EXHIBIT (3)(b)
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FORM OF BROKER/DEALER SUPERVISION
AND SALES AGREEMENT
BY AND BETWEEN AEGON USA SECURITIES, INC.
AND THE BROKER/DEALER
SELECTED BROKER AGREEMENT
AGREEMENT dated__________________________,19____, by and between AEGON USA
Securities, Inc. (Distributor), an Iowa corporation
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
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(1) Contracts--Variable life insurance contracts and/or variable annuity
contracts described in Schedule A attached hereto and issued by PFL
Life Insurance Company ("Company") 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 Iowa, 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
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(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
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(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.
(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 "PFL Life Insurance Company." 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 an Contract elects to return such Contract
pursuant to the free look right, the purchaser will receive a refund of
the greater of premium payments or the value of the invested portion of
such premiums. 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 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.
D. Compensation
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(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 affiliated insurance agency, whichever is
authorized to receive insurance commissions under applicable insurance
laws, in accordance with the schedules attached hereto, any General
Agent Agreement between Company and Broker or its affiliated insurance
agency, and the commission schedules attached thereto. 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
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(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 H of this Agreement.
F. Term of Agreement
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(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 H 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, upon five days written
notice to Broker, unless a shorter period is necessary due to
applicable law, regulation, order or other regulatory action, to
suspend, withdraw or modify the offering of the Contracts or to change
the conditions of their offering.
G. Confidentiality
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(1) The Distributor, Company and Broker each agree that all information,
including but not limited to customer information that is proprietary
in nature, communicated to it by the other, whether before the
effective date or during the term of this Agreement, shall be received
in strict confidence, shall be used only for the purposes of this
Agreement and that no such information shall be disclosed to a third
party by the recipient party, its agents, or employees without the
prior written consent of the other party. Except as may be necessary by
reason of legal or regulatory requirements, each party hereto agrees to
take all reasonable precautions to prevent the disclosure to outside
parties of such information including without limitation, the terms of
this Agreement.
(2) Distributor and Company expressly acknowledge that the names,
addresses, telephone numbers and other information identifying
policyowners and prospective policyowners established under this
Agreement is proprietary information of the Broker. The Distributor and
Company agree that they will not cross-sell or otherwise solicit
customers of the Broker without the Broker's prior written consent. The
Company reserves the right, however, to contact policyowners for policy
service purposes, and will attempt, to the extent practicable, to
notify the Broker in advance of any proposed mass mailing or other
group communication to customers of the Broker. The Company reserves
the right to contact policyowners for purposes of conservation of
existing policies in the event the Company reasonably determines a
systematic replacement of policies is being conducted or attempted and
such replacement does not reasonably appear to be in the best interest
of the policyowners as provided in the General Agent Agreement between
the Company and the Broker or its affiliated insurance agency.
H. Indemnity
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(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.
Company and Distributor will reimburse Broker and any director or
officer or controlling person of either for any legal or other expenses
reasonably incurred by Broker, or such director, officer or 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 Company or Distributor may otherwise have.
(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 or 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.
I. Assignability
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This Agreement shall not be assigned by either party without the
written consent of the other.
J. Governing Law
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This Agreement shall be governed by and construed in accordance with
the laws of the State of Iowa.
K. Notices
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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, to:
AEGON USA Securities, Inc.
_______________________________________ 0000 Xxxxxxxx Xxxx XX
_______________________(street address) Xxxxx Xxxxxx, Xxxx 00000-0000
_______________________(telephone no.) (000) 000-0000 (telephone no.)
_______________________(fax no.) (000) 000-0000 (fax no.)
Attention:_____________ Attention: Xxxxx X Xxxxxxxx,
___________ President
In Witness Whereof, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
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(Broker Name)
By:
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Title:
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AEGON USA SECURITIES, INC.
(Distributor)
By:
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President
EXHIBIT A
General Letter of Recommendation
BROKER hereby certifies to the Distributor and 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. BROKER 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.
