EXHIBIT (3)(a)(1)
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PRINCIPAL UNDERWRITING AGREEMENT
BY AND BETWEEN AUSA LIFE INSURANCE COMPANY, INC.
ON ITS OWN BEHALF AND ON THE BEHALF OF
THE MUTUAL FUND ACCOUNT
AND AFSG SECURITIES CORPORATION.
PRINCIPAL UNDERWRITING AGREEMENT
THIS PRINCIPAL UNDERWRITING AGREEMENT made and effective as of the 30th day
of April, 1998, by and between AFSG SECURITIES CORPORATION ("AFSG"), a
Pennsylvania corporation, and AUSA LIFE INSURANCE COMPANY, INC. ("AUSA"), a New
York corporation, on its own behalf and on behalf the separate investment
accounts of AUSA set forth in Exhibit A attached hereto and made a part hereof
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(collectively, the "Account").
WITNESSETH:
WHEREAS, the Account was established or acquired by AUSA under the laws of
the State of New York, pursuant to a resolution of AUSA's Board of Directors in
order to set aside the investment assets attributable to certain flexible
premium, multi-funded annuity contracts ("Contracts") issued by AUSA;
WHEREAS, AUSA has registered or will register the Account with the
Securities and Exchange Commission ("SEC") as a unit investment trust under the
Investment Company Act of 1940 (the "1940 Act");
WHEREAS, AUSA has registered or will register the Contracts under the
Securities Act of 1933 (the "1933 Act");
WHEREAS, AFSG is and will continue to be registered as a broker-dealer with
the SEC under the Securities Exchange Act of 1934 (the "1934 Act"), and a member
of the National Association of Securities Dealers, Inc. (the "NASD") prior to
the offer and sale of the Contracts; and
WHEREAS, AUSA proposes to have the Contracts sold and distributed through
AFSG, and AFSG is willing to sell and distribute such Contracts under the terms
stated herein;
NOW, THEREFORE, the parties, intending to be legally bound, hereby agree
as follows:
1. Appointment as Distributor/Principal Underwriter. AUSA grants to AFSG
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the exclusive right to be, and AFSG agrees to serve as, distributor and
principal underwriter of the Contracts during the term of this Agreement. AFSG
agrees to use its best efforts to solicit applications for the Contracts and
otherwise perform all duties and functions which are necessary and proper for
the distribution of the Contracts.
2. Prospectus. AFSG agrees to offer the Contracts for sale in accordance
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with the registration statements and prospectus therefor then in effect. AFSG
is not authorized to give any information or to make any representations
concerning the Contracts other than those contained in the current prospectus
therefor filed with the SEC or in such sales literature as may be authorized by
AUSA.
3. Considerations. All premiums, purchase payments or other moneys
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payable under the Contracts shall be remitted promptly in full together with
such application, forms and any other required documentation to AUSA or its
designated servicing agent and shall become the exclusive property of AUSA.
Checks or money orders in payment under the Contracts shall be drawn to the
order of "AUSA Life Insurance Company, Inc." and funds may be remitted by wire
if prior written approval is obtained from AUSA.
4. Copies of Information. On behalf of the Account, AUSA shall furnish
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AFSG with copies of all prospectuses, financial statements and other documents
which AFSG reasonably requests for use in connection with the distribution of
the Contracts.
5. Representations. AFSG represents that it is (a) duly registered as a
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broker-dealer under the 1934 Act, (b) a member in good standing of the NASD and
(c) to the extent necessary to offer the Contracts, duly registered or otherwise
qualified under the securities laws of any state or other jurisdiction. AFSG
shall be responsible for carrying out its sales and underwriting obligations
hereunder in continued compliance with the NASD Rules and federal and state
securities and insurance laws and regulations. Further, AFSG represents and
warrants that it will
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adopt, abide by and enforce the principles set forth in the Principles and Code
of Ethical Market Conduct of the Insurance Marketplace Standards Association as
adopted by the Company.
6. Other Broker-Dealer Agreements. AFSG is hereby authorized to enter
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into written sales agreements with other independent broker-dealers for the sale
of the Contracts. All such sales agreements entered into by AFSG shall provide
that each independent broker-dealer will assume full responsibility for
continued compliance by itself and by its associated persons with the NASD Rules
and applicable federal and state securities and insurance laws, shall provide
that each independent broker-dealer will adopt, abide by and enforce the
principles set forth in the Principles and Code of Ethical Market Conduct of the
Insurance Marketplace Standards Association as adopted by the Company, and shall
be in such form and contain such other provisions as AUSA may from time to time
require. All associated persons of such independent broker-dealers soliciting
applications for the Contracts shall be duly and appropriately registered by the
NASD and licensed and appointed by AUSA for the sale of Contracts under the
insurance laws of the applicable states or jurisdictions in which such Contracts
may be lawfully sold. All applications for Contracts solicited by such broker-
dealers through their representatives, together with any other required
documentation and premiums, purchase payments and other moneys, shall be handled
as set forth in paragraph 3 above.
7. Insurance Licensing and Appointments. AUSA shall apply for the proper
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insurance licenses and appointments in appropriate states or jurisdictions for
the designated persons associated with AFSG or with other independent broker-
dealers that have entered into sales agreements with AFSG for the sale of
Contracts, provided that AUSA reserves the right to refuse to appoint any
proposed registered representative as an agent or broker, and to terminate an
agent or broker once appointed.
8. Recordkeeping. AUSA and AFSG shall cause to be maintained and
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preserved for the periods prescribed such accounts, books, and other documents
as are required of them by
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the 1940 Act, and 1934 Act, and any other applicable laws and regulations. The
books, accounts and records of AUSA, of the Account, and of AFSG as to all
transactions hereunder shall be maintained so as to disclose clearly and
accurately the nature and details of the transactions. AUSA (or such other
entity engaged by AUSA for this purpose), on behalf of and as agent for AFSG,
shall maintain AFSG's books and records pertaining to the sale of Contracts to
the extent as mutually agreed upon from time to time by AUSA and AFSG; provided
that such books and records shall be the property of AFSG, and shall at all
times be subject to such reasonable periodic, special or other audit or
examination by the SEC, NASD, any state insurance commissioner and/or all other
regulatory bodies having jurisdiction. AUSA shall be responsible for sending
on behalf of and as agent for AFSG all required confirmations on customer
transactions in compliance with applicable regulations, as modified by an
exemption or other relief obtained by AUSA. AFSG shall cause AUSA to be
furnished with such reports as AUSA may reasonably request for the purpose of
meeting its reporting and recordkeeping requirements under the insurance laws
of the State of New York and any other applicable states or jurisdictions.
AUSA agrees that its records relating to the sale of Contracts shall be subject
to such reasonable periodic, special or other audit or examination by the SEC,
NASD, and any state insurance commissioner and/or all other regulatory bodies
having jurisdiction.
9. Commissions. AUSA shall have the responsibility for paying on behalf
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of AFSG (a) any compensation to other independent broker-dealers and their
associated persons due under the terms of any sales agreements entered into
pursuant to paragraph 6 above, between AFSG and such broker-dealers as agreed to
by AUSA and (b) all commissions or other fees to associated persons of AFSG
which are due for the sale of the Contracts in the amounts and on such terms and
conditions as AUSA and AFSG determine. Notwithstanding the preceding sentence,
no broker-dealer, associated person or other individual or entity shall have an
interest in any deductions or other fees payable to AFSG as set forth herein.
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10. Expense Reimbursement. AUSA shall reimburse AFSG for all costs and
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expenses incurred by AFSG in furnishing the services, materials, and supplies
required by the terms of this Agreement.
11. Indemnification. AUSA agrees to indemnify AFSG for any losses
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incurred as a result of any action taken or omitted by AFSG, or any of its
officers, agents or employees, in performing their responsibilities under this
Agreement in good faith and without willful misfeasance, gross negligence, or
reckless disregard of such obligations.
12. Regulatory Investigations. AFSG and AUSA agree to cooperate fully in
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any insurance or judicial regulatory investigation or proceeding arising in
connection with Contracts distributed under this Agreement. AFSG and AUSA
further agree to cooperate fully in any securities regulatory inspection,
inquiry, investigation or proceeding or any judicial proceeding with respect to
AUSA, AFSG, their affiliates and their representatives to the extent that such
inspection, inquiry, investigation or proceeding or judicial proceeding is in
connection with Contracts distributed under this Agreement. Without limiting
the foregoing:
(a) AFSG will be notified promptly of any customer complaint or notice of
any regulatory inspection, inquiry investigation or proceeding or judicial
proceeding received by AUSA with respect to AFSG or any representative or which
may affect AUSA's issuance of any Contracts marketed under this Agreement; and
(b) AFSG will promptly notify AUSA of any customer complaint or notice of
any regulatory inspection, inquiry, investigation or judicial proceeding
received by AFSG or any representative with respect to AUSA or its affiliates in
connection with any Contracts distributed under this Agreement.
In the case of a customer complaint, AFSG and AUSA will cooperate in
investigating such complaint and shall arrive at a mutually satisfactory
response.
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13. Termination.
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(a) This Agreement may be terminated by either party hereto upon 60 days'
prior written notice to the other party.
(b) This Agreement may be terminated upon written notice of one party to
the other party hereto in the event of bankruptcy or insolvency of such party to
which notice is given.
(c) This Agreement may be terminated at any time upon the mutual written
consent of the parties hereto.
(d) AFSG shall not assign or delegate its responsibilities under this
Agreement without the written consent of AUSA.
(e) Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except the obligations to settle accounts hereunder,
including payments or premiums or contributions subsequently received for
Contracts in effect at the time of termination or issued pursuant to
applications received by AUSA prior to termination.
14. Regulatory Impact. This Agreement shall be subject to, among other
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laws, the provisions of the 1940 Act and the 1934 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.
AFSG shall submit to all regulatory and administrative bodies having
jurisdiction over the operations of the Account, present or future; and will
provide any information, reports or other material which any such body by reason
of this Agreement may request or require pursuant to applicable laws or
regulations.
15. Severability. If any provision of this Agreement shall be held or
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made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
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16. Choice of Law. This Agreement shall be construed, enforced and
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governed by the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective duly authorized officials as of the day and year
first above written.
AFSG SECURITIES CORPORATION AUSA LIFE INSURANCE COMPANY, INC.
By: /s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
Title: President Title: Vice President
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EXHIBIT A
1. AUSA Endeavor Variable Annuity Account
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