EXHIBIT (3)(a)
--------------
PRINCIPAL DISTRIBUTION AGREEMENT BY AND BETWEEN PFL LIFE
INSURANCE COMPANY ON ITS OWN BEHALF AND ON THE BEHALF OF
THE MUTUAL FUND ACCOUNT,
AND AEGON USA SECURITIES, INC.
PRINCIPAL DISTRIBUTION AGREEMENT
THIS PRINCIPAL DISTRIBUTION AGREEMENT is made this 20th day of
November, 1996, by and between AEGON USA Securities, Inc. (hereinafter the
"Distributor") and PFL Life Insurance Company (hereinafter the "Insurance
Company"), on its own behalf and on behalf of PFL Retirement Builder Variable
Annuity Account (hereinafter the "Account"), a separate account of the Insurance
Company, as follows:
WHEREAS, the Account was established under authority of a resolution
of the Insurance Company's Board of Directors on March 29, 1996, in order to set
aside and invest assets attributable to certain flexible premium variable
annuity contracts (hereinafter "Policies") issued by the Insurance Company;
WHEREAS, the Insurance Company has registered the PFL Retirement
Builder Variable Annuity Account as a unit investment trust under the Investment
Company Act of 1940 (the "Investment Company Act") and has registered the
Policies under the Securities Act of 1933;
WHEREAS, the Distributor is registered as a broker-dealer with the
Securities and Exchange Commission (the "SEC") under the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and is a member of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Insurance Company and the Account desire to have Policies
sold and distributed through the Distributor and the Distributor is willing to
sell and distribute such Policies under the terms stated herein.
NOW THEREFORE, the parties hereto agree as follows:
1. The Insurance Company grants to the Distributor the right to be,
and the Distributor agrees to serve as, distributor and principal underwriter of
the Policies during the term of this agreement. The Distributor agrees to use
its best efforts to solicit applications for the Policies, and to undertake, at
its own expense, to provide all sales services relative to the Policies and
otherwise to perform all duties and functions which are necessary and proper for
the distribution of the Policies.
2. All premiums for Policies shall be remitted promptly in full
together with such application, forms and any other required documentation to
the Insurance Company. Checks or money orders in payment of premiums shall be
drawn to the order of "PFL Life Insurance Company".
3. The Distributor agrees to offer the Policies for sale in
accordance with the prospectus therefor then in effect. The Distributor is not
authorized to give any information or to make any representations concerning the
Policies other than those contained in the current prospectus therefore filed
with the Securities and Exchange Commissions or in such sales literature as may
be authorized by the Insurance Company.
4. On behalf of the Account, the Insurance Company shall furnish the
Distributor with copies of all prospectuses, financial statements and other
documents which the Distributor reasonably requests for use in connection with
the distribution of the Policies.
5. The Distributor represents that it is duly registered as a
broker/dealer under the Securities Exchange Act of 1934 ("1934 Act") and is a
member in good standing of the National Association of Securities Dealers, Inc.
("NASD") and, to the extent necessary to offer the Policies, shall be duly
registered or otherwise qualified under the securities laws of any state or
other jurisdiction. The Distributor shall be responsible for carrying out its
sales and underwriting obligations hereunder in continued compliance with the
NASD Rules of Fair Practice and federal and state securities laws and
regulations. Without limiting the generality of the foregoing, the Distributor
agrees that it shall be fully responsible for:
(a) ensuring that no person shall offer or sell the Policies on its
behalf until such person is duly registered as a representative of the
Distributor, duly licensed and appointed by the Insurance Company, and
appropriately licensed, registered or otherwise qualified to offer and sell
such Policies under the federal securities laws and any applicable
securities laws of each state or other jurisdiction in which such Policies
may be lawfully sold, in which the Insurance Company is licensed to sell
the Policies and in which such persons shall offer or sell the Policies;
and
2
(b) training, supervising, and controlling of all such persons for
purposes of complying on a continuous basis with the NASD Rules of Fair
Practice and with federal and state securities law requirements applicable
in connection with the offering and sale of the Policies. In this
connection, the Distributor shall:
(1) conduct such training (including the preparation and
utilization of training materials) as in the opinion of the
Distributor is necessary to accomplish the purposes of this Agreement;
(2) establish and implement reasonable written procedures for
supervision of sales practices of agents, representatives or brokers
selling the Policies; and
(3) take reasonable steps to ensure that its associated persons
shall not make recommendations to an applicant to purchase a Policy
and shall not sell a Policy in the absence of reasonable grounds to
believe that the purchase of the Policy is suitable for such
applicant.
6. Notwithstanding anything in the Agreement to the contrary, the
Distributor or the Insurance Company may enter into sales agreements with the
independent broker/dealers for the sale of the Policies. All such sales
agreements entered into by the Insurance Company or the Distributor shall
provide that each independent broker/dealer will assume full responsibility for
continued compliance by itself and its associated persons with the NASD Rules of
Fair Practice and applicable federal and state securities laws. All associated
persons of such independent broker/dealers soliciting applications for the
Policies shall be duly and appropriately licensed or appointed for the sale of
the Policies under the insurance laws of the applicable states or jurisdictions
in which such Policies may be lawfully sold.
7. The Insurance Company shall apply for the proper insurance licenses in
the appropriate states or jurisdictions for the designated persons associated
with the Distributor or with other independent broker/dealers which have entered
into agreements
3
with the Distributor for the sale of the Polices, provided that the Insurance
Company reserves the right to refuse to appoint any proposed registered
representative as an agent or broker, and to terminate an agent or broker once
appointed.
8. The Insurance Company and the Distributor shall cause to be maintained
and preserved for the periods prescribed such accounts, books, and other
documents as are required of them by the Investment Company Act of 1940, the
1934 Act, and any other applicable laws and regulations. The books, accounts
and records of the Insurance Company, the Account, and the Distributor as to all
transactions hereunder shall be maintained so as to disclose clearly and
accurately the nature and details of the transactions. The Insurance Company
shall maintain such books and records of the Distributor pertaining to the sale
of the Policies and required by the 1934 Act as may be mutually agreed upon from
time to time by the Insurance Company and the Distributor; provided that such
books and records shall be the property of the Distributor, and shall at all
times be subject to such reasonable periodic, special or other examination by
the SEC and all other regulatory bodies having jurisdiction. The Insurance
Company or the Distributor, as may be mutually agreed upon, shall be responsible
for sending all required confirmations on customer transactions in compliance
with applicable regulations, as modified by an exemptions or other relief
obtained by the Insurance Company or Distributor. The Distributor shall cause
the Insurance Company to be furnished with such reports as the Insurance Company
may reasonably request for the purpose of meetings its reporting and
recordkeeping requirements under the insurance laws of the Insurance Company's
domicile state and any other applicable states or jurisdictions.
9. The Distributor shall have the responsibility for paying (i) all
commission or other fees to its associate persons which are due for the sale of
the Policies and (ii) any compensation to other independent broker/dealer and
their associated persons due under the terms of any sales agreements between the
Distributor and such broker/dealers. Notwithstanding the preceding sentence, no
associated person or broker/dealer shall have an interest in any deductions or
other fees payable to the Distributor as set forth herein. The Distributor
shall have the responsibility for calculating and furnishing periodic reports
4
to the Insurance Company as to the sale of the Policies, and as to the
commissions and service fees payable to persons selling the Policies.
10. The Distributor shall be compensated for its distribution services as
set forth in a schedule to be determined by Insurance Company and Distributor.
Any commission paid to the Distributor in connection with a Policy must be
returned to the Insurance Company if the Policy is tendered for redemption
within the "free-look" period as defined in the Account's prospectus.
11. The services of the Distributor to the Account hereunder are not to be
deemed exclusive and the Distributor shall be free to render similar services to
other so long as its services hereunder are not impaired or interfered with
thereby.
12. (a) This Agreement may be terminated by either party hereto upon 60
days' written notice to the other party.
(b) This Agreement may be terminated upon written notice of one party
to the other party hereto in the event of bankruptcy or insolvency of such party
to which notice is given.
(c) This Agreement may be terminated at any time upon the mutual
written consent of the parties thereto.
(d) This Agreement shall automatically be terminated in the event of
its assignment.
(e) Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except the obligations to settle accounts hereunder,
including payments or premiums or contributions subsequently received for
Policies in effect at the time of termination or issued pursuant to applications
received by the Insurance Company prior to terminations.
13. This Agreement shall be subject to the provisions of the Investment
Company Act and the Securities Exchange Act and the rules, regulations, and
rulings thereunder and of the NASD, from time to time in effect, including such
exemptions from the Investment Company Act as the Securities and Exchange
Commission may grant, and the terms hereof shall be interpreted and construed in
accordance therewith. Without
5
limiting the generality of the foregoing, the term "assigned" shall not include
any transaction exempted from Section 15(b)(2) of the Investment Company Act.
The Distributor shall submit to all regulatory and administrative bodies
having jurisdiction over the operations of the Account, present or further, any
information, reports or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws or regulations.
14. If any provision of this Agreement shall be held or made invalid by a
court decision, statue, rule or otherwise, the remainder of this Agreement shall
not be affected thereby.
15. This Agreement shall be construed and enforced in accordance with that
governed by the laws of the State of Iowa.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officials thereunder duly authorized and seals to be
affixed, as of the day and year first above written.
PFL LIFE INSURANCE
COMPANY
Attest:
/s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
---------------------- ---------------------------
AEGON USA SECURITIES, INC.
Attest:
/s/ Xxxxxx Xxxxxx By: /s/ Xxxxx X. Xxxxxxxx
------------------ ---------------------------
6
