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Exhibit 3(a)
DISTRIBUTOR AGREEMENT
(Variable Annuity)
This Agreement is made this 10th day of November, 1994 by and between
Western-Southern Life Assurance Company, an insurance company organized and
existing under the laws of the State of Ohio (the "Company") and Touchstone
Securities, Inc., a Nebraska corporation (the "Distributor") and its undersigned
affiliated insurance agencies (the "Agencies").
WHEREAS, the Company and its Separate Account 1 and Separate Account 2
(individually a "Separate Account" and together the "Separate Accounts"), each
of which is a separate investment account registered as a unit investment trust
under the Investment Company Act of 1940 (the "1940 Act"), propose to offer for
sale certain variable annuity contracts, together with certificates under group
contracts and any riders (hereafter, the "Contracts"), interests under which may
be deemed to be securities under the Securities Act of 1933 (the "1933 Act") and
the laws of some states; and
WHEREAS, the Separate Accounts and various divisions thereof (the
"Sub-Accounts") will invest solely in various portfolios of the Select Advisors
Variable Insurance Trust, an open-end diversified management investment company
organized as a Massachusetts business trust (the "VI Trust") and various
portfolios of Select Advisors Portfolios, an open-end diversified management
investment company organized as a Massachusetts business trust (the "SA
Trust")(the portfolios of the VI Trust and the SA Trust being herein sometimes
referred to as the "Portfolios" or, individually, as a "Portfolio"); and
WHEREAS, the Distributor is registered as a broker-dealer with the
Securities and Exchange Commission (the "SEC") under the Securities Exchange Act
of 1934 (the "1934 Act") and is a member of the National Association of
Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Agencies are affiliated with the Distributor by common
ownership or contract and are duly licensed insurance agencies under the
applicable insurance laws of one or more of those states in which the Contracts
will be distributed pursuant to this Agreement; and
WHEREAS, certain personnel of the Company or its affiliates may engage,
or may be deemed to be engaged, directly or indirectly, in offering, selling,
advertising or marketing Contracts and confirming transactions as required by
1934 Act Rule 10b-10; in the maintenance of records required by 1934 Act Rules
17a-3 and 17a-4 or other SEC or NASD rules applicable to registered
broker-dealers; and in the payment of commissions with respect to Contracts; and
WHEREAS, all Company personnel engaged in the activities described in
the foregoing paragraph (and those registered representatives of the Distributor
who shall supervise securities activities related to the Contracts that are
conducted on the premises of financial institutions), as well as all other
persons who Section 3(a)(18) of the 1934 Act defines as associated persons of
the Distributor, will be referred to herein as "Associated Persons," (it being
understood that such term, as used in this Agreement, does not include persons
associated with other broker-dealer firms that are engaged by the Distributor to
offer and sell Contracts);
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NOW, THEREFORE, in consideration of the covenants and mutual promises
herein contained, the Distributor and the Company agree as follows:
1. APPOINTMENT OF DISTRIBUTOR. The Distributor will act as the
exclusive general distributor of the Contracts during the term of this Agreement
in each state or other jurisdiction where the Contracts may legally be sold. The
Distributor shall at all times function as, and be deemed to be, an independent
contractor and will be under no obligation to effectuate any particular amount
of sales of Contracts or to promote or make sales, except to the extent the
Distributor deems advisable. Anything in this Agreement to the contrary
notwithstanding, the Company retains the ultimate right to control the sale of
the Contracts, including the right to suspend sales in any jurisdiction or
jurisdictions, to appoint and discharge agents of the Company, or to refuse to
sell a Contract to any applicant for any reason whatsoever.
2. APPOINTMENT OF DEALERS. The Distributor will use its best efforts to
find purchasers for the Contracts and to promote the distribution of the
Contracts. The Distributor may enter into agreements, in form and substance
satisfactory to the Company, with dealers and other persons selected by the
Distributor ("Selected Dealers"), providing for the sale of Contracts by and
through such Selected Dealers. The Selected Dealers shall not have any authority
to act as agent for the Company, but shall act only as dealers for their own
accounts or as agents for their customers.
3. DISTRIBUTION RESPONSIBILITIES OF THE DISTRIBUTOR. The Distributor
will assume full responsibility for securities law compliance by the Associated
Persons with respect to the offering of the Contracts, including, as applicable,
compliance with the NASD Rules of Fair Practice and Federal and state securities
laws and regulations. The Distributor, directly or through the Company as its
agent, will (a) make timely filings as required by law with the SEC, NASD, and
any other securities regulatory authorities of any sales literature or materials
relating to the Separate Account or the Sub-Accounts, (b) make available to the
Company copies of any agreements or plans intended for use in connection with
the sale of the Contracts in sufficient numbers and in adequate time for
clearance by the appropriate regulatory authorities before they are used, and
(c) train the Associated Persons, use its best efforts to prepare them to
complete satisfactorily any and all applicable NASD and state securities
examinations, register the Associated Persons as its registered representatives
or principals to the extent legally required before they engage in securities
activities, and diligently supervise and control them in the performance of such
activities. The parties will use their best efforts to obtain any required
clearances by regulatory agencies as expeditiously as reasonably possible and
will not use any materials, plan or agreement in any jurisdiction unless all
filings have been made and approvals obtained that are necessary to make said
use proper and legal therein. The Company will be responsible for filing the
Contracts with and obtaining all necessary approvals thereof from state
insurance regulatory authorities.
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4. ADMINISTRATIVE FUNCTIONS AND SERVICES. Completed applications for
the Contracts shall be transmitted directly to the Company or its designated
agent for acceptance or rejection in accordance with rules and procedures
established by the Company. Initial and subsequent premium payments under the
Contracts shall be made payable to the Company and shall be delivered to the
Company or its designated agent; any such payments that are received in error by
the Distributor shall be forwarded by the Distributor to the Company or its
designated agent promptly after such receipt. All other administrative functions
and services in connection with the Contracts shall be performed by the Company.
5. APPOINTMENT OF AGENTS; COMPLIANCE WITH STATE INSURANCE LAWS. The
Company shall undertake to appoint as life insurance agents of the Company the
Distributor's qualified principals and representatives (including Associated
Persons where applicable) and, as appropriate upon the request of the
Distributor, those of the Selected Dealers. The Distributor, either itself or
through an affiliated insurance agency, shall comply with all state insurance
licensing requirements applicable to the Distributor in performing this
Agreement, and shall be responsible for ensuring that Associated Persons will
engage in the offer and sale of Contracts only if properly qualified under the
insurance laws of all relevant jurisdictions. Although the Distributor may
assist the Selected Dealers or their representatives or principals in qualifying
under relevant insurance laws to sell Contracts, and will assist the Company in
monitoring such qualification on a periodic basis, the responsibility for
ensuring that all such requirements have been met is that of such Selected
Dealers and not the Distributor. Each of the Agencies joins in the execution
this Agreement for the purpose of acknowledging its obligations to comply with
all state insurance licensing requirements of those states in which such Agency
is licensed that are applicable to the Contracts and the performance of this
Agreement on Distributor's behalf.
6. SUITABILITY. The Distributor will take reasonable steps to ensure
that the Associated Persons shall not make recommendations to an applicant to
purchase a Contract in the absence of reasonable grounds to believe that the
purchase of the Contract is suitable for the applicant.
7. SALES PRACTICES. The Distributor will use its best efforts to assure
that no person uses any sales aids, promotional material, or sales literature
with respect to Contracts that have not been specifically approved in advance by
the Distributor and the Company. The Company will be responsible for filing such
items, as necessary, with any insurance regulatory authorities and, where
necessary, obtaining approvals of said authorities. Distributor will use its
best efforts to assure that no person, in connection with the offer or sale of
the Contracts, makes any representations regarding the Contracts, the
Sub-Accounts, interests in the Portfolios, the Company, or the Distributor,
which are not either then authorized by the Company and the Distributor or
contained in a then-effective Registration Statement relating to any of the
Separate Accounts and the offering of the Contracts (the "Registration
Statement").
8. COSTS AND EXPENSES. Except as set forth below or otherwise
specifically set forth herein, or except as may otherwise be agreed between the
parties from time to time, each party to
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this Agreement shall bear all costs and expenses of providing the services and
performing the functions that it undertakes to provide or perform hereunder.
(a) As between the Company and the Distributor, the Company
will bear and/or reimburse the Distributor for the cost of all direct
services and expenses (but not any part of the Distributor's general
overhead) and all fees, including registration and filing fees,
required or incurred in connection with (i) registering and qualifying
the Separate Accounts and the Contracts with Federal and state
regulatory authorities, (ii) preparing, typesetting, printing, filing
and distributing registration statements, prospectuses and statements
of additional information (including amendments to any of the
foregoing) pertaining to the Separate Accounts and the Contracts
(except the cost thereof relating to those prospectuses and statements
of additional information distributed to prospective investors, which
will be borne by the Distributor), (iii) preparing, typesetting,
printing, filing and distributing Contract forms, (iv) preparing,
typesetting, printing, filing and distributing to Contract owners
confirmations, periodic statements of account, and periodic reports of
the Separate Accounts and the various Sub-Accounts to Contract owners,
(v) audit and accounting expenses pertaining to the Company and audit
and financial statement preparation expenses pertaining to the Separate
Accounts and the Sub-Accounts, (vi) preparation of and filing Forms
N-SAR for the Separate Accounts, (vii) preparation of and filing
required insurance regulatory reports for the Separate Accounts and the
Company, (viii) general advice, including the fees and expenses of
legal counsel, concerning the Separate Accounts and the Contracts, and
(ix) registering and qualifying those Associated Persons who are
employees of the Company or its affiliates with state insurance
regulatory authorities (including the training of Associated Persons
for this purpose).
(b) As between the Company and the Distributor, the
Distributor will bear and/or reimburse the Company for the cost of all
direct services and expenses (but not any part of the Company's general
overhead) and all fees, including registration and filing fees,
required or incurred in connection with (i) registering and qualifying
the Associated Persons with Federal and state securities regulatory
authorities, including the NASD (including the training of Associated
Persons for this purpose), (ii) preparing, typesetting, filing with
insurance and securities regulatory authorities, printing and
disseminating sales literature (including prospectuses and statements
of additional information distributed to prospective investors) and
advertising in connection with the Contracts or in connection with the
interests in the Portfolios purchased by the Separate Accounts through
its Sub-Accounts, and (iii) costs of computer processing that may be
necessary for the Distributor to perform its responsibilities
hereunder.
(c) In connection with the sale of the Contracts, Distributor
will pay all amounts (including sales commissions and overrides at
rates established by Distributor) becoming payable to the Selected
Dealers or their sales representatives, to the Associated Persons or to
any other broker-dealers who have entered into sales agreements with
the
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Distributor, provided that appropriate records of all commission
payments shall be maintained by the Company or its agent. The
agreements with the Selected Dealers and any such agreement with
another broker-dealer shall be subject to the Company's approval as to
form and substance.
9. RECORDS AND CONFIRMATIONS. The Distributor, directly or through the
Company as its agent, will (i) maintain and preserve in accordance with Rules
17a-3 and 17a-4 under the 1934 Act all books and records required to be
maintained in connection with the offer and sale of the Contracts being
distributed pursuant to this Agreement, which books and records shall remain the
property of the Distributor and shall be subject to inspection by the SEC in
accordance with Section 17(a) of the 1934 Act and (ii) upon or prior to the
completion of each Contract transaction for which a confirmation is legally
required, send a written confirmation for each such transaction reflecting the
facts of the transaction. All records maintained hereunder by the Company as the
Distributor's agent will be promptly surrendered by the Company at the request
of the Distributor and will be available at any time during business hours to
properly-constituted governmental authorities and furnished to them in true,
correct and current hard copy form, should the same be required by said
authorities.
The Company or the Distributor (but at the Company's expense), will
maintain and preserve all records in connection with the Contracts and the
Separate Accounts in accordance with Rules 31a-1 and 31a-2 under the 1940 Act.
To the extent maintained and preserved by the Distributor, such records shall be
the property of the Company and shall be returned to the Company upon request.
10. SECURITIES LAW REGISTRATION. The Distributor will execute such
papers and do such acts and things as shall from time to time be reasonably
requested by the Company for the purpose of (i) maintaining the registration of
the Contracts under the 1933 Act and the registration of each Separate Account
under the 1940 Act and (ii) qualifying and maintaining qualification of the
Contracts for sale under the applicable laws of any state.
Each party hereto shall advise the other promptly of (i) any action of
the SEC or any authorities of any state or territory, of which it has knowledge,
affecting the registration or qualification of any Separate Accounts or of the
Contracts or the right to offer the Contracts for sale or (ii) the happening of
any event which makes untrue any statement, or which requires the making of any
change in, any Registration Statement or any current prospectus or statement of
additional information, in order to make the statements therein not materially
misleading.
11. COMPENSATION. As compensation to the Distributor for assuming the
expenses and performing the distribution services to be assumed and performed by
it pursuant to this Agreement, the Distributor will receive from the Company
such amounts and at such times as are set forth in Schedule A to this Agreement
(as the same may from time to time be amended by agreement between the parties
hereto). To the extent that applicable state insurance laws require that
compensation due on account of the sale of Contracts be paid only to duly
licensed insurance
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agents, the Distributor agrees that any such compensation received from the
Company by the Distributor will be processed by the Distributor on behalf of its
affiliated insurance agency. In this event, such compensation will be reported
by the Distributor for purposes of satisfying securities regulatory requirements
and by its affiliated insurance agency for purposes of satisfying state
insurance regulatory requirements.
The Company will receive all amounts charged as "surrender charges" in
connection with the Contracts, and all other amounts assessed as Contract
charges.
12. COOPERATION. The Distributor and the Company agree to cooperate
with each other fully in any insurance regulatory examination, investigation, or
proceeding or any judicial proceeding arising in connection with the Contracts.
The Distributor and the Company further agree to cooperate fully with each other
in any securities regulatory examination, investigation or proceeding or any
judicial proceeding with respect to the Company, the Distributor, their
respective affiliates, agents or representatives (including all Associated
Persons), and the Selected Dealers, to the extent that such examination,
investigation or proceeding is in connection with Contracts distributed under
this Agreement. The Distributor shall furnish applicable Federal and state
regulatory authorities with any information or reports in connection with its
services under this Agreement which such authorities may request in order to
ascertain whether the Company's operations are being conducted in a manner
consistent with any applicable law or regulations.
13. INDEMNIFICATION.
(a) The Distributor shall indemnify and hold harmless each
Separate Account, the Company and each of its directors and officers,
and each person who controls the Company against any loss, liability,
claim, damage, or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damage
or expense and reasonable counsel fees incurred in connection
therewith) (i) arising by reason of any person's acquiring any Contract
or interest thereunder, which may be based upon the ground that any
Registration Statement of the Company or of any Separate Account or the
prospectus or statement of additional information contained therein, as
from time to time amended or supplemented, or any annual or interim
reports of the Company or any Separate Account to Contract owners,
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein not misleading, but only to the extent that
such statement or omission was made in reliance upon, and in conformity
with, information furnished to the Company in writing in connection
therewith by or on behalf of the Distributor or (ii) otherwise arising
out of the Distributor's negligence, bad faith, willful misfeasance or
reckless disregard of its responsibilities hereunder.
(b) The Company shall indemnify and hold harmless the
Distributor, its agents and employees, and each person, if any, who
controls the Distributor against any loss, liability, claim, damage, or
expense described in subparagraph (a), above, except as to
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statements (or omissions) made (or not made) in reliance upon, and
conformity with, information furnished to the Company in writing by or
on behalf of the Distributor for use in connection with (i) the
Registration Statement of the Company or any Separate Account or the
prospectus or statement of additional information contained therein, as
the same may be from time to time amended and supplemented, or (ii) any
annual or interim reports to Contract owners; provided, however, that
in no case is the indemnity of the Company in favor of the Distributor
and any such controlling persons to be deemed to protect the
Distributor or any such controlling persons against any liability to
the Company or its Contract owners to which the Distributor or any such
controlling person would otherwise be subject by reason or willful
misfeasance, bad faith or negligence in the performance of their duties
or by reason of reckless disregard of their obligations and duties
under this agreement.
(c) No person from whom indemnity may be sought under this
Section 13 ("Indemnitor") shall be liable to indemnify or hold harmless
any person ("Indemnitee") pursuant to this Section 13, unless the
Indemnitee shall have notified the Indemnitor in writing of the nature
of the claim as to which indemnity is being sought hereunder within a
reasonable time after the Indemnitee shall have been served with a
summons or other first legal process giving notice thereof (or shall
have received notice of such service on any designated agent), which
notice to the Indemnitor shall give information as to the nature of the
claim for which indemnity is sought hereunder. The failure of the
Indemnitee to notify the Indemnitor of any such claim shall not relieve
it from any liability which it may have to the Indemnitee otherwise
than on account of its indemnity agreement contained in this Section
13. The Indemnitor will be entitled to participate at its own expense
in the defense, or, if it so elects, to assume the defense of any suit
brought to enforce any such claim, but if the Indemnitor elects to
assume the defense, such defense shall be conducted by counsel chosen
by it that is reasonably satisfactory to the Indemnitee. If the
Indemnitor elects to assume the defense of any such suit and retain
such counsel in accordance herewith, the Indemnitee shall bear the fees
and expenses of any additional counsel retained by it. If the
Indemnitor does not elect to assume the defense of any such suit, it
will reimburse the Indemnitee for the reasonable fees and expenses of
any counsel retained by the Indemnitee that is reasonably satisfactory
to the Indemnitor.
14. MISCELLANEOUS.
(a) This Agreement shall become effective as of the date of
its execution and shall continue in full force and effect until
terminated. It may be terminated at any time without penalty on six
months' prior written notice by either party to the other.
(b) This Agreement may be amended only by the written
agreement of the parties hereto.
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(c) The Distributor will not assign or delegate its
responsibilities under this Agreement, except with the consent of the
Company.
(d) This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
(e) The Distributor shall keep confidential any information
obtained pursuant to this Agreement and shall disclose such information
only if the Company has authorized such disclosure, or if such
disclosure is expressly required by Federal or state authorities having
jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
WESTERN-SOUTHERN LIFE
ASSURANCE COMPANY TOUCHSTONE SECURITIES, INC.
By: /s/ XXXXXX X. XXXXXXXXX By:/s/ XXXXXX X. XXXXXXX, XX.
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Xxxxxx X. Xxxxxxxxx Xxxxxx X. Xxxxxxx, Xx.
Vice President Chief Executive Officer
By: /s/ XXXXXXX X. XXXXXX By:/s/ XXXX X. XXXXXXXX
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Xxxxxxx X. Xxxxxx Xxxx X. XxXxxxxx
Senior Vice President President
AND, its affiliated insurance agencies:
IFS INSURANCE AGENCY, INC.
By: /s/ XXXXXX X. XXXXXXX, XX.
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Xxxxxx X. Xxxxxxx, Xx.
President
By: /s/ XXXX X. XXXXXXXX
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Xxxx X. XxXxxxxx
Vice President
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IFS AGENCY SERVICES, INC.
By: /s/ XXXXXX X. XXXXXXX, XX.
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Xxxxxx X. Xxxxxxx, Xx.
President
By: /s/ XXXX X. XXXXXXXX
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Xxxx X. XxXxxxxx
Vice President
IFS AGENCY, INC.
By: /s/ XXXXXX XXXXXX
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Xxxxxx Xxxxxx
Vice President
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