UNDERWRITING AGREEMENT
AGREEMENT dated as of this 1st day of May, 1999, by and between American
Equity Investment Life Insurance Company, an Iowa corporation ("INSURER"), on
its behalf and on behalf of American Equity Life Variable Account and American
Equity Life Annuity Account (the "SEPARATE ACCOUNTS"); and American Equity
Capital, Inc., ("DISTRIBUTOR"), an Iowa corporation which is a registered
broker-dealer with the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934 (the "1934 ACT") and a member of the National
Association of Securities Dealers, Inc. ("NASD").
RECITALS
A. Distributor is a broker-dealer that engages in the distribution of
variable insurance products and other investment products; and
B. Insurer desires to issue certain variable insurance products described
more fully below to the public through Distributor acting as principal
underwriter;
NOW, THEREFORE, in consideration of the premises and of the mutual promises
and covenants hereinafter set forth, the parties agree as follows:
1. DEFINITIONS
A. CONTRACTS-- The class or classes of variable insurance products set
forth on Schedule 1 to this Agreement as in effect at the time this
Agreement is executed, and such other classes of variable products
that may be added to Schedule 1 from time to time in accordance with
Section 11.b of this Agreement, and including any riders to such
contracts and any other contracts offered in connection therewith. For
the purpose of this Agreement, a "CLASS OF CONTRACTS" shall mean those
Contracts issued by Insurer on the same policy form or forms and
covered by the same registration statement.
B. REGISTRATION STATEMENT -- With respect to each Class of Contracts, the
most recent post-effective registration statement filed with the SEC
or the most recent effective post-effective amendment thereto,
including financial statements included therein and all exhibits
thereto. For purposes of Section 9 of this Agreement, the term
"Registration Statement" means any document which is or at any time
was a Registration Statement within the meaning of this Section 1.B.
C. PROSPECTUS -- With respect to each Class of Contracts, the prospectus
for such Class of Contracts included within the Registration Statement
for such Class of Contracts; provided, however, that if the most
recently filed prospectus filed pursuant to Rule 497 under the 1933
Act subsequent to the date on which the Registration Statement became
effective differs from the prospectus on file at the time the
Registration Statement became effective, the term "Prospectus"
shall refer to the most recently filed prospectus filed under Rule 497
from and after the date on which it shall have been filed. For
purposes of Section 9 the term "any Prospectus" means any document
which is or at any time was a Prospectus within the meaning of this
Section 1.C.
D. FUNDS -- The registered investment companies in which the Separate
Accounts invest.
E. VARIABLE ACCOUNTS -- The separate accounts supporting any Class of
Contracts and specified in Schedule 1 as in effect at the time this
Agreement is executed, or as it may be amended from time to time in
accordance with Section 11.B of this Agreement.
F. 1933 ACT -- The Securities Act of 1933, as amended.
G. 1934 ACT -- The Securities Exchange Act of 1934, as amended.
H. 1940 Act -- The Investment Company Act of 1940, as amended.
I. SEC -- The Securities and Exchange Commission.
J. NASD -- The National Association of Securities Dealers, Inc. and any
affiliates.
K. REGULATIONS -- The rules and regulations promulgated by the SEC under
the 1933 Act, the 1934 Act and the 1940 Act as in effect at the time
this Agreement is executed or thereafter promulgated.
L. SELLING BROKER-DEALER -- A person registered as a broker-dealer and
licensed as a life insurance agent or affiliated with a person so
licensed, and authorized to distribute the Contracts pursuant to a
sales agreement as provided for in Section 4 of this Agreement.
M. REPRESENTATIVE -- When used with reference to Distributor or a Selling
Broker-Dealer, an individual who is an associated person, as that term
is defined in the 1934 Act, thereof.
N. APPLICATION - An application for a Contract.
O. PREMIUM -- A payment made under a Contract to purchase benefits under
the Contract.
P. ADMINISTRATIVE OFFICE -- The administrative office of the Insurer
identified in the most recently filed prospectus filed pursuant to
Rule 497.
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2. AUTHORIZATION AND APPOINTMENT OF DISTRIBUTOR.
A. SCOPE AND AUTHORITY. Insurer hereby authorizes Distributor on an
exclusive basis, and Distributor accepts such authority, subject to
the requirements and provisions of the 1933 Act, the 1934 Act and the
1940 Act, as well as all terms and conditions of this Agreement, to be
the distributor and principal underwriter for the sale of the
Contracts to the public in each state and other jurisdiction in which
the Contracts may lawfully be sold during the term of this Agreement.
Insurer hereby authorizes Distributor to grant authority to Selling
Broker-Dealers to solicit Applications and Premiums to the extent the
Distributor deems appropriate and consistent with the marketing
program for the Contracts or a Class of Contracts, subject to the
conditions set forth in Section 4 of this Agreement. The Contracts
shall be offered for sale and distribution at premium rates set from
time to time by Insurer. Distributor shall use its best efforts to
market the Contracts actively through Selling Broker-Dealers in
accordance with Section 4 of this Agreement, subject to compliance
with applicable laws, including rules of the NASD.
B. LIMITS ON AUTHORITY. Distributor shall act as an independent
contractor and nothing herein contained shall constitute Distributor
or its agents, officers, or employees as agents, officers or employees
of Insurer solely by virtue of their activities in connection with the
sale of Contracts hereunder. Distributor and its Representatives shall
not have authority, on behalf of Insurer to make, alter, or discharge
any Contract or other insurance policy or annuity entered into
pursuant to a Contract; to waive any Contract forfeiture provision; to
extend due date for payment of any Premium; or to receive monies or
Premiums (except for the sole purpose of forwarding monies or Premiums
to Insurer). Distributor shall not expend, nor contract for the
expenditure of, funds of the Insurer. Distributor shall not possess or
exercise any authority on behalf of Insurer other than that expressly
conferred on Distributor by this Agreement.
3. SOLICITATION ACTIVITIES.
A. NO SALES BY DISTRIBUTOR REPRESENTATIVES. The Distributor will not
solicit applications from the public for Contracts through Distributor
Representatives.
B. REPRESENTATIONS AND WARRANTIES OF DISTRIBUTOR. Distributor represents
and warrants to Insurer that Distributor is and shall remain during
the term of this Agreement (i) registered as a broker-dealer under the
1934 Act; (ii) a member of the NASD; (iii) duly registered under
applicable state securities laws; and (iv) in compliance with Section
9(a) of the 1940 Act.
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4. SELLING BROKER-DEALERS. Insurer and Distributor shall insure that sales of
the contracts by Selling Broker-Dealers comply with the following
conditions, and any additional conditions Insurer may specify from time to
time.
A. DUAL REGISTRATION/LICENSING. Every Selling Broker-Dealer shall be (i)
registered as a broker-dealer with the SEC; (ii) a member of the NASD;
and (iii) if required, licensed as an insurance agent with authority
to sell variable products or associated with an insurance agent so
licensed. Any individuals to be authorized to act on behalf of Selling
Broker-Dealer shall be (i) duly registered with the NASD as
representatives of Selling Broker-Dealer with authority to sell
variable products; and (ii) licensed as insurance agents with
authority to sell variable products. Insurer shall verify that Selling
Broker-Dealer and its Representatives are duly licensed under
applicable state insurance law to sell the Contracts or, if
Broker-Dealer is not so licensed, that it is associated with an entity
so licensed.
B. APPOINTMENT OF REPRESENTATIVES. Every Selling Broker-Dealer (or, if
applicable, its associated insurance agency) and each of its
Representatives shall have been appointed by Insurer; provided that
Insurer reserves the right to refuse to appoint any proposed person,
or once appointed, to terminate such appointment.
C. WRITTEN SALES AGREEMENT. Every Selling Broker-Dealer must enter into a
written sales agreement with Distributor and Insurer which sales
agreement, among other things, will require such Selling Broker-Dealer
to use its best efforts to solicit Applications for the Contracts and
to comply with applicable laws and regulations, including the
Insurer's rules and regulations as reflected in any written rules,
regulations and procedures provided by Insurer to insurance agents
appointed to sell its insurance contracts, as revised from time to
time.
D. SUITABILITY. In view of the fact that Insurer and Distributor want to
ensure that Contracts will be sold to purchasers for whom the
Contracts will be suitable, the written Sales Agreement shall require
that Selling Broker-Dealers and their Representatives not make
recommendations to an applicant to purchase a Contract in the absence
of reasonable grounds to believe that the purchase of the Contract is
suitable for the applicant. While not limited to the following, a
determination of suitability shall be based on information supplied by
an applicant after reasonable inquiry concerning the applicant's other
security holdings, insurance and investment objectives, financial
situation and needs, and the likelihood that the applicant will
continue to make premium payments contemplated by the Contract applied
for and will keep the Contract in force for a sufficient period of
time so that Insurer's acquisition costs are amortized over a
reasonable period of time.
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5. MARKETING MATERIALS
A. PREPARATION AND FILING. Subject to Section 11.J below, Insurer shall
be primarily responsible for the design and preparation of all
promotional, sales and advertising material related to the Contracts.
Distributor shall be responsible for filing such material as required,
with the NASD and any state securities regulatory authorities at
Insurer's expense. Insurer shall be responsible for filing all
promotional, sales or advertising material, as required, with any
state insurance regulatory authorities. Insurer shall be responsible
for preparing the Contract forms and filing them with applicable state
insurance regulatory authorities, and for preparing the Prospectuses
and Registration Statements and filing them with the SEC and state
regulatory authorities, to the extent required. The parties shall
notify each other expeditiously of any comments provided by the SEC,
NASD or any securities or insurance regulatory authority on such
material, and will cooperate expeditiously in resolving and
implementing any comments, as applicable.
B. USE IN SOLICITATION ACTIVITIES. Subject to Section 11.J below, Insurer
shall be responsible for furnishing Distributor with such
Applications, Prospectuses and other materials for use by Distributor
and Selling Broker-Dealers in their solicitation activities with
respect to the Contracts. Insurer shall notify Distributor of those
states or jurisdictions which require delivery of a statement of
additional information with a prospectus to a prospective purchaser.
6. COMPENSATION AND EXPENSES.
A. COMPENSATION. Subject to Section 11.J below, Insurer shall pay
compensation for sales of the Contracts in accordance with Schedule 2
hereto. Upon Distributor's request, Insurer shall pay compensation
directly to Selling-Broker-Dealers, on Distributor's behalf, subject
to the provisions of Section 7 of this Agreement.
B. EXPENSES. Subject to Section 11.J below, Insurer shall pay all
expenses in connection with:
(1) the preparation and filing of each registration statement
(including each pre-effective and post-effective amendment
thereto) and the preparation and filing of each Prospectus
(including any preliminary and each definitive Prospectus);
(2) the preparation, underwriting, issuance and administration of the
Contracts;
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(3) any registration, qualification or approval or other filing of
the Contracts or Contract forms required under the securities or
insurance laws of the states in which the Contracts will be
offered;
(4) all registration fees for the Contracts payable to the SEC;
(5) the printing of promotional materials, definitive Prospectuses
for the Contracts and any supplements thereto for distribution;
(6) any applicable postage costs; and
(7) any out-of-pocket expenses incurred by Distributor in carrying
out its obligations under this Agreement.
7. COMPLIANCE.
A. MAINTAINING REGISTRATION AND APPROVALS. Subject to Section 11.J below,
Insurer shall be responsible for maintaining the registration of the
Contracts with the SEC and any state securities regulatory authority
with which such registration is required, and for gaining and
maintaining the approval of the Contract forms where required under
the insurance laws and regulations of each state or other jurisdiction
in which the Contracts are to be offered.
B. CONFIRMATIONS AND THE 1934 ACT COMPLIANCE. Distributor, shall confirm
to each applicant for and purchaser of a Contract in accordance with
Rule 10b-10 under the 1934 Act acceptance of premiums and such other
transactions as are required by Rule 10b-10 or administrative
interpretations thereunder. Distributor shall maintain and preserve
such books and records with respect to such confirmations in
conformity with the requirements of Rules 17a-3 and 17a-4 under the
1934 Act to the extent such requirements apply. Distributor
acknowledges that such books and records are at all times subject to
inspection by the SEC in accordance with Section 17(a) of the 1934
Act.
C. ISSUANCE AND ADMINISTRATION OF CONTRACTS. Insurer shall be responsible
for issuing the Contracts and administering the Contracts and the
Variable Account, provided, however, that Distributor shall have full
responsibility for the securities activities of all persons employed
by the Insurer, engaged directly or indirectly in the Contract
operations, and for the training, supervision and control of such
persons to the extent of such activities.
8. INVESTIGATIONS AND PROCEEDINGS.
A. COOPERATION. Distributor and Insurer shall cooperate fully in any
securities or insurance regulatory investigation or proceeding or
judicial proceeding arising in connection with the offering, sale or
distribution of the Contracts distributed
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under this Agreement. Without limiting the forgoing, Insurer and
Distributor shall notify each other promptly of any customer complaint
or notice of any regulatory investigation or proceeding or judicial
proceeding received by either party with respect to the Contracts.
B. CUSTOMER COMPLAINTS. In the case of any customer complaints,
Distributor and Insurer will cooperate in investigating such complaint
and any response by Distributor or Insurer to such complaint will be
sent to the other party for review and approval not less than five
business days prior to its being sent to the customer or regulatory
authority, except that if a more prompt response is required, the
response shall be communicated by telephone or electronic mail.
9. INDEMNIFICATION.
A. BY INSURER. Insurer shall indemnify and hold harmless Distributor and
each person who controls or is associated with Distributor within the
meaning of such terms under the federal securities laws, and any
officer, director, employee or agent of the foregoing, against any and
all losses, claims, damages or liabilities, joint or several
(including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of,
any action, suit or proceeding or any claim asserted), to which
Distributor and/or any such person may become subject, under any
statute or regulation, any NASD rule or interpretation, at common law
or otherwise, insofar as such losses, claims, damages or liabilities:
(1) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact or omission or alleged
omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, in
light of the circumstances in which they were made, contained in
any (i) Registration Statement or in any Prospectus or (ii) blue
sky application or other document executed by Insurer
specifically for the purpose of qualifying any or all of the
Contracts for sale under the securities laws of any jurisdiction;
provided that Insurer shall not be liable in any such case to the
extent that such loss, claim, damage or liability arises out of,
or is based upon, an untrue statement or alleged untrue statement
or omission or alleged omission made in reliance upon information
furnished in writing to Insurer by Distributor specifically for
use in the preparation of any such Registration Statement or any
such blue sky application or any amendment thereof or supplement
thereto;
(2) result from any breach by Insurer of any provision of this
Agreement.
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This indemnification agreement shall be in addition to any
liability that Insurer may otherwise have; provided, however,
that no person shall be entitled to indemnification pursuant
to this provision if such loss, claim, damage or liability is
due to the willful misfeasance, bad faith, gross negligence or
reckless disregard of duty by the person seeking
indemnification.
B. BY DISTRIBUTOR. Distributor shall indemnify and hold harmless
Insurer and each person who controls or is associated with the
Insurer within the meaning of such terms under the federal
securities laws, and any officer, director, employee or agent of
the foregoing, against any and all losses, claims, damages or
liabilities, joint or several (including any investigative, legal
and other expenses reasonably incurred in connection with, and
any amounts paid in settlement of, any action, suit or proceeding
or any claim asserted), to which Insurer and/or any such person
may become subject under any statute or regulation, any NASD rule
or interpretation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities:
(1) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact or omission or
alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein
not misleading, in light of the circumstances in which they
were made, contained in any (i) Registration Statement or in
any Prospectus or (ii) blue sky application or other
document executed by Insurer specifically for the purpose of
qualifying any or all of the Contracts for sale under the
securities laws of any jurisdiction; in each case to the
extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission
was made in reliance upon information furnished in writing
by Distributor to Insurer specifically for use in the
preparation of any such Registration Statement or any such
blue sky application or any amendment thereof or supplement
thereto;
(2) result from any breach by Distributor of any provision of
this Agreement.
This indemnification shall be in addition to any liability that
Distributor may otherwise have; provided, however, that no person
shall be entitled to indemnification pursuant to this provision
if such loss, claim, damage or liability is due to the willful
misfeasance, bad faith, gross negligence or reckless disregard of
duty by the person seeking indemnification.
C. GENERAL. Promptly after receipt by a party entitled to
indemnification ("Indemnified Person") under this Section 9 of
notice of the commencement of any action as to which a claim will
be made against any person obligated to provide indemnification
under this Section 9 ("Indemnifying Party"), such indemnified
person shall notify the indemnifying party in writing of the
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commencement thereof as soon as practicable thereafter, but
failure to so notify the indemnifying party shall not relieve the
indemnifying party from any liability which it may have to the
indemnified person otherwise than on account of this Section 9.
The indemnifying party will be entitled to participate in the
defense of the indemnified person but such participation will not
relieve such indemnifying party of the obligation to reimburse
the indemnified person for reasonable legal and other expense
incurred by such indemnified person in defending himself or
herself.
The indemnification provisions contained in this Section 9 shall
remain operative in full force and effect, regardless of any
termination of this Agreement. A successor by law of Distributor
or Insurer, as the case may be, shall be entitled to the benefits
of the indemnification provisions contained in this Section 9.
10. TERMINATION. This Agreement shall terminate automatically if it is assigned
by a party without the prior written consent of the other party. (The term
"assigned" shall not include any transaction exempted from Section 15(b)(2)
of the 1940 Act.) This Agreement may be terminated at any time for any
reason by either party upon 90 days' written notice to the other party,
without payment of any penalty. This Agreement may be terminated at the
option of either party to this Agreement upon the other party's material
breach of any provision of this Agreement or of any representation or
warranty made in this Agreement, unless such breach has been cured within
30 days after receipt of notice of breach from the non-breaching party.
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 Applications
received by Insurer prior to termination.
11. MISCELLANEOUS.
A. BINDING EFFECT. This Agreement shall be binding on and shall inure to
the benefit of the respective successors and assigns of the parties
hereto provided that neither party shall assign this Agreement or any
rights or obligations hereunder without the prior written consent of
the other party.
B. SCHEDULES. The parties to this Agreement may amend Schedule 1 to this
Agreement from time to time to reflect the addition of any class of
Contracts and Variable Accounts. The provisions of this Agreement
shall be equally applicable to each such class of Contracts and each
Variable Account that may be added to the Schedule, unless the context
otherwise requires. Insurer may amend Schedule 2 unilaterally, from
time to time. Any other change in the terms or provisions of this
Agreement shall be by written agreement between Insurer and
Distributor.
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C. RIGHTS, REMEDIES, ETC. ARE CUMULATIVE. The rights, remedies and
obligations contained in this Agreement are cumulative and are in
addition to any and all rights, remedies and obligations, at law or in
equity, which the parties hereto are entitled to under state and
federal laws. Failure of either party to insist upon strict compliance
with any conditions of this Agreement shall not be construed as a
waiver of any of the conditions, but the same shall remain in full
force and effect. No waiver of any of the provisions of this Agreement
shall be deemed, or shall constitute, a waiver of any other
provisions, whether or not similar, nor shall any waiver constitute a
continuing waiver.
D. NOTICES. All notices hereunder are to be made in writing and shall be
given to the address set forth below or to such other address as such
party may hereafter specify by a notice complying with this Section.
Each such notice to a party shall be either hand delivered, sent by
fax with written confirmation of transmission or sent by registered or
certified United States mail with return receipt requested, or by
overnight mail by a nationally recognized courier, and shall be
effective upon delivery.
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1.) If to Insurer, to:
American Equity Investment Life Insurance Company
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxx Xxx Xxxxxx, Xxxx 00000
Fax No. 000-000-0000
2.). If to Distributor, to:
American Equity Capital, Inc.
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxx Xxx Xxxxxx, Xxxx 00000
Fax No. 000-000-0000
E. INTERPRETATION; JURISDICTION. Except as set forth in Section 11.J
below, this Agreement constitutes the whole Agreement between the
parties hereto with respect to the subject matter hereof, and
supersedes all prior written or oral understandings, agreements or
negotiations between the parties with respect to such subject matter.
No prior writings by or between the parties with respect to the
subject matter hereof shall be used by either party in connection with
the interpretation of any provision of this Agreement. This Agreement
shall be construed and its provisions interpreted under and in
accordance with the laws of the state of Iowa without giving effect to
principles of conflict of laws.
F. SEVERABILITY. In the event that any provision of this Agreement would
require a party to take action prohibited by applicable federal or
state law or prohibit a party from taking action required by
applicable federal or state law, then it is the intention of the
parties hereto that such provision shall be enforced to the extent
permitted under the law, and, in any event, that all other provisions
of this Agreement shall remain valid and duly enforceable as if the
provision at issue had never been a part hereof.
G. SECTION AND OTHER HEADINGS. The headings in this Agreement are
included for convenience of reference only and in no way define or
delineate any of the provisions hereof or otherwise affect their
construction or effect.
H. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which taken together shall constitute one and
the same instrument.
I. REGULATION. This Agreement shall be subject to the provisions of the
1933 Act, 1934 Act and the 1940 Act and the rules and regulations of
the NASD, from time to time in effect, including such exemptions from
the 1940 Act as the SEC
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may grant, and the terms hereof shall be interpreted and construed in
accordance therewith.
J. Any obligation of Insurer pursuant to this Agreement may be performed
by Insurer or Insurer may contract with qualified third parties to
provide those services or assume those responsibilities necessary to
satisfy Insurer's obligations under this Agreement. Insurer has
entered into agreements with EquiTrust Marketing Services, Inc.,
EquiTrust Investment Management Services, Inc. and EquiTrust Life
Insurance Company, to provide all or part of the services and meet
certain obligations of Insurer under this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by such authorized officers on the date specified below.
INSURER:
AMERICAN EQUITY INVESTMENT
LIFE INSURANCE COMPANY
By: /s/ X.X. Xxxxx, President Date: May 1, 1999
DISTRIBUTOR:
AMERICAN EQUITY CAPITAL, INC.
By: /s/ Xxxxx X. Xxxxxx, CFO Date: May 1, 1999
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SCHEDULE 1
Separate Accounts
Effective __________________
American Equity Life Variable Account
American Equity Life Annuity Account
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SCHEDULE 2
Compensation
Effective ___________________
NONE
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