EXHIBIT (3) (A): PRINCIPAL UNDERWRITER AGREEMENT
PRINCIPAL UNDERWRITING AGREEMENT
COMPANION SEPARATE ACCOUNT C
PRINCIPAL UNDERWRITING AGREEMENT effective _______, 1995, by and between
COMPANION LIFE INSURANCE COMPANY ("COMPANION") on its own behalf and on behalf
of COMPANION SEPARATE ACCOUNT C ("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 February 18, 1994, in order to set aside and invest
assets attributable to certain variable annuity 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;
o UNDERWRITER is registered as a broker-dealer with the Securities and the
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 Contract 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) conducts 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 Contact 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:
Title:
Date:
MUTUAL OF OMAHA INVESTOR SERVICES, INC.
By:
Print Name:
Title:
Date:
COMPENSATION SCHEDULE to the
PRINCIPLE UNDERWRITING AGREEMENT between
COMPANION LIFE INSURANCE COMPANY
("COMPANION")
and
MUTUAL OF OMAHA INVESTOR SERVICES, INC.
("UNDERWRITER")
Compensation Schedule Effective Date: , 1995
For Services Rendered by UNDERWRITER to COMPANION on COMPANION'S own behalf and
on behalf of COMPANION SEPARATE ACCOUNT C, COMPANION shall pay to UNDERWRITER:
1.
2. .
This compensation schedule shall remain in effect for at least one year from the
effective date stated above. Either party may initiate subsequent compensation
schedule terms upon 45 days advance notice to the other party.
