PRINCIPAL UNDERWRITING AGREEMENT
This Principal Underwriting Agreement (hereinafter "Agreement") is made and
entered into as of this ______ day of _________, 2000, by and between [[Party1]]
( "[[Party1]]") a life insurance company organized under the laws of the State
of Illinois on its own and on behalf of each separate account of [[Party1]] set
forth on Attachment A, as such Attachment may be amended from time (each such
account herein referred to as the "Account"), and Party2 ("[[Distributors]]"), a
limited liability corporation organized under the laws of the State of Delaware.
In consideration of the mutual promises and covenants exchanged by the parties
in this Agreement, [[Party1]] grants to [[Distributors]] the right to be and
[[Distributors]] agrees to serve as Principal Underwriter for the sale of
variable insurance products and other insurance and investment products during
the term of this Agreement and the parties agree as follows:
ARTICLE I
[DISTRIBUTOR'S] DUTIES AND OBLIGATIONS
1.01 [[Distributors]], a broker-dealer registered under the Securities Exchange
Act of 1934 (the "1934 Act") and a member of the National Association of
Securities Dealers, Inc. ("NASD"), will serve as principal underwriter and
distributor for the variable insurance contracts (contracts listed in Attachment
A , herein, the "Contracts") which will be issued by [[Party1]].
1.02 [[Distributors]] shall be duly registered or licensed or otherwise
qualified under the insurance and securities laws of the states in which the
Contracts are authorized for sale.
1.03 [[Distributors]] proposes to act as principal underwriter on an agency best
efforts basis in the marketing and distribution of the Contracts. [Distributors]
will use its best efforts to provide information and marketing assistance to
licensed insurance agents and broker-dealers ("Selling Broker-Dealers") on a
continuing basis.
1.04 [Distributors] shall be responsible for compliance with the requirements of
state broker-dealer regulations and the 1934 Act as each applies to
[Distributors] in connection with its duties as distributor of the Contracts.
Moreover, [Distributors] shall conduct its affairs in accordance with the Rules
of Fair Practice of the NASD.
1.05 As a principal underwriter, [Distributors] shall permit the offer and sale
of Contracts to the public only by and through persons who are appropriately
licensed under the securities laws and who are appointed in writing by
[[Party1]] to be authorized insurance agents (unless such persons are exempt
from such licensing and appointment requirements);
1.06 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 [[Party1]] by [Distributors] 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 Commission
thereunder, and will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading.
1.07 Subject to agreement with [[Party1]], [Distributors] may enter into selling
agreements with broker-dealers which are registered under the 1934 Act and/or
authorized by applicable law or exemptions to sell the Contracts. Any such
contractual arrangement is expressly made subject to this Agreement, and
[Distributors] will at all times be responsible to [[Party1]] for supervision of
compliance with federal securities laws regarding distribution of the Contracts.
ARTICLE II
[[PARTY1]'S] DUTIES AND OBLIGATIONS
2.01 [Party1] is validly existing as a stock life insurance company in good
standing under the laws of the State of Illinois, and 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.
2.02 [Party1] represents that:
a) Registration Statements for each of the Contracts identified in Attachment
A shall have been filed with the Securities and Exchange Commission ("SEC")
in the form previously delivered to [Distributors] and that copies of any
and all amendments thereto will be forwarded to [Distributors] at the time
that they are filed with the SEC;
b) Each Account is a duly organized, validly existing separate account,
established by resolution of the Board of Directors of [Party1], on the
date shown for such Account on Attachment A, for the purpose of issuing the
Contracts; and
c) [Party1] has registered or will register the Account as a unit investment
trust under the Investment Company Act of 1940 (the "1940 Act").
2.03 The Registration Statement and any further amendments or supplements
thereto will, when they became effective, conform in all material respects to
the requirements of the Securities Act of 1933 (the "1933 Act") and the 1940
Act, and the rules and regulations of the Commission 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 statement or omission made in reliance upon and in conformity
with information furnished in writing to [Party1] by [Distributors] expressly
for use therein.
2.04 [Party1] shall be responsible for the licensing and appointing of
registered representatives of Selling Broker-Dealers as required by state
insurance laws.
ARTICLE III
RECORDS
3.01 [Distributors] shall keep, in a manner and form approved by [Party1] and in
accordance with Rules 17a-3 and 17a-4 under the 1934 Act, accurate records and
books of account as required to be maintained by a registered broker-dealer,
acting as principal underwriter, of all transactions entered into on behalf of
[Party1] with respect its activities under this Agreement. [Distributors] shall
make such records of account available for inspection by the SEC and [Party1]
shall have the right to inspect, make copies of or take possession of such
records and books of account at any time upon demand.
3.02 Subject to applicable SEC or NASD restrictions, [Party1] will send
confirmations of Contract transactions to Contract owners. [Party1] will make
such confirmations and records of transactions available to [Distributors] upon
request. [Party1] will also maintain Contract Owner records on behalf of
[Distributors] to the extent permitted by applicable securities law.
3.03 [Distributors] and [Party1] shall keep confidential the records, books of
account and other information concerning the Contract owners, annuitants,
insureds, beneficiaries or any persons who have rights arising out of the
Contracts. [Distributors] or [Party1] may disclose the Records and such
information only if the other has authorized disclosure and if the disclosure is
required by applicable law. In the event [Distributors] or [Party1] is served
with a subpoena, court order or demand from a regulatory organization which
mandates disclosure of the Records or such information, such party must notify
the other and allow such other party sufficient time to authorize disclosure or
to intervene in the judicial proceeding or matter so as to protect its interest.
3.04 Unless otherwise agreed to, no party to this Agreement shall voluntarily
disclose to any third party other than Xxxxxx Investments, Inc. and its
affiliates, any books, reference manuals, instructions, information or data
which concern the other 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 books, reference manuals,
instructions, information or data in their possession.
3.05 For the purpose of determining the other party's compliance with this
Agreement, each party to this Agreement shall have reasonable access during
normal business hours to any records and books of account which concern the
Contracts and which are maintained by the other party.
3.06 Both [Party1] and [Distributors] agree to keep all information required by
applicable 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 perpetration of any reports required by law.
3.07 [Distributors] and [Party1] shall furnish to the other any reports and
information which the other may request for the purpose of meeting reporting and
recordkeeping requirements under the laws of Illinois or any other state or
jurisdiction.
ARTICLE IV
SALES MATERIALS
4.01 [Distributors] will utilize the currently effective prospectus relating to
the Contracts in connections with its underwriting, marketing and distribution
efforts. As to other types of sales material, [Distributors] hereby agrees and
will require Selling Broker-Dealers to agree to use only sales materials which
have been authorized for use by [Party1], which conform to the requirements of
federal and state laws and regulations, and which have been filed where
necessary with the appropriate regulatory authorities including the NASD.
4.02 [Distributors] will not distribute any prospectus, sales literature or any
other printed matter or material in the underwriting and distribution or any
Contract if, to the knowledge of [Distributors], any of the foregoing misstates
the duties, obligation or liabilities of [Party1] or [Distributors].
ARTICLE V
COMPENSATION
5.01 [Party1] shall pay to [Distributors] commissions described in Attachment B
, attached hereto and made a part hereof. [Distributors] shall not be obligated
to pay another broker/dealer for sales of Contracts pursuant to its selling
agreement with such broker/dealer until [Distributors] has received its
commissions for the sale of such Contracts from [Party1].
5.02 In compensating [Distributors], [Party1] reserves the right to withhold
commissions from [Distributors] if it determines [Distributors] is not paying
commissions to its Selling Broker-Dealers in accordance with applicable laws.
5.03 [Distributors] shall direct how commissions are paid, provided such
direction is in accordance with applicable law.
5.04 [Party1] agrees to pay [Distributors] for direct expenses incurred on
behalf of [Party1]. Such direct expenses shall include, but not be limited to,
the costs of goods and services purchased from outside vendors, travel expenses
and state and federal regulatory fees incurred on behalf of [Party1].
5.05 [Distributors] shall present a statement after the end of the quarter
showing the apportionment of services rendered and the direct expenses incurred.
Settlements are due and payable within thirty days.
ARTICLE VI
UNDERWRITING TERMS
6.01 [Distributors] makes no representations or warranties regarding the number
of contracts to be sold by Selling Broker-Dealer and the registered
representatives of Selling Broker-Dealer or the amount to be paid thereunder.
[Distributors] does, however, represent that it will actively engage in its
duties under this Agreement on a continuous basis while there is an effective
Registration Statement with the SEC.
6.02 [Distributors] will use its best efforts to ensure that the Contracts shall
be offered for sale by registered broker-dealers and registered representatives
(who are duly licensed as insurance agents) on the terms described in the
currently effective prospectus describing such Contracts.
6.03 [Party1] will use its best efforts to assure that the Contracts are
continuously registered under the 1933 Act (and under any applicable state "blue
sky" laws) and to file for approval under state insurance laws when necessary.
ARTICLE VII
LEGAL AND REGULATORY ACTIONS
7.01 [Party1] agrees to advise [Distributors] immediately of:
a) any request by the SEC for amendment of the Registration Statement or for
additional information relating to the Contracts;
b) the issuance by the SEC of any stop order suspending the effectiveness of
the Registration Statement relating to the Contracts or the initiation of
any proceedings for that purpose; and
c) the happening of any known material event which makes untrue any statement
made in the Registration Statement relating to the Contracts or which
requires the making of a change therein in order to make any statement made
therein not misleading.
7.02 Each of the undersigned parties agrees to notify the other in writing upon
being apprised of the institution of any proceeding, investigation or hearing
involving the offer or sale of the subject Contracts.
7.03 During any legal action or inquiry, [Party1] will furnish to [Distributors]
such information with respect to the Contracts in such form and signed by such
of its officers as [Distributors] may reasonably request and will warrant that
the statements therein contained when so signed are true and correct.
7.04 If changes in insurance laws or regulations could reasonably be expected to
affect the sales and administration of Contracts under this Agreement, [Party1]
shall notify [Distributors] within a reasonable time after [Party1] receives
notice of those changes. Such notice shall be in writing except, if
circumstances so require, the notice may be communicated by telephone or
facsimile and confirmed in writing.
ARTICLE VIII
TERMINATION
8.01 This Agreement shall terminate at either Party's option, without penalty:
(a) without case, on not less than 180 days' prior written notice to the
other Party;
(b) upon the mutual written consent of the Parties;
(c) upon written notice of one Party to the other in the event of
bankruptcy or insolvency of the Party to which notice is given;
(d) upon the suspension or revocation of any material license or permit
held by a Party by the appropriate governmental agency or authority;
however, such termination shall extend only to the jurisdiction(s) where
the Party is prohibited from doing business; or
(e) upon the finding by any regulatory body in a formal proceeding of
material wrongdoing by a Party regarding its duties under this Agreement.
8.02 If either Party breaches this Agreement or is in default in the performance
of any of its duties and obligations hereunder (the "defaulting Party"), the
non-defaulting Party may give written notice thereof to the defaulting Party,
and if such breach or default is not remedied within 60 days after such written
notice is given, then the non-defaulting Party may terminate this Agreement by
giving 30 days' prior written notice of such termination to the defaulting
Party.
8.03 The Parties agree to cooperate and give reasonable assistance to one
another in effecting an orderly transition following termination.
ARTICLE IX
INDEMNIFICATION
9.01 Scope of Indemnification
(a) Each Party (the "Indemnifying Party") agrees to indemnify and hold
harmless the other (the "Indemnified Party") against any loss, liability, claim,
damage or expense (including the reasonable cost of investigating or defending
any alleged loss, liability, claim, damage or expense, and reasonable counsel
fees incurred in connection therewith) arising by reason of any person's
acquiring any Contract, which may be based upon any law:
(i) on the ground that the Indemnifying Party, its directors,
officers, employees, agents, or subcontractors failed to comply with
any applicable laws and regulations in connection with its rendering of
duties or services under this Agreement; or
(ii) on the ground of negligence or misconduct by the
Indemnifying Party or its directors, officers, employees, agents, or
subcontractors, in the performance of its duties hereunder, or breach
by the Indemnifying Party of any representation or warranty hereunder.
The foregoing indemnities shall, upon the same terms and conditions,
extend to and inure to the benefit of each director, officer and employee of the
Indemnified Party and any person controlling or controlled by the Indemnified
Party within the meaning of Section 15 of the Securities Act of 1933 or Section
20 of the 1934 Act.
(b) In no case shall the indemnity in favor of the Indemnified Party,
including such controlling or controlled persons, be deemed to protect the
Indemnified Party against any liability to the Indemnifying Party to which it
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of reckless disregard
of its obligations and duties under this Agreement. In addition, in no case
shall the Indemnifying Party be liable under its indemnity agreement contained
in Section 4.1(a) hereof with respect to any claim made against an Indemnified
Party, unless the Indemnified Party shall have notified the Indemnifying Party
in writing by fax or overnight mail giving information of the nature of the
claim within two (2) business days after the summons or other first legal
process shall have been served upon the Indemnified Party (or after the
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify the Indemnifying Party of any such claim shall not
relieve it from any liability which it may have to the Indemnified Party against
whom such action is brought otherwise than on account of its indemnity agreement
contained in Section 4.1(a) hereof. The Indemnifying Party shall be entitled to
participate at its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce such liability. If the Indemnifying
Party elects to assume the defense, such defense shall be conducted by counsel
chosen by it and satisfactory to the Indemnified Party. In the event the
Indemnifying Party elects to assume the defense of any such suit and retains
such counsel, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, but, in case the Indemnifying Party does not
elect to assume the defense of any such suit, it shall reimburse the Indemnified
Party for the reasonable fees and expense of any counsel retained by the
Indemnified Party. The Indemnifying Party shall promptly notify the Indemnified
Party of the commencement of any litigation or proceedings against the
Indemnifying Party or any of its officers, directors, employees or
subcontractors in connection with the issuance or sale of the Contracts.
9.02 Limitation on Liability
In no event shall either Party be liable for lost profits or for
exemplary, special, punitive or consequential damages alleged to have been
sustained by the other Party, as opposed to a third party.
9.03 Injunctive Relief
The Parties each agree that monetary damages may be an inadequate
remedy in the event of a breach by either Party of any of the covenants in this
Agreement, and that any such breach by a Party may cause the other Party great
and irreparable injury and damage. Accordingly, nothing in this Agreement shall
limit a Party's right to obtain equitable relief when appropriate.
ARTICLE X
GENERAL PROVISIONS
10.01 This Agreement shall be subject to the laws of the State of Illinois.
10.02 This Agreement, along with any schedules attached hereto and
incorporated herein by reference, may be amended from time to time by
mutual agreement and consent of the under signed parties.
[Remainder of page intentionally left blank]
10.03 In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby.
IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to be
duly executed, to be effective as of _________, 2000
[[Party1]]
(and the Account(s) set forth on Attachment A)
By: ___________________________ ______________________
Title Date
[[Distributors]]
By: ___________________________ _______________________
Title Date
