FORM RRA98(AA97)
STATE FARM REGISTERED REPRESENTATIVE AGREEMENT
This Agreement is entered into as of the________ day of
______________________, _________ by and between State Farm VP Management Corp.
(hereinafter referred to as "Broker-Dealer") and
_______________________________________ (hereinafter referred to as "Registered
Rep").
WHEREAS, Broker-Dealer is a securities broker-dealer registered and
qualified to transact business pursuant to rules and regulations promulgated by
the Securities and Exchange Commission (the "SEC") and the National Association
of Securities Dealers, Inc. (the "NASD") and certain state securities
regulators;
WHEREAS, Registered Rep is duly qualified and licensed to sell variable
life insurance policies and variable annuity policies (together, "Variable
Products"); and
WHEREAS, the parties mutually desire to enter into this Agreement so that
Registered Rep may sell and service Variable Products on behalf of
Broker-Dealer;
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions as hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
AUTHORIZATION
Broker-Dealer hereby authorizes Registered Rep to become one of its
registered representatives and to execute securities transactions, including
Variable Product sales, exclusively through it. Registered Rep hereby accepts
that authorization.
ARTICLE II
REGISTERED REP'S OBLIGATIONS
SECTION 2.1 GENERAL. Registered Rep will solicit applications for
insurance, collect premiums, fees and charges, countersign and deliver policies,
reinstate and transfer insurance, assist policyholders and cooperate in
reporting and handling claims, avoid conflicts of interest, comply with all laws
and regulations, and cooperate with and advance the interests of Broker-Dealer,
the registered representatives, and the policyholders.
SECTION 2.2 COMPLIANCE WITH LAWS, RULES, REGULATIONS, ETC. All Registered
Rep's activities in connection with the offer and sale of Variable Products
shall conform to the requirements of state and federal securities laws, rules,
regulations and interpretive guidance, the Conduct Rules of the NASD, and state
insurance laws, rules, regulations and interpretive guidance.
SECTION 2.3 LICENSING AND REGISTRATION. Registered Rep shall remain:
a. registered with the NASD and, if necessary, any applicable state
securities regulatory authority; and
b. licensed as an insurance agent with authority to sell Variable Products
in any State in which Registered Rep will sell such Variable Products.
Registered Rep shall take all steps necessary to keep all such registrations and
licenses in force during the term of this Agreement.
SECTION 2.4 COMPLIANCE MANUAL. Registered Rep will familiarize Registered
Rep with, and will comply
with, all the requirements set forth in the State Farm VP Management Corp.
Variable Products Compliance Manual (the "Compliance Manual"), as it may be
amended from time to time or supplemented by compliance memoranda from
Broker-Dealer. Without limiting the generality of the preceding sentence,
Registered Rep shall comply with the customer complaint procedures and the
filing and recordkeeping requirements set forth in the Compliance Manual.
SECTION 2.5 MATERIAL STATEMENTS OR OMISSIONS. Registered Rep will not:
a. make any material statements, either oral or written, regarding
Variable Products which are untrue or misleading; or
b. omit a material fact necessary in order to make any oral or written
statements regarding Variable Products, in the light of the
circumstances under which they were made, not misleading.
SECTION 2.6 VARIABLE PRODUCTS OFFERED. Registered Rep shall offer, sell,
and service only those Variable Products offered by Broker-Dealer, and shall not
engage in any private securities transactions without prior written approval
from Broker-Dealer. A "private securities transaction" would include, among
other things, offering variable products or other securities that are not
offered by Broker-Dealer, including any privately placed securities that are not
registered with the Securities and Exchange Commission.
SECTION 2.7 OUTSIDE ACTIVITIES AND SECURITIES DISCLOSURE FORM. Registered
Rep shall complete the "Outside Activities and Securities Disclosure Form"
attached hereto as EXHIBIT A, and will update this form as requested by
Broker-Dealer promptly when any significant additions or changes to the
information disclosed on the form arise, including new employers or sources of
income, or significant changes in the amount of income from a previously
specified source. Broker-Dealer may amend the form from time to time, and
Registered Rep's obligations hereunder shall apply with equal force to any such
amended form.
SECTION 2.8 CHANGES TO FORM U-4. Registered Rep shall immediately notify
Broker-Dealer of any changes of information in Registered Rep's registration on
Form U-4 including any changes to Registered Rep's address.
SECTION 2.9 EDUCATION AND TRAINING MEETINGS. Registered Rep shall attend
all mandatory educational and/or training meetings sanctioned by Broker-Dealer,
including but not limited to the annual compliance meeting, scheduled by
Broker-Dealer.
SECTION 2.10 SUPERVISION OF EMPLOYEES. Registered Rep shall take such steps
as are necessary to ensure that none of Registered Rep's employees, whether
registered or unregistered, engage in any activities that are not authorized
under applicable law.
SECTION 2.11 NOTIFICATIONS REQUIRED. Registered Rep shall immediately
notify Broker-Dealer of:
a. any action or fact which comes to Registered Rep's knowledge which
may possibly constitute a violation of any law;
b. any investigations or inquiries by governmental agencies;
c. any judicial proceeding related to Registered Rep;
d. loss or suspension of Registered Rep's insurance license or securities
registration to sell Variable Products; and
e. any other events as required under the Compliance Manual.
SECTION 2.12 PERSONAL SERVICES REQUIRED. The fulfillment of this Agreement
requires Registered Rep's personal services, and Registered Rep will not
directly or indirectly write or service insurance for any other company, other
than Broker-Dealer's parent or affiliated companies or through any governmental
or insurance industry plan or facility, or for any agent or broker, except in
accordance with the terms of any written consent Broker-Dealer may give
Registered Rep.
SECTION 2.13 PREMIUM FUND ACCOUNT. All funds collected on behalf of the
issuing insurance company shall be held in trust by Registered Rep as the
absolute property of the issuing insurance company, and Registered Rep will be
responsible for these funds until they are safely transmitted to the issuing
insurance company. Registered Rep agrees to maintain a premium fund account for
the issuing insurance company's benefit in a bank or similar financial
institution, which the issuing insurance company may audit at any time, in which
Registered Rep will promptly deposit all funds collected for the issuing
insurance company's premiums, fees, or charges. Registered Rep further agrees to
transmit all such funds and all insurance applications promptly as directed by
Broker-Dealer.
SECTION 2.14 ADVERTISING. Broker-Dealer and the issuing insurance company
will advertise, provide promotional materials, and participate in the cost of
Registered Rep's advertising, in accordance with policies determined from time
to time by Broker-Dealer and the issuing insurance company. Registered Rep will
not use advertisements or sales literature relating to Variable Products unless
the advertisements or sales literature have been provided by Broker-Dealer.
SECTION 2.15 EXPENSES. The expense of any office, including rental,
furniture, and equipment; signs; supplies not furnished by Broker-Dealer; the
salaries of Registered Rep's employees; telephone; postage; advertising; and all
other charges or expense incurred by Registered Rep in the performance of this
Agreement shall be incurred at Registered Rep's discretion and paid by
Registered Rep.
SECTION 2.16 OFFICE LOCATION. Registered Rep agrees that in the location or
relocation of Registered Rep's office Registered Rep will not unduly infringe on
the established office location of any other registered representative.
Registered Rep agrees that Registered Rep will not make any commitment to change
office location without reasonable, at least 30 days, prior written notice to
Broker-Dealer or establish any office in addition to Registered Rep's principal
office without the prior approval of Broker-Dealer.
ARTICLE III
NATURE OF THE RELATIONSHIP
SECTION 3.1 INDEPENDENT CONTRACTOR. As a registered representative,
Registered Rep is obliged to follow Broker-Dealer procedures and processes and
to provide prompt, friendly, accurate, and cost effective service. Registered
Rep is an independent contractor for all purposes. Registered Rep has full
control of Registered Rep's daily activities, subject only to Broker-Dealer's
obligation to supervise Registered Rep under the securities laws, with the right
to exercise independent judgment as to time, place, and manner of soliciting
insurance, servicing policyholders, and otherwise carrying out the provisions of
this Agreement.
ARTICLE IV
COMPENSATION
SECTION 4.1 COMPENSATION SCHEDULE. Registered Rep's sole compensation as a
registered representative from Broker-Dealer shall be in the form of
compensation earned from Variable Product sales and service. The Schedule of
Payments attached hereto as EXHIBIT B sets forth the compensation to be paid to
Registered Rep for Variable Product sales and service while this Agreement is in
force.
SECTION 4.2 WAIVER UNTIL BROKER-DEALER IN RECEIPT OF COMPENSATION.
Registered Rep waives any right to compensation until Broker-Dealer is in
receipt of such compensation from the issuing insurance company. Compensation
will be payable by Broker-Dealer or its parent or affiliated companies.
SECTION 4.3 BONUSES, AWARDS, PRIZES, AND ALLOWANCES. Broker-Dealer reserves
the right to fix and determine the amount, extent, and conditions of any
bonuses, awards, prizes and allowances.
ARTICLE V
TERMINATION PAYMENTS
SECTION 5.1 PAYMENT AFTER TERMINATION. If this Agreement is terminated and
Registered Rep is subject to "disqualification," as that term is defined in the
NASD's bylaws, then no termination payments will be paid to Registered Rep
following the termination of this Agreement. If this Agreement is terminated and
Registered Rep is not
subject to "disqualification," termination payments will be paid to Registered
Rep or Registered Rep's legal representative in accordance with the provisions
of Section 5.2.
SECTION 5.2 TERMINATION PAYMENTS. If this Agreement is terminated and
Registered Rep is not subject to "disqualification," Broker-Dealer will pay
Registered Rep or Registered Rep's legal representative:
a. on business written by Registered Rep under the Schedule of Payments
attached hereto as EXHIBIT B ,
(i) any remaining writing compensation for the first through fifth
policy years as would have been due and payable to Registered Rep
if this Agreement had not been terminated; and
(ii) if on the date of termination Registered Rep had five (5) or more
years of combined service as an agent under the State Farm
Agent's Agreement or Local Agent's Appointment, any remaining
writing compensation for the sixth through fifteenth policy years
as would have been due and payable to Registered Rep if this
Agreement had not been terminated; and
b. if the date of termination of this Agreement coincides with the date
of termination of the State Farm Agent's Agreement, and if on the date
of termination Registered Rep has twenty five (25) or more years of
combined service as an agent under the State Farm Agent's Agreement or
Local Agent's Appointment, on business credited to Registered Rep's
account on which service compensation is being paid to Registered Rep,
(i) On Variable Deferred Annuity policies a monthly amount equal to
three-fourths of one percent (3/4 of 1%) of an average monthly
premium of any such policy; and
(ii) On Variable Universal Life policies a monthly amount equal to one
and one-half percent (1 1/2%) of an average monthly premium of
any such policy
beginning the last day of the month next following the month of
termination of this Agreement and until the last day of the month in
which Registered Rep's death occurs; except that no amount shall be
paid on any policy made available for assignment by the termination of
a State Farm Registered Representative Agreement or by a release of
policies pursuant to Article X of this Agreement or Article X of any
other State Farm Registered Representative Agreement, and except that
if Registered Rep is less than sixty five (65) years of age on the
date of termination of this Agreement, amounts shall be reduced
actuarially based on Registered Rep's lower age.
c. The "average monthly premium" of a policy shall be calculated by
dividing the total premium paid on the policy by the number of full
months elapsed between its Policy Date and termination of this
Agreement, except that the "average monthly premium" for a policy in
force less than sixty (60) months shall be no greater than:
(i) For a Variable Universal Life policy, one-twelfth (1/12) of the
total Primary Compensation Premium paid on the base policy and
any increases to base and added riders, and
(ii) For a Variable Deferred Annuity policy, two hundred dollars
($200).
d. After Registered Rep and any spouse (if accepted as a payee) have
died, or at any time Broker-Dealer owes, for each of three (3)
consecutive periodic payments in this Section, less than one hundred
dollars ($100), Broker-Dealer may, in its sole discretion, change the
frequency and amount of the periodic payments to payment or payments
less frequent and of greater amount or amounts, but of equal present
value. Any new amount or amounts shall reasonably consider the time
value of money and any influence of policy persistency, agent
mortality, and other factors relevant to the payment frequency and
amounts otherwise provided herein.
ARTICLE VI
CONFIDENTIALITY; PROPRIETARY MATERIALS
SECTION 6.1 CONFIDENTIALITY. Information regarding names, addresses, and
ages of issuing insurance company policyholders; and the expiration or renewal
dates of policies acquired or coming into Registered Rep's possession during the
effective period of this Agreement, or any prior Agreement, except information
and records of policyholders insured by the issuing insurance company pursuant
to any governmental or insurance industry plan or facility, are trade secrets
and confidential business information wholly owned by Broker-Dealer or its
parent or affiliated companies. All forms, computer-related and electronic
files, and other materials, whether furnished by Broker-Dealer or its parent or
affiliated companies or purchased by Registered Rep, upon which this information
is recorded shall be the sole and exclusive property of Broker-Dealer or its
parent or affiliated companies. Registered Rep's possession of this information
is only for use in carrying out Registered Rep's duties and responsibilities
under this Agreement. Registered Rep shall take all reasonable steps to maintain
the value and confidentiality of such information, including informing
Registered Rep's employees of this responsibility, and assuring their
compliance.
SECTION 6.2 MANUALS, ETC. Broker-Dealer will furnish Registered Rep,
without charge, manuals, forms, records, computer-related and electronic files,
equipment, and such other materials, supplies and services as Broker-Dealer may
specify from time to time. All such property furnished by Broker-Dealer shall
remain the property of Broker-Dealer. In addition, Broker-Dealer will offer at
Registered Rep's expense additional equipment, materials, supplies and services.
ARTICLE VII
TERM, TERMINATION AND SURVIVABILITY
SECTION 7.1 EFFECTIVE DATE AND TERM. This Agreement shall be effective on
the date set out above on Page 1 hereof and shall continue until terminated as
herein provided.
SECTION 7.2 TERMINATION. This Agreement will terminate upon the death of
Registered Rep. Either Registered Rep or Broker-Dealer has the right to
terminate this Agreement by written notice delivered to the other or mailed to
the other's last known address. The date of termination shall be the date
specified in the notice, but in the event no date is specified, the date of
termination shall be the date of delivery if the notice is delivered, or the
date of the postmark, if the notice is mailed. Either Registered Rep or
Broker-Dealer can accelerate the date of termination specified by the other by
giving written notice of termination in accordance with this paragraph. This
Agreement shall also terminate effective immediately upon the termination of the
State Farm Agent's Agreement to which Registered Rep is a party.
SECTION 7.3 RESTRICTIONS ON POST TERMINATION ACTIVITY. For a period of one
year following termination of this Agreement, Registered Rep will not either
personally or through any other person, agency, or organization:
a. induce or advise any issuing insurance company policyholder credited
to Registered Rep's account at the date of termination to lapse,
surrender, or cancel any issuing insurance company coverage; or
b. solicit any such policyholder to purchase any insurance coverage
competitive with the insurance coverages sold by Broker-Dealer. In the
event the "period of one year" conflicts with any statutory provision,
such period shall be the period permitted by statute.
After termination of this Agreement Registered Rep agrees not to act or
represent himself or herself in any way as an agent or representative of
Broker-Dealer.
SECTION 7.4 RETURN OF MATERIALS. Within ten days after the termination of
this Agreement, all property belonging to Broker-Dealer shall be returned or
made available for return to Broker-Dealer or its authorized
representative. Without limiting the foregoing, Registered Rep shall promptly
deliver to Broker-Dealer, without retaining any copies or excerpts thereof, the
Compliance Manual, any other manuals, compliance memoranda, prospectuses,
statements of additional information, advertising, sales materials, business
cards and letterhead.
SECTION 7.5 SURVIVABILITY. The agreements in Sections 5.1, 5.2, 6.1, 6.2,
7.3, 7.4, 9.11 and Article VIII shall survive the termination of this Agreement.
ARTICLE VIII
DISPUTE RESOLUTION
Any controversy between Broker-Dealer and Registered Rep arising out of, or
relating to, this Agreement or the breach thereof may be settled by arbitration
in accordance with the rules then pertaining of the NASD at Chicago, Illinois.
Any arbitration hereunder and award of the arbitrators, or of a majority of
them, shall be final, and judgment may be entered in any court, state or
federal, having jurisdiction.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 ASSIGNMENT. Since Broker-Dealer is relying on Registered Rep to
carry out the provisions of this Agreement, neither the Agreement nor any
interest thereunder can be sold, assigned or pledged by Registered Rep; and no
right in any sum due or to become due to Registered Rep hereunder can be sold,
assigned, or pledged without prior written consent of Broker-Dealer.
SECTION 9.2 ENTIRE AGREEMENT. This Agreement constitutes the sole and
entire Agreement between the parties hereto, and no change, alteration, or
modification of the terms of this Agreement may be made except by agreement in
writing signed by an authorized representative of the Broker-Dealer and accepted
by Registered Rep. This Agreement supersedes all prior commitments, inducements,
promises, negotiations, representations, obligations, conditions, or agreements,
oral or written, between Broker-Dealer, its representatives, and Registered Rep,
except with respect to compensation owing to Registered Rep under Schedules of
Payment under Registered Rep's immediately preceding State Farm Registered
Representative Agreement, if any, and with respect to compensation overpayments
or any other amounts owed Broker-Dealer or its parent or affiliated companies by
Registered Rep. All payments for termination by death or for termination other
than by death which otherwise might have become payable to Registered Rep under
the terms of prior agreements with Broker-Dealer are hereby waived by Registered
Rep.
SECTION 9.3 WAIVER. Failure of any party to enforce any provision of this
Agreement will not constitute a course of conduct or waiver in the future of the
right to enforce the same or any other provision.
SECTION 9.4 SEVERABILITY. The parties to this Agreement desire and intend
that the terms and conditions of this Agreement be enforced to the fullest
extent permissible under the laws and public policies applied in each state or
jurisdiction in which enforcement is sought. The parties agree specifically
that, if any particular term or condition of this Agreement is adjudicated, or
becomes by operation of law, invalid or unenforceable, this Agreement will be
deemed amended to delete the portion that is adjudicated, or that becomes by
operation of law, invalid or unenforceable. The deletion or reduction will apply
only with respect to the operation of the term or condition, and the remainder
of the Agreement will remain in full force and effect. A deletion or reduction
resulting from any adjudication will apply only with respect to the operation of
that term in the particular jurisdiction in which the adjudication is made.
SECTION 9.5 NOTICE. All notices to a party will be sent to the following
addresses or to such other address or person as such party may designate by
notice to each other party hereunder:
a. TO BROKER-DEALER:
State Farm VP Management Corp.
c/o Variable Products Administration Department
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to Registered Rep's Regional Agency Resources Department.
b. TO REGISTERED REP:
Registered Rep's Office Address.
SECTION 9.6 GOVERNING LAW. The validity, enforceability, and interpretation
of this Agreement shall be construed according to the laws of the State of
Illinois.
SECTION 9.7 HEADINGS. The headings in this Agreement are inserted for
convenience only and will not constitute a part hereof.
SECTION 9.8 SET OFF. Any amount (exclusive of premiums due on Registered
Rep's personal policies with the issuing insurance company) at any time owing by
Registered Rep to Broker-Dealer or its parent or affiliated companies shall be a
first lien on any payment due or thereafter becoming due Registered Rep under
any of the provisions of this Agreement, and Broker-Dealer is authorized to
deduct such indebtedness from any such payment due or thereafter becoming due to
Registered Rep from Broker-Dealer.
SECTION 9.9 CHARGE BACKS. If any application is rejected or any policy is
surrendered or canceled, in whole or in part, for any reason, before the
expiration of the policy period, or if any premium is reduced or an overpayment
made to Registered Rep, the compensation paid to Registered Rep on the amount
returned or credited to the policyholder or the amount overpaid to Registered
Rep shall be charged to Registered Rep and shall constitute an indebtedness of
Registered Rep to Broker-Dealer.
SECTION 9.10 RIGHT TO PRESCRIBE. Broker-Dealer and the issuing insurance
company retain the right to prescribe: all policy forms and provisions;
premiums, fees, and charges for insurance and services; rules governing the
binding, acceptance, renewal, rejection, or cancellation of risks, and
adjustments and payment of losses; and limitations on the submission of
applications by individual registered representatives, by market area, by line
of coverage, by policy type, by company, or by other means.
SECTION 9.11 REPRESENTATION. Registered Rep will not represent Registered
Rep as having any powers except those authorized by this Agreement and subject
to any applicable law. Without limiting the foregoing, Registered Rep shall not
have the authority to extend the time of payment of any premium, or to alter,
waive, or forfeit any of the issuing insurance company's rights, requirements,
or conditions in any policy of insurance, or otherwise obligate Broker-Dealer or
issuing insurance company in any way except as stated in this Agreement or
expressly authorized under the rules and regulations of Broker-Dealer or as
otherwise authorized in writing by Broker-Dealer.
SECTION 9.12 TRANSFER OF POLICIES. Broker-Dealer will leave in Registered
Rep's account all policies credited to Registered Rep's account so long as the
policyholder resides within a 75-mile radius of Registered Rep's principal place
of business and within a State in which Registered Rep is duly licensed, except
that Broker-Dealer may:
a. if service compensation is suspended, reduced or eliminated pursuant
to Section IV. G, Section IV. H, and/or Section IV. I of the Schedule
of Payments attached hereto as EXHIBIT B, transfer the Variable Products
credited to Registered Rep's account to the accounts of other registered
representatives or to Broker-Dealer for servicing; and
b. after prior written notice to Registered Rep, transfer any policy to
the account of another registered representative when the policyholder makes a
bona fide request in writing.
Registered Rep will respect the rights and interests of Registered Rep's fellow
registered representatives in policies credited to their accounts by refraining
from raiding or otherwise diverting policies from their accounts to Registered
Rep's account. Registered Rep shall neither directly nor indirectly attempt to
divert policies to Registered Rep's own account from unassigned accounts or from
those of other registered representatives, or from Registered Rep's own account
to the accounts of other registered representatives.
ARTICLE X
RELEASE OF POLICIES
In the event of a release of policies pursuant to Section VI of the State
Farm Agent's Agreement (AA97) or Section IV of another State Farm Agent's
Agreement, the Variable Products held by policyholders and members of the
household of such policyholders whose automobile insurance policies are released
shall likewise be released, and Broker-Dealer will pay with respect to the
Variable Products released by Registered Rep the termination payments in
accordance with Section 5.2 of this Agreement, as those provisions may be
applicable.
IN WITNESS WHEREOF, Broker-Dealer has caused this Agreement to be executed
on its behalf by its authorized representative, to be effective on the date
above set out on Page 1 hereof, upon its acceptance in writing by Registered Rep
on Form RRAA98(AA97), Registered Rep's Acceptance of Agreement, transmitted to
Broker-Dealer.
STATE FARM VP MANAGEMENT CORP.
By:_________________________________________________
Authorized Representative
REPLACES - NONE PRINTED IN U.S.A.
EFFECTIVE 2-1-98