EXHIBIT (3)(a)
PRINCIPAL UNDERWRITING AGREEMENT
PRINCIPAL UNDERWRITING AGREEMENT
UNDERWRITING AGREEMENT made and effective as of the 1st day of August,
1992, by and between Capital Holding Securities Corporation ("CHSC"), a
Pennsylvania corporation, and National Home Life Assurance Company, ("National
Home"), a Missouri corporation, on its own behalf and on behalf of National Home
Life Assurance Company Separate Account V (the "Account"), separate investment
account of National Home.
WITNESSETH:
WHEREAS, the Account was established by National Home under the laws of
the State of Missouri on February 14, 1992, pursuant to a resolution of National
Home's Board of Directors in order to set aside the investment assets
attributable to certain flexible premium multi-funded annuity contracts
("Contracts") issued by National Home;
WHEREAS, National Home as registered or will register the Account with
the Securities and Exchange Commission ("SEC") as a unit investment trust under
the Investment Company Act of 1940 ("1940 Act").
WHEREAS, CHSC is and will be registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934 ("1934 Act"), and a member of the
National Association of Securities Dealers, Inc. ("NASD") prior to the offer and
sale of the Contracts; and
WHEREAS, National Home proposes to register the Contracts under the
Securities Act of 1933 ("1933 Act") and
to have the Contracts sold and distributed through CHSC, and CHSC 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. National Home
grants to CHSC the exclusive right to be, and CHSC agrees to serve as,
distributor and principal underwriter of the Contracts during the term of this
Agreement, CHSC 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. CHSC agrees to offer the Contracts for sale in
accordance with the registration statements and prospectus therefor then in
effect. CHSC is not authorized to give any information or to make any
representations concerning the Contracts other than those contained in the
current prospectus therefore filed with the SEC or in such sales literature as
may be authorized by National Home.
3. Considerations. All premiums, purchase payments or other monies
payable under the Contracts shall be remitted promptly in full together with
such application, forms and any other required documentation to National Home or
its designated servicing agent and shall become the exclusive property of
National Home. Checks or money orders
2
in payment under the Contracts shall be drawn to the order of "National Home
Life Assurance Company" and may be remitted by wire if prior written approval is
obtained from National Home.
4. Copies of Information. On behalf of the Accounts, National Home
shall furnish CHSC with copies of all prospectuses, financial statements and
other documents which CHSC reasonably requests for use in connection with the
distribution of the Contracts.
5. Registration Representation. CHSC represents that it is or will
be prior to the offer and sale of the Contracts (i) duly registered as a
broker-dealer under the 1934 Act, (ii) a member in good standing of the NASD and
(iii) to the extent necessary to offer the Contracts, duly registered or
otherwise qualified under the securities laws of any State or other
jurisdiction. CHSC 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 and insurance laws and
regulations.
6. Other Broker-Dealer Agreements. CHSC 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 CHSC shall
provide that each independent broker-dealer will assume full responsibility for
continued compliance by itself and by its
3
associated persons with the NASD Rules of Fair Practice and applicable federal
and state securities and insurance laws, and shall be in such form and contain
such other provisions as National Home 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 National Home for the sale of the Contracts under the
insurance laws of the applicable states or jurisdiction in which such Contracts
may be lawfully sold. All applications for the Contracts solicited by such
broker-dealers through their representatives, together with any other required
documentation and premiums, purchase payments and other monies, shall be handled
as set forth in paragraph 3 above.
7. Insurance Licensing and Appointments. National Home shall apply
for the proper insurance licenses and appointments in appropriate states or
jurisdictions for the designated persons associated with CHSC or with other
independent broker-dealers which have entered into sales agreements with CHSC
for the sale of the Contracts, provided that National Home 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. Record Keeping. National Home and CHSC shall cause to be
maintained and preserved for the periods
4
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 National Home, of the Accounts, and of CHSC as to
all transactions hereunder shall be maintained so as to disclose clearly and
accurately the nature and details of the transactions. National Home (or such
other entity engaged by National Home for this purpose), on behalf of and as
agent for CHSC, shall maintain CHSC's books and records pertaining to the sale
of the Contracts to the extent as mutually agreed upon from time to time by
National Home and CHSC; provided that such books and records shall be the
property of CHSC, 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. National
Home shall be responsible for sending on behalf of and as agent for CHSC all
required confirmations on customer transactions in compliance with applicable
regulations, as modified by an exemption or other relief obtained by National
Home. CHSC shall cause National Home to be furnished with such reports as
National Home may reasonably request for the purpose of meeting its reporting
and record keeping requirements under the insurance laws of the State of
Missouri and any other applicable states or jurisdictions. National Home agrees
that its records
5
relating to the sale of the 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. National Home shall have the responsibility for
paying on behalf of CHSC (i) 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 CHSC and such
broker-dealers as agreed to by National Home, and (ii) all commissions or other
fees to associated persons of CHSC which are due for the sale of the Contracts
in the amounts and on such terms and conditions as National Home and CHSC
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 CHSC as set forth herein.
10. Expense Reimbursement. National Home shall reimburse CHSC for
all costs and expenses incurred by CHSC in furnishing the services, materials,
and supplies required by the terms of this Agreement.
11. Indemnification. National Home agrees to indemnify CHSC for any
losses incurred as a result of any action taken or omitted by CHSC, or any of
its officers,
6
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. CHSC and National Home agree to
cooperate fully in any insurance or judicial regulatory investigation or
proceeding arising in connection with the Contracts distributed under this
Agreement. CHSC and National Home further agree to cooperate fully in any
securities regulatory inspection, inquiry, investigation or proceeding or any
judicial proceeding with respect to National Home, CHSC, their affiliates and
their representatives to the extent that such inspection, inquiry, investigation
or proceeding or judicial proceeding is in connection with the Contracts
distributed under this Agreement. Without limiting the foregoing:
(a) CHSC will be notified promptly of any customer compliant or
notice of any regulatory inspection, inquiry investigation or
proceeding or judicial proceeding received by National Home with
respect to CHSC or any representative or which may affect
National Home's issuance of any Contracts marketed under this
Agreement; and
(b) CHSC will promptly notify National Home of any customer
compliant or notice of any regulatory inspection, inquiry,
investigation or judicial
7
proceeding received by CHSC or any representative with respect
to National Home or its affiliates in connection with any
Contracts distributed under this Agreement.
In the case of a customer complaint, CHSC and National Home 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) CHSC shall not assign or delegate its responsibilities under
this Agreement without the written consent of National Home.
(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
8
pursuant to applications received by National Home 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 Securities and
Exchange Commission may grant, and the terms hereof shall be interpreted and
construed in accordance therewith.
CHSC shall submit to all regulatory and administrative bodies having
jurisdiction over the operations of the Accounts, 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, statue, 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 Commonwealth of Kentucky.
9
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.
CAPITAL HOLDING SECURITIES CORPORATION
By: /s/ [ILLEGIBLE]
-------------------------
Title: VICE PRES.
----------------------
NATIONAL HOME LIFE ASSURANCE COMPANY
By: /s/ [ILLEGIBLE]
-------------------------
Title: Vice President
----------------------
jrm/0824922
10
