EXHIBIT 3(b)
SELLING AGREEMENT
AGREEMENT made this _______ day of _________________, 19__, by and
between ANNUITY INVESTORS LIFE INSURANCE COMPANY, an Ohio life insurance company
("AILIC"), AAG SECURITIES, INC., an Ohio corporation ("AAGS") and
_______________________________________, a ___________ corporation
("Broker/Dealer") and any and all insurance agency affiliates or subsidiaries of
Broker/Dealer ("Agencies"). Broker/Dealer and the Agencies are hereinafter
referred to as the "Producers." The Agencies are listed in Appendix I to this
Agreement, as may be amended from time to time.
WHEREAS, AILIC issues certain variable annuity and variable insurance
policies, and certificates thereunder in the case of group policies
("Contracts"), described in this Agreement, which are deemed securities under
the Securities Act of 1933, and
WHEREAS, AAGS is duly licensed as a broker-dealer with the National
Association of Securities Dealers, Inc. ("NASD") and the Securities and Exchange
Commission ("SEC"), and
WHEREAS, Broker/Dealer is duly licensed as a broker-dealer with the
NASD and SEC, and
WHEREAS, AILIC has appointed AAGS as the principal underwriter of the
Contracts, and
WHEREAS, AAGS proposes to have Broker/Dealer's registered
representatives ("Representatives") who are also duly licensed insurance agents
solicit sales of the Contracts, and
WHEREAS, AAGS delegates to Broker/Dealer and the Agencies, to the
extent legally permitted, training, supervisory and certain administrative
responsibilities and duties.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties agree as follows:
1. Appointment. AILIC and AAGS hereby appoint Broker/Dealer and the
Agencies under the securities and insurance laws to supervise Representatives in
connection with the distribution of the Contracts, solely in accordance with the
Contract and the then current Prospectus relating thereto, 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 Contracts and all such persons shall be subject to the
control of Broker/Dealer with respect to such persons' securities-related
activities in connection with the Contracts. 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 Contracts; Producers warrant that Representatives qualify under applicable
federal and state laws to engage in the sale of the Contracts; and Producers
will cause such Representatives to be registered representatives of
Broker/Dealer before such Representatives engage in the solicitation of
applications for the Contracts in jurisdictions where AILIC has authorized such
solicitation. 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 (the "1934 Act"). By
submitting to AAGS or AILIC a registered representative for appointment,
Broker/Dealer shall be deemed to have certified Representatives' qualifications
including those set forth in Appendix II hereto. Upon request, Broker/Dealer
shall confirm the foregoing by delivering a letter in the form of Appendix II
hereto. Producers shall ensure that the Contracts are offered, sold and serviced
only through Representatives who comply with all appropriate state insurance
licensing requirements and solely in accordance with the Contract and the then
current Prospectus relating thereto.
3. Appointment of Agents. With respect to each Representative to be
appointed, Broker/Dealer shall submit to AAGS an Agent Data Form, a copy of a
current NASD status sheet, a copy of the appropriate state insurance license and
such additional documents as requested by AILIC or AAGS and shall await approval
from AILIC before a Representative shall be permitted to solicit applications
for the sale of Contracts.
4. Notice of Representative's Noncompliance. In the event a
Representative fails or refuses to submit to supervision by Broker/Dealer,
ceases to be a registered representative of Broker/Dealer, or fails to meet the
rules and standards imposed by Broker/Dealer on its Representatives,
Broker/Dealer shall certify such fact to AILIC and shall immediately notify such
Representative that he or she is no longer authorized to sell the Contracts, and
Broker/Dealer shall take whatever additional action may be necessary to
terminate the sales activities of such Representative relating to the Contracts.
5. Compliance with NASD Rules of Fair Practice and Federal and State
Security and Insurance Laws. Broker/Dealer shall and shall ensure that its
Representatives fully comply with the requirements of the 1934 Act and the NASD
and all other applicable federal or state laws applicable to the offer, sale and
service of the Contracts and will establish such rules and procedures as may be
necessary to cause diligent supervision of the securities and insurance
activities of Representatives. Broker/Dealer agrees to maintain all
transactions, 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 AILIC or AAGS, Broker/Dealer shall furnish or make available for
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inspection, such appropriate records as may be necessary to establish such
diligent supervision.
6. Prospectus, Sales Promotion Material and Advertising. Broker/Dealer
shall be provided with, and Broker/Dealer shall forward to Representatives,
prospectuses relating to the Contracts and such other material as AILIC or AAGS
determines to be necessary or desirable for use in connection with sales of the
Contracts. Broker/Dealer shall ensure that no sales promotion materials or
advertising related to AILIC, AAGS and/or the Contracts shall be used by
Representatives unless the specific item has first been approved by AILIC or
AAGS in writing. Producers and their Representative shall discontinue the use of
any item when notified by AILIC or AAGS.
No Producer or any Representative shall in connection with the offer or
sale of Contracts use any advertising material, prospectus, proposal or
representation either in general or in relation to a Contract, AAGS or AILIC
unless furnished by AAGS or AILIC or until the consent of AAGS or AILIC is first
obtained. Neither Producers nor any Representative shall issue or recirculate
any illustration, circular, statement or memorandum of any sort, misrepresenting
the terms, benefits or advantages of any Contract, or make any misleading
statement as to benefits thereon or the financial position of AILIC.
7. Applications. Producers shall cause all applications for Contracts
to be made on application forms supplied by AILIC and all payments collected by
Broker/Dealer or any Representative to be remitted promptly in full, together
with such application forms and any other documentation, directly to AILIC at
the address indicated on such application. Producers shall review all such
applications for completeness. Producers shall be solely responsible for
determining the suitability of Contracts for purchasers. Checks or money orders
for Purchase Payments shall be drawn to the order of AILIC. All applications are
subject to acceptance or rejection by AILIC at its sole discretion. Producers
agree to remit in full to AILIC immediately upon receipt all Purchase Payments
received on such applications, forms and any other required documentation
obtained in respect to the Contracts.
8. Compensation.
(a) Commissions. Commissions payable in connection with the
Contracts for which Broker/Dealer is the broker of record shall be payable in
accordance with the Schedule(s) attached hereto and made a part hereof and shall
be paid by or on behalf of AAGS to one or more of the Producers in accordance
with applicable insurance and securities laws. Payment of commissions to the
Producer(s) shall be full and sole compensation for all services and expenses
and for the fulfillment of duties under this Agreement. These commissions will
be paid as a percentage of Purchase Payments received in cash and accepted by
AILIC on applications obtained by the Representatives of Broker/Dealer provided
a Contract is issued, delivered to and accepted by the applicant. Upon
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termination of this Agreement, all compensation to Broker/Dealer hereunder shall
cease; however, Producers shall continue to be liable for any chargebacks (as
defined in Subsections (A), (B) and (C) below). Producers shall have no interest
in any surrender charges, deductions or other fees payable to AILIC or AAGS. The
Producers shall pay the person(s) entitled thereto as provided in any agreement
between Producers and the Representatives, and AILIC and AAGS shall have no
responsibility or liability therefor.
A) If AAGS has paid any compensation in advance,
Producers hereby agree that they are indebted to AAGS if the Purchase
Payment on which the compensation is based is not paid within the time
provided by the Contract, or allowed by AILIC, or, if the Purchase
Payment is paid, if Producers would not have been entitled to the
compensation when the Purchase Payment is paid. AAGS, in its sole
discretion, will determine whether or not Producers would have been
entitled to the compensation when the Purchase Payment is paid.
B) Upon demand by AAGS, the Producers hereby agree to
return to AAGS any compensation paid to them based on refunds or
adjustments of Contract values, in whole or in part, including in the
event of termination, modification or recision of a Contract. AILIC may
in its sole discretion, and at any time, terminate, modify or rescind
the sale of any Contract or contract issued by it, and Producers are
indebted to AAGS for the amount of compensation deemed necessary to
refund until Producers repay such amount.
C) Any compensation which would be due Producers
under this Agreement shall not become due if any Producer is indebted
to AAGS or AILIC. In the case of such indebtedness, any compensation
will be applied by AAGS to reduce the indebtedness, regardless of any
claim or lien by Producers or by someone other than AAGS. Upon
termination of this Agreement, the Producers shall immediately pay to
AAGS any and all amounts which are owed.
The foregoing subsections A, B and C shall survive the termination of
this Agreement.
(b) Time of Payment. AAGS shall pay or cause to be paid any
compensation due Producers within fifteen (15) business days after the end of
the calendar month in which Purchase Payments upon which such compensation is
based are accepted by AILIC, and for which Contracts have been issued and
accepted by the applicant.
(c) Amendments of Schedules. AAGS may, upon at least ten (10)
business days prior written notice to Broker/Dealer, amend the attached
Schedule(s) made part hereof. Any such amendments shall be in writing and shall
apply to premiums received by AILIC after the effective date of such written
notice.
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(d) Prohibition Against Rebates and Replacements. Except as
permitted by law, if any Producer or any Representative of Broker/Dealer shall
rebate or offer to rebate all or any part of a Purchase Payment or commission on
a Contract, or if any Producer or any Representative of Broker/Dealer provides
or offers to provide an applicant with other valuable consideration or
inducement in connection with a Contract, the same shall be grounds for
termination of this Agreement by AILIC or AAGS. If any Producer, or any
Representative of Broker/Dealer shall withhold any Purchase Payment on a
Contract, the same shall also be grounds for termination of this Agreement by
AILIC or AAGS. If any Producer, or any Representative of Broker/Dealer, shall at
any time induce or endeavor to induce any person paying Purchase Payments on any
Contract issued hereunder to discontinue Purchase Payments or to relinquish any
such Contract except under circumstances in which there are reasonable grounds
for believing the Contract is not suitable for such person, any and all
compensation due Producers shall cease and terminate.
(e) Indebtedness. Nothing in this Agreement shall be construed
as giving Broker/Dealer the right to incur an indebtedness on behalf of AILIC or
AAGS.
9. Investigations. Producers, AAGS and AILIC 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 Contracts. Without limiting the foregoing:
(a) AILIC and AAGS 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 with respect to AILIC or AAGS
which may affect the issuance of the Contracts marketed under this Agreement.
(b) Producers will promptly notify AILIC and AAGS 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 Contracts or any activity in connection therewith.
In the case of a substantive complaint in connection with the
Contracts, AILIC, AAGS, and Producers will cooperate in investigating such
complaint. In connection therewith, Producers shall provide AILIC and AAGS with
all information reasonably requested. AILIC and AAGS shall respond to and defend
any such complaint.
10. Independent Contractors. Producers in performing their duties
hereunder shall be acting as independent contractors and not as agents or
employees of AILIC or AAGS. In addition, nothing contained herein shall be
construed as a partnership among AILIC, AAGS and Producers.
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11. Indemnification. Producers shall indemnify and hold harmless AILIC
and AAGS from any claims, damages, expenses (including reasonable attorneys'
fees and 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 Contracts, 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 Contracts.
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 servicing operations of Broker/Dealer. Broker/Dealer shall indemnify
and hold harmless AILIC and AAGS 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.
AILIC and AAGS 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 AILIC or AAGS or their employees in the offering for
sale, solicitation, or servicing of the Contracts and from any negligent,
fraudulent, or intentional acts, omissions, or errors of AILIC or AAGS 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 Contracts.
12. Termination. AAGS may terminate this Agreement immediately and
without notice if the Broker/Dealer fails to maintain its registration as a
broker/dealer under the 1934 Act or a member of the NASD. AAGS 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
AAGS's satisfaction under the terms and conditions of this Agreement or if
Broker/Dealer or Agency becomes insolvent or files a petition for bankruptcy,
reorganization or liquidation under applicable law. AAGS and Broker/Dealer or
Agency shall each have the right, upon thirty days' written notice to the other,
to terminate this agreement for whatever reason deemed appropriate by such
party. Notwithstanding the termination of this Agreement, AAGS, 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. In furtherance of the
foregoing, the provisions of Sections 8, 9, 10, 11 and 15 hereof shall survive
termination
13. Fidelity Bond. Broker/Dealer shall secure and maintain a fidelity
bond in at least the amounts prescribed under Article III, Xxxxxxx 00 xx xxx
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XXXX Rules of Fair Practice. Broker/Dealer shall provide AAGS with a copy of
said bond within thirty days after executing this Agreement.
14. Confirmations. Upon or prior to completion of each transaction for
which the issuance of a confirmation is legally required, a confirmation
reflecting the fact of the transaction and those items under SEC Rule 10b-10
will be promptly forwarded by AILIC on AAGS's behalf. A copy of such
confirmation will be made available to Broker/Dealer.
15. Scope of Authority for Processing Business. Broker/Dealer shall be
authorized to: (a) accept applications for Contracts, (b) receive for forwarding
to AILIC the Purchase Payments paid in connection with any such applications,
(c) deliver the Contracts issued to the applicants by AILIC, and (d) collect
Purchase Payments for forwarding to AILIC as specifically directed by such
applicants who have authorized Broker/Dealer to act on their behalf.
Broker/Dealer is not authorized to: (a) alter any applications or
Contracts, (b) collect or in any manner receive premiums from applicants in the
form of checks, money orders or electronic funds transfers payable to any person
or entity other than AILIC, (c) waive any forfeiture, (d) make any settlement of
any claim or claims, or (e) perform any function other than as expressly
authorized in the preceding paragraph.
16. Miscellaneous. AAGS and AILIC reserve the right, without notice to
Producers, to suspend, withdraw, or modify the offering of the Contracts or to
change the conditions of their offering with respect to anyone. Producers are
not authorized to market any Contract until notified by AILIC or AAGS of an
effective registration statement therefor with the Securities and Exchange
Commission. AAGS will provide Broker/Dealer with a list, and updates thereto
which list the jurisdictions in which the Contracts may be sold.
The right is reserved to AILIC and AAGS to contract separately with any
employee, representative or agent of Producers in connection with the Contracts
or otherwise, provided that the terms of any such contract do not conflict with
the provisions of this Agreement. Nothing contained herein shall prevent or
restrict (i) AILIC or AAGS from marketing said Contracts through other
broker/dealers, insurance agents and brokers, and through its own organization,
or (ii) Producers from acting as agent and/or broker for other insurance
companies, whether or not affiliated with a Producer, in any jurisdiction with
respect to any insurance or securities product, including securities products
similar or identical to those of AILIC or AAGS. Neither Producers nor their
Representatives shall have any right of exclusivity to market and sell Contracts
in any geographical area.
Any manuals, guides, books, tapes, programs and other materials, if
any, developed by AILIC or AAGS, which may be delivered to Broker/Dealer from
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time to time will be owned solely by AILIC or AAGS, 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 AILIC or AAGS may establish at the time of such
delivery. Upon termination of this Agreement, such items will be returned
promptly to AAGS.
Included on Appendix I is a list of jurisdictions in which
Broker/Dealer or Agency is duly authorized to sell the Contracts and receive
commissions thereon and Producers represent that this list is true and complete.
17. Notices, Etc. All notices, demands, xxxxxxxx, requests and other
written communications hereunder shall be deemed to have been properly given to
Producers when delivered by hand or sent by registered or certified United
States mail, postage prepaid and addressed to Producers at
_________________________________________________________. Any communications to
AILIC or AAGS shall be deemed properly given if delivered by hand or sent by
registered or certified United States mail, postage prepaid and addressed to
AILIC or AAGS, respectively, at 000 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxxx,
Xxxx 00000, Attention: Xxxx X. Xxxxxxxx, Esq. The address for notice hereunder
may be changed by giving written notice of such change to the other parties in
accordance with the provisions of this Section 17.
18. Governing Law. This Agreement shall be interpreted in accordance
with the laws of the State of Ohio. The parties hereto agree that any state or
federal court located in Xxxxxxxx County, Ohio shall have sole and exclusive
jurisdiction and be the appropriate venue for any required judicial
interpretation and enforcement of this Agreement.
19. 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.
20. No Assignment. This Agreement, and the rights and duties hereunder,
may not be assigned or delegated except as expressly provided for herein.
Commissions to be paid pursuant to this Agreement may not be assigned without
the consent of AAGS.
21. No Waiver. Any failure to enforce any right under this Agreement or
to object to any violations of its terms shall not operate as a waiver of any
rights.
This Agreement shall be effective as of the date it is fully executed
by all parties. This Agreement constitutes the entire Agreement between the
parties hereto. However, AILIC and AAGS reserve the right to modify the
Schedules as provided herein. AILIC and AAGS 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
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objections are received in writing by AILIC or AAGS within fifteen (15) days
after notification is mailed. This Agreement supersedes in its entirety any and
all previous agreements among the parties hereto with respect to the Contracts;
provided, however, any former agreement shall survive with respect to any
Contracts offered or sold during the term thereof.
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.
ANNUITY INVESTORS LIFE AAG SECURITIES, INC.
INSURANCE COMPANY
BY: ____________________________ BY: ___________________________
Name: __________________ Name: ________________
Title:__________________ Title: _______________
BROKER/DEALER:
-------------------------------
BY: ___________________________
Name: ________________
Title: _______________
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APPENDIX I
[LIST OF AGENCIES]
States
Name of Agency in which Licensed Taxpayer I.D. No.
-------------- ----------------- -----------------
By executing below, the foregoing entities agree to join in this
Agreement as an Agency and be bound by all terms of such Agreement.
Name of Agency
-----------------------------
By: _________________________
Its: ________________________
Name of Agency
-----------------------------
By: _________________________
Its: ________________________
Name of Agency
-----------------------------
By: _________________________
Its: ________________________
Name of Agency
-----------------------------
By: _________________________
Its: ________________________
APPENDIX II
General Letter of Recommendation
BROKER/DEALER hereby certifies to AAGS and AILIC that all the following
requirements will be fulfilled in conjunction with the submission of
licensing/appointment papers for all applicants as agents of AILIC submitted by
BROKER/DEALER. BROKER/DEALER will, upon request, forward proof of compliance
with same to AAGS and AILIC in a timely manner.
1. We have made a thorough and diligent inquiry and investi-
gation 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 AILIC 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.
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.
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 AILIC 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 AILIC in order to place insurance chiefly and
solely on his life or property, or lives or property of his
relatives, or lines or property 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.
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