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EXHIBIT 1.A. (3)(A): PRINCIPAL UNDERWRITING AGREEMENT
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PRINCIPAL UNDERWRITING AGREEMENT
COMPANION LIFE SEPARATE ACCOUNT B
PRINCIPAL UNDERWRITING AGREEMENT effective JANUARY 1, 1997, by and between
COMPANION LIFE INSURANCE COMPANY ("COMPANION") on its own behalf and on behalf
of COMPANION SEPARATE ACCOUNT B ("ACCOUNT") and MUTUAL OF OMAHA INVESTOR
SERVICES, INC. ("UNDERWRITER").
WHEREAS:
o The ACCOUNT was established under authority of a resolution of COMPANION's
Board of Directors on August 27, 1996, in order to set aside and invest
assets attributable to certain variable life contracts ("Contracts") issued
by COMPANION;
o COMPANION has registered the ACCOUNT as a unit investment trust under the
Investment Company Act of 1940 (the "1940 Act") and has registered the
Contracts under the Securities Act of 1933 (the "1933 Act");
o UNDERWRITER is registered as a broker-dealer with the Securities and
Exchange Commission ("SEC") under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and is a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD");
o COMPANION and the ACCOUNT desire to have the Contracts sold and distributed
through UNDERWRITER and UNDERWRITER is willing to sell and distribute such
Contracts under the terms stated herein; and
o UNDERWRITER desires to have COMPANION perform certain services in
connection with the sale of the Contracts;
NOW, THEREFORE, the parties agree as follows:
A. UNDERWRITER APPOINTMENT. COMPANION appoints UNDERWRITER, and UNDERWRITER
agrees to serve as, distributor and principal underwriter of the Contracts
during the term of this Agreement. UNDERWRITER will be under no obligation
to effectuate any particular amount of sales of Contracts or to promote or
to make sales, except to the extent that COMPANION deems advisable.
UNDERWRITER shall be responsible for carrying out its sales and
underwriting obligations hereunder in continued compliance with the NASD
Rules of Fair Practice and federal and state securities laws.
B. RETAIL BROKER-DEALER AGREEMENTS
B.1 COMPANION authorizes UNDERWRITER to enter into separate written agreements,
on terms and conditions UNDERWRITER determines are not inconsistent with
this Agreement, with independent broker-dealers who are registered as such
under the 1934 Act and are members of the NASD, and who agree to
participate in the distribution of the Contracts and to use their best
efforts to solicit applications for the Contracts. UNDERWRITER and
COMPANION may also enter into consulting and/or wholesale agreements with
other distributors to obtain assistance in locating independent
broker-dealers who are willing to enter into retail broker-dealer
agreements for the sale of Contracts.
B.2 Each retail broker-dealer agreement shall require that each retail
broker-dealer shall be responsible for carrying out its sales obligations
hereunder in compliance with the NASD Rules of Fair Practice and federal
and state securities laws, and specifically shall be fully responsible for:
(a) ensuring that no person shall offer or sell the Contracts on the retail
broker-dealer's behalf until such person is duly registered as a
representative of such retail broker-dealer, duly appointed by COMPANION,
and appropriately licensed, registered or otherwise qualified to offer and
sell such Contracts under the federal securities laws and any applicable
securities laws of each state or other jurisdiction in which such Contracts
may be lawfully sold, in which COMPANION is licensed to sell the Contracts
and in which such person shall offer or sell the Contracts (such persons
hereinafter referred to as "Representatives"); and
(b) training, supervising, and controlling of all such persons for purposes of
complying on a continuous basis with the NASD Rules of Fair Practice and
with federal and state securities law requirements applicable in connection
with the offering and sale of the Contracts. In this connection, the retail
broker-dealer shall:
(1) conduct its training (including the preparation and utilization of
training materials) as in the opinion of UNDERWRITER is necessary to
accomplish the purposes of this Agreement;
(2) establish and implement reasonable written procedures for supervision
of sales practices of agents, representatives or brokers selling
the Contracts; and
(3) take reasonable steps to ensure that its associated persons shall not
make recommendations to an applicant to purchase a Contract and shall
not sell a Contract in the absence of reasonable grounds to believe
that the purchase of the Contract is suitable for such applicant.
Without limiting any of the following, a determination of suitability
shall be based upon information furnished after reasonable inquiry
of the applicant concerning the applicant's insurance and investment
objectives, financial situation and needs, and the likelihood of
whether the applicant will persist with the Contract for such a period
of time that COMPANION's acquisition costs are amortized over a
reasonable period of time. COMPANION and UNDERWRITER will rely on the
signature of a principal of the retail broker-dealer as
evidence that the broker-dealer has made a reasonable determination
of suitability.
B.3 Each retail broker-dealer shall provide that the only information or
representations made concerning the Contracts are those contained in the
Registration Statement and prospectus filed with the SEC or are contained
in sales or promotional material approved by COMPANION and UNDERWRITER.
B.4 Applications for Contracts solicited by retail broker-dealers through their
Representatives shall be forwarded to COMPANION. All payment for Contracts
shall be remitted promptly to COMPANION as agent for UNDERWRITER.
B.5 Each broker-dealer who agrees to participate in the distribution of the
Contracts shall act as an independent contractor and nothing herein shall
constitute such broker-dealer or its agents or employees as employees of
UNDERWRITER or COMPANION in connection with the sale of Contracts.
B.6 COMPANION shall apply for the proper insurance licenses in the appropriate
states or jurisdictions for the Representatives associated with UNDERWRITER
or with other independent retail broker-dealers which have entered into
agreements with UNDERWRITER for the sale of Contracts, provided that
COMPANION reserves the right to refuse to appoint any proposed
Representative as an agent or broker, or to terminate a Representative once
appointed.
C. PROSPECTUSES AND PROMOTIONAL MATERIAL.
C.1 COMPANION shall furnish UNDERWRITER with copies of all prospectuses,
financial statements and other documents and materials which UNDERWRITER
reasonably requests for use in connection with the distribution of
Contracts. COMPANION shall have responsibility for the preparation, filing
and printing of all required prospectuses and/or registration statements in
connection with the marketing or sales of the Contracts, and the payment of
all related expenses. UNDERWRITER will, at COMPANION's sole expense,
execute such papers and do such acts and things that shall from time to
time be reasonably requested by COMPANION for the purpose of maintaining
the registration of the Contracts under the 1933 Act and the Account under
the 1940 Act, and qualifying and maintaining qualification of the Contracts
for sale under the applicable laws of any state.
C.2 UNDERWRITER and COMPANION shall cooperate fully in designing, drafting and
reviewing of sales promotion materials. UNDERWRITER shall only use such
materials that have been provided or approved by COMPANION. UNDERWRITER
will make timely filings with the SEC, NASD and any other securities
regulatory authorities of any sales literature or materials relating to the
Account as required by law to be filed.
C.3 COMPANION, on behalf of UNDERWRITER, will make timely filings with those
state securities regulatory authorities of any information related to the
Contracts as required by such state's Blue Sky laws in order to qualify and
maintain qualification of the Contracts for sale in such state.
D. REPRESENTATIVES RECORDS. COMPANION, on behalf of UNDERWRITER, shall have
the responsibility for maintaining the records of Representatives licensed,
registered or otherwise qualified to sell the Contracts.
E. OTHER RECORDS. COMPANION agrees to maintain all required books of account
and related financial records on behalf of UNDERWRITER. All such books of
account and records shall be maintained and preserved pursuant to 1934 Act
Rules 17a-3 and 17a-4 (or the corresponding provisions of any future
federal securities laws or regulations). All such books and records shall
be maintained by COMPANION on behalf of and as agent for UNDERWRITER whose
property they are and shall remain for all purposes and shall at all times
be subject to reasonable periodic, special or other examination by the SEC
and all other regulatory bodies having jurisdiction. COMPANION also agrees
to send to UNDERWRITER's customers all required confirmations of customer
transactions.
F. COMPENSATION.
F.1 As compensation for UNDERWRITER's assuming its distribution expenses and
performing the services to be assumed and performed by it pursuant to this
Agreement, UNDERWRITER shall receive from COMPANION such amounts and at
such times as may from time to time be agreed upon in writing by
UNDERWRITER and COMPANION.
F.2 COMPANION will, on behalf of UNDERWRITER and on its account, in connection
with the sale of the Contracts, pay all amounts (including the sales
commissions described in the Prospectus for the Contracts) due to
Representatives or to those broker-dealers who have entered into a standard
form Retail Broker-Dealer Agreement with UNDERWRITER and COMPANION, and
UNDERWRITER shall have no interest whatsoever in, nor any obligation to
pay, such accounts.
F.3 As compensation for its services performed and expenses incurred under this
Agreement, COMPANION will receive all amounts charged as sales charges
under the Contracts. It is understood that COMPANION assumes the risk that
the above compensation for its services may not prove sufficient to cover
its actual expenses in connection therewith.
G. INVESTIGATION AND PROCEEDINGS. UNDERWRITER and COMPANION agree to cooperate
fully in any customer complaint, insurance regulatory investigation or
proceeding or judicial proceeding arising in connection with the Contracts
distributed under this Agreement. UNDERWRITER and COMPANION further agree
to cooperate fully in any securities regulatory inspection, inquiry,
investigation or proceeding or any judicial proceeding with respect to
UNDERWRITER, COMPANION, their affiliates and their Representatives to the
extent that such inspection, inquiry, investigation or proceeding is in
connection with Contracts distributed under this Agreement. Such
cooperation shall include prompt notification to the other party of any
customer complaint or notice of any regulatory inspection, inquiry,
investigation or proceeding received in connection with any activity in
connection with any such Contract.
H. INDEMNIFICATION.
H.1 COMPANION and UNDERWRITER each, as the indemnifying party, agree to
indemnify and hold harmless, as the indemnified party, the other and the
other's directors and officers against any and all losses, claims, damages,
liabilities (including amounts paid in settlement by the indemnified party
with the written consent of the indemnifying party) or litigation
(including reasonable legal expenses and expenses of counsel chosen by the
indemnified party and consented to by the indemnifying party, which consent
shall not be unreasonably withheld, and other reasonable expenses), to
which the indemnified party may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements are related directly or indirectly to the sale or distribution
of the Contracts and:
(a) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in the Registration Statement,
Prospectus, Contracts or sales literature for the Contracts (or any
amendment or supplement to any of the foregoing), for which the
indemnifying party is responsible or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not apply if
such statement or omission or such alleged statement or omission was made
in reliance upon and in conformity with information furnished to the
indemnifying party by the indemnified party for use in the Registration
Statement, Prospectus, Contracts or sales literature for the Contracts (or
any amendment or supplement) or otherwise for use in connection with the
sale of the Contracts; or
(b) arise as the result of any failure by the indemnifying party to provide the
services and furnish the materials under the terms of this Agreement; or
(c) arise out of or result from any material breach or representation and/or
warranty made by the indemnifying party in this Agreement or arise out of
or result from any other material breach of this Agreement by the
indemnifying party, as limited by and in accordance with the provisions of
Sections H.1(a) and H.1(b) hereof; or
(d) arise out of wrongful conduct of the indemnifying party or persons under
its control with respect to the Registration Statement, Prospectus,
materials furnished, or this Agreement.
H.2 The indemnifying party shall not be liable under this Indemnification
Provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against the indemnified party as such may
arise from the indemnified party's wilful misfeasance, bad faith, or gross
negligence in the performance of its duties or by reasons of its reckless
disregard, obligations or duties under this Agreement.
H.3 The indemnifying party shall not be liable under this Indemnification
Provision with respect to any claim made against the indemnified party
unless the indemnified party shall have notified the indemnifying party in
writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim 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 the
indemnifying party from any liability which it may have to the indemnified
party otherwise than on account of this Indemnification Provision. In case
any such action is brought against the indemnified party, the indemnifying
party shall be entitled to participate at the indemnifying party's own
expense, in the defense of such action. The indemnifying party shall be
entitled to assume the defense thereof, at the indemnifying party's own
cost and expense, with counsel satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of the election
by the indemnifying party to assume the defense thereof, the indemnified
party shall bear the fees and expenses of any additional counsel retained
by it, and the indemnifying party will not be liable to the indemnified
party under this Agreement for any legal or other expenses subsequently
incurred by the indemnified party independently in connection with the
defense thereof other than reasonable costs of investigation.
H.4 The indemnified party will promptly notify the indemnifying party of the
commencement of any litigation or proceedings against it in connection with
the issuance for sale of the Contracts.
I. TERMINATION. This Agreement may be terminated at any time by either party
upon 60 days written notice to the other party, without the payment of any
penalty. This Agreement shall terminate automatically if it shall be
assigned. Upon termination of this Agreement, all authorizations, rights
and obligations shall cease except the obligation to settle accounts
hereunder, including commissions on premiums subsequently received for
Contracts in effect at the time of termination or issued pursuant to
obligations received by COMPANION prior to termination, and the agreements
contained in Section G, above.
J. REGULATION. This Agreement shall be subject to the provisions to 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. Without limiting the
generality of the foregoing, the term "assigned" shall not include any
transaction exempted from Section 15(b)(2) of the 1940 Act.
UNDERWRITER shall submit to all regulatory and administrative bodies having
jurisdiction over the operations of the Accounts, present or future, any
information, reports or other material which such body by reason of this
Agreement may request or require pursuant to applicable laws or
regulations.
K. SEVERABILITY. If any provisions 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.
L. APPLICABLE LAW. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Nebraska.
Signed by the parties.
COMPANION LIFE INSURANCE COMPANY
By:
Print Name: Xxxxxx X. Xxxxxxxx
Title: President
Date:
MUTUAL OF OMAHA INVESTOR SERVICES, INC.
By:
Print Name: Xxxxxxx X. Xxxx
Title: President
Date:
COMPENSATION SCHEDULE to the
PRINCIPAL UNDERWRITING AGREEMENT between
COMPANION LIFE INSURANCE COMPANY
("COMPANION")
and
MUTUAL OF OMAHA INVESTOR SERVICES, INC.
("UNDERWRITER")
for
COMPANION SEPARATE ACCOUNT B
Compensation Schedule Effective Date: JANUARY 1, 1997
For Services Rendered by UNDERWRITER to COMPANION on COMPANION'S own behalf and
on behalf of COMPANION OF OMAHA SEPARATE ACCOUNT B, COMPANION shall pay to
UNDERWRITER:
[DRAFT. TO BE COMPLETED WHEN AGREEMENT IS EXECUTED]
This compensation schedule shall remain in effect until amended by mutual
agreement of the parties.
