement will become
effective as of the Effective Date and will remain in effect for a period of one
year, and will automatically continue in effect for one-year periods thereafter.
This Agreement may be terminated earlier by agreement in writing by all the
parties hereto. After termination takes effect, Insurance Agency shall not hold
itself out as being authorized or able to sell Variable Products or as being
associated with Broker/Dealer. Furthermore, upon termination of this Agreement,
all authorizations, rights, and obligations shall cease except: (a) the
agreements contained in Sections 4.6 and 7.10 hereof; and (b) the obligation to
settle accounts hereunder.
7.2 ASSIGNMENT SUCCESSION. This Agreement will not be assignable by
any party hereto except that each party may assign its rights (but not its
obligations) hereunder to any affiliated company, provided that such company is
properly licensed and registered. This Agreement will insure to the benefit of
and be binding upon the parties and each of their successors.
7.3 ENTIRE AGREEMENT: MODIFICATION. This Agreement contains the
entire agreement and understanding of the parties with respect to the subject
matter hereof, and supersedes all prior agreements, arrangements and
understandings, written or oral, between the parties, and no waiver,
modification or change of any of its provisions will be valid unless in writing
and signed by the parties hereto, or in the case of a waiver, by the party
waiving compliance.
7.4 WAIVER OF BREACH. Failure of any party to enforce any provision
of this Agreement will not constitute a course of conduct or waiver in the
future of the right to enforce the same or any other provision.
7.5 SEVERABILITY: PARTIAL INVALIDITY. The parties to this Agreement
desire and intend that the terms and conditions of this Agreement be enforced to
the fullest extent permissible under the laws and public policies applied in
each jurisdiction in which enforcement is sought. The parties agree
specifically that, if any particular term or condition of this Agreement is
adjudicated, or becomes by operation or law, invalid or unenforceable, this
Agreement will be deemed amended to delete the portion that is adjudicated, or
that becomes by operation of law, invalid or unenforceable, the deletion or
reduction to apply only with respect to the operation of the term or condition,
and the remainder of the Agreement to remain in full force and effect. A
deletion or reduction resulting from any adjudication will apply only with
respect to the operation of that term in the particular jurisdiction in which
the adjudication is made.
7.6 NOTICES. Any notice, request, demand or other communication
required or permitted hereunder will be in writing and will be delivered in one
of the following manners: by personal delivery, which will be effective on the
day so delivered; by registered or certified mail, which will be effective three
days after mailing; by telecopier, which will be effective when receipt is
acknowledged; and by courier guaranteeing next day delivery, which will be
effective on the earlier of the second business day after timely delivery to the
courier or the day of actual delivery by the courier. All notices to a party
will be sent to the following addresses or to such other address or person as
such party may designate by notice to each other party hereunder:
(a) TO BROKER/DEALER:
(b) TO INSURANCE AGENCY:
7.7 GOVERNING LAW. This Agreement will be governed by and construed
in accordance with the internal laws of the State of (__________) without regard
to the conflict of law provisions thereof.
7.8 COUNTERPARTS. This Agreement may be executed simultaneously in
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.
7.9 HEADINGS. The headings in the sections of this Agreement are
inserted for convenience only and will not constitute a part hereof.
7.10 COMPLAINTS AND INVESTIGATIONS. The parties will notify each other
promptly if either receives any customer complaint or notice of any regulatory
investigation or proceeding or judicial proceeding with respect to their
respective activities or the activities of any Dual Representative. The parties
will cooperate fully in investigating any such complaint and in responding to
any such proceeding.
IN WITNESS HEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date and year first above written.
[Broker/Dealer].
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
[Insurance Agency]
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
EXHIBIT A
CONDUCT MANUAL
CONDUCT MANUAL RELATING TO
ACTIVITIES OF UNREGISTERED EMPLOYEES OF
[INSURANCE AGENCY]
IN CONNECTION WITH THE SALE OF VARIABLE INSURANCE PRODUCTS
Since you are not licensed or qualified to sell variable insurance
products ("Variable Products"), you must be very careful not to perform any
activities or provide any information to customers that could confuse a customer
as to your role in the sale of Variable Products. Under federal and state
securities laws, and state insurance laws, only properly licensed registered,
and qualified persons may solicit customers or recommend or discuss insurance or
investment products with a customer.
In sum, this means that you should provide only "clerical" and
"ministerial" services. The permissible activities for employees of
______________________. ("Insurance Agency") who do not hold all the required
securities registrations and insurance licenses (hereinafter "Unregistered
Employees") shall be limited to:
(a) referring prospective customers to an individual who holds
all the requisite insurance and securities qualifications
(a "Dual Representative");
(b) arranging an appointment with or taking a message for a
Dual Representative if a Dual Representative is absent or
unavailable;
(c) referring telephone calls and other written and oral
communications to a Dual Representative; and
(d) referring all Variable Products-related questions to a Dual
Representative.
When engaging in any of the foregoing permissible activities,
Unregistered Employees shall limit his or her discussion of the Variable
Products to statements advising customers of the availability of information
about the Variable Products from the broker/dealer affiliated with Insurance
Agency, i.e., _________________-, and the referral of such customer to a Dual
Representative. Such Unregistered Employees shall not offer investment advice,
make recommendations, discuss the features, merits, investment options, or
suitability of any Variable Product or handle any question that might require
familiarity with the securities industry. Such Unregistered Employees shall not
handle or maintain customer funds in connection with securities transactions,
handle or maintain securities, or have any involvement in securities
transactions other than providing clerical or ministerial advice. Nothing in
this Conduct Manual shall limit the ability of Insurance Agency or its employees
to provide administrative or clerical services to _________________________.
EXHIBIT C
COMPENSATION
