UNDERWRITING AGREEMENT
THIS UNDERWRITING AGREEMENT, made and entered into this the 9th day of
February, 1984 (by and between NORTHBROOK LIFE INSURANCE COMPANY (hereinafter
the "Company") on its own behalf and on behalf of the NORTHBROOK VARIABLE
ANNUITY ACCOUNT (hereinafter the "Account"), a separate account of the Company,
and XXXX XXXXXX XXXXXXXX INC., (hereinafter the "Underwriter").
WHEREAS, by resolution of its Board of Directors on February 14, 1983, the
Company established the Account to set aside and invest assets attributable to
certain variable annuity contracts (hereinafter the "Contracts") issued by the
Company;
WHEREAS, the Company has registered the Account as a unit investment trust
under the Investment Company Act of 1940 (hereinafter the ("1940 Act");
WHEREAS, the Company has filed the initial registration statement of the
Contracts under the Securities Act of 1933 (hereinafter the "1933 Act") and will
complete said registration under the 1933 Act;
WHEREAS, the Underwriter is registered as a broker-dealer with the
Securities and Exchange Commission (hereinafter the "SEC") under the Securities
Exchange Act of 1934, as amended, (hereinafter the ("1934 Act"), and is a member
in good standing of the National Association of Securities Dealers, Inc.
(hereinafter "NASD"); and
WHEREAS, the 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 of this Agreement;
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
1. Registration Statement -- At any time that this Agreement is in effect, the
currently effective registration statement, or currently effective post-
effective amendment thereto, relating to the Contracts and the Account,
including financial statements included in, and all exhibits to, such
registration statement or post-effective amendment.
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2. Prospectus -- Any Prospectus required to be filed on behalf of the Account.
Prospectus includes those Account Prospectuses within the registration
statement, except that, if the most recently filed Account Prospectus filed
pursuant to Rule 424(b) or Rule 424(c) of the 1933 Act subsequent to the date on
which the Registration Statement became effective differs from the Account
Prospectus on file at the time the Registration Statement became effective, the
term "Prospectus" shall refer to the most recently filed Account Prospectus
filed under Rule 424(b) or (c) from and after the date on which it shall have
been filed. (For purposes of Article VIl and VIll of this Agreement, the terms
"any Registration Statement" and "any Prospectus" mean, respectively, any
document which is or at any time was a Registration Statement or a Prospectus
within the meanings of paragraphs (1) or (2) of this Article 1.)
ARTICLE II
GENERAL PROVISIONS
3. The Company grants to the Underwriter the right to be, and the Underwriter
agrees to serve as, exclusive distributor and underwriter during the first year
of the term of this Agreement and as distributor and principal underwriter of
the Contracts during the remaining term of this Agreement. The Underwriter
agrees to sell Contracts under the terms set by the Company, to use its best
efforts in soliciting applications and in selling the Contracts, and to perform
all duties necessary and proper in distributing the Prospectus and all sales and
promotional materials. The Company reserves the right to refuse to issue any
Contract.
4. a.) The Underwriter shall act as a fiduciary on behalf of theCompany in its
handling of any premiums received for deposits into the Account.
b.) The Underwriter shall remit all premiums, send all applications, forms
and any other necessary documents promptly to the Company or its designated
representative.
c.) If any Purchase Payment is paid directly to the Company, the Company
agrees to remit all commissions according to Article IV of this Agreement.
5. The Company agrees to obtain and maintain approval of the Contracts in
those states or other jurisdictions where the Company determines it is desirable
to sell and offer the Contract.
6. The Underwriter shall not give any information or make any representations
concerning the Contract or Account or the Company to any person or entity unless
the information or representations are contained in the Registration Statement
in the Account's Prospectus filed with the SEC or are contained in the sales or
promotional
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literature approved by the Company. The Company must approve, in writing, all
sales or promotional literature to be used in selling or soliciting the
Contracts.
7. The Underwriter shall be responsible for carrying out the sales and
underwriting obligations of this Agreement in compliance with the NASD Rules of
Fair Practice and federal securities and state securities and insurance laws and
regulations. To the extent necessary to offer the Contracts, the Underwriter
shall be duly registered or licensed or otherwise qualified under the insurance
and securities laws of the states, including the District of Columbia but
excluding the State of New York.
8. The Company agrees to file sales or promotional literature if so required
by any state or other jurisdiction.
ARTICLE III
COSTS AND EXPENSES
9. Except as provided elsewhere in this Agreement, the Underwriter agrees to
perform, at its own expense, all duties and functions which are necessary and
proper for the sale of and distribution of the Contracts.
10. The Company shall bear:
a.) all costs and expenses, including the fees and disbursements of its
attorneys and independent accountants, which are incurred in connection
with preparing and filing those registration statements and prospectuses
concerning the Account and required to be filed by the Company;
b.) all expenses incurred in preparing, printing, mailing and otherwise
distributing the Account's annual or interim reports or prospectuses to
owners of the Contracts;
c.) all costs and expenses of preparing and providing camera-ready copy of
the Account's Prospectuses to the Underwriter;
d.) all costs and expenses incurred in obtaining approval of the Contracts
by the appropriate regulatory agencies in such states or other
jurisdictions where so determined by the Company;
e.) all costs and expenses incurred in maintaining state or other
regulatory agency approval of the Contracts until the Company determines
that it is no longer desirable to continue to offer the Contracts for sale
in that state or other jurisdiction; and,
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f.) all costs and expenses incurred in obtaining any necessary state, NASD
or other regulatory agency approval of sales or promotional literature
which is used by the Underwriter.
11. The Underwriter shall bear:
a.) all costs and expenses incurred in printing, mailing and distributing
the Account's Prospectus to any prospective purchaser of the Contract or,
at or near the time of the initial Purchase Payment, to contractholders.
The Underwriter is not responsible for printing, mailing and distributing
those Account prospectuses which, by law, must be sent at least annually to
owners of the Contract;
b.) all costs and expenses incurred in preparing, printing and
distributing any sales or promotional literature used by the Underwriter in
offering the Contracts for sale; and,
c.) all costs and expenses incurred in advertising the offering of the
Contracts.
ARTICLE IV
COMMISSIONS AND ALLOWANCES
12. The Company shall pay any commissions or other compensation payable on the
sale of the Contract to the Underwriter so long as the payment of commissions or
other compensation complies with insurance laws and regulations of the
jurisdictions, state or otherwise, where the Company decides to offer the
Contracts.
13. In any jurisdiction requiring payment of insurance commissions or other
compensation to persons other than the Underwriter, the Company shall pay the
commission in accordance with the laws or regulations of that jurisdiction and
in a manner determined by the Company.
14. In the event the Company improperly pays a commission, insurance or
otherwise, in reliance on information furnished by the Underwriter, the
Underwriter must reimburse or indemnify the Company for any losses or penalties
incurred as a result of such reliance as provided in Article VIII of this
Agreement.
15. The Company shall compensate the Underwriter for performing its duties and
functions under this Agreement as follows:
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a.) DIRECT COMMISSIONS -- For the sale of the Contract, theUnderwriter
shall receive a direct commission equal to ____ percent (__%) of all
Purchase Payments which are accepted by the Company. This __% commission
shall include the appropriate insurance commission which the Underwriter
shall pay to its associated persons or other employees unless otherwise
provided in paragraphs 12 and 13 of this Article. In the event any
Contract is fully or partially surrendered during the first six (6) months
after its date of issue, the Underwriter shall refund to the Company all of
the direct commission earned on the amount surrendered.
b.) DIRECT SALES EXPENSE ALLOWANCE. -- As additional compensation to defer
the Underwriter's expense incurred in producing sales materials, printing
prospectuses, licensing associated persons or other employees to sell or
offer to sell the Contracts, and advertising the Contract or Account, the
Underwriter shall receive an amount equal to _______ percent (___%) of all
Purchase Payments on Contracts which are accepted by the Company.
c.) SALES ADMINISTRATION EXPENSE ALLOWANCE As additional compensation to
defer the Underwriter's expenses incurred with respect to sales
administration, including general overhead, travel, sales personnel
training, production of management reports, compliance and personnel
expenses, the Underwriter shall receive an amount equal to ___% of the
Average Net Assets of the Account attributable to Contracts sold under this
Agreement.
The Company shall compute Average Net Assets by multiplying (A) times (B)
where: (A) is the mortality and expense guarantee charge earned by the Company
in the Account on Contracts sold by the Underwriter under this Agreement; and
(B) is 100.
The Company shall pay sales administration expense allowance to the
Underwriter annually and no later than sixty days after the close of the
calendar year.
ARTICLE V
ASSOCIATED PERSONS AND OTHER EMPLOYEES
16. The Underwriter will obtain and maintain all licenses, including any broker
or insurance agent or general agency licenses, necessary for its associated
persons or other employees to sell and service the Contracts and to fulfill
their responsibilities under this Agreement.
17. The Company requires that the Contracts shall be sold and offered only by
those registered and licensed associated persons or other employees of the
Underwriter who are licensed by the Underwriter and appointed by the Company.
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The Underwriter shall ensure that any associated person or other employee who
offers to sell or sells the Contracts is licensed under the appropriate federal
securities laws and any applicable state securities or insurance laws, including
those of the District of Columbia.
18. The Underwriter agrees to train its associated persons or other employees,
including those who are not involved in the sale or offering for sale of the
Contracts, and to use its best efforts to comply with the NASD Rules of Fair
Practice and with federal and state securities, insurance or other laws.
19. On or before January 1, 1984, the Underwriter shall establish and implement
reasonable written procedures for supervising the sales practices of associated
persons or other employees selling the Contracts. The Company reserves the
right to veto any unreasonable sales practice.
20. The Underwriter shall ensure that its associated persons or other employees
shall not recommend the purchase of a Contract nor sell a Contract to an
applicant in the absence of reasonable grounds to believe that the purchase of
the Contract is suitable for such applicant on the basis of information
furnished after reasonable inquiry of such applicant concerning the applicant's
insurance and investment objectives, financial situation and needs, and any
other information known to the insurer or to the agent making the
recommendation.
21. The Underwriter shall not withhold from its associated persons or employees
any monies lawfully payable as commission or compensation for sale of the
Contracts pursuant to this Agreement.
22. The Underwriter shall apply for the proper insurance licenses in the
appropriate states or jurisdictions for its associated persons or other
employees. The Company shall reimburse the Underwriter for any fees paid by the
Underwriter for insurance agent licenses.
23. The Company shall appoint those associated persons and other employees of
the Underwriter who are found eligible by state insurance departments and NASD
to act as variable annuity agents. The Company reserves the right to reasonably
refuse to appoint any proposed associated person or other employee as an agent
and the right to terminate an agent once appointed.
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ARTICLE VI
RECORDS
24. All records concerning the Account or Contract shall be the exclusive
property of the Company, free from any claim or retention of rights by the
Underwriter. "Records" means all cumulative data, including but not limited to
books, files, reports, data bases, facsimile signature devices or other
materials concerning the Account or Contracts, which are intended to perpetuate
a knowledge of the activities of the Account or Contracts. "Records" does not
include reports or other data which are not produced at the request of or on
behalf of the Company and which do not contain identifiable information about
the contractholder.
25. Neither party shall disclose voluntarily any tape, books, reference
manuals, instructions or data which concern either party's business and which
are exchanged during the negotiation and performance of this Agreement. When
this Agreement terminates or expires, the parties shall return all such tapes,
books, reference manuals, instructions, information or data in their possession.
This paragraph shall not apply to those "Records" in Paragraph 24 of this
Article.
26. The Company shall have full and free access during normal business hours to
any Records which concern the Account or Contracts and which are maintained by
the Underwriter.
27. The Underwriter shall keep confidential any Records concerning the contract
owners, annuitants or beneficiaries or any persons who have rights arising out
of the Contract. The Underwriter may disclose such Records only If the Company
has authorized a disclosure and if the disclosure is permitted by the applicable
federal or state law governing privacy of records held by or within control of
insurance companies. In the event the Underwriter is served with a subpoena or
any other Court Order which mandates disclosure, the Underwriter must notify the
Company and allow the Company sufficient time to authorize disclosure or to
intervene in the judicial proceeding so as to protect its interest.
28. Both the Company and the Underwriter agree to keep all records required by
federal and state laws, to maintain the books, accounts and records as to
clearly and accurately disclose the precise nature and details of the
transaction, and to assist one another in the timely preparation of records.
29. The Company shall furnish the Underwriter with copies of all documents
which must be filed with the SEC by the Company concurrently with the Company's
SEC filing. Concurrent with any other filing, whether state or federal, the
Company shall furnish the Underwriter with copies of the filing if it affects
the Account.
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30. The Underwriter shall submit to all regulatory and administrative bodies
which have jurisdiction over the Account any information, reports or other
material requested pursuant to applicable laws or regulations.
31. The Underwriter shall furnish to the Company any reports and information
which the Company may request for the purpose of meeting its reporting and
recordkeeping requirements under the insurance laws of the State of Illinois and
any other state or jurisdiction.
ARTICLE VII
COMPANY'S INDEMNITY AGREEMENT
32. The Company shall indemnify and hold harmless the Underwriter and each
person who controls or is associated with the Underwriter within the meaning of
the 1933 Act or 1934 Act for losses, claims, damages, or liabilities, joint or
several, arising out of or based on any untrue statement or an alleged untrue
statement of material fact, any omission or alleged omission of a material fact
required by the 1933, 1934 or 1940 Acts, or any misleading statement resulting
from an omitted or misstated material fact, contained in any Registration
Statement or in any Prospectus provided that the Company will not be liable in
any such case to the extent that such loss, claim, damage or liability arises
out of, or is based upon, an untrue or alleged untrue statement, omission or
alleged omission, or misleading statement made in reliance upon written
information furnished to the Company by or on behalf of the Underwriter
specifically for use in the preparation of any such Registration Statement or
Prospectus.
33. The Company will reimburse the Underwriter for any legal or other expenses
reasonably incurred by the Underwriter in investigating or defending any action
or claim arising out of any action under paragraph 32 of this Article.
34. At its own expense, the Company may participate in or may assume the
defense of any suit brought to enforce any such liability described in paragraph
32 of this Article. If the Company assumes its own defense, such defense shall
be conducted by counsel chosen by the Company. If the Company assumes the
defense of any suit and retains counsel, the Underwriter shall bear the fees and
expenses of any additional counsel retained by them. If the Company does not
assume the defense of any such suit, it will reimburse the Underwriter for the
reasonable fees and expenses of any counsel retained by them.
35. The Company shall not indemnify the Underwriter for any action where an
owner of the Contract or other person seeking legal recourse was not furnished
or sent or given, at or prior to written confirmation of the sale of the
Contract, a copy
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of the most recent Prospectus (excluding documents incorporated by reference) as
amended, if the Company has previously furnished copies of the most recent
Prospectus in accordance with the terms of this Agreement.
36. The Company shall not indemnify the Underwriter against any liability to
which the Underwriter would otherwise be liable by reason of its negligence in
the performance of its duties or by reason of disregard of its obligations and
duties under this Agreement.
37. The Company shall not indemnify the Underwriter against any liability if
the Underwriter does not notify the Company, in writing, within a reasonable
time after the Underwriter or its designated service of process agent is served
with the summons or other legal process which initially notifies the Underwriter
of the nature of this claim.
ARTICLE VIII
UNDERWRITERIS INDEMNITY AGREEMENT
38. The Underwriter shall indemnify and hold harmless the Company and each
person who controls or is associated with the Company within the meaning of the
1933 Act or 1934 Act for losses, claims, damages, or liabilities, joint or
several, arising out of or based on any untrue statement or an alleged untrue
statement of material fact, any omission or alleged omission of a material fact
required by the 1933, 1934 or 1940 Acts, or any misleading statement resulting
from an omitted or misstated material fact, contained in any Registration
Statement or in any Prospectus provided that the Underwriter will not be liable
in any such case to the extent that such loss, claim, damage or liability arises
out of, or is based upon, an untrue or alleged untrue statement, omission or
alleged omission, or misleading statement made in reliance upon written
information furnished to the Underwriter by or on behalf of the Company
specifically for use in the preparation of any such Registration Statement.
Further, the Underwriter shall indemnify and hold harmless the Company for any
losses, claims, damages or liabilities to which the Company or any director or
officer thereof may become subject, insofar as the liabilities arise out of or
are based upon any unauthorized use of sales materials or any verbal or written
misrepresentations or any unlawful sales practices concerning the Contracts by
the Underwriter.
39. The Underwriter shall indemnify and hold harmless the Company for any
penalties or liabilities which the Company incurs by paying commissions as a
result of relying on information furnished by the Under-writer. Paragraph 14 of
Article IV of this Agreement is incorporated by reference. 40. The Underwriter
will reimburse
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the Company for any legal or other expenses reasonably incurred by the Company
in investigating or defending any action or claim arising out of any action
under paragraphs 38 and 39 of this Article.
41. At its own expense, the Underwriter may participate In or may assume the
defense of any suit brought to enforce any such liability described in
paragraphs 38 and 39 of this Article. If the Underwriter assumes their own
defense, such defense shall be conducted by counsel chosen by the Underwriter.
If the Underwriter assumes the defense of any suit and retains counsel, the
Company shall bear the fees and expenses of any additional counsel retained by
it. If the Underwriter does not assume the defense of any such suit, it will
reimburse the Company for the reasonable fees and expenses of any counsel
retained by it.
42. The Underwriter shall not indemnify the Company against any
liability to which the Company would otherwise be liable by reason of its
negligence in the performance of its duties or by reason of disregard of its
obligations and duties under this Agreement.
43. The Underwriter shall not indemnify the Company against any liability if
the Company does not notify the Underwriter, in writing, within a reasonable
time after the Company or its designated service of process agent is served with
a summons or other legal process which initially notifies the Company of the
nature of this claim.
ARTICLE IX
COMPLAINTS AND INVESTIGATIONS
44. The Underwriter and the Company agree to cooperate fully in any insurance
regulatory investigation or proceeding or judicial proceeding arising in
connection with the Contracts marketed under this Agreement. The Underwriter
and the Company further agree to cooperate fully in any securities regulatory
investigation or proceeding with respect to the Underwriter, the Company, their
affiliates and their registered representatives to the extent that such
investigation or proceeding is in connection with Contracts marketed under this
Agreement. Without limiting the foregoing:
(1) The Underwriter will be notified promptly of any customer complaint or
notice of any regulatory investigation or proceeding or judicial proceeding
received by the Company with respect to the Underwriter or any registered
representative of the Underwriter or which may affect Company's issuance of
any Contract marketed under this Agreement.
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(2) The Underwriter will promptly notify the Company of any customer
complaint or notice of any regulatory investigation or proceeding received
by the Underwriter or its affiliates with respect to the Underwriter, its
affiliates, or any of its registered representative in connection with any
Contract marketed under this Agreement or any activity in connection with
any such Contract.
45. In the case of a customer complaint, the Company and the Underwriter will
cooperate with each other in investigating such complaint and any response to
such complaint will be sent to the other party of this Agreement for approval
not less than five (5) business days of receipt 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
and confirmed in writing.
ARTICLE X
EFFECTIVE DATE
46. This Agreement shall be effective upon execution by both parties and will
remain in effect unless terminated as provided in Article XI of this Agreement.
ARTICLE XI
TERMINATION
47. This Agreement shall be automatically terminated if it is assigned by the
Underwriter. The term "assigned" shall not include any transaction exempted
from Section 15(b)(2) of the 1940 Act.
48. This Agreement may be terminated by either the Company or the Underwriter
at any time effective upon the mailing of written notice by registered mail by
the terminating party to the other party not less than sixty (60) days prior to
the termination date.
49. This Agreement may be terminated at any time upon the mutual written
consent of the parties.
50. In the event either the Company or the Underwriter cannot or will not
fulfill its responsibilities under this Agreement, the other party shall have
the right to demand, in writing, that the noncompliance be corrected within
thirty (30) days of the day on which the notice is received. In the event the
noncompliance is not corrected within thirty (30) days, this Agreement will
terminate on the 31st day after the complying party mails a termination notice
by registered mail to the noncomplying party.
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51. Upon the termination of this Agreement, the parties shall have no duties or
functions under this Agreement except (a) to settle their accounts including
payments of premiums or commissions subsequently received on Contracts in effect
on the date of termination or issued pursuant to applications received by the
Company prior to termination, and (b) to indemnify as set forth in Articles Vil
and VIII of this Agreement. On any contract, partially or fully surrendered
within the first six (6) months after Its date of issue, the Underwriter shall
refund any commission in accordance with Article IV of this Agreement.
ARTICLE XII
MODIFICATION
52. Both parties declare that there are no oral or other agreements or
understandings between them affecting this Agreement or relating to the selling
or servicing of the Account and the Contracts. This Agreement supersedes all
prior agreements between the parties and constitutes the entire Agreement
between the parties.
53. The parties agree that in the event any provision of this Agreement
conflicts with any provision of the Managing General Agent's Contract entered
into between the Company and the Underwriter, this Agreement shall supersede and
take precedence over the Managing General Agent's Agreement.
54. This Agreement may be modified only if in writing and if attested to by
those persons authorized to enter into Agreements on behalf of the Company and
Underwriter.
55. If either party fails to require performance by the other party of any
provision of this Agreement, that party does not waive its right to require such
performance at a later time. If either party waives the breach of any provision
of this Agreement by the other party, the waiving party still has the right to
require performance of the provision and its conduct shall not be construed to
waive succeeding breaches.
ARTICLE XIII
NOTICE
56. Unless otherwise provided in this Agreement, all notices, requests, demands
and other communications which must be provided under this Agreement shall be in
writing and shall be deemed to have been given on the date of service if served
personally on the party to whom notice is to be given, or on the date of mailing
if sent by first class mail or registered or certified, postage prepaid.
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57. All notices, requests, demands and other communications which are sent to
the Company shall be sent to:
Xxxxxx X. Xxxxxx
Senior Vice President, Secretary
and General Counsel
Northbrook Life Insurance Co.
Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
58. All notices, requests, demands and other communications which are sent to
the Underwriter shall be sent to-
Xxxxxx Xxxx
lst Vice-President
Xxxx Xxxxxx Xxxxxxxx Inc.
Insurance Services
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX
ARTICLE XIV
APPLICABLE LAWS
59. This Agreement shall be subject to the 1933, 1934 and 1940 Acts, and the
rules, regulations, and rulings issued thereunder, including such exemptions as
the Securities and Exchange Commission may grant.
60. Except as provided in paragraph 59 of this Article XIV, this Agreement
shall be construed in accordance with the laws of the State of Illinois.
61. 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized officers
as of the day and year first above written.
NORTHBROOK LIFE INSURANCE COMPANY
Attest /s/ Xxxxxx X. Xxxxxx By:/s/Xxxxxx X. Xxxxxxx
--------------------- -----------------------
Secretary XXXXXX X. XXXXXXX
President
UNDERWRITER XXXX XXXXXX XXXXXXXX INC.
Attest /s/Xxxxxxx Xxxxxx By:/s/Xxxxxxx Xxxxxxxxxxxx
------------------- -----------------------
Assistant Secretary XXXXXXX XXXXXXXXXXX
Executive Vice President
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