DISTRIBUTION AND PRINCIPAL UNDERWRITING AGREEMENT
THIS AGREEMENT is made this ___ day of April, 1999, by and among Fidelity
Security Life Insurance Company ("FSL"), a Missouri corporation, with its
principal offices in Kansas City, Missouri and each of the investment companies
as set forth in Schedule A attached hereto, as the same may be amended from time
to time, each acting on its own behalf and not on behalf of any other investment
company and each being solely responsible for its obligations, (each, a
"Separate Account" and collectively, the "Separate Accounts"), each of which is
a registered, open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act") of FSL established pursuant to
Missouri Revised Statutes Section 376.309, with its principal offices in Kansas
City, Missouri, and National Pension and Group Consultants, Inc. (the
"Distributor"), a Missouri corporation.
RECITALS
WHEREAS, the Distributor is engaged principally in the business of
distributing variable insurance products and investment company shares, is
registered as a broker-dealer under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and is a member of the National Association of
Securities Dealers, Inc. ("NASD"); and
WHEREAS, FSL and each Separate Account have registered variable annuity
contracts (the "Contracts") under the Securities Act of 1933, as amended (the
"1933 Act"), and desire to retain the Distributor to distribute the Contracts
and the Distributor is willing to distribute the Contracts in the manner and on
the terms set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, FSL, each Separate Account, and the Distributor hereby agree
as follows:
1. Definitions. The terms "affiliated person," "assignment," "interested
person," and "majority of the outstanding voting securities," when used in this
Agreement, shall have the respective meanings specified under the 1940 Act and
rules thereunder. In addition, the term "representative," when used in this
Agreement shall have the meaning specified under the 1934 Act and rules
thereunder.
2. Distribution and Principal Underwriting of the Contracts.
(a) Right to Distribute Contracts. FSL and each Separate Account hereby
grant to the Distributor the exclusive right, subject to the requirements of the
1933 Act, the 1934 Act, and the 1940 Act, and the terms set forth herein, to act
as agent for distribution of the Contracts and as principal underwriter during
the term of this Agreement. The Distributor shall at all times function as and
be deemed to be an independent contractor and nothing herein contained shall
constitute the Distributor or its agents, officers, or employees as officers or
employees of FSL solely by virtue of their activities in connection with the
sale of the Contracts hereunder. The Distributor will use its best efforts to
solicit applications for the Contracts and to undertake to provide sales
services relative to the Contracts and otherwise to perform all duties and
functions that are necessary and proper for the distribution of the Contracts in
accordance with applicable laws, including the rules of the NASD.
FSL and each Separate Account hereby authorize the Distributor to enter
into written sales or service agreements, on such terms and conditions as the
Distributor may determine are consistent with this Agreement, with
broker-dealers that are registered under the 1934 Act and are members of the
NASD and who agree to distribute the Contracts.
In performing its functions under this Agreement, Distributor may enter
into affiliation agreements with validly licensed insurance agencies in the
states and other jurisdictions that require such licensing or registration in
connection with sales or solicitation of the Contracts. All such insurance
agencies shall be properly authorized as required under applicable state law to
receive insurance commissions generated from sales of the Contracts.
Distributor represents that each insurance agency will be an associated
person of Distributor as that term is defined under Section 3(a)(18) of the
Securities Exchange Act of 1934, as amended. Distributor further represents that
it will maintain supervision and control over the activities of each Registered
Representative appointed by an insurance agency engaged in the solicitation and
sales of Contracts pursuant to this Agreement.
(b) Limits on Authority. This Agreement notwithstanding, FSL retains the
ultimate right to control the sale of the Contracts, including the right to
suspend sales in any jurisdiction or jurisdictions, to appoint and discharge
agents of FSL, or to refuse to sell a Contract to any applicant for any reason
whatsoever. Furthermore, the Distributor and its representatives shall not have
authority, on behalf of FSL: to make, alter, or discharge any Contract or other
variable contract entered into pursuant to a Contract; to waive any Contract
forfeiture provision; to extend the time of paying any premium, or to receive
any monies or premiums. The Distributor shall not expend, nor contract for the
expenditure of, the funds of FSL. The Distributor shall not possess or exercise
any authority on behalf of FSL other than that expressly conferred on the
Distributor by this Agreement.
(c) Registration; Compliance with NASD Conduct Rules. The Distributor
represents and warrants to FSL that the Distributor is, and during the term of
this Agreement shall remain, registered as a broker-dealer under the 1934 Act,
admitted as a member with the NASD, and that the Distributor is and shall remain
during the term of this Agreement in compliance with Section 9(a) of the 1940
Act. To the extent necessary to distribute the Contracts, the Distributor shall
be duly registered or otherwise qualified under all applicable securities laws
of any state or other jurisdiction in which the Distributor is licensed or
otherwise authorized to distribute the Contracts, if required. The Distributor
shall be responsible for the training, supervision, and control of its
representatives for the purpose of the NASD Conduct Rules and all applicable
federal and state securities law requirements.
(d) Marketing Materials; Preparation and Filing. FSL shall design and
develop all promotional, sales, and advertising material relating to the
Contracts and any other marketing-related documents for use in the sale of the
Contracts, subject to review and approval by Distributor of such material and
documents in accordance with Section 2210 of the NASD Conduct Rules. The
Distributor shall be responsible for filing such material with the NASD and any
state securities regulatory authorities requiring such filings. FSL shall be
responsible for filing all promotional, sales, or advertising material, as
required, with any state insurance regulatory authorities. FSL shall be
responsible for preparing the Contract forms and filing them with applicable
state insurance regulatory authorities, and for preparing the prospectuses and
registration statements for the Contracts and filing them with the Securities
and Exchange Commission (the "SEC") and state regulatory authorities, to the
extent required. The parties shall notify each other expeditiously of any
comments provided by the SEC, NASD, or any securities or insurance regulatory
authority on such material, and will cooperate expeditiously in resolving and
implementing any comments, as applicable.
3. Books and Records.
(a) FSL, each Separate Account, and the Distributor shall cause to be
maintained and preserved all books of account and related financial records as
are required by the 1934 Act, the NASD, and any other applicable laws and
regulations. These books and records as to all transactions hereunder shall be
maintained so as to disclose clearly and accurately the nature and details of
the transactions. All the books and records maintained by FSL on behalf of the
Distributor, or by any person on behalf of FSL, or by the Distributor directly,
in connection with the offer and sale of the Contracts, shall be maintained and
preserved in conformity with the requirements of Rules 17a-3 and 17a-4 under the
1934 Act or the corresponding provisions of any future federal securities laws
or regulations. All such books and records shall be maintained and held by FSL
or by any person on behalf of FSL on behalf of and as agent for the Distributor,
whose property they are and shall remain. Such books and records shall be at all
times subject to inspection by the SEC in accordance with Section 17(a) of the
1934 Act. FSL shall have access to all records maintained in connection with the
Contracts.
(b) FSL, as agent for the Distributor, shall confirm to each purchaser of a
Contract, in accordance with Rule 10b-10 under the 1934 Act, acceptance of
premiums and such other transactions as are required by and in accordance with
Rule 10b-10 and administrative interpretations thereunder.
4. Reports.
(a) The Distributor shall cause FSL and each Separate Account to be
furnished with such reports as either or both may reasonably request for the
purpose of meeting reporting and record keeping requirements under the 1933 Act,
the 1934 Act, and the 1940 Act and rules thereunder, as well as the insurance
laws of the State of Missouri and any other applicable states or jurisdictions.
(b) The Distributor and FSL shall submit to all regulatory and
administrative bodies having jurisdiction over the present and future operations
of each Separate Account, 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.
5. Maintaining Registration and Approvals. FSL shall be responsible for
maintaining the registration of the Contracts with the SEC and any state
securities regulatory authority with which such registration is required, and
for gaining and maintaining approval of the Contract forms where required under
the insurance laws and regulations of each state or other jurisdiction in which
the Contracts are to be offered.
6. Issuance and Administration of Contracts. FSL shall be responsible for
issuing the Contracts and administering the Contracts and each Separate Account.
Distributor shall have full responsibility for the securities activities of all
persons employed by FSL, engaged directly or indirectly in the Contract
operations, and for the training, supervision, and control of such persons to
the extent of such activities.
7. Non-Exclusivity. FSL and each Separate Account agree that the services
to be provided by the Distributor hereunder are not to be deemed exclusive and
the Distributor is free to act as distributor of other variable insurance
products or investment company shares.
8. Affiliated Persons. It is understood that any Contract owner or agent of
each Separate Account may be a Contract owner, shareholder, director, officer,
employee, or agent of, or be otherwise interested in, the Distributor, any
affiliated person of the Distributor, any organization in which the Distributor
may have an interest or any organization which may have an interest in the
Distributor; that the Distributor, any such affiliated person, or any such
organization may have an interest in each Separate Account and that the
existence of any such dual interest shall not affect the validity hereof or any
transaction thereunder except as may otherwise be provided in the articles of
organization or by-laws of the Distributor or by specific provisions of
applicable law.
9. Indemnification.
(a) By FSL. FSL on its behalf and on behalf of each Separate Account shall
indemnify and hold harmless the Distributor and any officer, director, or
employee of the Distributor against any and all losses, claims, damages, or
liabilities, joint or several (including any investigative, legal, and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit, or proceeding or any claim asserted), to which
the Distributor and/or any such person may become subject, under any statute or
regulation, any NASD rule or interpretation, at common law or otherwise, insofar
as such losses, claims, damages, or liabilities:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in light of the circumstances in which they were made, contained
in any registration statement or in any prospectus for the Contracts; provided
that FSL shall not be liable in any such case to the extent that such loss,
claim, damage, or liability arises out of, or is based upon, an untrue statement
or alleged untrue statement or omission or alleged omission made in reliance
upon information furnished in writing to FSL by the Distributor specifically for
use in the preparation of any such registration statement or any amendment
thereof or supplement thereto; or
(ii) result from any breach by FSL of any provision of this Agreement.
This indemnification agreement shall be in addition to any liability that FSL
may otherwise have; provided, however, that no person shall be entitled to
indemnification pursuant to this provision if such loss, claim, damage, or
liability is due to the willful misfeasance, bad faith, gross negligence, or
reckless disregard of duty by the person seeking indemnification.
(b) By The Distributor. The Distributor shall indemnify and hold harmless
FSL on its behalf and on behalf of each Separate Account and any officer,
director, or employee of FSL or each Separate Account against any and all
losses, claims, damages, or liabilities, joint or several (including any
investigative, legal, and other expenses reasonably incurred in connection with,
and any amounts paid in settlement of, any action, suit, or proceeding or any
claim asserted), to which FSL and/or any such person may become subject under
any statute or regulation, any NASD rule or interpretation, at common law or
otherwise, insofar as such losses, claims, damages, or liabilities:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading, in light of the circumstances in which they were made,
contained in any registration statement or in any prospectus for the Contracts;
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in reliance
upon information furnished in writing by the Distributor to FSL specifically for
use in the preparation of any such registration statement or any amendment
thereof or supplement thereto; or
(ii) result from any breach by the Distributor of any provision of this
Agreement; or
(iii) result from the Distributor's own misconduct or negligence.
This indemnification agreement shall be in addition to any liability that the
Distributor may otherwise have; provided, however, that no person shall be
entitled to indemnification pursuant to this provision if such loss, claim,
damage, or liability is due to the willful misfeasance, bad faith, gross
negligence, or reckless disregard of duty by the person seeking indemnification.
(c) General. Promptly after receipt by a party entitled to indemnification
("indemnified person") under this Paragraph 9 of notice of the commencement of
any action as to which a claim will be made against any person obligated to
provide indemnification under this Paragraph 9 ("indemnifying party"), such
indemnified person shall notify the indemnifying party in writing of the
commencement thereof as soon as practicable thereafter, but failure to so notify
the indemnifying party shall not relieve the indemnifying party from any
liability which it may have to the indemnified person otherwise than on account
of this Paragraph 9. The indemnifying party will be entitled to participate in
the defense of the indemnified person but such participation will not relieve
such indemnifying party of the obligation to reimburse the indemnified person
for reasonable legal and other expenses incurred by such indemnified person in
defending himself or itself.
The indemnification provisions contained in this Paragraph 9 shall remain
operative in full force and effect, regardless of any termination of this
Agreement. A successor by law of the Distributor or FSL, as the case may be,
shall be entitled to the benefits of the indemnification provisions contained in
this Paragraph 9.
10. Regulation. This Agreement shall be subject to the provisions of the
1933 Act, the 1934 Act, and the 1940 Act and the rules, regulation, and rulings
thereunder, and of the NASD, as in effect from time to time, including such
exemptions and other relief as the SEC, its staff, or the NASD may grant, and
the terms hereof shall be interpreted and construed in accordance therewith.
11. Investigation and Proceedings.
(a) Each party hereto shall advise the other promptly of (i) any action of
the SEC or any authorities of any state or territory, of which it has knowledge,
affecting registration or qualification of each Separate Account and the
Contracts, or the right to offer the Contracts for sale, and (ii) the happenings
of any event that makes untrue any statement or which requires the making of any
change, in the registration statement or prospectus for the Contracts in order
to make the statements therein not misleading.
(b) FSL, each Separate Account, and the Distributor agree to cooperate
fully in any regulatory inspection, inquiry, investigation, or proceeding or any
judicial proceeding with respect to FSL, each Separate Account, or the
Distributor, their affiliates and their representatives to the extent that such
inspection, inquiry, investigation, or proceeding is in connection with the
Contracts distributed under this Agreement.
12. Duration and Termination of the Agreement.
(a) This Agreement shall become effective with respect to the Contracts as
of the date first written above, and shall continue in full force and effect
until termination or expiration. This Agreement may be amended at any time by
mutual agreement of the parties hereto.
(b) This Agreement shall continue in effect for two years from the date of
its execution, and thereafter from year to year, but only so long as such
continuance is specifically approved at least annually by (i) each Separate
Account's Board of Managers (the "Board"), or by a vote of the majority of the
outstanding voting securities of each Separate Account, and (ii) a vote of a
majority of those members of the Board who are not parties to this Agreement nor
interested persons of such parties, cast in person at a meeting called for the
purpose of voting on such approval.
(c) This Agreement may be terminated at any time for any reason by either
party upon 90 days' written notice to the other party, without payment of any
penalty. This Agreement may be terminated immediately at the option of either
party to this Agreement upon the other party's material breach of any provision
of this Agreement, unless such breach has been cured within 10 days after
receipt of notice from the non-breaching party of such breach.
(d) This Agreement shall automatically terminate in the event of its
assignment. (The term "assigned" shall not include any transaction exempted from
Section 15(b)(2) of the 1940 Act).
(e) Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except the obligation to settle accounts, and the
provisions contained in Paragraph 9 regarding indemnification agreements.
13. Rights, Remedies, etc. are Cumulative. The rights, remedies, and
obligations contained in this Agreement are cumulative and are in addition to
any and all rights, remedies, and obligations, at law or in equity, which the
parties hereto are entitled to under state and federal laws. Failure of either
party to insist upon strict compliance with any of the conditions of this
Agreement shall not be construed as a waiver of any of the conditions, but the
same shall remain in full force and effect. No waiver of any of the provisions
of this Agreement shall be deemed, or shall constitute, a waiver of any other
provisions, whether or not similar, nor shall any waiver constitute a continuing
waiver.
14. Interpretation. This Agreement constitutes the whole agreement between
the parties hereto with respect to the subject matter hereof, and supersedes all
prior oral or written understandings, agreements, or negotiations between the
parties with respect to such matter. No prior writing by or between the parties
with respect to the subject matter hereof shall be used by either party in
connection with the interpretation of any provisions of this Agreement.
15. Severability. This is a severable Agreement. In the event that any
provision of this Agreement would require a party to take action prohibited by
applicable federal or state law or prohibit a party from taking action required
by applicable federal or state law, then it is the intention of the parties
hereto that such provision shall be enforced to the extent permitted under the
law, and, in any event, that all other provisions of this Agreement shall remain
valid and duly enforceable as if the provision at issue had never been a part
hereof.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which shall
be deemed one instrument.
17. Notices. All notices and other communications provided for hereunder
shall be in writing and shall be either hand-delivered, transmitted by
registered or certified United States mail with return receipt requested, or by
overnight mail by a nationally recognized courier. All notices shall be
effective upon delivery and shall be addressed as follows:
(a) If to FSL:
Fidelity Security Life Insurance Company
0000 Xxxxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: ____________________
(b) If to each Separate Account:
Fidelity Security Life Insurance Company, Separate Account
0000 Xxxxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: ____________________
(c) If to the Distributor:
National Pension and Group Consultants, Inc.
0000 Xxxxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: ____________________
or to such other address as FSL, each Separate Account, or the Distributor shall
designate by written notice to the other parties.
18. Miscellaneous. Captions in this Agreement are included for convenience
or reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, Fidelity Security Life Insurance Company, each Separate
Account, and the Distributor have caused this Agreement to be executed in their
names and on their behalf by and through their duly authorized officer on the
day and year first above written.
FIDELITY SECURITY LIFE INSURANCE COMPANY
By:___________________________________________
Name:_________________________________________
Title:__________________________________________
EACH OF THE SEPARATE ACCOUNTS
LISTED ON SCHEDULE A, ATTACHED HERETO.
By: _________________________________________
Name: _______________________________________
Title:________________________________________
NATIONAL PENSION AND GROUP CONSULTANTS, INC.
By: ___________________________________________
Name:_________________________________________
Title:__________________________________________
SCHEDULE A
TO THE DISTRIBUTION AND PRINCIPAL UNDERWRITING AGREEMENT
List of Separate Accounts
FSL Separate Account M
