Exhibit 2
PROPOSED FORM OF UNDERWRITING AGREEMENT
PARAGON LIFE INSURANCE COMPANY
PRINCIPAL UNDERWRITING AGREEMENT
This UNDERWRITING AGREEMENT made this 21/st/ day of April 1988, by and
between Walnut Street Securities, Inc. (hereinafter "the Underwriter") and
Paragon Life Insurance Company (hereinafter "the Insurance Company"), on its own
behalf and on behalf of Paragon Life Insurance Company Separate Account A
(hereinafter "the Account"), a separate account of the Insurance Company;
WITNESSETH as follows:
WHEREAS, the Account was established under authority of a resolution of the
Insurance Company's Board of Directors as of October 30, 1987, in order to set
aside and invest assets attributable to certain flexible premium life variable
contracts (hereinafter "Contracts") issued by the Insurance Company;
WHEREAS, the Insurance Company has registered the Account as a unit
investment trust under the Investment Company Act of 1940 (the "Investment
Company Act") and has registered the Contracts under the Securities Act of 1933;
WHEREAS, the Underwriter 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 Contracts
sold and distributed through the Underwriter and the Underwriter is willing to
sell and distribute such Contracts under the terms stated herein;
NOW, THEREFORE, the parties hereto agree as follow:
1. The Insurance Company grants to the Underwriter the right to be, and
Underwriter agrees to serve as, distributor and principal underwriter of the
Contracts during the term of this Agreement. The Underwriter agrees to use its
best efforts to solicit applications for the Contracts at its own expense, and
otherwise to perform all duties and functions which are necessary and proper for
the distribution of the Contracts.
2. All premiums for Contracts shall be remitted promptly to the Insurance
Company in full together with appropriate application forms and any other
required documentation. Checks or money orders in payment of premiums shall be
drawn to the order of "Paragon Life Insurance Company".
3. The Underwriter agrees to offer the Contracts for sale in accordance
with the prospectus for them then in effect. The Underwriter is not authorized
to give any information or to make any representations concerning the Contracts
other than those contained in the current prospectus filed with the SEC or in
such sales literature as may be developed and authorized by the Insurance
Company in conjunction with the Underwriter.
4. On behalf of the Account, the Insurance Company shall furnish the
Underwriter with copies of all prospectuses, financial statements, and other
documents which the Underwriter reasonably requests for use in connection with
the distribution of the Contracts.
5. The Underwriter represents that it is duly registered as a broker-
dealer under the 1934 Act, and is a member in good standing of the NASD, and --
to the extent necessary to offer the Contracts -- shall be duly registered or
otherwise qualified under
the securities laws of any state or other jurisdiction. The Underwriter shall be
responsible for carrying out its sales and underwriting obligations hereunder in
continued compliance with the NASD Rules of Fair Practice, and applicable
federal and state securities laws and regulations. Without limiting the
generality of the foregoing, the Underwriter agrees that it shall be fully
responsible for:
(a) ensuring that no person shall offer or sell the Contracts on its
behalf until such person is duly registered as a representative of the
Underwriter; duly licensed and appointed by the Insurance Company; and
appropriately licensed, registered, or otherwise qualified to offer and sell
such Contracts under the federal securities laws and any applicable securities
laws of each state or other jurisdiction in which the Insurance Company is
licensed to sell the Contracts and in which such persons shall offer or sell the
Contracts; and
(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 Contracts. In this connection, the Underwriter
shall:
(1) conduct such training (including the preparation and utilization
of training materials) as in the opinion of the Underwriter 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 Contracts; and
(3) take reasonable steps to ensure that its associated persons shall
not make recommendations to an applicant to purchase a Contract and shall not
sell a Contract in the absence of reasonable grounds to believe that the
purchase of the Contract is suitable for such applicant.
6. Notwithstanding anything in the Agreement to the contrary, the
Underwriter is hereby authorized to enter into sales agreements with other
independent broker-dealers for the sale of the Contracts. All such sales
agreements entered into by the Underwriter 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 Contracts shall be duly and
appropriately licensed or appointed by the Insurance Company for the sale of the
Contracts under the insurance laws of the applicable states of jurisdictions in
which such persons shall offer or sell the Contracts.
7. The Insurance Company shall apply for the proper insurance licenses in
the appropriate states or jurisdictions for persons associated with the
Underwriter; or with other independent broker-dealers which have entered into
agreements with the Underwriter for the sale of the Contracts provided that the
Insurance Company reserves the right to refuse to appoint any proposed
associated person as an agent or broker, and to terminate an agent or broker
once appointed.
8. The Insurance Company and the Underwriter 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, the 1934 Act,
and other applicable laws and regulations. The books, accounts and records of
the Insurance Company, the
Account, and the Underwriter 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 Underwriter pertaining to the sale of the Contracts and required by the 1934
Act as may be mutually agreed upon from time to time by the Insurance Company
and the Underwriter; provided that such books and record shall be the property
of the Underwriter, 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 shall be responsible for
sending all required confirmations on customer transactions in compliance with
applicable regulations, as modified by an exemption of other relief obtained by
the Insurance Company. The Underwriter shall cause the Insurance Company to be
furnished with such reports as the Insurance Company may reasonably request for
the purpose of meeting its reporting and recordkeeping obligations under the
insurance laws of the State of Missouri and any other states or jurisdictions.
9. Ownership and control of records shall not be affected by this
Agreement.
10. Each party to this Agreement has the right to inspect, audit, and copy
all pertinent records of the other party pertaining to performance under this
Agreement.
11. Each party to this Agreement will keep any information obtained in the
course of its relationship to the other party in confidence and will not use
such information for its own benefit or disclose it except as authorized by the
other party or as required by regulatory authorities having jurisdictions.
12. The Insurance Company shall pay commissions as per Schedule A of this
Agreement to the Underwriter. The Underwriter shall have the responsibility for
paying (i) all commissions or other fees to its associated persons and (ii) any
compensation to other independent broker-dealers and their associated person due
under the terms of any sales agreements between the Underwriter 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
Underwriter as set forth herein.
13. As of the date of issue of the first contract, the Insurance Company
shall start to reimburse the Underwriter for all costs and expenses incurred by
the Underwriter in furnishing the services, materials, and supplies required by
the terms of this Agreement. The rate of reimbursement shall be set in Schedule
A, and subject to annual renegotiations.
14. The Insurance Company agrees to indemnify the Underwriter for any
losses incurred as a result of any action taken or omitted by the Underwriter,
or any of its officers, agents, or employees, in performing their
responsibilities under this Agreement in good faith and without willful
misfeasance, gross negligence, or reckless disregard of such obligations.
15. The Insurance Company undertakes to guarantee the performance of all
of Underwriter's obligations imposed by Section 27(f) of the Investment Company
Act, as amended, and Rule 27d-2 adopted by the SEC, to make refunds of the
premiums or charges to owners of Contracts required by Section 27(f) or the
condition of any exemptions therefrom.
16. (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) The Underwriter shall not assign or delegate its responsibilities
under this Agreement without consent of the Insurance Company. Without 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.
(e) This Agreement may be terminated by either party without penalty.
(f) In the event either party to this Agreement fails to perform in a
satisfactory manner the other party may cancel this Agreement.
(g) 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
Contracts in effect at the time of termination or issued pursuant to
applications received by the Insurance Company prior to termination.
(h) In the event this Agreement is ended for any reason each party
agrees to return all records belonging to the other party promptly and free from
all claims.
17. This Agreement shall be subject to the provisions of the Investment
Company Act and the 1934 Act and the rules, regulations, and ruling thereunder
and of the NASD, from time to time in effect, including such exemptions from the
Investment Company Act as the SEC may grant, and the terms hereof shall be
interpreted and construed in accordance therewith.
18. Each party to this Agreement expressly reserves unto itself the
ultimate authority and responsibility for conduct of its business.
19. Each party to this Agreement shall furnish to regulatory authorities
having jurisdiction such information as may be requested in order for such
authorities to ascertain that Insurance Company's variable life insurance
operations are being conducted in accordance with applicable laws and
regulations.
20. Each party to this Agreement shall be liable for its own misconduct
and negligence.
21. Neither party to this Agreement shall attempt to immunize itself from
liability solely in reliance upon an opinion of that party's own counsel.
22. Neither party to this Agreement shall undertake any activity which
might conflict with its faithful discharge of the duties outlined in the
Agreement.
23. The statutes of limitations contained in the laws applicable to this
Agreement shall govern.
24. 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.
25. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Missouri.
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.
WALNUT STREET SECURITIES, INC.
Attest:
/s/ Xxxxx Xxxxxxx by: /s/ Xxxxx X. Xxxx
----------------------------------- ------------------------------------
Secretary President
PARAGON LIFE INSURANCE COMPANY
/s/ Xxxxx Xxxxxxx by: /s/ Xxxx X. Xxxxxxxx
----------------------------------- ------------------------------------
Secretary President
PARAGON LIFE INSURANCE COMPANY
PRINCIPAL UNDERWRITING AGREEMENT
SCHEDULE A
Commissions are payable to the Underwriter based upon Case Commission Agreements
attached to agent contracts between registered representatives of the
Underwriter and the Insurance Company. The Insurance Company may be granted
authority by the Underwriter to pay commissions directly to the registered
representative on behalf of the Underwriter.
Reimbursement for expenses and costs of the Underwriter will be made by the
Insurance Company at the rate of $1,000.00 per month for the first twelve months
of the Underwriting Agreement's term. Thereafter reimbursement shall be at a
rate to be negotiated annually.
