Exhibit 99.A4.B
Exhibit 24(b)(3)(b)
Form of Broker/Dealer Supervisory and Service Agreement
AFSG Securities Corporation, Member NASD
PRINCIPAL UNDERWRITER FOR THE
AUSA VARIABLEANNUITY PLAN
BROKER-DEALER SUPERVISORY AND SERVICE AGREEMENT
This Broker-Dealer Supervisory and Service Agreement (the "Agreement") is
made this ____ day of _________, 2001, by and between AUSA Life Insurance
Company, Inc. ("AUSA"), AFSG Securities Corporation ("AFSG"), a broker-dealer
registered 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 WMA Securities, Inc.
("Broker-Dealer"), also a broker-dealer registered with the SEC under the 1934
Act and a member of the NASD, and World Financial Group, Inc., an insurance
agency affiliate ("Agency") of this broker-dealer, (hereinafter Broker/Dealer
and Agency are collectively referred to as "Producers"). In certain states,
"Agency" includes the insurance agency associated with Agency or Broker-Dealer
which is duly licensed in that state and named in the Appendix of this
Agreement.
RECITALS
WHEREAS, AUSA offers for sale certain variable annuity contracts in the
State of New York (hereinafter referred to as the "Plan");
WHEREAS, AFSG is the principal underwriter of the Plan;
WHEREAS, AFSG proposes to have Broker-Dealer's registered representatives
("Representatives") who are also licensed and appointed as life insurance agents
of AUSA in New York solicit and sell the Plan, which is deemed to be a security
under the Securities Act of 1933; and
WHEREAS, AUSA and AFSG propose to have Producers provide certain
supervisory and administrative services in connection with the distribution of
the Plan.
NOW THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. Appointment. AUSA and AFSG hereby appoint Agency under the insurance
laws and authorize Broker-Dealer under the securities laws to
supervise Representatives in connection with the distribution of the
Plan and to provide certain services as described herein.
2. Supervision of Representatives. Broker-Dealer shall have full
responsibility for the training and supervision of all Representatives
associated with Broker-Dealer who are engaged directly or indirectly
in the offer or sale of the Plan and all such persons shall be subject
to the control of Broker-Dealer with respect to such persons'
securities-regulated activities in connection with the Plan.
Broker-Dealer will establish rules, procedures and supervisory and
inspection techniques necessary to diligently supervise the activities
of its Representatives.
Producers will cause the Representatives to be trained in the sale of
the Plan; will use their best efforts to cause such Representatives to
qualify under applicable federal and New York state laws to engage in
the sale of the Plan; and will cause such Representatives to be
registered representatives of Broker-Dealer before such
Representatives engage in the solicitation of applications for the
Plan and will cause such Representatives to limit solicitation of
applications for the Plan to New York. Broker-Dealer has full
responsibility in connection with the training, supervision and
control of the Representatives as contemplated by Section 15(b)(4)(E)
of the Securities Exchange Act of 1934. Broker-Dealer shall certify
Representatives' qualifications to the satisfaction of AFSG, including
certifying a General Letter of
Recommendation set forth in Exhibit A hereto. Producers shall ensure
that the Plan is offered, sold and serviced only through
Representatives who comply with all appropriate state insurance
licensing requirements.
3. Representative's Application. Producers shall cause each such
Representative to execute an Agent Information Sheet and License Only
Agreement with AUSA before a Representative shall be permitted to
solicit applications for the sale of the Plan. AUSA shall furnish
Producers with copies of Agent Information Sheet forms and License
Only Agreements for execution by the Representatives.
4. Notice of Representative's Noncompliance. In the event a
Representative fails or refuses to submit to supervision of
Broker-Dealer, ceases to be a registered representative of
Broker-Dealer, or fails to meet the rules and standards imposed by
Producers on their Representatives, Producers shall certify such fact
to AUSA and shall immediately notify such Representative that he or
she is no longer authorized to sell the Plan, and Producers shall take
whatever additional action may be necessary to terminate the sales
activities of such Representative relating to the Plan.
5. Compliance with NASD Rules of Fair Practice and Federal and New York
State Security and Insurance Laws. Producers shall fully comply with
the requirements of the 1934 Act and all other applicable federal or
New York state laws applicable to the solicitation and service of the
Plan and will establish such rules and procedures as may be necessary
to cause diligent supervision of the securities and insurance
activities of Representatives. Producers agree to maintain appropriate
books and records concerning the activities of their Representatives
as required by the SEC, NASD or other regulatory agencies having
jurisdiction, or under applicable state insurance laws or regulations.
Upon request by AUSA or AFSG, Producers shall furnish such appropriate
records as may be necessary to establish such diligent supervision.
6. Prospectus, Sales Promotion Material and Advertising. Producers shall
be provided with, and Producers shall forward to Representatives, a
prospectus relating to the Plan and such other material as AFSG
determines to be necessary or desirable for use in connection with
sales of the Plan. Producers shall ensure that no sales promotion
materials or advertising related to the Plan shall be used by
Representatives unless the specific item has been approved by AFSG in
writing.
7. Applications. Producers shall cause all applications for the Plan to
be made on application forms supplied by AUSA and all payments
collected by Producers or any Representative to be remitted promptly
in full, together with such application forms and any other
documentation, directly to AUSA at the address indicated on such
application. Producers shall review all such applications for
completeness. Checks or money orders in payment on any such Plan shall
be drawn to the order of AUSA. All applications are subject to
acceptance or rejection by AUSA at its sole discretion. Producers
agree to remit in full to AUSA immediately upon receipt all premiums
received on such applications, forms and any other required
documentation obtained in respect of participants in the Plan.
8. Compensation. Agency shall serve as Paymaster for amounts due
Representatives. Such amounts shall be paid to Agency, whichever is
authorized to receive insurance commissions under applicable insurance
laws, by AUSA acting on behalf of AFSG in accordance with the Service
Fee and Commission Schedule attached hereto as Exhibit C. Agency
shall, in turn, pay Representatives amounts due them in connection
with the sales of the Plan and Representatives shall solely look to
Agency for payment of such amounts. Agency shall be compensated for
the services provided hereunder in accordance with the Service Fee and
Commission Schedule. Such amounts payable to Representatives and
Agency will be paid in cash or other legal tender based upon the Plan
accepted by AUSA on applications obtained by the Representatives. Upon
termination of this Agreement, all compensation to Agency and
Representatives hereunder shall cease; however, (i) Agency shall
continue to be liable for chargebacks pursuant to the provisions of
Service Fee and Commission Schedule or for any other amounts advanced
by or otherwise due AUSA hereunder, and (ii) Agency shall receive any
commissions due under such Schedule
(continuing or otherwise) arising out of a Plan sold by a
Representative prior to termination of this Agreement, provided that
the obligation to pay such commissions shall cease after the tenth
(10th) year following the date of issue of the Plan. Agency shall have
no interest in any surrender charges, deductions or other fees payable
to AUSA.
9. Investigations. Producers, AFSG and AUSA agree to cooperate fully in
any investigation or proceeding with respect to any Representative or
other agent or the Producers to the extent that such investigation or
proceeding is in connection with the Plan. Without limiting the
foregoing:
a. AFSG and AUSA will promptly notify Producers of any substantive
customer complaint or notice of any regulatory investigation or
proceeding or judicial proceeding received by it with respect to
Producers or any Representative or other agent of Producers or
with respect to AFSG or AUSA which may affect the issuance of the
Plan marketed under this Agreement.
b. Producers will promptly notify AFSG and AUSA of any substantive
customer complaint or notice of any regulatory investigation or
proceeding or judicial proceeding received by Producers with
respect to Producers or to any Representative or other agent of
Producers in connection with the Plan or any activity in
connection therewith.
In the case of a substantive customer complaint in connection
with the Plan, AFSG, AUSA and Producers will cooperate in
investigating such complaint, but any response to such complaint
will be the sole responsibility of AFSG or AUSA, as appropriate.
10. Independent Contractors. Producers in performing their duties
hereunder shall be acting as an independent contractors, and not as
agents or employees of AUSA or AFSG.
11. Indemnification. Producers shall indemnity and hold harmless AFSG and
AUSA from any claims, damages, expenses, liabilities or causes of
action, asserted or brought by anyone, resulting from any negligent,
fraudulent, or intentional acts, omissions, or errors of Producers,
their employees, registered representatives, other representatives, or
agents in the offering for sale, solicitation, or servicing of the
Plan, and from any negligent, fraudulent, or intentional acts,
omissions, or errors of Producers, their employees, registered
representatives, other representatives, or agents in violation of
Federal or State laws or regulations and NASD rules of any nature,
applicable to the offering for sale, solicitation, or servicing of the
Plan.
Broker-Dealer shall assume full responsibility for the activities of
all persons associated with it who are engaged directly or indirectly
in the sales and securities operations of Broker-Dealer. Broker-Dealer
shall indemnify and hold harmless AFSG and AUSA from any claims,
damages, expenses, liabilities or causes of action, asserted or
brought by anyone, resulting from any private business transactions of
any associated persons which are the subject of this paragraph.
AFSG and AUSA shall indemnify and hold harmless Producers from any
claims, damages, expenses, liabilities or causes of action, asserted
or brought by anyone, resulting from any negligent, fraudulent, or
intentional acts, omissions, or errors of AFSG or AUSA or their
employees in the offering for sale, solicitation, or servicing of the
Plan, and from any negligent, fraudulent, or intentional acts,
omissions, or errors of AFSG or AUSA or their employees in violation
of Federal or State laws or regulations and NASD rules of any nature,
applicable to the offering for sale, solicitation, or servicing of the
Plan.
12. Termination. AFSG may terminate this Agreement immediately and without
notice if the Broker-Dealer fails to maintain its registration as a
Broker-Dealer or a member of the NASD. AFSG may terminate this
Agreement immediately upon providing written notice to Broker-Dealer
or Agency if Broker-Dealer or Agency violates this Agreement or fails
to perform to AFSG's satisfaction under the terms and conditions of
this Agreement, or if Broker-Dealer or Agency becomes insolvent. AFSG
and Broker-Dealer or
Agency shall each have the right, upon five (5) days' written notice
to the other, to terminate this agreement for whatever reason deemed
appropriate by such party. Notwithstanding the termination of this
Agreement, AFSG, Broker-Dealer and Agency acknowledge that each of
them shall be individually and respectively liable, responsible and
accountable for any and all actions undertaken prior to the effective
date of the termination of this Agreement.
13. Fidelity Bond. Broker-Dealer shall secure and maintain a fidelity bond
in at least the amounts prescribed under Article III, Section 32 of
the NASD Rules of Fair Practice. Broker-Dealer shall provide AFSG with
a copy of said bond within thirty (30) days after executing this
Agreement.
14. Miscellaneous. AFSG and AUSA reserve the right, without notice to
Producers, to suspend, withdraw, or modify the offering of the Plan or
to change the conditions of their offering with respect to anyone.
Producers are not authorized to market any Plan until notified by AFSG
or AUSA of an effective registration statement therefor with the
Securities and Exchange Commission. Nothing contained herein shall
prevent or restrict (I) AUSA or AFSG from marketing said Plan through
other stock brokerage firms, insurance agents or brokers, and through
its own organization, or (II) Producers from acting as agents and/or
brokers for other insurance companies, whether or not affiliated with
Producers, in any jurisdiction with respect to any insurance or
securities product, including securities products similar or identical
to those of AUSA or AFSG.
Any manuals, guides, books, tapes, programs and other materials, if
any, developed by AFSG or AUSA, which may be delivered to Producers
from time to time will be owned solely by AFSG and AUSA, as the case
may be; however, during such time as this Agreement is in effect
between the parties hereto, if the Producers elect to do so,
Representatives may use any such manuals, guides, books, programs and
other materials which may have been delivered to the Producers but may
use them solely in the Producers' business hereunder, and upon such
terms and conditions as AFSG and AUSA may establish at the time of
such delivery. Producers shall pay AUSA promptly for all such
materials as set forth in Exhibit D. Upon termination of this
Agreement, such items will be returned promptly to AFSG. No material
prepared by Producers or Reps relating to AUSA or the Plan may be used
unless approved in writing in advance by Compliance Officer of AFSG
and Legal Department of AUSA.
Attached hereto as Exhibit B is a list of jurisdictions in which
Broker-Dealer or Agency is duly authorized to sell the Plan and
receive commissions thereon.
15. Governing Law. This Agreement shall be interpreted in accordance with
the laws of the State of Iowa. The parties hereto agree that the
Circuit Court for Linn County, Iowa shall have jurisdiction and be the
appropriate venue for any required judicial interpretation and
enforcement of this Agreement.
16. Binding Effect. 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.
17. Broker Dealer agrees to 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.
This Agreement shall be effective as of the date it is fully executed by
all parties. AUSA and AFSG reserve the right to modify the Service Fee and
Commission Schedule ("Schedule") under this Agreement by publishing from time to
time a revised schedule; such revised schedule will govern only new business
applications written on or after the effective date of the revised schedule.
AUSA and AFSG further reserve the right to amend from time to time this
Agreement, other than its schedule, by providing thirty (30) days' written
notice to the Broker-Dealer; Broker-Dealer shall be deemed to have accepted all
terms and conditions set forth in such amendment if no objections are received
in writing by AUSA and AFSG within thirty (30) days after notification is
mailed.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officials thereunto duly authorized, as of the day
and year first above written.
AUSA LIFE INSURANCE COMPANY, INC. AFSG SECURITIES CORPORATION
By: ___________________________________ By__________________________________
Title: __________________________________ Title: _____________________________
WORLD FINANCIAL GROUP, INC. WMA SECURITIES, INC.
By:____________________________________ By: ________________________________
(Signature) (Signature)
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(Print Full Name) (Print Full Name)
Title: __________________________________ Title: _____________________________
Contact Person __________________________ Contact Person _____________________
(Print Full Name) (Print Full Name)
EXHIBIT A
GENERAL LETTER OF RECOMMENDATION
BROKER-DEALER hereby certifies to AUSA that all the following
requirements will be fulfilled in conjunction with the submission of
licensing/appointment papers for all applicants as agents of AUSA
submitted by BROKER-DEALER. BROKER-DEALER will, upon request, forward
proof of compliance with same to AUSA in a timely manner.
1. We have made a good faith reasonable effort to conduct an
inquiry and investigation relative to each applicant's identity,
residence and business reputation and declare that each
applicant is known to be of good moral character, has a good
business reputation, is reliable, is financially responsible and
is worthy of a license. To our knowledge each individual is
trustworthy, competent and qualified to act as an agent for AUSA
to hold himself out in good faith to the general public.
2. We have on file a U-4 form which was completed 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, and each
applicant is presently registered as an NASD registered
representative.
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 AUSA 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 AUSA 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 as an
agent until duly licensed therefore. 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.
EXHIBIT B
TO
BROKER-DEALER SUPERVISORY AND SERVICE AGREEMENT
1.The following is a list of jurisdictions in which Broker-Dealer is duly
registered or licensed as a dealer or broker and is fully authorized to
sell the securities described in the Agreement:
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(OR) All states of the United States except:
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2.Notices permitted or required to be given to Broker-Dealer shall be
given to:
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Name
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Address
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City, State and Zip Code
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Telephone Number
3.Broker-Dealer's Taxpayer Identification
Number:--------------------------------------
