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EXHIBIT 1.A.(3)(a)
PRINCIPAL UNDERWRITING AGREEMENT
THIS PRINCIPAL UNDERWRITING AGREEMENT made and effective as of the 1st
day of October, 1998, by and between AFSG SECURITIES CORPORATION ("AFSG"), a
Pennsylvania corporation, and WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
("WRL"), an Ohio corporation, on its own behalf and on behalf the separate
investment accounts of WRL set forth in Exhibit A attached hereto and made a
part hereof (collectively, the "Account").
WITNESSETH:
WHEREAS, the Account was established or acquired by WRL under the laws
of the State of Ohio, pursuant to a resolution of WRL's Board of Directors in
order to set aside the investment assets attributable to certain variable life
insurance and annuity contracts ("Contracts") issued by WRL;
WHEREAS, WRL 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, as amended (the "1940 Act");
WHEREAS, WRL has registered or will register the Contracts under the
Securities Act of 1933, as amended (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, as amended (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, WRL 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. WRL grants
to AFSG 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.
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2. Prospectus. AFSG agrees to offer the Contracts for sale in
accordance 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 WRL.
3. Considerations. All premiums, purchase payments or other
moneys payable under the Contracts shall be remitted promptly in full together
with such application, forms and any other required documentation to WRL or its
designated servicing agent and shall become the exclusive property of WRL.
Checks or money orders in payment under the Contracts shall be drawn to the
order of "WRL Life Insurance Company" and funds may be remitted by wire if
prior written approval is obtained from WRL.
4. Copies of Information. On behalf of the Account, WRL shall
furnish 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 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 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 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
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contain such other provisions as WRL 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 WRL 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. WRL shall apply for the
proper 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 WRL 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. WRL and AFSG shall cause to be maintained and
preserved for the periods prescribed such accounts, books, and other documents
as are required of them by the 1940 Act, and 1934 Act, and any other applicable
laws and regulations. The books, accounts and records of WRL, 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.
WRL (or such other entity engaged by WRL 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 WRL 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. WRL 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 WRL. AFSG shall cause WRL to be
furnished with such reports as WRL may reasonably request for the purpose of
meeting its reporting and recordkeeping requirements under the insurance laws
of the State of Ohio and any other applicable states or jurisdictions. WRL
agrees that its records relating to the sale of Contracts shall be
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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. WRL shall have the responsibility for paying on
behalf 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 WRL 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 WRL 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.
10. Expense Reimbursement. WRL shall reimburse AFSG for all costs
and expenses incurred by AFSG in furnishing the services, materials, and
supplies required by the terms of this Agreement.
11. Indemnification. WRL agrees to indemnify AFSG for any losses
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 WRL agree to cooperate
fully in any insurance or judicial regulatory investigation or proceeding
arising in connection with Contracts distributed under this Agreement. AFSG
and WRL further agree to cooperate fully in any securities regulatory
inspection, inquiry, investigation or proceeding or any judicial proceeding
with respect to WRL, 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 WRL with respect to AFSG or any representative
or which may affect WRL's issuance of any Contracts marketed under this
Agreement; and
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(b) AFSG will promptly notify WRL of any customer complaint or
notice of any regulatory inspection, inquiry, investigation or judicial
proceeding received by AFSG or any representative with respect to WRL or its
affiliates in connection with any Contracts distributed under this Agreement.
In the case of a customer complaint, AFSG and WRL will cooperate in
investigating such complaint and shall arrive at a mutually satisfactory
response.
13. Termination.
(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 WRL.
(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 WRL prior to termination.
14. Regulatory Impact. This Agreement shall be subject to, among
other 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.
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15. 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.
16. Choice of Law. This Agreement shall be construed, enforced
and governed by the laws of the State of Florida.
17. No Assignment. Neither party may assign its interest in this
Agreement without the prior written consent of the other party, which consent
shall not be unreasonably withheld or delayed.
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
By: /s/ XXXX X. XXXXXXXXXX
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Title: Xxxx X. Xxxxxxxxxx
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Vice President
WESTERN RESERVE LIFE ASSURANCE
CO. OF OHIO
By: /s/ XXXX X. XXXXXX
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Title: Xxxx X. Xxxxx
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President
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EXHIBIT A
WRL Series Life Corporate Account
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