UNDERWRITING AGREEMENT
THIS AGREEMENT is entered into as of , 2006, by and between Southwestern
Life Insurance Company ("Southwestern"), a Texas insurance company,
and SL Distributors, Inc. ("SLDI"), a Connecticut corporation.
WITNESSETH:
WHEREAS, Southwestern is an insurance company licensed to issue variable annuity
contracts ("Variable Products"); and
WHEREAS, Southwestern has registered the separate account ("Separate Account")
that is part of the Variable Products with the Securities and Exchange
Commission ("SEC") as an investment company under the Investment Company Act of
1940 ("1940 Act") and the interests in the Separate Account for offer and sale
to the public under the Securities Act of 1933 ("1933 Act"); and
WHEREAS, the offer and sale of Variable Products involve both transactions in
securities and transactions in the insurance contracts and policies
("Contracts"); and
WHEREAS, sales of securities must be effected through registered broker-dealers
and sales of Contracts must be effected through licensed insurance companies;
and
WHEREAS, SLDI is a member of the National Association of Securities Dealers,
Inc. ("NASD") and is registered as a broker-dealer with the SEC and with all
states in which its activities require it to be so registered; and
WHEREAS, Southwestern is licensed to issue insurance in the states in which its
activities require it to be so licensed; and
WHEREAS, SLDI is the wholly-owned subsidiary of Valley Forge Life Insurance
Company, an affiliate of Southwestern, and was formed for the sole purpose of
assisting in the distribution of Variable Products;
NOW, THEREFORE, in consideration of the mutual agreements and promises contained
in this Agreement and other valuable consideration, the receipt of which both
parties acknowledge, SLDI and Southwestern agree as follows:
ARTICLE I -
APPOINTMENT AND COMPENSATION
A. JOINT AGREEMENT
Southwestern and SLDI agree that they shall participate jointly in the offer and
sale of Variable Products under the terms and conditions set forth in this
Agreement and that all sales of Variable Products by either of them shall be
subject to this Agreement.
B. APPOINTMENT
Southwestern hereby appoints SLDI, and SLDI hereby accepts appointment, as the
underwriter of all Variable Products issued by Southwestern (Southwestern
Variable Products) subject to the terms and conditions set forth in this
Agreement.
C. RELATIONSHIP
It is understood that, in connection with its duties as underwriter, SLDI shall
be an agent for Southwestern only with respect to the sale and redemption of the
Variable Products. For all other purposes, SLDI is acting as an independent
contractor and not as an agent, employee, partner, joint venturer, affiliate or
associate of Southwestern, unless Southwestern specifically designates SLDI as
its agent in writing. Any person, who is an officer, director, employee or agent
of both Southwestern and SLDI, shall be deemed, when providing services to SLDI
or acting on any business of SLDI, to be rendering such services to or acting
solely for SLDI and not as an officer, director, employee or agent or one under
the control or direction of Southwestern even though paid by Southwestern.
D. DUTIES OF SLDI
As underwriter, SLDI shall be responsible for all transactions in securities
that are effected in connection with the Southwestern Variable Products. It is
understood that no new Southwestern Variable Products are being offered to the
public and that in any event, both SLDI and Southwestern are acting only as
wholesalers of the Southwestern Variable Products. Neither SLDI nor any of its
Registered Representatives shall have any direct contact with customers other
than to respond to or resolve customer service requests or customer complaints.
E. EXPENSES
Southwestern shall be responsible for all costs and expenses that are incurred
by either party in connection with the offer and sale of the Southwestern
Variable Products. All other expenses shall be charged to and borne by the party
who incurred the expense.
F. REIMBURSEMENT OF EXPENSES AND CAPITAL CONTRIBUTIONS
To compensate SLDI for its agreement to serve as the underwriter for the
Southwestern Variable Products, Southwestern hereby agrees that it shall
reimburse SLDI for any and all expenses SLDI incurs in connection with acting as
underwriter of the Southwestern Variable Products under the terms of this
Agreement.
ARTICLE II - DUTIES AND RESPONSIBILITIES
A. COMPLIANCE AND SUPERVISION
All activities engaged in by SLDI and Southwestern with respect to this
Agreement shall be in compliance with all applicable federal and state
securities laws and regulations and all applicable state insurance laws and
regulations. Both SLDI and Southwestern Life have in place and shall maintain
systems of compliance and supervision reasonably designed to assure that they
and Dual Representatives (as defined below) comply with all applicable
securities and insurance laws, statutes, rules, regulations and other
requirements applicable to them. Each of them specifically represents that such
system includes procedures required by regulatory authorities for maintaining
the privacy of nonpublic customer information and for preventing and detecting
money laundering and the financing of terrorist activities.
B. REQUIREMENTS FOR DUAL REPRESENTATIVES
Southwestern and SLDI agree that if any individual associated with either of
them is involved in any transaction in Southwestern Variable Products or if any
such individual receives any compensation in connection with the sale of any
Southwestern Variable Product, such individual ("Dual Representative") must be a
Registered Representative of SLDI and must have been properly licensed and
appointed by Southwestern to sell the Southwestern Variable Products. In no
event shall any Associated Person of either SLDI or Southwestern be authorized
to discuss with customers whether to purchase or sell a Variable Product,
provide advice about Variable Products or otherwise participate in a transaction
in a Variable Product, unless the Associated Person is a Dual Representative.
C. PAYMENT OF COMMISSIONS
Southwestern and SLDI do not anticipate commissions being paid with regards to
the Southwestern Variable Products. However, in the event any commission would
be payable, such commission shall be paid by Southwestern directly to any
selling brokers earning those commissions and directly to any Dual
Representatives. It is understood that all those commissions shall be reflected
on the books and records of SLDI as if they had been paid to SLDI, in compliance
with SEC and NASD rules and releases concerning sales of Variable Products.
D. CUSTOMER PAYMENTS
Southwestern and SLDI understand and agree that they will only accept payments
from customers for the purchase of a Variable Product or for deposit into an
existing Variable Product account, that are made payable to Southwestern. Both
SLDI and Southwestern have established and currently enforce procedures
reasonably designed to prevent accepting any cash payments or any other payments
other than those conforming to this requirement.
E. BOOKS AND RECORDS
Each of SLDI and Southwestern shall maintain all books and records relating to
transactions in Southwestern Variable Products to the full extent required by
the regulatory authorities to which they are subject. Each shall keep the books
and records at their joint office in Dallas, Texas.
Each of SLDI and Southwestern shall reflect all transactions in Variable
Products on each of their respective books and records to the full extent as if
the transactions had been fully effected through each of them.
F. TRAINING
SLDI and Southwestern understand and agree that, during the term of this
Agreement, they are jointly responsible for the training of all Dual
Representatives in the proper sales practices in connection with the offer and
sale of Variable Products, including, but not limited to, compliance with
securities and insurance registration and appointment requirements, suitability
requirements, prohibitions against switching, churning, and improper
replacements in connection with the offer and sale of Variable Products.
G. COMPLAINTS
1. Notice
SLDI and Southwestern shall notify the other party immediately if either
receives any written complaint, notice of regulatory proceeding or notice
of court action involving any Variable Product offered or sold under this
Agreement, whether such complaint or notice is from a customer,
regulatory authority or other person. If so requested, the party
receiving the complaint or notice shall fax the complaint or notice to
the other party for their immediate review. Both parties will be
responsible for documenting the item on their books and records and
reporting any information about the complaint or notice to their
respective regulators. SLDI and Southwestern shall each be responsible
for compliance with regulatory requirements applicable to each of them
with regard to the handling, processing, resolution and reporting of
customer complaints. SLDI and Southwestern shall cooperate with each
other in order to assist the other in complying with requirements under
applicable law, rules or regulations governing the handling, processing
and resolution of customer complaints.
2. Cooperation
Each of the parties agrees to cooperate fully in investigating any
complaint and/or responding to any action or proceeding and/or in
preparing and sending any response to such complaint.
3. Regulatory Investigations and Proceedings
SLDI and Southwestern shall cooperate fully in any securities or
insurance regulatory investigation or proceeding or judicial proceeding
arising in connection with the offering, sale or distribution of the
Contracts distributed under this Agreement, and shall make books and
records maintained by each of them available for inspection by regulatory
authorities to which the other is subject to the extent provided for in
this Agreement or required by applicable law, subject to the rights such
party may have to the attorney-client privilege or nondisclosure
obligations such party may have under applicable confidentiality
requirements.
4. Right to Indemnification
It is expressly acknowledged and agreed that the parties may seek
indemnification from the other for liabilities arising as a result of
customer complaints, regulatory investigations or other proceedings, to
the extent consistent with the terms and conditions of this Agreement.
H. ADVERTISING AND SALES MATERIALS
SLDI and Southwestern understand and agree that, during the term of this
Agreement, they are each responsible for reviewing and approving all
advertising, sales, literature, marketing materials, performance data,
promotional materials or other written documents or communications with any
customers, any other broker-dealers or any member of the public relating to the
offer and sale of the Variable Products by SLDI and/or Southwestern. In
addition, SLDI and Southwestern understand and agree that each of them shall be
responsible for reviewing and approving all of such materials as required by the
rules and regulations to which they are subject and for filing any or all of
those materials with any regulatory authorities having jurisdiction over them.
ARTICLE III - REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF SLDI
SLDI hereby represents and warrants to Southwestern as follows:
1. Due Incorporation and Organization
SLDI is duly organized and is in good standing under the laws of the
state of Connecticut and is fully authorized to enter into this
Agreement and to carry out its duties and obligations hereunder.
2. Authority and Enforceability
This Agreement when executed will be duly authorized, executed and
delivered by SLDI and will be a valid and binding agreement of SLDI,
enforceable in accordance with its terms, except to the extent that
enforceability may be limited by (i) bankruptcy, insolvency, moratorium,
liquidation, reorganization, or similar laws affecting creditors' rights
generally, regardless of whether such enforceability is considered in
equity or at law, (ii) general equity principles, and (iii) limitations
imposed by federal and state securities laws or the public policy
underlying such laws regarding the enforceability of indemnification or
contribution provisions.
3. Registration
At the time this Agreement becomes effective, SLDI will be a member in
good standing of the NASD and will be registered as a broker-dealer with
the SEC and with all states in which its activities require it to be so
registered. SLDI shall maintain such membership and registrations in
effect at all times during which this Agreement is effective; and
SLDI will have full power and authority under all applicable regulatory
provisions to enter into this Agreement and carry out its obligations
hereunder.
4. Regulatory Compliance
SLDI is in compliance with all of the laws, rules and regulations of all
regulatory authorities having jurisdiction over it and it shall remain in
compliance during the term of this Agreement.
5. Disciplinary History
None of SLDI, its Registered Representatives, its Associated Persons or
any of its Affiliates has been:
a. named in any action by any regulatory or governmental authority
affecting its registration, its ability to act as a SLDI or
that must be disclosed on Form BD or Form U-4, and no
action is currently pending or threatened that if concluded
adversely to any of such persons would result in any
restriction or limitation on their respective registrations
or their ability to act as a regulated person or which
would require disclosure on their respective Form BD or
Form U-4's;
b. convicted of any felony; or
c. convicted of any misdemeanor that involved the taking of
property or the providing of false information;
and no action has been filed or threatened against any of such parties
alleging any such activity;
6. Notification
SLDI shall notify Southwestern immediately if:
a. any action is brought against SLDI or any of its Registered
Representative seeking to revoke or suspend any of their
respective registrations to offer and sell securities in
any jurisdiction in which they are currently registered; or
b. SLDI receives notice of the filing of any action that, if
concluded adversely to it, would result in a change to any of the
representations listed above.
7. Advertising and Sales Materials
Neither SLDI nor any of its Associated Persons shall use any advertising,
sales literature, marketing materials, performance data, promotional
materials or other written document or communication with any customer,
any other broker-dealer or any member of the public, that uses the name
of Southwestern unless those materials have been approved, in advance, by
Southwestern and unless those materials have been filed and approved in
every jurisdiction in which such filing and approval is required.
8. Best Efforts
At all times during the term of this Agreement, SLDI shall use its best
judgment and effort in carrying out its obligations hereunder and shall
comply with all of its representations, warranties, obligations and
duties contained in this Agreement.
B. REPRESENTATIONS AND WARRANTIES OF SOUTHWESTERN
Southwestern hereby represents and warrants to SLDI as follows:
1. Due Incorporation and Organization
Southwestern has been duly incorporated and is in good standing under the
laws of the state of Indiana and is fully authorized to enter
into this Agreement and carry out its obligations hereunder.
2. Authority and Enforceability
This Agreement when executed will be duly authorized, executed and
delivered by Southwestern and will be a valid and binding agreement of
Southwestern, enforceable in accordance with its terms, except to the
extent that enforceability may be limited by (i) bankruptcy, insolvency,
moratorium, liquidation, reorganization, or similar laws affecting
creditors' rights generally, regardless of whether such enforceability is
considered in equity or at law, (ii) general equity principles, and (iii)
limitations imposed by federal and state securities laws or the public
policy underlying such laws regarding the enforceability of
indemnification or contribution provisions.
3. Insurance Laws
The Contracts sold to purchasers, when accepted by Southwestern, will
constitute legal, valid and binding obligations of Southwestern,
enforceable in accordance with their respective terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other similar laws
and principles of equity relating to or affecting the enforcement of
creditors' rights.
4. Securities Laws
The separate account ("Separate Account") underlying Southwestern
Variable Products have been registered as investment companies under the
1940 Act and interests in each Separate Account have been registered or
qualified for offer and sale to the public under the 1933 Act. Such
registrations or qualifications will be kept in effect during the term of
this Agreement.
5. Antifraud
The most current registration statements for the Separate Account,
including the prospectuses and Statements of Additional Information
contained in those registration statements, do not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading and
during the term of this Agreement, such documents as they may be amended
or supplemented shall not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Southwestern
agrees that it will notify SLDI immediately should any prospectus or
Statement of Additional Information no longer comply with this provision.
6. Licensing
a. Southwestern
Southwestern is licensed as an insurance company and authorized to
offer and sell Variable Products in all states in which its
activities require it to be so licensed; and Southwestern has full
power and authority under all applicable regulatory provisions to
enter into this Agreement and carry out its obligations hereunder.
b. Licensing of Agents
Southwestern shall take all reasonable steps to assure that each
Dual Representative is appointed and licensed to sell Southwestern
Variable Products in each state in which such Dual Representative
is required to be licensed.
c. Maintenance of Licenses
Southwestern agrees to maintain all of the above licenses in
effect during the term of this Agreement and thereafter to the
extent required for Southwestern and any Dual Representatives to
carry out their activities hereunder and to receive any continuing
compensation payable in connection with the Variable Products
offered and sold under the terms of this Agreement.
7. Disciplinary History
None of Southwestern or any of its associated persons has been:
a. named in any action by any regulatory or governmental authority
affecting its license to sell insurance, its ability to act
as an insurance agent or that must be disclosed to
customers and has not been disclosed on an Exhibit to this
Agreement, and no action is currently pending or threatened
that if concluded adversely to any of such persons would
result in any restriction or limitation on their respective
licenses or their ability to act as a regulated person or
which would require disclosure to customers;
b. convicted of any felony; or
c. convicted of any misdemeanor that involves the taking of
property or the providing of false information;
and no action has been filed or threatened against any of such parties
alleging any such activity;
8. Notification
Southwestern shall notify SLDI immediately if:
a. any action is brought against Southwestern or any of its
Associated Persons seeking to revoke or suspend any of their
respective qualifications or licenses to offer and sell
insurance in any jurisdiction in which they are currently
licensed or qualified; or
b. Southwestern receives notice of the filing of any action that,
if concluded adversely to it, would result in a change to any
of the representations listed above.
9. Advertising and Sales Materials
Neither Southwestern nor any of its agents, employees or associated
persons shall use any advertising, sales literature, marketing materials,
performance data, promotional materials or other written document or
communication with any customer, any insurance agency, agent or
broker-dealer or any other member of the public, that uses the name of
SLDI unless those materials have been approved, in advance, by SLDI and
unless those materials have been filed and approved by the insurance
regulator of every state in which such filing and approval is required.
10. Best Efforts
At all times during the term of this Agreement, Southwestern shall use
its best judgment and effort in carrying out its obligations hereunder
and shall comply with all of its representations, warranties, obligations
and duties contained in this Agreement.
ARTICLE IV - INDEMNIFICATION
Each party shall indemnify and hold harmless the other and each person who
controls or is associated with the indemnified party within the meaning of such
terms under the federal securities laws, and any officer, director, employee or
agent of the foregoing, against any and all losses, claims, damages or
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
the indemnified party and/or any such person may become subject, under any
statute or regulation, any NASD rule or interpretation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities arise from the
acts or omissions of the indemnifying party.
ARTICLE V - TERMINATION
This Agreement shall terminate by either party, with or without cause, upon
thirty (30) days written notice and immediately, upon notice of a breach of this
Agreement.
ARTICLE VI - MISCELLANEOUS
A. EFFECTIVE DATE AND BINDING EFFECT
This Agreement shall be effective as November 1, 2006. This Agreement will
continue in effect until terminated as provided in Article V, except that the
provisions concerning complaints in Article II, the representations and
warranties in Article III and the provisions for indemnification in Article IV,
shall continue after the termination of this Agreement.
B. ASSIGNMENT AND BINDING EFFECT
This Agreement shall be binding on and shall inure to the benefit of the
respective successors and assigns of the parties hereto; provided, however, that
neither party shall assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other party.
C. AMENDMENT
Any change in the terms or provisions of this Agreement shall be by written
agreement between Southwestern and SLDI.
D. CUMULATIVE RIGHTS, REMEDIES
The rights, remedies and obligations contained in this Agreement are cumulative
and are in addition to any and all rights, remedies and obligations, at law or
in equity, which the parties hereto are entitled to under state and federal
laws. Failure of either party to insist upon strict compliance with any of the
conditions of this Agreement shall not be construed as a waiver of any of the
conditions, but the same shall remain in full force and effect. No waiver of any
of the provisions of this Agreement shall be deemed, or shall constitute, a
waiver of any other provisions, whether or not similar, nor shall any waiver
constitute a continuing waiver.
E. NOTICES
All notices hereunder are to be made in writing and shall be given:
to Southwestern at:
Southwestern Life Insurance Company
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attn: President & CEO
to SLDI at:
SL Distributors, Inc.
00000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: President & CEO
or such other address as such party may hereafter specify in writing. Each such
notice to a party shall be either hand delivered or transmitted by registered or
certified United States mail with return receipt requested, or by overnight mail
by a nationally recognized courier, and shall be effective upon delivery.
F. INTERPRETATION; JURISDICTION
This Agreement constitutes the whole agreement between the parties hereto with
respect to the subject matter hereof, and supersedes all prior oral or written
understandings, agreements or negotiations between the parties with respect to
such subject matter. No prior writings by or between the parties with respect to
the subject matter hereof shall be used by either party in connection with the
interpretation of any provision of this Agreement. This Agreement shall be
construed and its provisions interpreted under and in accordance with the
internal laws of the state of Connecticut without giving effect to principles of
conflict of laws.
G. SEVERABILITY
This is a severable Agreement. In the event that any provision of this Agreement
would require a party to take action prohibited by applicable federal or state
law or prohibit a party from taking action required by applicable federal or
state law, then it is the intention of the parties hereto that such provision
shall be enforced to the extent permitted under the law, and, in any event, that
all other provisions of this Agreement shall remain valid and duly enforceable
as if the provision at issue had never been a part hereof.
H. SECTION AND OTHER HEADINGS
The headings in this Agreement are included for convenience of reference only
and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
I. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of which taken
together shall constitute one and the same instrument.
J. REGULATION
This Agreement shall be subject to the provisions of the 1933 Act, 1934 Act and
1940 Act and the Regulations and the rules and regulations of the NASD, from
time to time in effect, including such exemptions from the 1940 Act as the SEC
may grant, and the terms hereof shall be interpreted and construed in accordance
therewith.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by such authorized officers on the date specified below.
SOUTHWESTERN LIFE INSURANCE COMPANY
By:
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SL DISTRIBUTORS, INC.
By:
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