EXHIBIT 1.A.(3)(a)
UNDERWRITING AGREEMENT
This UNDERWRITING AGREEMENT ("Agreement") is entered into on this day of
,1995, between Protective Life Insurance Company a life insurance
company organized and existing under the laws of the State of Tennessee, for
itself and on behalf of the Protective Variable Life Separate Account
("Protective") and Investment Distributors, Inc. ("IDI"), a broker-dealer
organized and existing under the laws of the State of Tennessee.
WITNESSETH:
WHEREAS, the Board of Directors of PROTECTIVE has registered interests in a
certain individual flexible premium variable and fixed life insurance policies
(the "Policies") with the Securities and Exchange Commission ("SEC") under the
Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment
Company Act of 1940, as amended;
WHEREAS, IDI is a broker-dealer registered as such under the Securities
Exchange Act of 1934 and is a member of the National Association of Securities
Dealers, Inc. ("NASD"); and
WHEREAS, IDI has agreed to act as principal underwriter in connection with
offers and sales of the Policies under the terms and conditions set forth in
this Agreement.
NOW THEREFORE, in consideration of the foregoing and of the mutual covenants
and conditions set forth herein, PROTECTIVE and IDI agree as follows:
A. DISTRIBUTION SERVICES
1. IDI represents that it is duly registered as a broker-dealer under the
Securities Exchange Act of 1934 Act and is a member in good standing of the NASD
and, to the extent necessary to offer the Policies, shall be duly registered or
otherwise qualified under the securities laws of any state or other
jurisdiction.
2. IDI shall act as the principal underwriter for the sale of Policies to
the public, during the term of this Agreement, in each state and other
jurisdiction in which such Policies may lawfully be sold. IDI shall offer the
Policies for sale and distribution under guidelines established by PROTECTIVE.
IDI agrees to use its best efforts to solicit applications for the Policies at
its own expense, and otherwise perform all duties and functions which are
necessary and proper for the distribution of the Policies; provided, however,
IDI shall not be obligated to sell any specific number of Policies. Completed
applications for Policies shall be transmitted directly to PROTECTIVE for
acceptance or rejection in accordance with underwriting rules established by
PROTECTIVE. All premium payments under the Policies shall be made by check
payable to PROTECTIVE and shall be transmitted promptly in full by IDI or its
representatives to PROTECTIVE.
3. IDI shall be fully responsible for training, supervising and controlling
its representatives soliciting applications for Policies, for taking all
necessary and appropriate steps to ensure compliance by IDI and its
representatives on a continuous basis with the NASD Rules of Fair Practice,
federal and state securities law requirements and all other applicable laws and
regulations concerning the offer and sale of Policies (and the riders and other
contracts offered in connection therewith), and for ensuring that its
representatives are duly and appropriately licensed or otherwise qualified for
the offer and sale of the Policies under the federal securities laws and any
applicable securities, insurance or other laws of each state or other
jurisdiction in which the Policies may be lawfully sold.
4. PROTECTIVE agrees that during the term of this Agreement it will take
any action which is required to cause the Policies to comply as insurance
products and a registered security with all applicable federal and state laws
and regulations.
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5. IDI agrees that it will execute such documents and do such acts as shall
from time to time be reasonably requested by PROTECTIVE for the purpose of (a)
maintaining the registration of the Policies under the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940, and
(b) qualifying and maintaining qualification of the Policies for sale under the
applicable laws of any state or other jurisdiction.
6. IDI is hereby authorized to enter into separate written agreements, on
such terms and conditions as IDI may determine which are not inconsistent with
this Agreement, with one or more organizations which agree to participate in the
distribution of the Policies. Such organization (hereafter "Brokers") shall be
registered both as a broker/dealer under the 1934 Act and as a member of the
NASD. All such sales agreements shall provide that each Broker will assume full
responsibility for continued compliance by itself and its representatives with
applicable federal and state securities laws, including but not limited to
training, supervision and control of its representatives engaged in the
distribution of the Policies. IDI shall obtain the approval of PROTECTIVE prior
to entering into an agreement with any such organization. All Brokers shall act
as independent contractors and nothing herein shall constitute such Brokers or
their agents or employees as employees of PROTECTIVE in connection with the sale
of the Policies.
7. IDI shall take reasonable steps to ensure that any Broker and its
representatives soliciting applications for Policies shall be duly and
appropriately licensed, registered or otherwise qualified for the sale of such
Policies (and the riders and other contracts offered in connection therewith)
under the state insurance laws, the federal securities laws, and any applicable
blue-sky laws of each state or other jurisdiction in which PROTECTIVE is
licensed to sell the Policies.
8. IDI shall take reasonable steps to ensure that each Broker trains,
supervises and controls its representatives in compliance with applicable laws
and regulations including, but not limited to (a) conducting such training
(including the preparation and utilization of training materials) as in the
opinion of IDI is necessary to accomplish the purposes of this Agreement and (b)
establish and implement reasonable written procedures for supervision of sales
practices of agents, representatives or brokers selling the Policies. Each
Broker shall assume any legal responsibilities of PROTECTIVE for the acts,
commissions, omissions, or declarations of such representatives in so far as
they relate to the sale of the Policies. Applications for Policies solicited by
a Broker through its agents or representatives shall be transmitted directly to
PROTECTIVE, and if received by IDI, shall be forwarded to PROTECTIVE. All
premium payments under the Policies shall be made by check payable to PROTECTIVE
and remitted promptly to PROTECTIVE as agent for IDI.
9. PROTECTIVE shall undertake to appoint the qualified representatives of
IDI or any Broker appointed by IDI as life insurance agents of PROTECTIVE and
shall apply for proper licenses in the appropriate states or jurisdictions for
these proposed agents. PROTECTIVE reserves the right to refuse to appoint any
proposed agent, or once appointed to terminate the same.
B. COMPLIANCE AND RECORDKEEPING
1. IDI is authorized to appoint the organizations described in paragraph 6
of Article A above as independent agents of PROTECTIVE for the sale of the
Policies. IDI is responsible for ensuring that Brokers are duly qualified, under
the insurance laws of the applicable jurisdictions, to sell the Policies.
2. PROTECTIVE and IDI wish to ensure that Policies sold by IDI will be
issued to purchasers for whom the Policies will be suitable. IDI shall take
reasonable steps to ensure that the various representatives appointed by it
shall not make recommendations to an applicant to purchase a Policy in the
absence of reasonable grounds to believe that the purchase of the Policies is
suitable for such applicant. While not limited to the following, a determination
of suitability shall be based on information furnished to a representative after
reasonable inquiry of such applicant concerning the applicant's retirement and
financial needs, objectives and situation. IDI is not authorized to give any
information or to make any representations concerning the Policies other than
those contained in the current prospectus filed with the SEC or in such sales
literature as may be authorized by PROTECTIVE.
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3. PROTECTIVE, at its sole expense, shall have the responsibility for
furnishing IDI and its representatives with prospectuses, financial statements,
sales promotion materials as well as individual sales proposals related to the
sale of the Policies, and other documents which IDI reasonably requests for use
in connection with the distribution of the Policies. PROTECTIVE shall have
responsibility for preparing, filing with the appropriate federal and state
regulatory authorities and printing all required prospectuses and/or
registration statements in connection with the Policies and the payments of all
related expenses. IDI shall not use any sales materials that have not been
approved by PROTECTIVE; provided, however, that IDI shall have responsibility
for approving and filing all sales literature and advertisements with the NASD
and the SEC as required by law or rule.
4. On behalf of IDI, PROTECTIVE shall cause to be maintained and preserved,
for the periods prescribed, such accounts, books and other documents as are
required of PROTECTIVE and IDI by the Securities Act of 1933, Securities
Exchange Act of 1934, and the Investment Company Act of 1940, any applicable
releases issued by the SEC under the federal securities laws, and any other
applicable laws and regulations in connection with the offer and sale of the
Policies. The books, accounts and records of PROTECTIVE and IDI as to all
transactions hereunder shall be maintained so as to disclose clearly and
accurately the nature and details of the transactions. PROTECTIVE shall
maintain, on behalf of and as agent for IDI, such books and records of IDI
pertaining to the offer and sale of the Policies and required by the Securities
Act of 1933, the Securities Exchange Act of 1934, and the Investment Company Act
of 1940, as may be mutually agreed upon from time to time by PROTECTIVE and IDI,
including but not limited to maintaining a record of representatives licensed,
registered and otherwise qualified under the federal securities laws to sell the
Policies and of the payments of commissions and service fees made to such
representatives; provided that such books and records shall be the property of
IDI and shall at all times be subject to such reasonable periodic, special or
other inspection or examination by the SEC and all other regulatory bodies
having jurisdiction. PROTECTIVE, on behalf of and as agent for IDI, shall be
responsible for sending all required confirmations on customer transactions upon
or before completion thereof in compliance with applicable laws and regulations,
as modified by an exemption or other relief obtained by PROTECTIVE, and any
applicable releases issued by the SEC under the federal securities laws. Such
confirmation, unless modified by an exemption or other relief obtained by
PROTECTIVE, shall reflect the facts of the transaction, and the form thereof
will show that it is being sent on behalf of IDI acting in the capacity of agent
for PROTECTIVE.
5. PROTECTIVE shall own and control all pertinent records relating to the
Policies. IDI agrees that all accounts and records which it maintains for
PROTECTIVE shall be the property of PROTECTIVE and that it will surrender
promptly to the designated officers of PROTECTIVE any or all such accounts and
records upon request. PROTECTIVE, or its authorized representative shall have
the right to copy any such records in the possession of IDI. Such accounts and
records shall be available to properly constituted government authorities as
required by federal and state law and/or regulation. IDI shall cause PROTECTIVE
to be furnished with such reports as PROTECTIVE may reasonably request for the
purpose of meeting its reporting and recordkeeping requirements under the
insurance laws of the State of Tennessee and any other applicable states or
jurisdictions.
6. IDI and PROTECTIVE agree to cooperate fully in any insurance regulatory
investigation or proceeding or judicial proceeding arising in connection with
Policies distributed under this Agreement. IDI and PROTECTIVE further agree to
cooperate fully in any securities regulatory inspection, inquiry, investigation
or proceeding or judicial proceeding with respect to PROTECTIVE, IDI, their
affiliates and their agents or representatives to the extent that such
inspection, inquiry, investigation or proceeding is in connection with Policies
distributed under this Agreement. Without limitation:
(a) IDI will be notified promptly of any customer complaint or notice of any
regulatory inspection, inquiry, investigation or proceeding or judicial
proceeding received by PROTECTIVE with respect to IDI or any agent or
representative or which may affect PROTECTIVE's issuance of any Policy
marketed under this Agreement.
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(b) IDI will promptly notify PROTECTIVE of any customer complaint or notice
of any regulatory inspection, inquiry, investigation or proceeding
received by IDI or its affiliates with respect to IDI or any agent or
representative in connection with any Policy distributed under this
Agreement or any activity in connection with any such Policy.
(c) In the case of a substantive customer complaint, IDI and PROTECTIVE will
cooperate in investigating such complaint and any response to such
complaint will be sent to the other party to this Agreement for approval
not less than [five] business days prior to its being sent to the
customer or regulatory authority, except that, if a more prompt response
is required, the proposed response shall be communicated by telephone or
telecopy.
C. COMPENSATION
1. On behalf of IDI, PROTECTIVE shall arrange for the payment of
commissions directly to those registered representatives of IDI who are entitled
thereto in connection with the sale of the Policies in the amounts and on such
terms and conditions as PROTECTIVE and IDI shall determine. PROTECTIVE will pay
the difference between the amount of the commissions payable with respect to a
Policy and the amount paid to the registered representative for such Policy to
IDI for expenses associated with distribution and marketing of Policies and
supervision of its registered representatives. (See Schedule A.)
2. PROTECTIVE shall arrange for the payment of commissions directly to
those Brokers who sell Policies under written agreements entered into pursuant
to paragraph 6 of Article A above, in amounts as may be agreed to by PROTECTIVE
and specified in such written agreements.
3. PROTECTIVE shall reimburse IDI for the costs and expenses incurred by
IDI in furnishing or obtaining the services, materials and supplies required by
the terms of this Agreement in the initial sales efforts and the continuing
obligations hereunder.
4. Notwithstanding anything in this Agreement to the contrary, no
representative of IDI or any Broker shall have an interest in any deductions or
other fees payable to IDI.
D. MISCELLANEOUS
1. This Agreement shall be effective upon the execution hereof. This
Agreement:
(a) shall automatically terminate in the event of its assignment, unless
prior written consent of PROTECTIVE to such assignment is obtained;
(b) may be terminated by either party at any time upon 60 days' written
notice to the other party;
(c) may be terminated upon written notice of a party to the other party in
the event of bankruptcy or insolvency of such party to which notice is
given; and
(d) may be terminated at any time upon the mutual written consent of either
party;
(e) may be terminated for "cause" at any time by PROTECTIVE. "Cause" is
defined and limited for this purpose to mean willful misfeasance, bad
faith, or gross negligence by IDI in the performance of its duties or
reckless disregard by it of its obligations and duties under this
Agreement.
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 Policies in
effect at the time of termination or issued pursuant to applications received by
PROTECTIVE prior to termination, and all commissions attributable thereto.
2. In the event of termination for any reason, all records shall promptly
be returned to PROTECTIVE free from any claim or retention of rights by IDI.
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3. IDI shall not disclose or use any records of information obtained
pursuant to this Agreement in any manner whatsoever except as expressly
authorized herein and, further, IDI will keep confidential any information
obtained pursuant to the service relationship set forth herein and disclose such
information only if PROTECTIVE has authorized such disclosure or such disclosure
is expressly required by applicable federal or state regulatory authorities.
4. IDI shall submit to all regulatory and administrative bodies having
jurisdiction over the operations of PROTECTIVE, present or future, any materials
reasonably related to the administrative and marketing services provided
hereunder and any other information, reports or other material, as may be
requested or required by any government agency having jurisdiction.
5. IDI shall act as an independent contractor and nothing herein contained
shall constitute IDI or its agents or employees as employees of PROTECTIVE in
connection with the sale of the Policies.
6. IDI shall be liable for its own misconduct and negligence.
7. The services of IDI hereunder are not to be deemed exclusive and IDI
shall be free to render similar services to others so long as its services
hereunder are not impaired or interfered with thereby.
8. This Agreement shall be subject to the provisions of the 1934 Act and
the rules, regulations, and rulings thereunder and of the applicable rules and
regulations of the NASD, from time to time in effect, and the terms hereof shall
be interpreted and construed in accordance therewith.
9. A copy of this Agreement shall be furnished to the SEC.
10. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Tennessee.
11. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
INVESTMENT DISTRIBUTORS, INC.
ATTEST: By:
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PROTECTIVE LIFE INSURANCE COMPANY
ATTEST: By:
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