Exhibit 1(A)(3)(d)
Principal Underwriting Agreement
PRINCIPAL UNDERWRITING AGREEMENT
THIS PRINCIPAL UNDERWRITING AGREEMENT made and effective as of the 1st day
of October, 1998, by and between AFSG SECURITIES CORPORATION ("AFSG"), a
Pennsylvania corporation, and WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
("WRL"), an Ohio corporation, on its own behalf and on behalf the separate
investment accounts of WRL set forth in EXHIBIT A attached hereto and made a
part hereof (collectively, the "Account").
WITNESSETH:
WHEREAS, the Account was established or acquired by WRL under the laws of
the State of Ohio, pursuant to a resolution of WRL's Board of Directors in order
to set aside the investment assets attributable to certain variable life
insurance and annuity contracts ("Contracts") issued by WRL;
WHEREAS, WRL has 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, as amended (the "1940 Act");
WHEREAS, WRL has registered or will register the Contracts under the
Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, AFSG is and will continue to be registered as a broker-dealer
with the SEC under the Securities Exchange Act of 1934, as amended (the "1934
Act"), and a member of the National Association of Securities Dealers, Inc. (the
"NASD") prior to the offer and sale of the Contracts; and
WHEREAS, WRL proposes to have the Contracts sold and distributed through
AFSG, and AFSG 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. WRL grants to AFSG
the exclusive right to be, and AFSG agrees to serve as, distributor and
principal underwriter of the Contracts during the term of this Agreement. AFSG
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. AFSG agrees to offer the Contracts for sale in accordance
with the registration statements and prospectus therefor then in effect. AFSG is
not authorized to give any information or to make any representations concerning
the Contracts other than those contained in the current prospectus therefor
filed with the SEC or in such sales literature as may be authorized by WRL.
3. CONSIDERATIONS. All premiums, purchase payments or other moneys payable
under the Contracts shall be remitted promptly in full together with such
application, forms and any other required documentation to WRL or its designated
servicing agent and shall become the exclusive property of WRL. Checks or money
orders in payment under the Contracts shall be drawn to the order of "WRL Life
Insurance Company" and funds may be remitted by wire if prior written approval
is obtained from WRL.
4. COPIES OF INFORMATION. On behalf of the Account, WRL shall furnish AFSG
with copies of all prospectuses, financial statements and other documents which
AFSG reasonably requests for use in connection with the distribution of the
Contracts.
5. REPRESENTATIONS. AFSG represents that it is (a) duly registered as a
broker-dealer under the 1934 Act, (b) a member in good standing of the NASD and
(c) to the extent necessary to offer the Contracts, duly registered or otherwise
qualified under the securities laws of any state or other jurisdiction. AFSG
shall be responsible for carrying out its sales and underwriting obligations
hereunder in continued compliance with the NASD Rules and federal and state
securities and insurance laws and regulations. Further, AFSG represents and
warrants that it will adopt, abide by and enforce the principles set forth in
the Principles and Code of Ethical Market Conduct of the Insurance Marketplace
Standards Association as adopted by the Company.
6. OTHER BROKER-DEALER AGREEMENTS. AFSG 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 AFSG shall provide that
each independent broker-dealer will assume full responsibility for continued
compliance by itself and by its associated persons with the NASD Rules and
applicable federal and state securities and insurance laws, shall provide that
each independent broker-dealer will adopt, abide by and enforce the principles
set forth in the Principles and Code of Ethical Market Conduct of the Insurance
Marketplace Standards Association as adopted by the Company, and shall be in
such form and contain such other provisions as WRL 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 WRL for the sale of Contracts under the
insurance laws of the applicable states or jurisdictions in which such Contracts
may be
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lawfully sold. All applications for Contracts solicited by such broker-dealers
through their representatives, together with any other required documentation
and premiums, purchase payments and other moneys, shall be handled as set forth
in paragraph 3 above.
7. INSURANCE LICENSING AND APPOINTMENTS. WRL shall apply for the proper
insurance licenses and appointments in appropriate states or jurisdictions for
the designated persons associated with AFSG or with other independent
broker-dealers that have entered into sales agreements with AFSG for the sale of
Contracts, provided that WRL 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. RECORDKEEPING. WRL and AFSG shall cause to be maintained and preserved
for the periods 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 WRL, of the Account, and of
AFSG as to all transactions hereunder shall be maintained so as to disclose
clearly and accurately the nature and details of the transactions. WRL (or such
other entity engaged by WRL for this purpose), on behalf of and as agent for
AFSG, shall maintain AFSG's books and records pertaining to the sale of
Contracts to the extent as mutually agreed upon from time to time by WRL and
AFSG; provided that such books and records shall be the property of AFSG, 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. WRL shall be responsible for
sending on behalf of and as agent for AFSG all required confirmations on
customer transactions in compliance with applicable regulations, as modified by
an exemption or other relief obtained by WRL. AFSG shall cause WRL to be
furnished with such reports as WRL may reasonably request for the purpose of
meeting its reporting and recordkeeping requirements under the insurance laws of
the State of Ohio and any other applicable states or jurisdictions. WRL agrees
that its records relating to the sale of 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. WRL shall have the responsibility for paying on behalf of
AFSG (a) 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 AFSG and such broker-dealers as agreed to
by WRL and (b) all commissions or other fees to associated persons of AFSG which
are due for the sale of the Contracts in the amounts and on such terms and
conditions as WRL and AFSG determine. Notwithstanding the
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preceding sentence, no broker-dealer, associated person or other individual or
entity shall have an interest in any deductions or other fees payable to AFSG as
set forth herein.
10. EXPENSE REIMBURSEMENT. WRL shall reimburse AFSG for all costs and
expenses incurred by AFSG in furnishing the services, materials, and supplies
required by the terms of this Agreement.
11. INDEMNIFICATION. WRL agrees to indemnify AFSG for any losses incurred
as a result of any action taken or omitted by AFSG, or any of its officers,
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. AFSG and WRL agree to cooperate fully in
any insurance or judicial regulatory investigation or proceeding arising in
connection with Contracts distributed under this Agreement. AFSG and WRL further
agree to cooperate fully in any securities regulatory inspection, inquiry,
investigation or proceeding or any judicial proceeding with respect to WRL,
AFSG, their affiliates and their representatives to the extent that such
inspection, inquiry, investigation or proceeding or judicial proceeding is in
connection with Contracts distributed under this Agreement. Without limiting the
foregoing:
(a) AFSG will be notified promptly of any customer complaint or notice of
any regulatory inspection, inquiry investigation or proceeding or judicial
proceeding received by WRL with respect to AFSG or any representative or which
may affect WRL's issuance of any Contracts marketed under this Agreement; and
(b) AFSG will promptly notify WRL of any customer complaint or notice of
any regulatory inspection, inquiry, investigation or judicial proceeding
received by AFSG or any representative with respect to WRL or its affiliates in
connection with any Contracts distributed under this Agreement.
In the case of a customer complaint, AFSG and WRL 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.
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(d) AFSG shall not assign or delegate its responsibilities under this
Agreement without the written consent of WRL.
(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 pursuant to
applications received by WRL 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 SEC may grant, and
the terms hereof shall be interpreted and construed in accordance therewith.
AFSG shall submit to all regulatory and administrative bodies having
jurisdiction over the operations of the Account, 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, statute, 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 State of Florida.
17. No Assignment. Neither party may assign its interest in this Agreement
without the prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed.
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.
AFSG SECURITIES CORPORATION
By: /s/ XXXX X. XXXXXXXXXX
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Title: Xxxx X. Xxxxxxxxxx
Vice President
WESTERN RESERVE LIFE ASSURANCE
CO. OF OHIO
By: /s/ XXXX X. XXXXXX
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Title: Xxxx X. Xxxxxx
President
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EXHIBIT A
WRL Series Life Corporate Account
