EXHIBIT 1.3(a)
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DISTRIBUTION AGREEMENT
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AGREEMENT, dated as of __________ __, 1999, by and among First Penn-Pacific
Securities, Inc. ("Distributor"), First Penn-Pacific Life Insurance Company
("First Penn-Pacific") and [First Penn-Pacific Variable Life Insurance Separate
Account] ("Variable Life Insurance Separate Account").
W I T N E S S E T H
WHEREAS, the Variable Life Insurance Separate Account is a separate account
established and maintained by First Penn-Pacific pursuant to the laws of the
State of Indiana, under which income, gains and losses, whether or not realized,
from assets allocated to the Variable Life Insurance Separate Account, are
credited to or charged against the Variable Life Insurance Separate Account
without regard to other income, gains or losses of First Penn-Pacific;
WHEREAS, the Variable Life Insurance Separate Account is registered as an
investment company under the Investment Company Act of 1940, as amended ("1940
Act");
WHEREAS, First Penn-Pacific, through the Variable Life Insurance Separate
Account, intends to issue certain variable universal life insurance contracts
and may in the future issue additional forms of variable life insurance
contracts, whose net considerations may be allocated in whole or in part to the
Variable Life Insurance Separate Account for investment, and in the future may
issue, through other separate accounts, variable life insurance and variable
annuity contracts, whose net considerations may be allocated in whole or in part
to other separate accounts maintained by First Penn-Pacific;
WHEREAS, First Penn-Pacific proposes to make the variable life insurance
contracts and variable annuity contracts listed on Exhibit A of this Agreement
("Contracts") available for sale to suitable purchasers;
WHEREAS, the variable portions of the Contracts are registered under the
Securities Act of 1933 ("1933 Act");
WHEREAS, Distributor, a wholly-owned subsidiary of First Penn-Pacific, is a
broker-dealer registered under the Securities Exchange Act of 1934 ("1934 Act")
and is a member of the National Association of Securities Dealers, Inc.
("NASD");
WHEREAS, the parties hereto desire to have Distributor act as principal
underwriter or distributor for the separate accounts of First Penn-Pacific
listed on Exhibit B of this Agreement ("Separate Accounts") to assume the
responsibilities set forth in this Agreement with respect to the distribution of
the Contracts, and Distributor desires to assume such responsibilities;
NOW, THEREFORE, the parties hereto agree as follows:
1. APPOINTMENT AND AUTHORIZATION
a. First Penn-Pacific authorizes Distributor to act, and Distributor agrees to
serve, as the principal underwriter for the Separate Accounts and as a
distributor of the Contracts in each state or other jurisdiction where the
Contracts may legally be sold. Distributor also is authorized and hereby
agrees to find purchasers for the Contracts, in each case acceptable to
First Penn-Pacific.
b. Distributor is hereby authorized to enter into separate written agreements
("Selling Agreements"), on such terms and conditions as Distributor may
determine not to be inconsistent with this Agreement, with broker-dealers
("Selling Broker-Dealers") that agree to participate in the distribution
of, and to use their best efforts to solicit applications for, the
Contracts. The Selling Agreements shall be substantially in the form of the
Form of Selling Agreement attached as Exhibit C to this Agreement, or such
other form(s) as may be agreed upon by the parties. Each Selling
Broker-Dealer and its registered representatives ("Agents") soliciting
applications for the
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Contracts shall be duly and appropriately licensed, appointed by First
Penn-Pacific, registered and otherwise qualified for the sale of the
Contracts under the NASD Rules and federal and state securities and
insurance laws applicable to the offer and sale of the Contracts.
d. Distributor will not publicly offer or seek purchasers for a Contract
unless and until the Registration Statement for that Contract is effective.
In addition, Distributor will not publicly offer or seek purchasers for a
Contract in a state or jurisdiction in which that Contract is not qualified
for sale under all applicable securities and insurance laws. Distributor
will use its best efforts to provide information and marketing assistance
to licensed insurance agents and broker/dealers on a continuing basis.
e. The variable contracts covered by this Agreement are described on Exhibit
A. The Separate Accounts covered by this Agreement are described on Exhibit
B. First Penn-Pacific in its sole discretion may amend Exhibit A from time
to time to add or delete other classes of variable life insurance or
variable annuity contracts issued by First Penn-Pacific and may amend
Exhibit B to add or delete other Separate Accounts. The provisions of this
Agreement shall apply with equal force to such additional Contracts and
Separate Accounts unless the Contract requires otherwise.
f. Anything in this Agreement to the contrary notwithstanding, First
Penn-Pacific shall retain the ultimate right of control over, and the
responsibility for, the issuance, servicing and marketing of the Contracts,
including the right to review and approve all advertising concerning the
Contracts, to suspend sales of the Contracts in any jurisdiction, to
appoint and discharge its agents authorized to sell the Contracts, and to
refuse to sell a Contract to any applicant for any reason whatsoever.
2. LICENSING AND APPOINTMENT OF ASSOCIATED PERSONS AND AGENTS
a. Distributor is authorized to recommend the appointment of its associated
persons ("Associated Persons") and the Selling Broker-Dealers and their
eligible Agents as agents of First Penn-Pacific in connection with the sale
of Contracts. Distributor shall not propose an Associated Person or Agent
for appointment unless such person is an "associated person" of
Broker-Dealer (as defined in Section 3(a)(18) of the 1934 Act), duly
registered as a representative of Distributor or a Selling Broker-Dealer,
as appropriate, and duly licensed as an insurance agent in the state(s) in
which it is proposed that such person engage in activities requiring such
appointment. Distributor shall be responsible for such Associated Persons'
continuing compliance with applicable securities registration requirements
and state insurance agent licensing laws. Each Selling Broker-Dealer shall
be responsible for its Agents' continuing compliance with applicable
securities registration requirements and state insurance agent licensing
laws.
b. Distributor shall assist First Penn-Pacific in the appointment of Agents
under applicable insurance laws. Distributor or the sponsoring Selling
Broker-Dealer, as appropriate, shall comply with First Penn-Pacific's
requirements, as First Penn-Pacific in its sole discretion may establish
and change from time to time, in submitting licensing or appointment
documentation for Associated Persons and Agents. All such documentation
shall be submitted to First Penn-Pacific or its designated agent licensing
administrator. A copy of First Penn-Pacific's current General Letter of
Recommendation, to be used in connection with the appointment of Agents, is
attached hereto as Exhibit D.
c. First Penn-Pacific reserves the right to refuse to appoint any such
designated Associated Person or Agent and, once appointed, to terminate or
refuse to renew such appointment.
d. The parties hereto recognize that any Associated Person or Agent selling
the Contracts as contemplated by this Agreement shall be acting as an
insurance agent of First Penn-Pacific and that the obligations and rights
of Distributor to supervise such persons shall be limited to the extent
specifically described herein or required under applicable federal or state
securities laws or NASD Rules. Such Agents shall not be considered agents
or employees of Distributor, unless any contract between Distributor and
any such person specifically provides otherwise. Further, it is intended by
the parties hereto that such Associated Persons and Agents are and shall
continue to be considered to have a common law independent contractor
relationship with First Penn-Pacific
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and not to be considered common law employees of First Penn-Pacific, unless
any contract between First Penn-Pacific and any person selling the
Contracts specifically provides otherwise.
3. SUPERVISION OF ASSOCIATED PERSONS
a. Distributor shall be fully responsible for carrying out all compliance and
supervisory obligations in connection with the distribution of the
Contracts, as required by the NASD Conduct Rules ("NASD Rules") and by
federal and any applicable state securities laws. Distributor shall assume
full responsibility for training and oversight of its Associated Persons
engaged directly or indirectly in the distribution of the Contracts, and
shall have the authority to require that disciplinary action be taken with
respect to the Associated Persons. Distributor agrees to comply with First
Penn-Pacific's statement in support of the concepts in the Principles and
Code of Ethical Market Conduct of the Insurance Marketplace Standards
Association (the "IMSA Principles and Code"), as such statement may be
amended from time to time, and to engage in active and fair competition as
contemplated by the IMSA Principles and Code. A copy of First
Penn-Pacific's current statement in support of the IMSA Principles and Code
is attached as Exhibit E.
b. Distributor is specifically charged with the responsibility of supervising
and reviewing its Associated Persons' use of sales literature and
advertising and all other communications with the public in connection with
the Contracts. No sales solicitation, including the delivery of
supplemental sales literature or other such materials, shall occur, be
delivered to or used with a prospective purchaser unless accompanied or
preceded by the appropriate then current prospectus, the then current
prospectus for the underlying funds funding the Contract, and where
required by state insurance law, the then current statement of additional
information.
c. Distributor shall execute any electronic or telephone orders only in
accordance with the current prospectus applicable to the Contracts and
agrees that First Penn-Pacific will not be liable for any loss incurred as
a result of acting upon electronic or telephone instructions containing
unauthorized, incorrect or incomplete information received from Distributor
or its Associated Persons.
d. Upon request by First Penn-Pacific, Distributor shall furnish appropriate
records or other documentation to evidence its diligent supervision of
Associated Persons.
e. If an Associated Person performs any unauthorized transaction with respect
to a Contract, Distributor shall bear sole responsibility, shall notify
First Penn-Pacific and shall act to terminate such unauthorized activities.
f. If an Associated Person fails to meet Distributor's rules and standards,
Distributor shall notify First Penn-Pacific and shall act to terminate any
violative conduct of such Associated Person relating to the Contracts.
4. SUPERVISION OF SELLING-BROKER DEALERS
a. Each Selling Agreement shall provide as follows, in words or substance with
respect to the training and supervision of Agents and other persons
associated with such Selling-Broker Dealer who are involved directly or
indirectly in the offer or sale of Contracts:
(1) All such Agents and other persons shall be subject to the control
of such Selling-Broker Dealer with respect to such persons'
activities in connection with the sale of Contracts. Such
Selling-Broker Dealer shall be responsible for training and
supervision of all such persons. Distributor and First
Penn-Pacific shall not have responsibility for the training and
supervision of any Agent or other person associated with such
Selling-Broker Dealer. Distributor shall provide such Selling
Broker-Dealer with a copy of First Penn-Pacific's statement in
support of the concepts in the IMSA Principles and Code, as such
statement may be amended from time to time, and shall require
such Selling Broker-Dealer to agree to comply with that statement
and to engage in active and fair competition as contemplated by
the IMSA Principles and Code.
(2) Such Selling Broker-Dealer shall be required to assume full
responsibility for continued compliance by itself and its
associated persons (as defined in Section 3(a)(18) of the 0000
Xxx) with the NASD Rules
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and applicable federal and state securities and insurance laws.
Such Selling-Broker Dealer shall be specifically charged with the
responsibility of supervising its Agents' compliance with all
applicable suitability requirements under federal or state law or
the regulations of the NASD. Such Selling Broker-Dealer shall be
specifically charged with providing or arranging for adequate
training to ensure that Agents have thorough knowledge of each
Contract and the ability to make appropriate product
presentations and suitability determinations in compliance with
applicable law. Such Selling Broker-Dealer and its Agents shall
not recommend the purchase of a Contract to a prospective
purchaser unless they have reasonable grounds to believe that
such purchase is suitable for the prospective purchaser and is in
accordance with applicable regulations of any regulatory
authority, including the Securities and Exchange Commission
("SEC") and the NASD. While not limited to the following, a
determination of suitability shall be based on information
concerning the prospective purchaser's insurance and investment
objectives, risk tolerance, need for liquidity, and financial and
insurance situation and needs.
b. Any supervision of the Selling Broker-Dealer required by applicable law
shall be performed by Distributor, and Distributor shall assume any legal
responsibilities of First Penn-Pacific for the acts or omissions of any
Selling Broker-Dealer or its Agents.
5. SALES PROMOTION MATERIAL AND ADVERTISING
a. During the term of this Agreement, subject to the approval of First
Penn-Pacific, Distributor will be responsible for providing certain and
approving all promotional, sales and advertising material to be used by
Distributor and Selling Broker-Dealers in connection with the offer and
sale of Contracts. Distributor will file such materials or will cause such
materials to be filed with the SEC and the NASD, and with any state
securities regulatory authorities, as required. First Penn-Pacific reserves
the right to require the recall of any material approved by it at any time
for any reason, and Distributor shall promptly comply, and cause all
Selling Broker-Dealers to promptly comply, with any such request for the
return of material and shall not use such material thereafter.
b. Distributor will require that the Associated Persons and Agents use only
the effective current prospectuses, statements of additional information
("SAIs") and other materials authorized by First Penn-Pacific for use in
soliciting the sale of the Contracts. Distributor is not authorized, and
may not authorize anyone else, to give any information or to make any
representation concerning First Penn-Pacific, the Contracts, the Separate
Accounts or the funding media for the Contracts other than those contained
in the current materials authorized for use by First Penn-Pacific.
Distributor and its Associated Persons may not modify or represent that
they are authorized to modify any such prospectus, SAI or other materials
authorized by First Penn-Pacific for use in soliciting the sale of the
Contracts.
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6. OBLIGATIONS OF DISTRIBUTOR
a. All solicitations for the sale of Contracts will be made only by Associated
Persons and Agents who are registered representatives of Distributor or a
Selling Broker-Dealer and duly licensed insurance agents and appointed by
First Penn-Pacific. Continued solicitation for the Contracts shall be
contingent upon the continuing qualification of such Associated Persons and
Agents by possession of the required licenses, appointments, and
registrations. Solicitation may only occur in those states in which First
Penn-Pacific is admitted to do business and in which the Contracts have
been approved for sale by the appropriate regulatory authority.
b. All applications for the Contracts shall be made on application forms
supplied by First Penn-Pacific or in a form otherwise satisfactory to First
Penn-Pacific. All applications forwarded to First Penn-Pacific shall first
be approved as to suitability by an appropriate principal of the submitting
Selling-Broker Dealer or, if originated by Distributor, by an appropriate
principal of Distributor. All applications for Contracts shall be subject
to acceptance or rejection by First Penn-Pacific in its sole discretion. If
First Penn-Pacific rejects an application, it will return any premium paid
by that applicant to such applicant and promptly notify Distributor of such
action. If a purchaser exercises his or her free look right under a
Contract, any amount to be refunded as provided in such Contract will be so
refunded to the purchaser by or on behalf of First Penn-Pacific and the
relevant Separate Accounts(s) and First Penn-Pacific will promptly notify
Distributor of such action.
c. All money payable in connection with the Contracts, whether as purchase
payments or otherwise, and whether paid by, or on behalf of any applicant
or Contract owner, is the property of First Penn-Pacific. Distributor shall
promptly transmit to First Penn-Pacific any such payment received by it in
accordance with First Penn-Pacific's administrative procedures without any
deduction or offset for any reason, unless there has been mutual
arrangement for net wire transmissions between Distributor and First
Penn-Pacific. No cash payments shall be accepted by Distributor in
connection with the Contracts.
d. Before transmitting to First Penn-Pacific applications or other documents
relating to Contracts sold by Associated Persons, Distributor shall review
such documents for completeness and correctness, as well as compliance with
applicable suitability standards. Distributor promptly, but in no case
later than the end of the next business day following receipt by
Distributor or an Associated Person, shall forward completed applications
to First Penn-Pacific in accordance with First Penn-Pacific's
administrative procedures. An appropriate principal of Distributor shall
approve each such application as to suitability before forwarding such
application to First Penn-Pacific. Applications and payments shall be sent
to First Penn-Pacific at the address shown on the application or such other
address as First Penn-Pacific may specify from time to time. Checks, money
orders or electronic transmissions of funds in payment on any Contract
shall be drawn to the order of "First Penn-Pacific Life Insurance Company".
e. Contracts issued on accepted applications shall be delivered to the
Contract owner according to procedures established by First Penn-Pacific.
If First Penn-Pacific forwards a Contract to Distributor for delivery, such
Contract shall be delivered to the Contract owner within four days of
receipt.
f. Distributor agrees to comply with the established rules and regulations of
First Penn-Pacific now in effect or which may be established hereafter.
g. Distributor agrees to carry out its sales and administrative activities and
obligations under this Agreement in continuous compliance with the federal
and state laws and regulations, including those governing securities and
insurance related activities or transactions, as applicable. Distributor
shall notify First Penn-Pacific immediately in writing if Distributor fails
to comply with any applicable law or regulation.
h. The costs of printing the prospectuses, SAIs and sales material used in
connection with the solicitation of applications for the Contracts shall be
borne by First Penn-Pacific. First Penn-Pacific shall provide Distributor
with a reasonable supply of such materials. First Penn-Pacific shall make
available to Distributor copies of all financial statements and other
documents that Distributor shall reasonably request for use in connection
with the distribution of the Contracts.
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i. Distributor periodically shall furnish reports to First Penn-Pacific as to
the sale of Contracts made pursuant to this Agreement.
7. BOOKS AND RECORDS
a. Distributor and First Penn-Pacific shall each maintain and preserve, or
cause to be maintained and preserved such books and records concerning the
offer and sale of the Contracts as may be required by the SEC, the NASD and
other agencies having jurisdiction and that may be reasonably required to
reflect adequately the Contracts business conducted by each party. Each
party shall make such books and records reasonably available to the other
party. The parties shall promptly furnish each other with any reports and
information the other party may reasonably request for the purpose of
meeting its reporting and recordkeeping requirements under the insurance
laws of any state, under any applicable federal or state securities laws,
rules or regulations, or under the rules of the NASD.
b. Distributor and First Penn-Pacific shall each submit to all regulators and
administrative bodies having jurisdiction over the sales of the Contracts,
present or future, any information, reports or other material that any such
body by reason of this Agreement may request or require pursuant to
applicable laws or regulations. In particular, without limiting the
foregoing, First Penn-Pacific agrees that any books and records which it
maintains which are required to be maintained by Distributor under Rule
17a-3 or 17a-4 of the 1934 Act shall be subject to inspection by the SEC in
accordance with Section 17(a) of the 1934 Act.
c. Distributor and First Penn-Pacific each agree and understand that all
documents, reports, records, books, files and other materials required
under applicable NASD regulations and federal and state securities laws
relative to the sale of Contracts shall be the property of Distributor,
except that: (a) any books and records maintained by First Penn-Pacific
that relate to sales compensation shall be the joint property of First
Penn-Pacific and Distributor, and (b) all such documents, reports, records,
books, files and other materials that are also required by applicable
regulation or law to be maintained by First Penn-Pacific shall be the joint
property of Distributor and First Penn-Pacific. All other documents,
reports, records, books, files and other materials maintained relative to
this Agreement shall be the property of First Penn-Pacific. Upon the
termination of this Agreement, all such material shall be returned to the
applicable party.
d. Subject to applicable SEC or NASD restrictions, First Penn-Pacific, as
agent for Distributor, will send confirmations of Contract transactions to
Contract owners. First Penn-Pacific will make such confirmations and
records of transactions available to Distributor upon request. First
Penn-Pacific also will maintain Contract owner records on behalf of
Distributor to the extent permitted by applicable securities laws.
Distributor and First Penn-Pacific from time to time during the term of
this Agreement shall allocate among themselves, subject to a right of
further delegation, the administrative responsibility for maintaining and
preserving the books, records and accounts kept in connection with the
Contracts.
8. REPRESENTATIONS
a. First Penn-Pacific represents and warrants to Distributor that:
(1) First Penn-Pacific has filed a Registration Statement with the SEC for
each of the Contracts. First Penn-Pacific has delivered to Distributor a
copy of each such Registration Statement. First Penn-Pacific will deliver
to Distributor a copy of each amendment to any such Registration Statement
promptly after such amendment is filed with the SEC.
(2) The Registration Statements for the Contracts and any further
amendments or supplements thereto will, when they become effective, conform
in all material respects to the requirements of the 1933 Act and the 1940
Act, and the rules and regulations of the SEC under such Acts, and will 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 not misleading; provided, however, that this representation and
warranty shall not apply to any
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statement or omission made in reliance upon and in conformity with
information furnished in writing to First Penn-Pacific by Distributor
expressly for use therein.
(3) First Penn-Pacific is validly existing as a stock life insurance
company in good standing under the laws of the State of Indiana, with power
to own its properties and conduct its business as described in the
Prospectus. First Penn-Pacific has been duly qualified for the transaction
of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any
business.
(4) The Contracts have been duly and validly authorized and when issued and
delivered with payment therefor as provided herein, will be duly and
validly issued and will conform to the description of such Contracts
contained in the Prospectuses relating thereto.
(5) The performance of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result in a violation
of any of the provisions of or default under any statute, indenture,
mortgage, deed of trust, note agreement or other agreement or instrument to
which First Penn-Pacific is a party or by which First Penn-Pacific is bound
(including Articles of Incorporation, By-Laws, or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over First Penn-Pacific or any of its properties).
(6) There are no material legal or governmental proceedings pending to
which First Penn-Pacific or the Separate Accounts are a party or of which
any property of the Separate Accounts is the subject (other than as set
forth in the Prospectus relating to the Contracts), or litigation incident
to the kind of business conducted by First Penn-Pacific which, if
determined adversely to First Penn-Pacific would individually or in the
aggregate have a material adverse effect on the financial position, surplus
or operations of First Penn-Pacific.
b. Distributor represents and warrants to First Penn-Pacific that:
(1) Distributor is a broker/dealer duly registered with the SEC pursuant to
the 1934 Act, is a member in good standing of the NASD, and is in
compliance with the securities laws in those states in which it conducts
business as a broker/dealer.
(2) The performance of this Agreement and the consummation of the
transactions herein contemplated will not result in a breach or violation
of any of the terms or provisions of or constitute a default under any
statute, indenture, mortgage, deed of trust, note agreement or other
agreement or instrument to which Distributor is a party or by which it is
bound (including the Articles of Incorporation or Bylaws of Distributor or
any order, rule or regulation of any court or governmental agency or body
having jurisdiction over either Distributor or its property).
(3) To the extent that any statements made in the Registration Statement or
any amendment or supplement thereto are made in reliance upon and in
conformity with written information furnished to First Penn-Pacific by
Distributor expressly for use therein, such statements will, when they
become effective or are filed with the SEC, as the case may be, conform in
all material respects to the requirements of the 1933 Act and the rules and
regulations of the SEC thereunder, and will not contain any untrue
statement of material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading.
9. INDEPENDENT CONTRACTOR
Distributor shall at all times function as and be deemed to be an independent
contractor and not as an employee of First Penn-Pacific. Distributor will be
under no obligation to effectuate any particular number or dollar volume of
sales of Contracts, except to the extent Distributor deems advisable.
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10. COMPENSATION AND EXPENSES
a. First Penn-Pacific shall compensate Distributor for its services under this
Agreement in accordance with the terms of Exhibit C hereto, as it may be
amended from time to time. Distributor shall be fully responsible for
compensating the Associated Persons (as defined in Paragraph 2.a) for their
sales of the Contracts. At Distributor's request, First Penn-Pacific will
pay all or a portion of the compensation due hereunder directly to the
relevant Associated Person in satisfaction of Distributor's obligation to
compensate such Associated Person.
b. Distributor shall be fully responsible for compensating the Selling
Broker-Dealers for their sales of the Contracts as provided in the Selling
Agreements. Distributor shall not be obligated to pay such compensation
with respect to a Contract until Distributor has received its compensation
with respect to such Contract from First Penn-Pacific. At Distributor's
request, First Penn-Pacific will pay all or a portion of the compensation
due hereunder directly to the relevant Selling Broker-Dealer in
satisfaction of Distributor's obligation to compensate such Selling
Broker-Dealer. If after reasonable efforts Distributor is unable to recover
a commission chargeback from a Selling Broker-Dealer, Distributor shall not
be liable to First Penn-Pacific for such chargeback and, in addition, First
Penn-Pacific shall compensate Distributor for its expenses associated with
such chargeback.
c. Unless otherwise agreed in writing by First Penn-Pacific, neither
Distributor nor any agent of First Penn-Pacific nor any Selling
Broker-Dealer shall have an interest in any surrender charges, deductions
or other fees payable to First Penn-Pacific.
11. NOTIFICATION OF CUSTOMER COMPLAINTS OR REGULATORY MATTER
a. Each party will promptly notify the other of any customer complaint or
notice of any regulatory investigation or proceeding received by such party
or their respective affiliates relating to the Contracts or any or
threatened or filed arbitration action or civil litigation arising out of
the offer or sale of the Contracts.
b. The parties shall cooperate fully in investigating and responding to any
such complaint, regulatory investigation or proceeding, arbitration, or
civil litigation, and in any settlement or trial of any actions arising out
of the conduct of business under this Agreement.
c. Any response by Distributor or First Penn-Pacific to an individual customer
complaint will be sent to the other for approval at least five (5) business
days before it is sent to the customer, except that if a more prompt
response is required, the proposed response may be communicated by
telephone, facsimile or in person.
d. Distributor will include in each Selling Agreement a notification provision
comparable to this Paragraph 11 requiring the Selling Broker-Dealer (a) to
notify Distributor and First Penn-Pacific promptly of any customer
complaint or notice of any regulatory investigation or proceeding received
by the Selling-Broker Dealer or its affiliates with respect to Distributor,
any Selling Broker-Dealer, or any agent or representative in connection
with any Contract and (b) to assist First Penn-Pacific and Distributor in
resolving any complaint to the satisfaction of all parties.
e. First Penn-Pacific shall promptly notify Distributor of:
(1) Any request by the SEC for any amendments or supplements to a
Contract's current prospectus or statement of additional information, other
than requests in the ordinary course of SEC review or registration
statements and amendments thereto prior to their effective date;
(2) Any request by the SEC for information that must be provided by
Distributor or any Selling Broker-Dealer, or any affiliated person of
Distributor or any Selling Broker-Dealer;
(3) The issuance by the SEC of any stop order with respect to a Contract's
Registration Statement or the initiation of any proceedings for that
purposes or for any other purpose relating to the registration and/or
offering of the Contracts; and
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(4) Any event as a result of which the prospectuses or any sales literature
for a Contract would include any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein not
misleading.
12. INDEMNIFICATION
a. Distributor shall indemnify and hold harmless First Penn-Pacific, its
affiliates, officers, directors, employees and agents against any and all
loss, claim, damage, liability or expense (including reasonable attorneys'
fees), joint or several, insofar as such loss, claim, damage, liability or
expense arises out of or is based upon (i) any breach of this Agreement,
any applicable law or regulation, or any applicable rule of any
self-regulatory organization, by Distributor and/or any of its Associated
Persons; or (ii) any claim by any Associated Person of Distributor for
commissions, service fees, expense allowances or other compensation or
remuneration of any type. This indemnification will be in addition to any
liability which Distributor may otherwise have.
b. First Penn-Pacific shall indemnify and hold harmless Distributor and its
affiliates, officers, directors, employees and agents against any and all
loss, claim, damage, liability or expense (including reasonable attorneys'
fees), joint or several, insofar as such loss, claim, damage, liability or
expense arises out of or is based upon any breach of this Agreement, any
applicable law or regulation, or any applicable rule of any self-regulatory
organization, by First Penn-Pacific. This indemnification will be in
addition to any liability which First Penn-Pacific may otherwise have.
13. TERM OF AGREEMENT
a. This Agreement shall terminate automatically upon its assignment.
b. This Agreement may be terminated by any party hereto on not less than sixty
(60) days' prior written notice to the other parties or by an agreement in
writing signed by all of the parties hereto.
c. This Agreement shall terminate at the option of First Penn-Pacific upon
institution of formal proceedings against Distributor by the NASD or the
SEC, or if Distributor or any of its Associated Persons:
(1) employs any device, scheme, artifice, statement or omission to defraud
any person; or
(2) violates the provisions of this Agreement.
d. Upon termination of this Agreement, all authorizations, rights, and
obligations shall cease except the obligations to settle accounts
hereunder, including the settlement of monies due in connection with
Contracts in effect at the time of termination or issued pursuant to
applications received by First Penn-Pacific prior to termination, and the
agreements contained in Paragraphs 5, 7, 11, and 12.
14. MISCELLANEOUS
a. None of the parties hereto shall be liable to the other for any action
taken or omitted by it, or any of its officers, agents or employees, in
performing their respective responsibilities under this Agreement in good
faith and without negligence, willful misfeasance or reckless disregard of
such responsibilities.
b. Distributor will execute such papers and do such acts and things as shall
from time to time be reasonably requested by First Penn-Pacific for the
purpose of (a) maintaining the registration of the interests under the
Contracts under the 1933 Act and the Separate Accounts under the 1940 Act,
and (b) qualifying and maintaining qualification of the Contracts for sale
under the applicable laws of any state.
15. NOTICE
All notices under this Agreement shall be given in writing and addressed as
follows:
Page 9 of 10
if to Distributor, to:
First Penn-Pacific Securities, Inc.
0000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx Xxxxxxx, XX 00000-0000
Attention: ___________________
if to First Penn-Pacific or the Separate Accounts, to:
First Penn-Pacific Life Insurance Company
0000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx Xxxxxxx, XX 00000-0000
Attention: __________________
or to such other address as such party may hereafter specify in writing.
Each such notice shall be either hand delivered or transmitted by certified
United States mail, return receipt requested, and shall be effective upon
delivery.
16. 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.
17. ENTIRE AGREEMENT AND AMENDMENTS
This Agreement constitutes the entire agreement between the parties hereto and
may not be modified except in a written instrument executed by all parties
hereto.
18. CONSTRUCTION
This Agreement shall be subject to the provisions of the 1934 Act and, to the
extent applicable, the 1940 Act and the rules, regulations and rulings
thereunder and 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.
19. GOVERNING LAW
This Agreement shall be interpreted in accordance with the laws of the State of
Indiana, except to the extent those laws are inconsistent with the federal
securities laws.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officials hereunto duly authorized, as of the day and
year first above written.
FIRST PENN-PACIFIC SECURITIES, INC.
By:
FIRST PENN-PACIFIC LIFE INSURANCE COMPANY
By:
FIRST PENN-PACIFIC VARIABLE LIFE INSURANCE SEPARATE ACCOUNT
66799v1
Page 10 of 10
By: FIRST PENN-PACIFIC LIFE INSURANCE COMPANY as depositor
By:
Page 11 of 10
EXHIBIT A
CONTRACTS
Contract Name Policy Form No.
EXHIBIT B
SEPARATE ACCOUNTS
First Penn-Pacific Variable Life Insurance Separate Account
EXHIBIT C
FORM OF SELLING AGREEMENT
EXHIBIT D
GENERAL LETTER OF RECOMMENDATION
Distributor hereby certifies to First Penn-Pacific that all the following
requirements will be fulfilled in conjunction with the submission by Distributor
of appointment papers for all applicants to become agents of First Penn-Pacific
("Applicants"). Distributor will, upon request, forward proof of compliance with
same to First Penn-Pacific in a timely manner.
1. We have on file a Form U-4 which was completed by each Applicant. We
have fulfilled all the necessary investigative requirements for the registration
of each Applicant as a registered representative, and each Applicant is
presently registered as an NASD registered representative. The above information
in our files indicates no fact or condition which would disqualify the Applicant
from receiving a license, and all the findings of all investigative information
is favorable.
2. We have made a thorough and diligent inquiry and investigation relative
to each Applicant's identity, residence, business reputation, and experience and
declare that each Applicant is personally known to us, has been examined by us,
is known to be of good moral character, has a good business reputation, is
reliable, is financially responsible and is worthy of appointment as a variable
contract agent of First Penn-Pacific. This inquiry and background investigation
has included a credit and criminal check on each Applicant. Based upon our
investigation, we vouch for each Applicant and certify that each individual is
trustworthy, competent and qualified to act as an agent for First Penn-Pacific
and hold himself out in good faith to the general public.
3. We certify that all educational requirements have been met for the
specific state in which each Applicant is requesting a license and that all such
persons have fulfilled the appropriate examination, education and training
requirements.
4. We hereby warrant that the Applicant is not applying for a license with
First Penn-Pacific in order to place insurance chiefly or solely on his or her
life or property or on the lives, property or liability of relatives or
associates.
5. We certify that each Applicant will receive close and adequate
supervision, and that we will make inspection when needed of any or all risks
written by these Applicants, to the end that the insurance interest of the
public will be properly protected.
6. We will not permit any Applicant to transact insurance as an agent until
duly licensed and appointed by First Penn-Pacific. No Applicants have been given
an insurance contract or furnished supplies, nor have any Applicants been
permitted to write, solicit business or act as an agent in any capacity, and
they will not be so permitted until the certificate of authority or license
applied for is received.
EXHIBIT E
FIRST PENN-PACIFIC'S STATEMENT IN SUPPORT OF THE
PRINCIPLES AND CODE OF ETHICAL MARKET CONDUCT
OF THE INSURANCE MARKETPLACE STANDARDS ASSOCIATION
--------------------------------------------------
EXHIBIT F
COMPENSATION
This schedule is attached to and made a part of the most current executed
Distribution Agreement (the "Agreement") between and among First Penn-Pacific
Life Insurance Company ("First Penn-Pacific"), for itself and on behalf of its
[First Penn-Pacific Variable Life Insurance Separate Account], and First
Penn-Pacific Securities, Inc. ("Distributor").
The compensation for the variable life insurance and annuity products (the
"Contracts") referred to in the Agreement is as follows:
FOR FLEXIBLE PAYMENT VARIABLE UNIVERSAL LIFE INSURANCE CONTRACTS, written on
Form No. _____________________, and any variations of that form as may be
required by insurance regulatory authorities:
1. NEW BUSINESS COMMISSION AND EXPENSE REIMBURSEMENT ALLOCATION:
a. On Contracts originated by Distributor, Distributor shall receive
commissions equal to _% of the initial Payment.
b. On Contracts originated by a Selling Broker-Dealer, Distributor
shall receive commissions equal in amount to the commissions
payable to the Selling-Broker-Dealer of record pursuant to the
Selling Agreement with such Selling Broker-Dealer. Such
commissions shall not exceed _% of the initial Payment on each
such Contract.
However, no compensation shall be paid on Payment received from a Contract owner
when an existing life insurance or annuity contract issued by First Penn-Pacific
on the same life has lapsed, been terminated or surrendered, been continued on a
nonforfeiture option, or been changed, modified or converted in any manner
within six months of the date of the application for the new Contract or twelve
months after the issue date of the new Contract, except to the extent that the
first year's annualized premium for the new Contract exceeds the first year's
annualized premium from the existing contract.
2. RETURN OF COMPENSATION IN SPECIFIED CIRCUMSTANCES
The following rules regarding "chargebacks" shall apply in connection with
the offer and sale of Contracts under this Agreement:
a. In the event that:
i. a Payment is returned because First Penn-Pacific rejects the
application for the Contract under which such Payment has been paid or
because the Payment, or the related application, is not timely received by
First Penn-Pacific as required herein, or a refund is made because a
purchaser exercises his or her free look right under a Contract; or
ii. within the first twelve months after the date on which a
Contract was issued, the purchaser surrenders the Contract, or otherwise
rescinds the Contract, or the Contract lapses;
then, in any such event, Distributor shall not be entitled to any compensation
with respect to such Contract, and any and all compensation previously received
by Distributor based on all Payments paid into the Contract shall be repaid to
First Penn-Pacific, and Distributor shall pay any loss incurred as a result of a
Payment being returned which was not timely received or for which an application
was not timely received by First Penn-Pacific.
b. If and to the extent that any loans or partial withdrawals are
made with respect to any Contract during the first year after issuance, the
compensation due to Distributor shall be recomputed as though the amount of the
loan or partial withdrawal had never been paid as a Payment.
c. If and to the extent that a Contract is exchanged for another
contract during the first policy year of the Contract, the compensation due to
Distributor shall be recomputed as though the Contract had never been issued.
First Penn-Pacific shall have the right to collect from Distributor or to
withhold from future payments of compensation due to Distributor under this
Agreement an amount equal to any reduction in compensation effected by this
Exhibit F, to the extent permitted by applicable law; provided, however, that:
(1) this option on the part of First Penn-Pacific shall not prevent First
Penn-Pacific from pursuing any other means or remedies available to it to
recover such compensation; and (2) if after reasonable efforts Distributor is
unable to recover a commission chargeback from a Selling Broker-Dealer,
Distributor shall not be liable to First Penn-Pacific for such chargeback and,
in addition, First Penn-Pacific shall compensate Distributor for its expenses
associated with such chargeback. First Penn-Pacific will notify Distributor
promptly of any premium refund or commission chargeback. For purposes of this
Exhibit F, the payment of a death benefit pursuant to the terms of a Contract
shall not be deemed a surrender or rescission by a purchaser.
66799.1
