DRAFT EXHIBIT 3(a)
DISTRIBUTION AGREEMENT
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AGREEMENT made this _______ day of ______________ , by and between
Lutheran Brotherhood, a fraternal benefit society organized under the laws
of the state of Minnesota ("LB"), on its own behalf and on behalf of the LB
Variable Annuity Account I (the "Variable Account"), and Lutheran
Brotherhood Securities Corp., a Pennsylvania corporation ("LBSC").
WITNESSETH:
WHEREAS, LB has established and maintains the Variable Account, a
separate investment account, pursuant to the laws of Minnesota for the
purpose of selling flexible premium variable annuity contracts
("Contracts"), to commence after the effectiveness of the Registration
Statement relating thereto filed with the Securities and Exchange Commission
on Form N-4 pursuant to the Securities Act of 1933, as amended (the "1933
Act") and the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Variable Account will be registered as a unit
investment trust under the 1940 Act; and
WHEREAS, LBSC is registered as a broker-dealer under the Securities
Exchange Act of 1934 (the "Securities Exchange Act") and is a member of the
National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, LB and LBSC wish to enter into an agreement to have LBSC
act as the Company's principal underwriter for the sale of the Contracts
through the Variable Account;
NOW, THEREFORE, the parties agree as follows:
1. APPOINTMENT OF THE DISTRIBUTOR
LB agrees that during the term of this Agreement it will take
all action which is required to cause the Contracts to comply
as an insurance product and a registered security with all
applicable federal and state laws and regulations. LB
appoints LBSC and LBSC agrees to act as the principal
underwriter for the sale of Contracts to the public, during
the term of this Agreement, in each state and other
jurisdiction in which such Contracts may lawfully be sold.
LBSC shall offer the Contracts for sale and distribution at
premium rates set by LB. Applications for the Contracts shall
be solicited only by representatives duly and appropriately
licensed or otherwise qualified for the sale of such Contracts
in each state or other jurisdiction. LB shall undertake to
appoint LBSC's qualified registered representatives as life
insurance or annuity agents of LB. Completed applications for
Contracts shall be transmitted directly to LB for acceptance
or rejection in accordance with underwriting rules established
by LB. Initial premium payments under the Contracts shall be
made by check payable to LB and shall be held at all times by
LBSC or its registered representatives in a fiduciary capacity
and remitted promptly to LB. Anything in this Agreement to
the contrary notwithstanding, LB retains the ultimate right to
control the sale of the Contracts and to appoint and discharge
life insurance agents of LB. LBSC shall be held to the
exercise of reasonable care in carrying out the provisions of
this Agreement.
2. SALES AGREEMENTS
LBSC is hereby authorized to enter into separate written
agreements, on such terms and conditions as LBSC may determine
not inconsistent with this Agreement, with one or more
registered representatives who agree to participate in the
distribution of Contracts. Such registered representatives
shall be registered as securities agents with the NASD. LBSC
and its registered representatives soliciting applications for
Contracts shall also be duly and appropriately licensed,
registered or otherwise qualified for the sale of such
Contracts (and the riders and other policies offered in
connection therewith) under the insurance laws and any
applicable blue sky laws of each state or other jurisdiction
in which LB is authorized to offer the Contracts. LBSC shall
have the responsibility for ensuring that its registered
representatives are properly supervised. LBSC shall assume
any legal responsibilities of LB for the acts, commissions or
defalcations of such registered representatives insofar as
they relate to the sale of the Contracts. Applications for
Contracts solicited by LBSC through its registered
representatives shall be transmitted directly to LB. All
premium payments under the Contracts shall be made by check to
LB and, if received by LBSC, shall be held at all times in a
fiduciary capacity and remitted promptly to LB.
3. LIFE INSURANCE OR ANNUITY LICENSING
LB shall be responsible for ensuring that the registered
representatives are duly qualified under the insurance laws of
the applicable jurisdictions to sell the Contracts.
4. SUITABILITY
LB wishes to ensure that Contracts sold by LBSC will be issued
to purchasers for whom the Contract will be suitable. LBSC
shall take reasonable steps to ensure that the various
registered representatives appointed by it 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 such applicant. While not
limited to the following, a determination of suitability shall
be based on information furnished to a registered
representative after reasonable inquiry of such applicant
concerning the applicant's insurance and investment
objectives, financial situation and needs, and the likelihood
that the applicant will continue to make the premium payments
contemplated by the Contracts.
5. PROMOTION MATERIALS
LB shall have the responsibility for furnishing to LBSC and
its registered representatives sales promotion materials and
individual sales proposals related to the sale of the
Contracts. LBSC shall not use any such materials that have
not been approved by LB.
6. COMPENSATION
LB shall arrange for the payment of commissions directly to
those registered representatives of LBSC who are entitled
thereto in connection with the sale of the Contracts on behalf
of LBSC, in the amounts and on such terms and conditions as LB
and LBSC have determined in the VARIABLE PRODUCTS SCHEDULE OF
COMMISSION RATES attached hereto as Exhibit A and Exhibit B
and incorporated by reference herein; provided, however, that
such terms, conditions and commissions as are set forth in or
as are not inconsistent with the Prospectus included as part
of the Registration Statement for the Contracts and effective
under the 1933 Act. LB may, at its option, adjust the
VARIABLE PRODUCTS SCHEDULE OF COMMISSION RATES for contracts
and riders hereafter sold, by giving written notice to LBSC
thirty days in advance of such change.
LB shall reimburse LBSC for the costs and expenses incurred by
LBSC in furnishing or obtaining the services, materials and
supplies required by the terms of this Agreement, in the
initial sales efforts and the continuing obligations
hereunder.
7. RECORDS
LBSC shall have the responsibility for maintaining the records
of representatives licensed, registered and otherwise
qualified to sell the Contracts. LBSC shall maintain such
other records as are required of it by applicable laws and
regulations. The books, accounts and records of LB, the
Variable Account and LBSC shall be maintained so as to clearly
and accurately disclose the nature and details of the
transactions. All records maintained by LBSC or in connection
with this Agreement shall be the property of LB and shall be
returned to LB upon termination of this Agreement, free from
any claims or retention of rights by LBSC. LBSC shall keep
confidential any information obtained pursuant to this
Agreement and shall disclose such information, only if LB has
authorized such disclosure, or if such disclosure is expressly
required by applicable federal or state regulatory
authorities.
8. INVESTIGATIONS AND PROCEEDINGS
(a) LBSC and LB agree to cooperate fully in any insurance
regulatory investigation, proceeding or judicial
proceeding arising in connection with the Contracts
distributed under this Agreement. LBSC and LB further
agree to cooperate fully in any securities regulatory
investigation, proceeding or judicial proceeding with
respect to LB, LBSC, their affiliates and their agents
or representatives to the extent that such investigation
or proceeding is in connection with Contracts
distributed under this Agreement. LBSC 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 LB's
operations are being conducted in a manner consistent
with any applicable law or regulation.
(b) In the case of a written customer complaint, LBSC and LB
will cooperate in investigating such complaint and any
response to such complaint will be sent to the other
party to this Agreement for approval not less than five
business days prior to its being sent to the customer or
regulatory authority, except that if a more prompt
response is required, the proposed response shall be
communicated by telephone or telegraph.
9. TERMINATION
This Agreement shall terminate automatically upon its
assignment by either party without the prior written consent
of both parties. This Agreement may be terminated at any time
by either party on 60 days' written notice to the other party,
without the payment of any penalty. Upon termination of this
Agreement all authorizations, rights and obligations shall
cease except the obligation to settle accounts hereunder,
including commissions on premiums subsequently received for
Contracts in effect at time of termination, and the agreements
contained in paragraph 8 hereof.
10. REGULATION
This Agreement shall be subject to the provisions of the 1933
Act, the 1940 Act and the Securities Exchange Act and the
rules, regulations and rulings promulgated thereunder and of
the applicable rules and regulations of the NASD, from time to
time in effect, and the terms hereof shall be interpreted and
construed in accordance therewith.
11. SEVERABILITY
If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
12. APPLICABLE LAW
This Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of Minnesota.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
LUTHERAN BROTHERHOOD
By
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LUTHERAN BROTHERHOOD
SECURITIES CORP.
By
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