EXHIBIT 5(b)
Form of
Group Selling Agreement Among
Great American Reserve Insurance Company,
PADCO Financial Services, Inc.,
Broker, and Insurance Agent
PAGE
SAMPLE
GREAT AMERICAN RESERVE INSURANCE COMPANY
PADCO FINANCIAL SERVICES, INC.
GROUP SELLING AGREEMENT
T h is 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;
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PADCO Group Selling Agreement
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, make any purchases on behalf
of the Company, or otherwise obligate the Company
other than for commissions to be paid for sales of
Policies; 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.
T h i s 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,
c o s t s, expenses, damages and liability in connection
therewith, arising out of or resulting from the default in the
performance of, or in the 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.
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PADCO Group Selling Agreement
Broker and Insurance Agent agree:
a. to establish such rules and procedures as are
n e cessary 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
P o l icies. 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
w i l l 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
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PADCO Group Selling Agreement
cooperate with the Company in any investigations by
federal or state regulators, the NASD, or other self
regulatory organizations.
k. that the right to sell the Policies is subject to the
B r o k e r s or the representative s continued
registration and compliance with such Agreement and
the rules and procedures which may be established by
the Company and/or the Underwriter.
1.3. Broker's Agents.
B r o k e r 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
t e r m s 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.
All matters concerning the licensing of any of the Broker s
representatives under any applicable state insurance law shall
b e 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
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PADCO Group Selling Agreement
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
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PADCO Group Selling Agreement
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
a n y promotional, sales or advertising material
relating to the Contracts without the prior written
approval of Underwriter and the Company.
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PADCO Group Selling Agreement
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
A g r eement. 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.
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PADCO Group Selling Agreement
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
d e termined 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 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 Moines 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
a n y of its other rights to pursue collection of any
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PADCO Group Selling Agreement
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,
r e d uce, limit, or otherwise alter their services
performed for or relationships with the Company or
Underwriter, or policyowners of Company to terminate or
r e place their Policies; (iii) interfered with the
c o l l ection 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 in breach of this
Agreement. 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
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PADCO Group Selling Agreement
suspension, revocation or termination of Broker's or
Insurance Agent s license by any regulatory authority.
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
t h i s Agreement. No compensation is vested unless
specifically described in the applicable Compensation
S c h edule. However, if this agreement were to be
terminated under the provisions of Paragraph 4.a.,
Cause , regardless of what the Compensation Schedule(s)
m i ght 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
b e paid to Broker's or Insurance Agent s lawful
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PADCO Group Selling Agreement
w i dow(er), and, thereafter, lawful heirs or legal
representatives.
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
b e t w een 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.
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PADCO Group Selling Agreement
6. Entire Agreement.
This Agreement, including any supplements and the Compensation
Schedule(s), is the entire Agreement between the parties for
all dealings after its effective date. Any understandings,
n e gotiations, 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
O F THE STATE OF INDIANA EXCLUSIVE OF CHOICE OF LAWS
PROVISIONS. Venue for any action between the parties arising
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PADCO Group Selling Agreement
u n der this Agreement shall be in a Court located in
Noblesville, Xxxxxxxx County, Indiana.
The effective date of this Group Selling Agreement with Great
A m e r i c a n R eserve Insurance Company shall
b e : _ _ _ _ _ _ _ _ __________________ _________________,
__________________.
(Month) (Day)
(Year)
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
-------------------------- --------------------------
Type or Print Name of Broker T y pe or Print Name of
Insurance Agent
(if different from Broker)
-------------------------- --------------------------
Signature of Broker Signature of Insurance
Agent
(if different from Broker)
--------------------------- ---------------------------
Social Security Number of Broker Social Security Number of
Insurance Agent
(if different from Broker)
--------------------------- ---------------------------
Taxpayer Identification Number T a x p a y e r
Identification
of Broker Number of Insurance Agent
(if different from Broker)
Great American Reserve Insurance PADCO Financial Services,
Inc.
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PADCO Group Selling Agreement
Company
By:_____________________________ By:______________________
Authorized Signature Authorized Signature
____________________________ _________________________
Type or Print Name Date
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