EXHIBIT 99.3a
DISTRIBUTION AND ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made this 10th day of January 1995, by and between Northern Life
Insurance Company, a Washington corporation, ("Northern") on its own behalf and
on behalf of Separate Account One ("Variable Account") and Washington Square
Securities, Inc. a Minnesota corporation ("WSSI") which is a member of the
National Association of Securities Dealers, Inc. ("NASD") and is registered as a
broker-dealer with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934 (the "1934 Act").
WHEREAS, Northern has established and maintains the Variable Account, a separate
investment account, for the purpose of issuing variable annuity contracts
("Contracts"), to commence on the effective date of the Registration Statement
relating to the Contract and Variable Account filed with the Securities and
Exchange Commission on Form N-4 pursuant to the Securities Act of 1933, as
amended (the "1933 Act") and the Investment Company Act of 1940, as amended (the
"l940 Act"); and
WHEREAS, Northern and WSSI are affiliated as direct wholly owned subsidiaries of
Northwestern National Life Insurance Company, a direct wholly owned subsidiary
of The NWNL Companies, Inc.; and
WHEREAS, Northern desires to retain WSSI as the Distributor and Principal
Underwriter for the sale and distribution of the Contracts to the public
directly and through other broker-dealers and WSSI is willing to render such
services; and
WHEREAS, Northern as issuer of the Contracts will retain certain records
regarding the Contracts, some of which are also required to be kept by WSSI,
since the Contracts are securities under federal law; and
WHEREAS, the parties desire Northern to act as recordkeeping and servicing agent
for WSSI with respect to the distribution of the Contracts by and through WSSI
and thus obtain a mutually advantageous economic result without the necessity
and expense of keeping a dual set of records for the Contracts;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties agree as follows:
I. DISTRIBUTION OF CONTRACTS
A. PRINCIPAL UNDERWRITER. Northern hereby appoints WSSI, during the term of
this Agreement, subject to the registration requirements of the 1933 Act and the
1940 Act and the provisions of the 1934 Act, to be the Distributor and Principal
Underwriter for the sale of Contracts to the public in each state and other
jurisdictions in which the Contracts may be lawfully sold. WSSI shall offer the
Contracts for sale and distribution at prices set by Northern.
B. SELLING AGREEMENTS. WSSI is hereby authorized to enter into separate
written agreements ("Selling Agreements"), on such terms and conditions as WSSI
and Northern determine are not inconsistent with this Agreement, with such
organizations that agree to participate as a broker-dealer in the distribution
of the Contracts and to use their best efforts to solicit applications for
Contracts. Any such broker-dealer (hereinafter "Broker"), shall be both
registered as a broker-dealer under the 1934 Act and a member of the NASD. The
Selling Agreement shall require Broker and its agents or representatives
soliciting applications for Contracts to be duly and appropriately licensed,
registered and otherwise qualified for the sale of the Contracts (and the riders
offered in connection therewith) under the insurance laws and any applicable
blue sky laws of each state or other jurisdiction in which such Contracts may be
lawfully sold and in which Northern is licensed to sell such Contracts. Northern
shall undertake to appoint Broker's qualified agents or representatives as life
insurance agents of Northern, provided that Northern reserves the right to
refuse to appoint any proposed representative or agent, or once appointed, to
terminate such appointment. All Selling Agreements shall require Brokers to
supervise their agents or representatives.
WSSI now serves, and may hereafter serve as general distributor of variable
annuity contracts and variable life insurance policies issued by other life
insurance company issuers under common control with Northern and WSSI. In such
case, provided such other issuers consent, WSSI may amend existing selling
agreements (which are substantially equivalent to those described herein), or
prepare new ones, which include the right to distribute the Contracts hereunder.
C. SUITABILITY. Northern desires to ensure that Contracts will be sold to
purchasers for whom the Contracts will be suitable. WSSI shall require that
Brokers and their representatives make recommendations to an applicant for the
purchase of a Contract based on reasonable grounds that the purchase of the
Contract is suitable for such applicant.
D. CONFORMITY WITH REGISTRATION STATEMENT AND APPROVED SALES MATERIALS. In
performing its duties as Distributor, WSSI will act in conformity with the
Prospectus and with the instructions and directions of Northern, the
requirements of the 1933 Act, the 1934 Act, the 1940 Act, and all other
applicable federal and state laws and regulations. WSSI shall not give any
information nor make any representations concerning any aspect of the Contract
or of Northern's operations to any persons or entity unless such information or
representations are contained in the Registration Statement and the pertinent
prospectus filed with the Securities and Exchange Commission, or are contained
in sales or promotional literature approved by Northern. WSSI will not use any
sales promotion material and advertising which has not been previously approved
by Northern and will impose this same requirement upon all Brokers with whom
WSSI enters into Selling Agreements.
E. REVIEW OF ADVERTISING AND SALES MATERIALS. WSSI will provide Northern
with at least one copy of all sales presentations, mailings, sales promotion
materials, advertising and any other marketing materials in connection with the
distribution or sale of the Contracts, regardless of by whom prepared, for
approval prior to their first use.
F. APPLICATIONS. Completed applications for contracts solicited by a Broker
through its agents or representatives shall be transmitted directly to Northern,
X.X. Xxx 00000, Xxxxxxx, Xxxxxxxxxx 00000, or such other address as it may
direct in writing. All payments under the Contracts shall be made by check
payable to Northern or by other method acceptable to Northern, and if received
by WSSI, shall be held at all times in a fiduciary capacity and remitted
promptly to Northern. All such payments will be the property of Northern.
Northern has the sole authority to approve or reject such applications or
payments.
II. RECORDKEEPING AND ADMINISTRATIVE SERVICES
A. COMMITMENT TO KEEP RECORDS. Northern hereby undertakes to maintain and
preserve on behalf of WSSI the books and records required to be maintained and
preserved by WSSI pursuant to Rules 17a-3 and 17a-4 under the Act and to permit
examination of such books and records at any time or from time to time during
business hours by WSSI, its auditors and attorneys and by examiners or other
representatives of the Securities and Exchange Commission, and to furnish to
said Commission at its principal office in Washington, D.C., or at any Regional
Office of said Commission specified in demand made by or on behalf of said
Commission for copies of books and records, true, correct, complete and current
copies of any or all, or any part, of such books and records. This undertaking
shall be binding upon Northern, its successors and assigns. Nothing herein
contained shall be deemed to relieve WSSI from the responsibility that such
books and records be accurately maintained and preserved as specified in Rule
17a-3 and Rule 17a-4.
B. ADMINISTRATIVE SERVICES. Northern will provide the services enumerated
in Schedule A with respect to the Contracts. To the extent such services include
the payment of commissions to the sales personnel of WSSI or dealer concessions
to Brokers, Northern will provide such services to WSSI as a purely ministerial
act and the records in respect of such payments will be reflected on the books
and records maintained by or for WSSI.
III. GENERAL PROVISIONS
A. COMPENSATION. Northern agrees to compensate WSSI for the services WSSI
performs under this Agreement as determined from time to time by mutual
agreement between Northern and WSSI. WSSI will not make any payment to Northern
for the services Northern performs hereunder in recognition of the fact that
Northern must keep all the enumerated records set forth in Exhibit A and that
this Agreement provides for the economic keeping of such records by affiliated
companies.
B. TERMINATION. This Agreement may be terminated at any time, for any
reason, by either party on 60 days' written notice to the other party, without
the payment of any penalty. Upon termination of this Agreement, all
authorizations, rights and obligations shall cease except the obligation to
settle accounts hereunder,
including commissions on purchase payments subsequently received for contracts
in effect at time of termination.
C. ASSIGNMENT. Either party may assign or transfer this Agreement or
contract with others to perform or provide any of the services to be provided
hereunder only with the prior written consent of a duly authorized officer of
the other party.
D. REGULATION. This Agreement shall be subject to the provisions of the
1940 Act and the 1934 Act and the rules, regulations and rulings thereunder, and
of the applicable rules and regulations of the NASD and applicable state
insurance law and other applicable law, from time to time in effect, and the
terms hereof shall be interpreted and construed in accordance therewith.
E. 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.
F. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Washington.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
NORTHERN LIFE INSURANCE COMPANY
By:
Title: Vice President, Marketing
WASHINGTON SQUARE SECURITIES, INC.
By: /s/ Xxxxxxx Xxxxxxx
Xxxxxxx X. Xxxxxxx
Title: President and Chief Operating Officer
EXHIBIT A
A. ISSUANCE OF CONTRACT
1. Reviews form of application, applies issuance criteria to application
for annuity Contract.
2. For applications submitted by registered representative of WSSI,
refers same to a registered principal of WSSI for review of
suitability materials and new account information and sign-off by a
registered principal that this has occurred.
3. Notifies dealer/agent of any error or missing data needed to establish
participant, annuitant or Contract owner records.
4. If issuance criteria are met, prepares Contract data page, prepares
issued Contract, and mails to Contract owners or registered to
representatives/agents.
5. Establishes and maintains participant, annuitant, and Contract owner
records, as applicable, on authorized storage/retrieval systems.
6. Causes to have printed and maintains supply of confirmation
statements. Prepares and mails confirmation statements of purchases to
Contract owners with copies to registered representatives/agents, if
required.
7. Deposits monies received with application into the designated Account
(see "Banking" below).
8. Causes to have printed and maintains inventory of issue related forms,
Contracts and endorsements.
B. BILLING AND COLLECTION
1. Receives purchases payments and reconciles amount paid with returned
billing statements or other remittance media.
2. Prepares and mails confirmation statement of purchase payments to
Contract owners with copies to registered representatives/ agents, if
requested.
3. Updates the Contract owner master records and other records to reflect
payments received, and performs accounting distribution of each
payment received.
4. Deposits cash received under the Contracts into a designated bank
account (see "Banking" below).
5. Transmits daily accounting and bank transfer authorization summaries
prepared for each valuation period.
6. Prepares individual bills or group billing lists for all periodic
payment Contracts (confirmation can double as billing statement, if
desired).
7. Prepares pre-authorized checks ("PAC"). Causes to have printed and
maintains supply of PAC authorization forms. Generates and deposits
PAC's on appropriate schedule.
C. BANKING
1. Microfilms all checks. Balances, edits, endorses and prepares daily
deposit.
2. Deposits are placed into depository account.
3. Transfer funds from the depository account to the applicable Account.
4. On dishonored items, reverses transactions, prepares reports, and
communicates with Contract owner.
5. Receives funds from Accounts for transfer into disbursement account
and tax withholding account.
6. Prepares disbursement checks (see "Disbursement" below).
7. Prepares daily cash journal summary reports and transmits by facsimile
transmission. Mails detail of activity.
D. ACCOUNTING/AUDITING
1. Provides information necessary to post accounting entries to the
general account ledger, including amounts withheld from annuity
payments for taxes.
2. Generates accounting information necessary to post entries to Separate
Account ledgers.
3. Prepares daily accounting reports for Contracts maintained on the
system.
4. Determines the "Net Amount Available for Investment."
5. Retains systems generated reports in accordance with a retention
schedule mutually established. Provides access to such reports for
internal and external auditing.
6. Assists with annual audit of Variable Account financials conducted for
purposes of financial statement certification and publication.
Accommodates WSSI or regulatory audits, as required.
E. PRICING/VALUATION
1. Receives information needed in determining Variable Account unit
values from the Investment Company transfer agent. This information
includes the daily net asset value of the underlying Investment
Company and any capital gains or dividend distribution made by the
Investment Company.
2. Performs unit valuation procedure for accumulation and annuity
(payout) unit values for the Separate Account based upon valuation
information from the Investment Company.
3. Performs valuation of annuity reserves, minimum death benefits
contingency reserves, etc., associated with the variable annuity
contracts.
4. Collect the number of Investment Company shares from the Investment
Company transfer agent. Compares assets (Investment Company market
value, accrued dividend/ capital gains) to liability (participant
value which is total amount multiplied by Variable Account unit
value). Calculates daily asset charge. Redeems asset charges
periodically.
F. CONTRACT OWNER SERVICE/RECORD MAINTENANCE
1. Processes Contract owner service requests, including information
requests, beneficiary changes, transfer of assets between eligible
investment vehicles, and changes of any other information maintained
on the system.
2. Researches inquiries using both data stored in the system and
microfilm records. Responds directly to questions or inquiries
relating to transaction records or current account value.
3. Prepares a set of daily journals confirming changes made to
participant, annuitant, or Contract owner accounts. Microfilms copies
of communications from and to participants, annuitants, and Contract
owners.
G. DISBURSEMENT (SURRENDERS, BORROWINGS, CLAIMS)
1. Notifies Contract owners of qualified minimum distribution regulations
at appropriate time.
2. Receives requests for partial or full surrenders, minimum
distributions, partial withdrawals and death claims from Contract
owners and beneficiaries. Accounts for any Contract administrative
charge.
3. Processes minimum distribution, surrender and partial withdrawal
requests and death claims against the participant master files.
4. Prepares checks for surrenders, partial withdrawals, and death claims
and forwards to Contract owner, annuitant, and designated payee.
5. Prepares and mails confirmation statements of disbursement
transactions to Contract owners with copies to registered
representatives/agents, if requested.
6. Prepares report on surrenders, partial withdrawals, and death claims.
7. Reviews, causes to have printed, and maintains adequate supply of
checks.
H. COMMISSIONS
1. Creates and maintains detailed commission transaction records for each
financial transaction processed.
2. Creates commission adjustment transactions, as necessary, due to
cancellations, lapses, and the like.
3. Prepares commission statements and checks, if required.
4. Prepares commission interface to WSSI in machine readable form, as
required.
5. Creates agent tax reporting forms, as required.
I. ANNUITY BENEFIT PROCESSING
1. Receives information with respect to annuities going into the annuity
(payout) phase.
2. Calculates the amount of the initial annuity payment for variable
payout.
3. Deducts applicable premium taxes.
4. Calculates annuity reserves.
5. Processes annuity reserve adjustments.
J. PROXY PROCESSING
1. Receives record date information and proxy solicitation from
Investment Companies.
2. Prepares proxy cards.
3. Mails annual solicitations (and Resolicitations, if necessary).
4. Maintains proxy registers and other required proxy material.
K. PERIODIC REPORTS TO CONTRACT OWNERS
1. Collates information necessary to prepare semi-annual reports for
Variable Account.
2. Inserts and mails statement of Account to each participant, annuitant,
or Contract owner.
3. Prepares and mails statement of Account to each participant,
annuitant, or Contract owner.
L. REGULATORY STATEMENT REPORTS
1. Collates relevant financial information for preparation of convention
blanks for Variable Account.
2. Prepares IRS Reports 1099-R, W-2P, and 5498 as required for Contract
owners who made contributions or received annuity payments or
distributions. Mail to Contract owners and file with IRS.
3. Maintains Taxpayer Identification Numbers for Contract owners and
performs withholding and backup withholding as required by the
Internal Revenue Code and regulations thereunder.
4. Responds to requests from plan administrators or trustees for
information affecting the plan or participants for qualified plans.
5. Provides relevant financial data for preparation of the Annual SEC
Report for Separate Accounts under the Investment Company Act of 1940.
M. PREMIUM TAXES
1. Collects and accounts for premium taxes as appropriate.
2. Prepares and maintains premium tax records by Contract owner and by
state.
N. FINANCIAL AND MANAGEMENT REPORTS
1. Prepares and makes available to WSSI upon request the reports listed
below.
ITEMS PRODUCTION DATES
General Distributor Compensation
Statement.................................1st and 15th of each month
Commission Statement........................1st and 15th of each month
Commissions Check Register..................1st and 15th of each month
Commission Proofs...........................1st and 15th of each month
Cash Recap Report...........................Daily
Agents' Negative Balance Listing............1st and 15th of each month
Commissions Suspended File Listing..........1st and 15th of each month
Agent Balance Forward Net Change
Report....................................1st and 15th of each month
Annuity Commissions Transactions not
Processed.................................1st and 15th of each month
Agent Summary Listing.......................1st and 15th of each month
NWNL Detail Production Report by
Region/Division...........................End of each month
Report Listing contracts where Owner
and Annuitant differ......................End of each month
Daily Price Report..........................Daily
Daily Production Report.....................Daily
As of Transaction Report....................Daily
Annuity Masterfile Update ..................Daily
Annuity New Policy Register ................Daily
Gain and Loss Report .......................Daily
Cash Recap Supersheet ......................Daily
Unit Value Supersheet ......................Daily
Address Change Report ......................Daily
Nightly Pricing Sheet ......................Daily
Cash Transfers on Fixed Account.............Daily
Checks for Asset Charges, Sales
Charges, Liquidations and State Taxes ....Daily
0. AGENT LICENSING RECORDKEEPING
1. Appoints and terminates appointments of agents for state insurance
licensing purposes, maintains agent license status information as
required:
(a) New Agents
(b) Changes in Status
(c) Agents Terminated
2. Establishes, maintains, or deletes agent records on computer system,
as required.
3. Edits against agent records when processing transactions against a
Contract.
