EXHIBIT (3)(b)
--------------
FORM OF BROKER/DEALER SUPERVISION AND SALES AGREEMENT
BY AND BETWEEN
AFSG SECURITIES CORPORATION
AND THE BROKER/DEALER.
SELECTED BROKER AGREEMENT
AGREEMENT dated , 19 , by and between AFSG
---------------------------- ----
Securities Corporation ("Distributor"), a Pennsylvania corporation, AUSA Life
Insurance Company, Inc. ("Company") and
--------------------------------------
("Broker"), a corporation. This Agreement
------------------- --------------------
supersedes and replaces any prior Selected Broker Agreement regarding the
subject matter between the parties hereto.
WITNESSETH:
In consideration of the mutual promises contained herein, the parties hereto
agree as follows:
A. Definitions
-----------
(1) Contracts--Variable life insurance contracts and/or variable annuity
contracts described in Schedule A attached hereto and issued by AUSA Life
Insurance Company, Inc. and for which Distributor has been appointed the
principal underwriter pursuant to Distribution Agreements, copies of
which have been furnished to Broker.
(2) Accounts--Separate accounts established and maintained by Company
pursuant to the laws of New York, as applicable, to fund the benefits
under the Contracts.
(3) The Funds--, open-end management investment companies registered under
the 1940 Act, shares of which are sold to the Accounts in connection with
the sale of the Contracts, as described in the Prospectus for the
Contracts.
(4) Registration Statement--The registration statements and amendments
thereto relating to the Contracts, the Accounts, and the Funds, including
financial statements and all exhibits.
(5) Prospectus--The prospectuses included within the Registration Statements.
(6) 1933 Act--The Securities Act of 1933, as amended.
(7) 1934 Act--The Securities Exchange Act of 1934, as amended.
(8) 1940 Act--The Investment Company Act of 1940, as amended.
(9) SEC--The Securities and Exchange Commission.
(10) NASD--The National Association of Securities Dealers, Inc.
B. Agreements of Distributor
-------------------------
(1) Pursuant to the authority delegated to it by Company, Distributor hereby
authorizes Broker during the term of this Agreement to solicit
applications for Contracts from eligible persons provided that there is
an effective Registration Statement relating to such Contracts and
provided further that Broker has been notified by Distributor that the
Contracts are qualified for sale under all applicable securities and
insurance laws of the state or jurisdiction in which the application will
be solicited. In connection with the solicitation of applications for
Contracts, Broker is hereby authorized to offer riders that are available
with the Contracts in accordance with instructions furnished by
Distributor or Company.
(2) Distributor, during the term of this Agreement, will notify Broker of the
issuance by the SEC of any stop order with respect to the Registration
Statement or any amendments thereto or the initiation of any proceedings
for that purpose or for any other purpose relating to the registration
and/or offering of the Contracts and of any other action or circumstance
that may prevent the lawful sale of the Contracts in any state or
jurisdiction.
(3) During the term of this Agreement, Distributor shall advise Broker of any
amendment to the Registration Statement or any amendment or supplement to
any Prospectus.
C. Agreements of Broker
--------------------
(1) It is understood and agreed that Broker is a registered broker/dealer
under the 1934 Act and a member of the NASD and that the agents or
representatives of Broker who will be soliciting applications for the
Contracts also will be duly registered representative of Broker.
(2) Commencing at such time as Distributor and Broker shall agree upon,
Broker agrees to use commercially reasonable efforts to find purchasers
for the Contracts acceptable to Company. In meeting its obligation to use
its commercially reasonable efforts to solicit applications for
Contracts, Broker shall, during the term of this Agreement, engage in the
following activities:
(a) Regularly utilize only training, sales and promotional materials
relating to the Contracts which have been approved by Company.
(b) Establish and implement reasonable procedures for periodic inspection
and supervision of sales practices of its agents or representatives and
submit periodic reports to Distributor as may be requested on the results
of such inspections and the compliance with such procedures.
(c) Broker shall take reasonable steps to ensure that the various
representatives appointed by it shall not make recommendations to an
applicant to purchase a Contract in the absence of reasonable grounds to
believe that
the purchase of the Contract is suitable for such applicant.
While not limited to the following, a determination of suitability shall
be based on information furnished to a representative after reasonable
inquiry of such applicant concerning the applicant's insurance and
investment objectives, financial situation and needs, and, if applicable,
the likelihood that the applicant will make the premium payments
contemplated by the Contract.
(d) Broker shall adopt, abide by, and enforce the principles set forth in
the Principles and Code of Ethical market Conduct of the Insurance
Marketplace Standards Association as adopted by the Company and provided
to You with this Agreement.
(3) All payments for Contracts collected by agents or representatives of
Broker shall be held at all times in a fiduciary capacity and shall be
remitted promptly in full together with such applications, forms and
other required documentation to an office of the Company designated by
Distributor. Checks or money orders in payment of initial premiums shall
be drawn to the order of "AUSA Life Insurance Company, Inc." Broker
acknowledges that the Company retains the ultimate right to control the
sale of the Contracts and that the Distributor or Company shall have the
unconditional right to reject, in whole or part, any application for the
Contract. In the event Company or Distributor rejects an application,
Company immediately will return all payments directly to the purchaser
and Broker will be notified of such action. In the event that any
purchaser of a Contract elects to return such Contract pursuant to the
free look right, the purchaser will receive a refund of either premium
payments or the value of the invested portion of such premiums as set
forth in the Contract and according to applicable state law. The Broker
will be notified of any such action.
(4) Broker shall act as an independent contractor, and nothing herein
contained shall constitute Broker, its agents or representatives, or any
employees thereof as employees of Company or Distributor in connection
with solicitation of applications for Contracts. Broker, its agents or
representatives, and its employees shall not hold themselves out to be
employees of Company or Distributor in this connection or in any dealings
with the public.
(5) Broker agrees that any material, including material it develops, approves
or uses for sales, training, explanatory or other purposes in connection
with the solicitation of applications for Contracts hereunder (other than
generic advertising materials which do not make specific reference to the
Company or the Contracts) will only be used after receiving the written
consent of Distributor to such material and, where appropriate, the
endorsement of Company to be obtained by Distributor.
(6) Solicitation and other activities by Broker shall be undertaken only in
accordance with applicable Company procedures, ethical principles and
manuals, and applicable laws and regulations. No agent or representative
of Broker shall solicit applications for the contracts until duly
licensed and appointed by Company (such appointment not to be
unreasonably withheld by the Company) as a life insurance and variable
contract broker or agent of Company in the appropriate states or other
jurisdictions. Broker shall ensure that such agents or representatives
fulfill any training requirements necessary to be licensed and that such
agents or representatives are properly supervised and controlled pursuant
to the rules and regulations of the SEC and the NASD. Broker shall
certify agents' and representatives' qualifications to the satisfaction
of Distributor, including certifying a General Letter of Recommendation
set forth in Exhibit A hereto. Broker understands and acknowledges that
neither it nor its agents or representatives is authorized by Distributor
or Company to give any information or make any representation in
connection with this Agreement or the offering of the Contracts other
than those contained in the Prospectus or other solicitation material
authorized in writing by Distributor or Company.
(7) Broker shall not have authority on behalf of Distributor or Company to:
make, alter or discharge any Contract or other form; waive any
forfeiture, extend the time of paying any premium; receive any monies or
premiums due, or to become due, to Company, except as set forth in
Section C(3) of this Agreement. Broker shall not expend, nor contract for
the expenditure of the funds of Distributor, nor shall Broker possess or
exercise any authority on behalf of Broker by this Agreement.
(8) Broker shall have the responsibility for maintaining the records of its
representatives licensed, registered and otherwise qualified to sell the
Contracts. Broker shall maintain such other records as are required of it
by applicable laws and regulations. The books, accounts and records of
the Company, the Account, Distributor and Broker relating to the sale of
the Contracts shall be maintained so as to clearly and accurately
disclose the nature and details of the transactions. All records
maintained by the Broker in connection with this Agreement shall be the
property of the Company and shall be returned to the Company upon
termination of this Agreement, free from any claims or retention of
rights by the Broker. Nothing in this Section C(8) shall be interpreted
to prevent the Broker from retaining copies of any such records which the
Broker, in its discretion, deems necessary or desirable to keep. The
Broker shall keep confidential any information obtained pursuant to this
Agreement and shall disclose such information only if the Company has
authorized such disclosure or if such disclosure is expressly required by
applicable federal or state regulatory authorities.
D. Compensation
------------
(1) Pursuant to the Distribution Agreement between Distributor and Company,
Distributor shall cause Company to arrange for the payment of commissions
to Broker as compensation for the sale of each contract sold by an
agent or representative of Broker. Such amounts shall be paid to Broker
or its subsidiary insurance agency, whichever is authorized to receive
insurance commissions under applicable insurance laws, in accordance with
the schedules attached hereto, the General Agent Agreement, and the
commission schedules attached thereto. All terms and conditions of the
General Agent Agreement not otherwise conflicting with the terms herein,
shall be incorporated by reference herein. Company shall identify to
Broker with each such payment the name of the agent or representative of
Broker who solicited each Contract covered by the payment.
(2) Neither Broker nor any of its agents or representatives shall have any
right to withhold or deduct any part of any premium it shall receive for
purposes of payment of commission or otherwise. Neither Broker nor any of
its agents or representatives shall have an interest in any compensation
paid by Company to Distributor, now or hereafter, in connection with the
sale of any Contracts hereunder.
E. Complaints and Investigations
-----------------------------
(1) Broker and Distributor jointly agree to cooperate fully in any insurance
or securities regulatory investigation or proceeding or judicial
proceeding arising in connection with the Contracts marketed under this
Agreement. Broker, upon receipt, will notify Distributor of any customer
complaint or notice of any regulatory investigation or proceeding or
judicial proceeding in connection with the Contracts. Broker and
Distributor further agree to cooperate fully in any securities regulatory
investigation or proceeding or judicial proceeding with respect to
Broker, Distributor, their affiliates and their agents or representatives
to the extent that such investigation or proceeding is in connection with
Contracts marketed under this Agreement. Broker shall furnish applicable
federal and state regulatory authorities with any information or reports
in connection with its services under this Agreement which such
authorities may request in order to ascertain whether the Company's
operations are being conducted in a manner consistent with any applicable
law or regulation. Each party shall bear its own costs and expenses of
complying with any regulatory requests, subject to any right of
indemnification that may be available pursuant to Section G of this
Agreement.
F. Term of Agreement
-----------------
(1) This Agreement shall continue in force for one year from its effective
date and thereafter shall automatically be renewed every year for a
further one year period; provided that either party may unilaterally
terminate this Agreement upon thirty (30) days' written notice to the
other party of its intention to do so.
(2) Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except (a) the agreements contained in Section E
hereof; (b) the indemnity set forth in Section G hereof; and (c) the
obligations to settle accounts hereunder, including commission payments
on premiums subsequently received for Contracts in effect at the time of
termination or issued pursuant to applications received by Broker prior
to termination.
(3) Distributor and Company reserve the right, without notice to Broker, to
suspend, withdraw or modify the offering of the Contracts or to change
the conditions of their offering.
G. Indemnity
---------
(1) Broker shall be held to the exercise of reasonable care in carrying out
the provisions of this Agreement.
(2) Distributor agrees to indemnify and hold harmless Broker and each officer
or director of Broker against any losses, claims, damages or liability,
joint or several, to which Broker or such officer or director 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 any untrue statement or alleged untrue statement of a
material fact, required to be stated therein or necessary to make the
statements therein not misleading, contained in any Registration
Statement or any post-effective amendment thereto or in the Prospectus or
any amendment or supplement to the Prospectus, or any sales literature
provided by the Company or by the Distributor.
(3) Broker agrees to indemnify and hold harmless Company and Distributor and
each of their current and former directors and officers and each person,
if any, who controls or has controlled Company or Distributor within the
meaning of the 1933 Act or the 1934 Act, against any losses, claims,
damages or liabilities to which Company or Distributor and any such
director or officer or controlling person 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:
(a) Any unauthorized use of sales materials or any verbal or written
misrepresentations or any unlawful sales practices concerning the
Contracts by Brokers, its agents, employees or representatives; or
(b) Claims by agents or representatives or employees of Broker for
commissions, service fees, development allowances or other compensation
or remuneration of any type;
(c) The failure of Broker, its officers, employees, or agents to comply
with the provisions of this Agreement; and Broker will reimburse Company
and Distributor and any director or officer or controlling person of
either for any legal or other expenses reasonably incurred by Company,
Distributor, or such director, officer of controlling person in
connection with investigating or defending any such loss, claims, damage,
liability or action. This indemnity agreement will be in addition to any
liability which Broker may otherwise have.
H. Assignability
-------------
This Agreement shall not be assigned by either party without the written
consent of the other.
I. Governing Law
-------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of Iowa.
J. Notices
-------
All communications under the Agreement shall be in writing and shall be
deemed delivered when mailed by certified mail, postage prepaid.
Alternatively, communications shall be deemed delivered by timely
transmission of the writing, delivery charges prepaid, to a third party
company or governmental entity providing delivery services in the
ordinary course of business, which guarantees delivery to the other party
on the next business day. Notices shall be sent to the following
addresses unless and until the addressee notifies the other party of a
change in address according to the terms of this Section:
(1) if to Broker, to: (2) if to the Distributor or Company,
send to the Company, to:
------------------------------ AUSA Life Insurance Company, Inc.
------------------------------(street address) Financial Markets Division
------------------------------ 0000 Xxxxxxxx Xxxx XX
------------------------------(city, state, zip) Xxxxx Xxxxxx, Xxxx 00000
------------------------------(telephone no.)
------------------------------(fax no.) (000) 000-0000 (telephone no.)
Attention: (000) 000-0000 (fax no.)
------------------
In Witness Whereof, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
--------------------------------
(Broker Name)
By:
-----------------------------
Title:
--------------------------
AFSG SECURITIES CORPORATION
(Distributor)
By:
-----------------------------
Title:
--------------------------
AUSA LIFE INSURANCE COMPANY, INC.
(Company)
By:
-----------------------------
Title:
--------------------------
EXHIBIT A
General Letter of Recommendation
BROKER-DEALER hereby certifies to the Company that all the following
requirements will be fulfilled in conjunction with the submission of
licensing/appointment papers for all applicants as agents of the Company
submitted by BROKER-DEALER. BROKER-DEALER will, upon request, forward proof of
compliance with same to the Company 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
the Company to hold himself out in good faith to the general public.
2. We have on file a U-4 form which was completed (and has been amended, as
required) 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, including but not
limited to: (i) checking for and investigating criminal arrest and
conviction records available to Broker-Dealer on the CRD system; and (ii)
communicating with each employer of the applicant for 3 years prior to the
applicant's registration with our firm. 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.
At the time of application, in those states required by the Company, we
shall provide the Company with a copy of the entire U-4 form, or designated
pages, thereof, completed by each applicant, including any amendments or
updates thereto, and we certify those items are true copies of the
original.
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 the Company 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 the
Company in order to place insurance chiefly and solely on his life or
property, or lives or property of his relatives, or property or liability
of his associates.
6. We will not permit any applicant to transact insurance in a state as an
agent until duly licensed and appointed therefor with the appropriate
State Insurance Department. 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.
