1.A.(3)(c)
Principal Underwriting Agreement
PRINCIPAL UNDERWRITING AGREEMENT
THIS PRINCIPAL UNDERWRITING AGREEMENT made and effective as of the 1st day
of November, 1999, by and between AFSG SECURITIES CORPORATION ("AFSG"), a
Pennsylvania corporation, and TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
("TOLIC"), a California corporation, on its own behalf and on behalf of the
separate investment accounts of TOLIC set forth in EXHIBIT A attached hereto and
made a part hereof (collectively, the "Account").
WITNESSETH:
WHEREAS, the Account was established or acquired by TOLIC under the laws of
the State of California, pursuant to a resolution of TOLIC's Board of Directors
in order to set aside the investment assets attributable to certain variable
life insurance and annuity contracts ("Contracts") issued by TOLIC;
WHEREAS, TOLIC has registered or will register the Account with the
Securities and Exchange Commission ("SEC") under the Investment Company Act of
1940, as amended (the "1940 Act");
WHEREAS, TOLIC 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, TOLIC 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. TOLIC 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.
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 TOLIC.
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 TOLIC or its
designated servicing agent and shall become the exclusive property of TOLIC.
Checks or money orders in payment under the Contracts shall be drawn to the
order of "Transamerica Occidental Life Insurance Company" and funds may be
remitted by wire if prior written approval is obtained from TOLIC.
4. COPIES OF INFORMATION. On behalf of the Account, TOLIC 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 TOLIC.
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 TOLIC, and shall be in
such form and contain such other provisions as TOLIC 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 TOLIC 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. TOLIC 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 TOLIC 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. TOLIC 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 TOLIC, 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.
TOLIC (or such other entity engaged by TOLIC 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
TOLIC 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. TOLIC 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 TOLIC. AFSG
shall cause TOLIC to be furnished with such reports as TOLIC may reasonably
request for the purpose of meeting its reporting and recordkeeping requirements
under the insurance laws of the State of California and any other applicable
states or jurisdictions. TOLIC 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. TOLIC 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
TOLIC 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 TOLIC 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. TOLIC 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. TOLIC 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 TOLIC agree to cooperate fully
in any insurance or judicial regulatory investigation or proceeding arising in
connection with Contracts distributed under this Agreement. AFSG and TOLIC
further agree to cooperate fully in any securities regulatory inspection,
inquiry, investigation or proceeding or any judicial proceeding with respect to
TOLIC, 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 TOLIC with respect to AFSG or any representative or which
may affect TOLIC's issuance of any Contracts marketed under this Agreement; and
(b) AFSG will promptly notify TOLIC of any customer complaint or notice
of any regulatory inspection, inquiry, investigation or judicial proceeding
received by AFSG or any representative with respect to TOLIC or its affiliates
in connection with any Contracts distributed under this Agreement.
In the case of a customer complaint, AFSG and TOLIC 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 TOLIC.
(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 TOLIC 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.
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 Iowa.
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/ XXXXXXXXX X. XXXXXXX
------------------------
Xxxxxxxxx X. Xxxxxxx
Title: Assistant Vice President and
Assistant Secretary
TRANSAMERICA OCCIDENTAL LIFE
INSURANCE COMPANY
By: /s/ XXXXXX X. XXXXXXX
---------------------
Xxxxxx X. Xxxxxxx
Title: Vice President
EXHIBIT A
Transamerica Occidental Life Separate Account VUL-3
