Exhibit 3(b)1
GREAT AMERICAN RESERVE INSURANCE COMPANY
PADCO FINANCIAL SERVICES, INC.
GROUP SELLING AGREEMENT
This Agreement is made between Great American Reserve Insurance Company
("Company") with Administrative Offices in Carmel, Indiana, PADCO Financial
Services, Inc. ("Underwriter") with Administrative Offices in Rockville,
Maryland, the Broker-Dealer named herein ("Broker"), and the Insurance Agent
named herein ("Insurance Agent"). The parties hereby agree as follows:
1. AUTHORIZATION.
Broker, either an individual, partnership, limited liability company, or
corporation, is hereby authorized by Company and Underwriter to solicit
applications for variable annuity policies ("Policies"), as set forth in the
Compensation Schedule which is made a part of the Group Selling Agreement, to
collect and remit initial required premiums to Company, and to promptly deliver
Policies issued by Company:
a. only in jurisdictions where Broker is duly licensed and appointed by
the appropriate regulatory agencies, and;
b. only in states or territories in which Company is admitted to do
business and only for those Policies offered by Company that have been
approved by the appropriate regulatory agencies.
Broker shall supply Company with copies of all certificates of qualification or
licenses required of Broker under this Agreement.
1.1. LIMITATION OF AUTHORITY, RELATIONSHIP.
Neither Broker nor Insurance Agent has authority during the time this Agreement
is in effect, or after termination, to:
a. make or modify Policies on behalf of Company or waive any of Company's
rights or requirements;
b. collect the first premiums on such Policies other than in the form of
a check or money order made payable to the Company.
c. endorse, cash or deposit any checks or drafts payable to Company;
d. open any bank account or trust account on behalf of, for the benefit
of, or containing the name of, Company;
e. advertise or publish any matter or thing, including use of the names
or logos of Company or those of its subsidiaries or affiliates,
concerning Company or its Policies without prior written permission of
Company;
f. directly or indirectly cause or endeavor to cause any broker or agent
of Company or registered representatives of Underwriter to terminate
or alter its/his contract with Company, or induce or attempt to induce
any policyholder of Company to relinquish, surrender, replace or lapse
a Policy; or
g. incur any liability, indebtedness or expense on behalf of the Company
other than for commissions to be paid for sales of Policies, make any
purchases on behalf of the Company, or otherwise obligate the Company;
or
h. institute, prosecute or maintain any legal proceeding on behalf of the
Company; or
i. do or perform any acts or things other than expressly authorized
herein.
This Agreement shall not create an employer-employee relationship. The
relationship of Broker to Company shall be that of independent contractor.
Broker and Insurance Agent, jointly and severely shall indemnify and hold
harmless Company, Underwriter, and any marketing agent of Company and each of
their affiliates and any officer, director, employee or agent if the foregoing
from any and all claims, demands, penalties, suits, or actions, and from any and
all losses, costs, expenses, damages and liability in connection therewith,
arising out of or resulting from the default in the performance of, or in the
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negligent performance of, by Broker, Insurance Agent, or their partners,
directors, officers, employees, representatives, or agents, the obligations of
Broker or Insurance Agent under this Agreement, including but not limited to any
payments made by Company or Underwriter to any marketing agent pursuant to any
obligation of Company or Underwriter to indemnify or hold harmless such
marketing agent in connection with sales of the Policies by or through the
Broker. In addition, Broker or Insurance Agent agrees to furnish and maintain a
satisfactory bond of indemnity when requested by Company, a copy of such bond to
be submitted to Company within 30 days of request. This indemnification is in
addition to any other liability which Broker and Insurance Agent may have for
any unauthorized acts by Broker or Insurance Agent or their partners, directors,
officers, employees, representatives or agents. The provisions of this
paragraph shall survive the termination of this Agreement.
1.2. REPRESENTATION AND SERVICE.
Broker and Insurance Agent agree:
a. to establish such rules and procedures as are necessary to insure
compliance with applicable federal and state securities and insurance
laws;
b. to observe the rules, procedures and other directives established, and
given by Underwriter relating to the sale of the Policies. Broker
will comply with the rules and regulations of the Securities and
Exchange Commission ("SEC") and the National Association of Securities
Dealers, Inc., ("NASD") relating to the sale and distribution of the
Policies, maintain the required registrations or licenses and will
observe all applicable federal and state laws relating to the
Policies. Insurance Agent will maintain all necessary licenses for
the sale of the Policies and shall conduct its activities in
compliance with all applicable federal and state laws relating to the
Polices;
c. that all solicitations for Policies are accompanied by the appropriate
current prospectuses for the Policies conforming to the requirements
of the Securities Act of 1933;
d. no registrations and licenses concerning the Policies will be made
except those contained in the appropriate current prospectuses and in
information supplemental to the prospectuses;
e. to become fully informed as to the provisions and benefits of each
Policy offered by Company for which applications are solicited under
this Agreement;
f. to represent such Policies accurately and fairly to prospects;
g. to provide all usual and customary service to policyholders and
attempt to maintain in force any business placed with Company;
h. to hold in a fiduciary capacity all premiums received with any
application for Policies solicited for the Company; and
i. that they are in compliance with the terms and conditions of letters
issued by the Staff of the SEC with respect to the non-registration as
a broker/dealer of an insurance agency associated with a registered
broker/dealer. Broker and Insurance Agent shall notify Underwriter
immediately In writing if Broker and/or Insurance Agent fail to comply
with any such terms and conditions and shall take such measures as may
be necessary to comply with any such terms and conditions.
j. to conduct activities in a professional manner. Broker and Insurance
Agent agree to comply and cooperate with the Company in any
investigations by federal or state regulators, the NASD, or other self
regulatory organization.
k. that the right to sell the policies is subject to the Broker's and
representative's continued registration and compliance with such
agreement and the rules and procedures which may be established by
Company and/or the Underwriter.
1.3. BROKER'S AGENTS.
Broker will recruit, train and supervise registered representatives
("Representatives") for the sale of the Policies. Appointment of each
Representative shall be subject to Company's prior approval. Company may require
termination of any Representative's authority to sell the Policies. Broker is
responsible for the Representatives' compliance with the terms and conditions of
this Agreement and for the Representatives being duly licensed pursuant to
applicable state and federal laws. Broker acknowledges its responsibility to
Company for any unauthorized acts of Representatives.
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All matters concerning the licensing of any of the Broker's representatives
under any applicable state insurance law shall be a matter handled directly by
the Broker and the representative involved; but the Company must be furnished
proof of licensing before any commission payments may be made with respect to
sales of policies by such representative or before Company will designate such
representative as an authorized person to sell such policies.
1.4. DELIVERY OF POLICY.
Broker and/or Insurance Agent shall return promptly to the Company all receipts
for delivered Policies, all undelivered Policies and all receipts for
cancellation, in accordance with the instructions from the Company. Upon
issuance of a Policy by the Company and delivery of such Policy to Broker and
Insurance Agent, Broker or Insurance Agent shall promptly deliver such Policy to
its purchaser. For purposes of this provision "promptly" shall be deemed to
mean not later than five calendar days. The Company will assume that a Policy
will be delivered to the purchaser of such Policy within five calendar days for
purposes of determining when to transfer premiums initially allocated to the
Money Market Subaccount available under such Policy to the particular investment
options specified by such purchaser. As a result, if purchasers exercise the
free look provisions under such Policy, Broker and Insurance Agent shall
indemnify the Company for any loss incurred by the Company that results from
Broker's or Insurance Agent's failure to deliver such Policy to the purchasers
within the contemplated five calendar day period.
1.5 ADMINISTRATIVE GUIDELINES AND COMPLIANCE.
Company's administrative guidelines, including bulletins, product and procedure
updates, any revisions, additions and amendments thereto, from the time made by
Company, shall be for all purposes a part of this Agreement as fully as if set
out word for word herein and shall be complied with by Broker and Insurance
Agent. Broker and Insurance Agent agree to comply fully with all applicable
regulations, bulletins, rulings, circular letters, proclamations and statutes,
now or hereafter in force, and to promptly notify Company in writing of all
contacts and/or correspondence received from insurance regulatory or other
governmental authorities, and to cooperate fully with Company in making
responses to those authorities.
Broker and Insurance Agent agree that all applications for policies shall be
remitted in full together with such applications, signed by the applicants,
directly to the Company. Checks or money orders in payment thereof shall be
drawn to the order of "Great American Reserve Insurance Company". Payments shall
not be considered as received until the application has been accepted by the
Company, except as otherwise provided at the direction and risk of the Company.
After the initial purchase payment has been made and the policy has been issued,
the policyowner shall make all future payments (if any are called for under the
policy or otherwise permitted by the Company) directly to the Company.
SALES MATERIALS.
a. During the term of this Agreement, the Underwriter and the Company
will provide Broker and Insurance Agent, without charge, with as many
copies of prospectuses (and any supplements thereto), current fund
prospectus(es) (and any supplements thereto), and applications. The
Broker and Insurance Agent will promptly return to Underwriter any
prospectuses, applications, fund prospectuses, and other materials and
supplies furnished by Underwriter or the Company to Broker or
Insurance Agent or to the Representatives.
b. During the term of this Agreement, Underwriter and the Company will be
responsible for providing and approving all promotional, sales and
advertising material to be used by Broker, Insurance Agent and the
Representatives. Underwriter will file such materials or will cause
such materials to be filed with the SEC, the NASD, and/or with any
state securities regulatory authorities, as appropriate.
c. Broker and Insurance Agent shall not use or implement any promotional,
sales or advertising material relating to the Contracts without the
prior written approval of Underwriter and the Company.
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1.6 LIMITATION OF LIABILITY.
The Broker understands and agrees that the Company and the Underwriter may
employ or may have employed a marketing agent in order to market to the Broker
the opportunity to enter into this Agreement and sell the Policies. Broker
agrees that such marketing agent shall not be held liable by Broker for any
claim, liability, judgment or cost, including attorneys fee, that may arise in
respect of or relating to this Agreement.
2. COMPENSATION.
All compensation payable for sales of the Policies shall be paid by Company to
Broker on behalf of Underwriter and nothing contained herein shall create any
right, title or interest in Underwriter to such compensation nor any
responsibility on the part of Underwriter for payment of such compensation.
Broker and Insurance Agent agree that the Company will be discharged from
liability for such compensation payments upon payment of any compensation due
under this Agreement to Underwriter. Company agrees to pay compensation in the
form of commissions and service fees as provided in the Compensation Schedule(s)
delivered to Broker by Company and incorporated herein by reference, upon any
cash premiums received by Company for Policies issued on applications submitted
by Broker. Such compensation shall be payment in full for all services performed
and all expenses incurred by Broker and Insurance Agent. Company reserves the
right to accrue compensation under this Agreement until a minimum of $25.00 has
become due.
2.1. COMPENSATION SCHEDULE(S).
The Compensation Schedule(s) attached, or which may hereafter be added, is
incorporated herein and made a part of this Agreement. Company reserves the
right to change such Compensation Schedule(s) at any time upon written notice to
Broker. However, no such change shall be applicable to Policies for which
Company has accepted premiums prior to the effective date of such change.
2.2. ACCOUNTING.
Company will give to Broker a weekly statement of all compensation becoming due
and payable since the date of the previous weekly statement. Unless Company
receives written objection to such weekly statement from Broker, within 90 days
after the date this statement is mailed to Broker's last known address or
delivered to Broker in person, the same shall be deemed final and binding upon
Broker.
2.3. EXCHANGES.
If in the sole discretion of Company a new Policy is issued to replace a
terminated or in force policy of Company or its affiliates or subsidiaries, the
new Policy shall be regarded as an exchanged Policy, and any compensation
payable shall be determined and adjusted by Company in accordance with Company's
then current exchange rules.
2.4 RETURN OF PREMIUM.
If no Policy is issued on an application, all moneys collected by Broker or
Insurance Agent will be immediately returned to the applicant. If Company finds
it necessary, for any reason, to cancel a Policy
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and refund premiums, any compensation paid to Broker on the amount refunded
shall be repaid to Company, or may be deducted from any compensation payable to
Broker under this Agreement.
2.5. LOCAL TAXES.
Broker is responsible for any county or municipal occupational or privilege fee,
tax or license which may be required of Broker, Insurance Agent or
Representatives as a result of business submitted hereunder.
3. INDEBTEDNESS.
Broker and Insurance Agent hereby authorize Underwriter and the Company to set
off from all amounts otherwise payable to Broker and the Insurance Agent all
liabilities of Broker or Insurance Agent. Broker and Insurance Agent shall be
jointly and severally liable for the payment of all Monies due to Underwriter
and/or the Company which may arise out of this Agreement or any other agreements
between Broker, Insurance Agent and Underwriter or the Company including, but
not limited to, any liability for any chargebacks or for any amounts advanced by
or otherwise due Underwriter or the Company hereunder. Underwriter and the
Company do not waive any of its other rights to pursue collection of any
indebtedness owed by Broker or Insurance Agent to Underwriter or the Company.
In the event Underwriter or the Company initiates legal action to collect any
indebtedness of Broker or Insurance Agent, Broker and Insurance Agent shall
reimburse Underwriter and the Company for reasonable attorney fees and expenses
in connection therewith.
Upon termination of this Agreement, any indebtedness by Broker and Insurance
Agent to the Company or Underwriter becomes immediately due and payable.
4. TERMINATION.
Termination of this Agreement is effected as follows:
a. Cause. This Agreement may be terminated for cause by Company,
immediately upon written notice to Broker and Insurance Agent, when
Broker or Insurance Agent or it's partner, director, officer, employee
or agent has, or is reasonably believed to have: (i) misappropriated
or withheld funds from any policyowner or from Company; (ii) induced
or attempted to induce Brokers of Company or registered
representatives of Underwriter to terminate, reduce, limit or
otherwise alter their services performed for or relationships with the
Company or Underwriter, or policyowners of Company to terminate or
replace their Policies; (iii) interfered with the collection of
renewal premiums; (iv) engaged in fraudulent or dishonest acts; (v)
been adjudged a bankrupt or executed a general assignment for benefit
of creditors or committed an act of bankruptcy; or (vi) otherwise
acted to adversely affect the reputation, good standing or business of
Company. If Company does not terminate this Agreement for any such
cause, a waiver shall not result and this Agreement may be terminated
under this subparagraph for any subsequent cause.
b. Death or Dissolution. If Broker or Insurance Agent is not a
corporation or partnership, this Agreement will terminate on the date
of Broker's or Insurance Agent's death. If broker or Insurance Agent
is a corporation or partnership, this Agreement will terminate on the
date that the corporation or partnership is dissolved or otherwise
determined by appropriate regulatory agencies to no longer be a legal
entity.
c. License Suspension or Revocation. This Agreement will terminate
immediately in the event of any order of suspension, revocation or
termination of Broker's or Insurance Agent's license by any regulatory
authority.
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d. Breach. This Agreement will terminate immediately upon notice in the
event of:
1. breach of any of the terms or provisions of this Agreement; or
2. Broker or Broker's associated person's failure to timely and
fully comply with Company supervisory directives, rules,
regulations or manuals.
e. Ownership Change. This Agreement will terminate if Broker or Insurance
Agent is not a natural person and in the event of a significant change
in Broker's or Insurance Agent's ownership or management as determined
by the Underwriter or Company in their sole discretion, or in the
event of the execution of an agreement of sale, transfer or merger of
Broker or Insurance Agent, without prior notice and written consent of
Company.
f. Notice. This Agreement may be terminated by any party without cause by
giving the other parties at least 30 days advance written notice
delivered personally or mailed to the last known address of the other
parties.
4.1. VESTED COMPENSATION.
a. Definition. Vested compensation is any compensation that would become
due under this Agreement for business submitted prior to the effective
date of termination, subsequent to the termination of this Agreement,
as described within Compensation Schedule(s) attached to this
Agreement. No compensation is vested unless specifically described in
the applicable Compensation Schedule. However, if this agreement were
to be terminated under the provisions of Paragraph 4.a., "Cause",
regardless of what the Compensation Schedule(s) might provide, no
compensation of any kind shall thereafter be payable.
b. Dissolution of Corporation or Partnership. Any vested compensation
shall be paid as directed by the Articles of Dissolution, or by the
Liquidation Agreement, or by the courts, or in accordance with
applicable statutes, as appropriate.
c. Death. If termination is by reason of Broker's or Insurance Agent's
death, such vested compensation shall be paid to Broker's or Insurance
Agent's lawful widow, and thereafter, lawful heirs or legal
representative.
d. Earnings Requirement for Continued Vested Compensation. In the event
less than $600 is earned in any calendar year after termination, no
further compensation will ever be paid regardless of the reason for
termination.
e. Payment of vested compensation will be reduced by any debt or
liability of Broker or Insurance Agent due the Company.
5. PREVIOUS AGREEMENT.
By execution of this Agreement, any prior agreement between the Company,
Underwriter, Broker and Insurance Agent or between Company and the signing
principal(s) related specifically to the business transacted under this
Agreement is terminated as of the effective date of this Agreement; but while
this Agreement remains in force, any rights of Broker and Insurance Agent to
receive compensation under the terms and conditions of the prior agreement are
continued hereunder, and such earned compensation shall be payable at the rate,
for the remainder of the period, and on the basis applicable as if that
agreement remained in force.
6. ENTIRE AGREEMENT.
This Agreement, including any supplements and the Compensation Schedule(s), is
the entire Agreement
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between the parties for all dealings after its effective date. Any
understandings, negotiations, representations, statements, promises, and
agreements, oral or otherwise, not included herein shall have no force and
effect in the instruction of the rights and obligations of the parties hereto
except as provided in this Section 6. This Agreement shall not be assigned
without the prior written consent of Company. No amendment of this Agreement
shall be valid unless made in writing by an authorized officer of the Company.
7. WAIVER.
No waiver by Company of rights arising from wrongdoing or failure by Broker or
Insurance Agent shall occur by Company's election not to enforce any provision
of this Agreement, nor reduce or affect Company's rights arising from subsequent
wrongdoing or failure by Broker or Insurance Agent.
8. NOTICE.
Any written notice given under any provision of this Agreement shall be complete
upon deposit, postage paid, in the U.S. Mail addressed to Broker and Insurance
Agent's at Broker's and Insurance Agent's last known address according to
Company's records or to Company or Underwriter at its Administrative Offices.
9. LEGAL ACTION
If any legal action is filed or threatened against the Company,
Underwriter, Broker or Insurance Agent pertaining to the Company's business or
Policies, the Underwriter, Broker, or Insurance Agent shall notify the Company
of such action within twenty-four (24) hours of receipt of knowledge and shall
forward to the Company by overnight delivery service copies of all documents
served upon the Underwriter, Broker or Insurance Agent.
10. CONSTRUCTION.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
INDIANA EXCLUSIVE OF CHOICE OF LAWS PROVISIONS. Venue for any action between the
parties arising under this Agreement shall be in a Court located in Noblesville,
▇▇▇▇▇▇▇▇ County, Indiana.
The effective date of this Group Selling Agreement with Great American Reserve
Insurance Company shall be: ___________________ _____________, _______________.
(Month) (Day) (Year)
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Contract Account Number (Assigned by Company)
BROKER: INSURANCE AGENT:
Check Type of Legal Entity: Check Type of Legal Entity:
/ / Individual / / Partnership / / Individual / / Partnership
/ / Corporation / / Corporation
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Type or Print Name of Broker Type or Print Name of Insurance
Agent (if different from Broker)
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Signature of Broker Signature of Insurance Agent
(if different from Broker)
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Social Security Number of Broker Social Security Number of Insurance
Agent (if different from Broker)
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Taxpayer Identification Number of Broker Taxpayer Identification Number of
Insurance Agent (if different
from Broker)
GREAT AMERICAN RESERVE INSURANCE PADCO FINANCIAL SERVICES INC.
COMPANY
By: By:
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Authorized Signature Authorized Signature
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Type or Print Name Type or Print Name
--------------------------------
Date
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