EXHIBIT 3(a)
PRINCIPAL UNDERWRITING AGREEMENT
FOR
VARIABLE CONTRACTS
AGREEMENT ("Agreement") made and effective as of this __________ day of
___________, 2001 by and between NATIONAL SECURITY LIFE AND ANNUITY COMPANY
("National Security"), a New York corporation, and OHIO NATIONAL EQUITIES, INC.
("ONEQ"), an Ohio corporation.
It is hereby mutually agreed as follows:
1. National Security hereby appoints ONEQ as the exclusive principal underwriter
of those variable annuity contracts and variable universal life insurance
contracts (the "Contracts") issued by National Security that have been
registered as securities under the Securities Act of 1933 (as amended) and with
assets held in National Security's Variable Accounts A and L respectively that
have been registered under the Investment Company Act of 1940 (as amended).
2. ONEQ shall at all times during the term of this Agreement be registered as a
broker-dealer under the Securities Exchange Act of 1934 (as amended) and shall
be a member of the National Association of Securities Dealers, Inc. ("NASD").
ONEQ agrees to comply with the Conduct Rules of the NASD.
3. ONEQ is authorized to solicit other broker-dealers (the "Distributors") to
enter into distribution agreements with ONEQ and National Security to offer,
sell and distribute the Contracts through the registered representatives of the
Distributors. The Distributors shall be members of the NASD, and each of the
registered representatives offering the Contracts shall be a person who has
obtained all necessary licenses to act as an insurance agent for National
Security in any state in which the registered representative shall offer the
Contracts. The distribution agreements shall require the Distributor to maintain
full responsibility for the training, supervision and control of its registered
representatives and for assuring that all sales of the Contracts made by its
registered representatives are suitable for the purchaser based on relevant
financial information furnished by the purchaser to the Distributor or its
registered representative.
The distribution agreements shall not permit the Distributor or any registered
representative to make any representations concerning the Contracts other than
those contained in the then-current prospectus or statement of additional
information therefor or in supplemental literature approved by National
Security. All premiums or purchase payments for the Contracts shall be promptly
forwarded by the Distributor to National Security except to the extent that
National Security agrees in writing to permit a Distributor to forward premiums
or purchase payments net of dealer concessions, which latter amounts would then
be subtracted from the compensation to ONEQ under section 8, below.
4. National Security shall be responsible for, and bear all costs associated
with, the drafting, printing, filing with regulatory authorities (including the
NASD), and mailing to Contract
owners of prospectuses, financial reports and sales literature with respect to
the Contracts. National Security shall reimburse ONEQ for expenses incurred by
ONEQ with respect to the foregoing, including regulatory filing fees incurred by
ONEQ, and for ONEQ's NASD membership fees attributable to the sale of the
Contracts.
5. National Security agrees to indemnify and hold harmless ONEQ, its directors,
officers and affiliated persons against any losses, claims, damages, liabilities
and expenses (including the cost of any legal fees incurred in connection
therewith) that ONEQ, its directors, officers or affiliated persons may incur
under any statute or regulation of the United States or of any state, district
or territory thereof, or at common law or otherwise, arising out of or based
upon (a) any untrue statement or alleged untrue statement of a material fact
contained in any registration statement for the Contracts or any supplemental
literature authorized by National Security for use in connection therewith, or
(b) any omission or alleged omission to state a material fact required to be
stated in a registration statement or supplemental literature necessary to make
the statements therein not misleading, provided, however, that insofar as
losses, claims, damages, liabilities or expenses arise out of or are based upon
any such untrue statement or omission (or alleged untrue statement or omission)
made in reliance upon and in conformity with information furnished to National
Security by ONEQ for use in a registration statement or supplemental literature,
the indemnification does not apply. In no case shall National Security indemnify
ONEQ or any of its directors, officers or affiliated persons as to any amounts
incurred for any liability arising out of or based upon any action for which
ONEQ, its directors, officers or affiliated persons would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its or their duties or by reason of the reckless disregard of its
or their obligations and duties under this Agreement.
6. ONEQ agrees to indemnify and hold harmless National Security, its directors,
officers and employees against any losses, claims, damages, liabilities and
expenses (including the cost of any legal fees incurred in connection therewith)
that National Security, its directors, officers or employees may incur under any
statute or regulation of the United States or of any state, district or
territory thereof, or at common law or otherwise, arising out of the acquisition
of the Contracts by any person that (a) may be based upon any wrongful act by
ONEQ or any of its directors, officers or affiliated persons, or (b) may be
based upon any untrue statement or alleged untrue statement of a material fact
contained in a registration statement or supplemental literature, or any
omission or alleged omission to state a material fact required to be stated
therein as necessary to make the facts therein not misleading, provided,
however, that insofar as losses, claims, damages, liabilities or expenses arise
out of or are based upon any such untrue statement or omission (or alleged
untrue statement or omission) made in reliance upon information furnished or
confirmed in writing by National Security to ONEQ, the indemnification does not
apply.
7. National Security agrees to take all actions and do all things necessary to
secure and maintain the registrations and approvals of the Contracts and
investment companies in connection therewith by all federal and state regulatory
bodies having jurisdiction.
8. National Security shall pay to ONEQ as consideration hereunder amounts
computed in accordance with the Compensation Schedule or Schedules attached
hereto and made a part of this Agreement. National Security reserves the right
to revise any Compensation Schedule at any time upon at least 30 days advance
written notice to ONEQ. National Security further reserves the right: (a) to
reduce or not to pay compensation that would otherwise have been
2
payable hereunder on sales of Contracts that replace insurance or annuity
contracts previously issued by National Security; and (b) to offset future
compensation payable to ONEQ against any compensation required to be repaid by
ONEQ to National Security under the terms of any distribution agreement. Any
future amendments or additions to the Compensation Schedule shall not otherwise
affect the remaining terms of this Agreement. At ONEQ's request, National
Security agrees to serve as ONEQ's paying agent for compensation due from ONEQ
to any Distributor under a distribution agreement to which National Security is
a party, in which event compensation due ONEQ hereunder will be offset by the
amounts paid by National Security to the Distributor on behalf of ONEQ.
9. All books and records required by applicable laws or regulations to be
maintained by ONEQ relative to this Agreement or its operations pursuant hereto
shall be and remain the property of ONEQ, subject, however, to inspection by
National Security upon reasonable notice during regular business hours or by any
regulator having jurisdiction or by the NASD.
10. Upon completion of any transaction for which a confirmation is required,
National Security shall, as agent for ONEQ for this purpose, send to the
purchaser or Contract owner a written confirmation reflecting the facts of the
transaction.
11. This Agreement shall be construed in accordance with the laws of New York.
All transactions by ONEQ under this agreement shall, to the extent permitted by
applicable law, be considered to have been made at ONEQ's offices in Montgomery,
Ohio.
12. This Agreement may be terminated by either party on 60 days' advance written
notice to the other party or sooner if mutually agreed by both parties. Upon
termination of this Agreement, all obligations of National Security and ONEQ
each to the other shall cease, except for the provisions of Sections 4, 5, 6, 7,
9 and 10 above, and all compensation payable to ONEQ as provided in Section 8
above shall likewise cease.
IN WITNESS WHEREOF, National Security and ONEQ have caused this Agreement to be
executed at Montgomery, Ohio on the day and year first above written.
NATIONAL SECURITY LIFE AND ANNUITY COMPANY
By:
-----------------------------------------
Xxxx X. Xxxxxx, Chief Executive Officer
OHIO NATIONAL EQUITIES, INC.
By:
-----------------------------------------
Xxxxx X. X'Xxxxx, Chairman
' 3
