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Exhibit 3(b)
SELLING AGREEMENT
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AGREEMENT dated as of March 1, 1993, by and between PML Securities
Company ("PML"), a Pennsylvania Corporation that is registered as a
broker-dealer 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 Sentinel Financial
Services Company a Vermont partnership that is registered as a broker-dealer
with the SEC under the 1934 Act and a member of the NASD ("Broker Dealer") and
licensed as an insurance agent pursuant to the laws of the State of Vermont.
RECITAL
PML has been appointed as the principal underwriter of the
Providentmutual Life and Annuity Company of America ("PLACA") variable annuity
policies (the "Policies").
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree
as follows:
1. AUTHORIZATION TO SELL AND SERVICE
Subject to the terms and conditions of this Agreement, PML appoints and
authorizes Broker Dealer to solicit sales of and provide service with respect to
the Policies which are set forth on Schedule "A" attached hereto and
incorporated herein by reference, on a non-exclusive basis, provided that there
is an effective Registration Statement relating to such Policies under the
Securities Act of 1933 ("1933 Act "). Broker Dealer hereby accepts such
appointment and agrees to use its best efforts to find purchasers for the
Policies.
2. REPRESENTATIVES
The agents or representatives of Broker Dealer that will be soliciting
applications for the Policies ("Representatives") will be NASD registered
representatives of Broker Dealer, will possess all licenses necessary or
appropriate to sell variable life insurance and annuities in the state in which
applications for Policies are being solicited or signed and will have an
appropriate appointment or license by PLACA.
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3. COMMISSIONS
As compensation for the sale of each of the Policies by the
Representatives, PML shall pay to Broker Dealer, either directly or through
PLACA acting on PML's behalf, the commissions set forth on Schedule "B" attached
hereto and incorporated herein by reference (the "Commissions"). The Commissions
shall be subject to chargeback in accordance with the terms and conditions set
forth on such Schedule "B". PML reserves the unconditional right, upon thirty
(30) days written notice, to change the Commissions payable for Policies issued,
renewed, converted, exchanged or otherwise modified on or after the effective
date of such change, as set forth in the notice of change. No Commissions will
be due and payable for any surrendered or cancelled Policies which are
subsequently reinstated or rewritten through efforts of representatives of PML
or PLACA other than the Representatives. Broker Dealer shall be solely
responsible for the payment of any Commissions, payments or other considerations
of any kind whatsoever to the Representatives in connection with the sale of the
Policies (hereinafter referred to as "Representatives Compensation"). Broker
Dealer shall also be responsible for all tax reporting with respect to
commissions paid to the Representatives.
4. TERM OF AGREEMENT
This Agreement shall continue in force for one year from its effective
date and will automatically renew from year to year thereafter; provided that
this Agreement shall be terminated immediately if Broker Dealer breaches this
Agreement. Any party may terminate this Agreement at any time, without cause,
upon sixty (60) days written notice to the other party. Upon termination of this
Agreement, all authorizations, rights and obligations shall cease except
Sections 5(h), 9, and 10 of this Agreement shall survive the termination of this
Agreement, and Broker Dealer shall settle all accounts with PML and shall
continue to be responsible for all applicable chargebacks.
5. BROKER DEALER'S OBLIGATIONS
In addition to other obligations assumed by Broker Dealer under this
Agreement:
(a) Broker Dealer shall be insurance licensed. Broker Dealer shall have
all Representatives insurance licensed and appointed by PLACA. All insurance
licenses and appointments will be processed in accordance with PLACA procedures.
PLACA may, in its sole discretion, refuse, terminate or non-renew any such
license and appointment, without cause.
(b) Broker Dealer shall only pay Representatives Compensation to
Representatives who are properly insurance licensed and appointed with PLACA and
registered with the NASD.
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(c) Broker Dealer shall service the Policies in accordance with the
written administrative procedures established by PML or PLACA from time to time.
(d) Broker Dealer shall ensure that the Representatives shall use their
best efforts to keep the Policies in force.
(e) Broker Dealer shall ensure that the Representatives shall only
recommend the purchase of the Policies upon reasonable grounds to believe that
such purchase is suitable to the applicant. Among other things, a determination
of suitability shall be based on the standards provided by PML from time to
time.
(f) Broker Dealer agrees that no sales promotion or other advertising
materials relating to the Policies shall be used unless provided or approved in
writing by PML prior to such use. No representations in connection with the
sales 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 sales promotion or other advertising materials, shall
be made by Broker Dealer or any of the Representatives. Broker Dealer and the
Representatives shall solicit applications for the Policies only in states where
such Policies have been approved by state authorities.
(g) Broker Dealer shall maintain or shall cause to have maintained the
records of the Representatives as required by applicable laws and regulations.
The books, accounts and records of Broker Dealer relating to the sale of
Policies shall be maintained so as to clearly and accurately disclose the nature
and details of all of the transactions. All such records shall be subject to
inspection and duplication by PLACA or PML at any time while this Agreement is
in force.
(h) Broker Dealer shall keep confidential all information obtained
pursuant to this Agreement (including, without limitation, names of the
purchasers of the Policies) and shall disclose such information only if PML has
authorized such disclosure in writing or if such disclosure is expressly
required by applicable federal or state regulatory authorities.
(i) Broker Dealer shall maintain its registration under the 1934 Act and
shall always be a member in good standing of the NASD and shall maintain its
license as an insurance agent pursuant to the laws of the State of Louisiana and
any other state in which such license is required by the applicable insurance
laws and regulations for sale of the Policies.
(j) Broker Dealer shall investigate all Representatives relative to
their business reputation and competency to sell the Policies. In addition,
Broker Dealer will be responsible for training, supervision, and control of the
Representatives selling the Policies. Broker Dealer shall ensure that all
Representatives who will be soliciting and servicing the Policies are duly
registered with the NASD.
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(k) Broker Dealer shall ensure that all Representatives who will be
soliciting and servicing the Policies are duly licensed in those states in which
such license is required by the applicable insurance laws and regulations for
sale of the Policies.
(l) Upon request by PML, Broker Dealer shall furnish such records as are
necessary to establish that the terms of this paragraph 5 are satisfied.
6. PML'S OBLIGATIONS
In addition to other obligations assumed by PML under this Agreement:
(a) PML shall use its best efforts to ensure that PLACA uses its best
efforts to maintain effectiveness of the Policies' Registration Statements with
the SEC and any state securities commissions where blue-sky laws require
registration of the Policies and to maintain the appropriate approvals in each
state where Policies are to be sold. PML shall keep Broker Dealer advised of any
changes in the Status of the Registration Statements for the Policies.
(b) PML shall furnish Broker Dealer with information regarding the
states in which the Policies may be sold.
(c) PML, or its agent, shall furnish Broker Dealer with promotional
material for use at point of sale, applications, prospectuses and policy forms.
A reasonable charge established by PML may be made for such materials.
7. COMPLIANCE WITH STATE AND FEDERAL LAW.
Broker Dealer and the Representatives shall comply with all requirements
of the NASD, the 1933 Act, the 1934 Act and all other federal and/or state laws
applicable to the solicitation and service of the Policies or the operation of
Broker Dealer including, without limitation, the NASD Rules of Fair Practice,
Section 15(b)(4)(E) of the 1934 Act and all insurance replacement regulations
and regulations prohibiting the rebating of commissions.
8. INVESTIGATIONS; CUSTOMER COMPLAINTS
Broker Dealer agrees to cooperate fully in any insurance, securities or
other regulatory or judicial investigation or proceeding arising in connection
with the Policies, Broker Dealer, and/or any of the Representatives. Broker
Dealer shall permit applicable federal and state insurance and other regulatory
authorities to audit its records and shall furnish the foregoing authorities
with any information which such authorities may
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request in order to ascertain whether Broker Dealer is complying with all
applicable laws and/or regulations. Broker Dealer agrees to cooperate with PML
and PLACA in resolving all customer complaints with respect to the Policies,
Broker Dealer, and/or the Representatives.
9. INDEMNIFICATION
(a) PML hereby agrees to indemnify and hold harmless Broker Dealer and
each of its affiliates, officers or directors against any losses, expenses
(including reasonable attorneys fees), claims, damages or liabilities to which
Broker Dealer or such affiliates, officers or directors become subject, under
the 1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon PML's
performance, non-performance or breach of this Agreement, or are based upon any
material misstatement or omission contained in any Registration Statement (or
any post effective amendment thereof) or in the Prospectus or any amendment or
supplement to the Prospectus for the Policies.
(b) Broker Dealer hereby agrees to indemnify and hold harmless PML and
PLACA and each of their current and former affiliates, directors, officers and
each person, if any, who controls or has controlled PML or PLACA within the
meaning of the 1933 Act or the 1934 Act, 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 PML and
PLACA and any such affiliates, directors, officers or controlling persons may
become subject, under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon Broker Dealer and/or its Representatives performance, non-performance or
breach of this Agreement including, but not limited to, any unauthorized use of
sales materials, any oral or written misrepresentations, or any unlawful sales
practices concerning the Policies.
(c) Within 30 days after receipt by either party of notice of the
commencement of any action, such party shall, if a claim in respect thereof is
to be made, notify the other party in writing of the commencement thereof; but
the omission to so notify shall not relieve the indemnifying party from any
liability which it might otherwise have.
10. MISCELLANEOUS PROVISIONS
(a) All money payable in connection with the Policies is PLACA's
exclusive property, shall be drawn payable to "Providentmutual Life and Annuity
Company of America" and shall be transmitted to PLACA within two days of receipt
along with applications and other documents in accordance with the
administrative procedures of PLACA (as developed and amended from time to time
by PLACA) without any deduction or offset for any reason. All applications and
other communications shall be on forms supplied
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by PLACA and are subject to acceptance or rejection by PLACA in PLACA's sole
discretion, or by PML on behalf of PLACA. In the event an application is
rejected, all payments will be returned to the purchaser, and Broker Dealer will
be notified of such action.
(b) Broker Dealer agrees to make appropriate arrangements for delivery
to the applicant of the Policy accompanied by any additional appropriate
documents. Broker Dealer or the Representative will obtain, upon delivery of
the Policy to applicant, the required signature on PLACA's policy delivery
receipt and any application amendments and immediately forward such to PLACA.
(c) Broker Dealer agrees that for a period of two years from the
termination of the Agreement it shall not and shall cause the Representatives
not to directly or indirectly contact policyholders of PLACA for the purpose of
inducing or attempting to induce such policyholders to cancel, lapse or fail to
renew such Policies with PLACA, to discourage or attempt to discourage such
policyholders from paying any additional premiums under such policies, or
encouraging market timing activity.
(d) Broker Dealer and its Representatives are independent contractors
with respect to PML and PLACA and (i) shall not have the right to incur
indebtedness on behalf of PML or PLACA nor hold themselves out as employees of
PML or PLACA in connection with the solicitation of the Policies or otherwise
and (ii) shall not have the authority to make, alter, waive or discharge any
provision(s) of the Policies, to waive any forfeiture or to grant, permit, or to
extend the time of making any payments, or to alter or substitute the forms
which PLACA may prescribe, or enter into any proceeding in a court of law or
before a regulatory agency in the name of or on behalf of PML or PLACA.
(e) Broker Dealer represents that all of.its directors, officers, and
Representatives are and shall be covered by blanket fidelity bonds, including
coverage for larceny and embezzlement, issued by a reputable bonding company.
These bonds shall be maintained at Broker Dealer's expense and shall be, at
least, of the form, type and amount required under the NASD Rules of Fair
Practice. PML may require evidence, satisfactory to it, that such coverage is in
force and Broker Dealer shall give prompt written notice to PML of any notice of
cancellation or change of coverage.
(f) Broker Dealer represents that it has full power and authority to
enter into this Agreement.
(g) This Agreement shall be binding on and shall inure to the benefit of
the parties hereto and their respective successors and assigns provided that
Broker Dealer may not assign this Agreement without the prior written consent of
PML.
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(h) All notices or communications shall be sent to the addresses set
forth below or to such other address as any party may request by giving written
notice to the other parties.
TO PML: PML Securities Company
000 Xxxxxxxxxxx Xxxxx
Christiana Executive Campus
X.X. Xxx 00000
Xxxxxxxxxx, Xxxxxxxx 00000
TO BROKER DEALER: Sentinel Financial Services Company
National Life Drive
Montpelier, Vermont 05604
(i) This Agreement shall be governed by the laws of the State of
Delaware and constitutes the entire agreement and understanding between the
parties hereto with respect to the Policies. PML reserves the unconditional
right to amend this Agreement and the Schedules attached hereto and any of the
Policies or suspend the sales of any of the Policies at any time without prior
notice. The submission of an application by any Representative after notice of
any such amendment has been sent to Broker Dealer shall constitute Broker
Dealer's agreement to any such amendment.
(j) Notwithstanding the foregoing subparagraph (i), any future insurance
products issued by PLACA may be covered by this Agreement only as agreed by the
parties in writing.
(k) 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 such
conditions and no waiver of any of the provisions of this Agreement shall be
deemed a waiver of any other provisions.
(1) 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PML SECURITIES COMPANY
By: /s/ Xxxxx X. Xxxxx (SEAL)
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By: (SEAL)
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SCHEDULE "A"
Flexible Premium Deferred Variable Annuity Contracts (The Market Street VIP)
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SCHEDULE "B"
1. COMMISSIONS
1.1 For contracts sold by PML's registered representatives, PML shall pay to
Broker Dealer, either directly or through PLACA acting on behalf of PML,
1 % of the initial premium payment for each such contract, as
compensation for Broker Dealer's efforts in marketing and distribution
of the contracts.
1.2(a) For contracts sold by registered representatives of Broker Dealer or by
registered representatives of other broker-dealers which have entered
into selling agreements with Broker Dealer to distribute the contracts,
PML shall pay to Broker Dealer, either directly or through PLACA acting
on PML's behalf, 6% of each initial premium payment for a contract and
2% of each subsequent premium payment for such contract.
1.2(b) For contracts sold by registered representatives of other
broker-dealers which have entered into selling agreements with Broker
Dealer to distribute the contracts, Broker Dealer shall pay to such
broker-dealers, either directly or through PLACA acting on Broker
Dealer's behalf, 5% of the amount of each initial premium payment for a
contract and 2% of each subsequent premium payment for such contract.
2. CHARGEBACKS
If any contract sold by a registered representative of PML, a registered
representative of Broker Dealer or a registered representative of a
broker-dealer having a selling agreement with Broker Dealer is
surrendered or is otherwise cancelled, any commission paid under
Sections 1.1, 1.2(a) or 1.2(b) above shall be repaid to PML or PLACA, as
the case may be, by Broker Dealer pursuant to the following table:
If surrender occurs within the 100% of Commission paid with
first six months after a premium respect to such premium payment
payment:
If surrender occurs during the 50% of commission paid with
seventh through twelfth months respect to such premium
after a premium payment: payment
