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Exhibit (3)(a)
PRINCIPAL UNDERWRITING AGREEMENT
FOR
VARIABLE LIFE INSURANCE
AGREEMENT made and effective as of this thirtieth day of May, 1997 by and
between OHIO NATIONAL LIFE ASSURANCE CORPORATION ("ONLAC") and OHIO NATIONAL
EQUITIES, INC. ("ONEQ"), both Ohio corporations.
It is hereby mutually agreed as follows:
1. ONLAC hereby appoints ONEQ as the exclusive principal underwriter of those
variable universal life insurance contracts (the "contracts") issued by ONLAC
that have been registered as securities under the Securities Act of 1933 (as
amended) and with assets held in those of ONLAC's separate accounts that have
been registered under the Investment Company Act of 1940 (as amended).
2. ONEQ shall at all times during the term of this agreement be registered as a
broker-dealer under the Securities Exchange Act of 1934 (as amended) and shall
be a member of the National Association of Securities Dealers, Inc. ("NASD").
ONEQ agrees to comply with the Conduct Rules of the NASD.
3. ONEQ agrees to enter into distribution agreements with other broker-dealers
(the "distributors") which shall promise to use their best efforts to offer,
sell and distribute the contracts through their respective registered
representatives. The distributors shall be members of the NASD and the
registered representatives offering the contracts shall be life insurance agents
of ONLAC who have obtained all necessary licenses from any state in which a
registered representative shall offer the contracts. The distribution agreements
shall provide that each of the distributors shall maintain full responsibility
for the training, supervision and control of its registered representatives and
that each of the distributors shall be responsible for assuring that all sales
of the contracts made by its registered representatives are suitable for the
purchaser based on relevant financial information furnished by the purchaser to
the distributor or its registered representative.
The distribution agreements shall not permit the distributors or any registered
representative thereof to make any representations concerning the contracts
other than those contained in the then-current prospectus or statement of
additional information therefor or in supplemental literature approved by ONLAC.
All variable annuity purchase payments shall be promptly forwarded by the
distributor to ONLAC except to the extent that ONLAC might agree in writing to
permit a distributor to forward purchase payments net of dealer concessions
which latter amounts would then be subtracted from the compensation to ONEQ
under section 8, below.
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4. ONEQ shall reimburse ONLAC for the reasonable costs of printing reasonable
quantities of prospectuses and supplemental sales literature with respect to the
contracts.
5. ONLAC agrees to indemnify and hold harmless ONEQ, its directors, officers and
affiliated persons against any losses, claims, damages, liabilities and expenses
(including the cost of any legal fees incurred in connection therewith) which
ONEQ, its directors, officers or affiliated persons may incur under any statute
or regulation of the United States or any state, district or territory thereof,
or at common law or otherwise, arising out of or based upon (a) any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement for the contracts or any supplemental literature
authorized by ONLAC for use in connection therewith, or (b) any omission or
alleged omission to state a material fact required to be stated in a
registration statement or supplemental literature necessary to make the
statements therein not misleading, provided, however, that insofar as losses,
claims, damages, liabilities or expenses arise out of or are based upon any such
untrue statement or omission (or alleged untrue statement or omission) made in
reliance upon and in conformity with information furnished to ONLAC by ONEQ for
use in a registration statement or supplemental literature, the indemnification
does not apply. In no case shall ONLAC indemnify ONEQ or any of its directors,
officers or affiliated persons as to any amounts incurred for any liability
arising out of or based upon any action for which ONEQ, its directors, officers
or affiliated persons would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its or their
duties or by reason of the reckless disregard of its or their obligations and
duties under this agreement.
6. ONEQ agrees to indemnify and hold harmless ONLAC, its directors, officers and
employees against any losses, claims, damages, liabilities and expenses
(including the cost of any legal fees incurred in connection therewith) which
ONLAC, its directors, officers or employees may incur under any statute or
regulation of the United States or any state, district or territory thereof, or
at common law or otherwise arising out of the acquisition of the contracts by
any person which (a) may be based upon any wrongful act by ONEQ or any of its
directors, officers or affiliated persons, or (b) may be based upon any untrue
statement or alleged untrue statement of a material fact contained in a
registration statement or supplemental literature, or any omission or alleged
omission to state a material fact required to be stated therein as necessary to
make the facts therein not misleading, provided, however, that insofar as
losses, claims, damages, liabilities or expenses arise out of or are based upon
any such untrue statement or omission (or alleged untrue statement or omission)
made in reliance upon information furnished or confirmed in writing by ONLAC to
ONEQ, the indemnification does not apply.
7. ONLAC agrees to take all actions and do all things necessary to secure and
maintain the registrations and approvals of the contracts and investment
companies in connection therewith by all federal and state regulatory bodies
having jurisdiction.
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8. ONLAC shall, at least quarterly, pay to ONEQ as consideration hereunder
amounts computed in accordance with the Compensation Schedule appended hereto
and made a part of this agreement. Any future amendments or additions to the
Compensation Schedule shall not otherwise affect the remaining terms of this
agreement.
9. All books and records required by any regulator to be maintained by ONEQ
shall remain the property of ONEQ and shall be subject to inspection by any
regulator having jurisdiction or by the NASD.
10. Upon completion of any transaction for which a confirmation is required,
ONLAC shall, as agent for ONEQ for this purpose, send to the purchaser or
contract owner a written confirmation reflecting the facts of the transaction.
11. This agreement shall be construed in accordance with the laws of Ohio. All
transactions under this agreement shall, to the extent permitted by applicable
law, be considered to have been made at the office of both parties hereto in
Montgomery, Ohio.
12. This agreement may be terminated by either party on 60 days' written notice
to the other party or sooner if mutually agreed by both parties.
IN WITNESS WHEREOF, ONLAC and ONEQ have caused this agreement to be executed at
Montgomery, Ohio on the day and year first above written.
OHIO NATIONAL LIFE ASSURANCE CORPORATION
By:
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Xxxxx X. X'Xxxxx, Chairman, President and
Chief Executive Officer
OHIO NATIONAL EQUITIES, INC.
By:
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Xxxx X. Xxxxxx
President and Chief Executive Officer
PrnUndw2
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COMPENSATION SCHEDULE
TO
PRINCIPAL UNDERWRITING AGREEMENT
FOR
VARIABLE LIFE INSURANCE
Ohio National Life Assurance Corporation ("ONLAC") hereby agrees to pay Ohio
National Equities, Inc. ("ONEQ") for the sale of variable universal life
insurance policies at the following rates:
Tables showing the Maximum Commissionable Premium ("MCP") and the SEC Guideline
Premium ("SECGP"), for each $1,000 of stated amount of insurance and at varying
issue ages, are attached to and made a part of this Supplement.
(A) FIRST YEAR COMMISSIONS
VARI-VEST II
------------
For Vari-Vest II policies issued up to and including age 65, First Year
Commissions shall be paid equal to 90% of the premiums received by ONLAC during
the policy's first contract year up to the MCP. For issue ages after age 65, the
rates of First Year Commissions on such premiums up to the MCP shall be as
follows:
Issue
Ages Rates
-------- -----
66 - 70 80%
71 - 75 55%
76 - 80 28%
First Year Commissions shall also be paid for Vari-Vest II policies at the rate
of 12% of the premiums received by ONLAC during the policy's first contract year
to the extent such premiums are in excess of the MCP but not in excess of the
SECGP plus 6% of such premiums in excess of the SECGP.
VARI-VEST IV AND VARI-VEST V
----------------------------
For Vari-Vest IV policies issued up to and including age 65, and for Vari-Vest V
policies at all issue ages, First Year Commissions shall be paid equal to 92.5%
of the premiums received by ONLAC during the policy's first contract year up to
the MCP. For Vari-Vest IV policies issued after age 65, the rates of First Year
Commissions on such premiums up to the MCP shall be as follows:
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VARI-VEST IV
------------
Issue Issue
Age Rate Age Rate
--------- ---- --------- ----
66 89.0% 73 55.4%
67 85.7 74 48.7
68 82.3 75 42.0
69 79.0 76 37.0
70 75.6 77 31.9
71 68.9 78 26.9
72 60.5 79 21.8
80 16.8
First Year Commissions shall also be paid for Vari-Vest IV and Vari-Vest V
policies equal to 4.5% of such premiums in excess of the MCP.
(B) RENEWAL COMMISSIONS AND SERVICE FEES. For Vari-Vest II, Vari-Vest IV and
Vari-Vest V policies, Renewal Commissions and Service Fees shall be paid equal
to the percentages shown in the table below of premiums received by ONLAC during
the policy's second and later contract years:
RENEWAL COMMISSIONS
-------------------
Renewal Contract
Commission Years
Policy Rate (inclusive)
------ ---------- -----------
Vari-Vest II 6.0% 2-10
Vari-Vest IV 4.5 2-10
Vari-Vest V 4.5 2-5
3.0 6-10
SERVICE FEES
------------
Service
Fee Contract
Policy Rate Years
------ ------- --------
Vari-Vest II 6.0% 11 and later
Vari-Vest IV 4.5 11 and later
Vari-Vest V 3.0 11 and later
(C) TRAIL COMMISSIONS. Trail Commissions shall be paid equal to 0.225% of the
total qualified cash values (monthly average) on Vari-Vest IV policies and 0.50%
of the total qualified cash values (monthly average) on Vari-Vest V policies.
Qualified cash values (monthly average) are determined at the end of each
calendar year and are the sum of the cash values, less loans, on each policy's
monthiversary, divided
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by the number of monthiversaries in the calendar year. Only cash values from
monthiversaries after a policy's first anniversary are included.
Trail Commissions are paid annually in January for the preceding calendar year
but only so long as a duly appointed registered representative who is also a
licensed agent of ONLAC is servicing the policies to ONLAC's satisfaction.
(D) RIDERS. If an extra benefit rider is included in or added to the policy, the
MCP and SECGP for the policy shall be increased by twelve times the minimum
monthly premium for any such rider.
(E) INCREASES IN STATED AMOUNT. A portion of the premiums received after an
increase in stated amount is allocated to the increased portion of the policy.
The amount of premiums so allocated is based upon the ratio of SECGP for the
increased portion of the stated amount divided by the SECGP for the entire
policy (including the increased amount). A First Year Commission shall be paid
to ONEQ as provided in Subsection (A) above on the amount of premium allocated
to the increased portion of the policy and received during the first 12 months
after the increase takes effect.
(F) DECREASES IN STATED AMOUNT AND CANCELLATION OF RIDERS. If the stated amount
is decreased or if a rider is canceled within the first contract year of any
Vari-Vest II, Vari-Vest IV or Vari-Vest V policy, the policy shall be treated as
having been reissued and the MCP and SECGP shall be recalculated. Any First Year
Commission previously paid on such policy or rider based upon the higher MCP or
SECGP prior to recalculation shall be charged back against ONEQ.
(G) PLAN TYPE CHANGES. A change in plan type shall not affect compensation due
hereunder.
(H) SUBSTANDARD RISKS. For substandard insurance risks, the per $1,000 portion
of the factors shown in the MCP table for standard risks shall be multiplied by
a factor which equals one plus 90% of any extra mortality multiple up to and
including substandard table F. Any substandard rating greater than table F shall
be treated as though it were table F for MCP purposes. Flat extra mortality
charges will not increase the standard rate MCP factors.
Agreed to and accepted as of May 30, 1997.
OHIO NATIONAL LIFE ASSURANCE CORPORATION
By: ____________________________________________________
Xxxxx X. X'Xxxxx, Chairman, President and
Chief Executive Officer
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OHIO NATIONAL EQUITIES, INC.
By:_____________________________________________________
Xxxx X. Xxxxxx, President and
Chief Executive Officer
CmpSch2
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