EXHIBIT 3 (a)
PRINCIPAL UNDERWRITING AGREEMENT
UNDERWRITING AGREEMENT, to be effective as of September 20, 2006, by
and between OLD MUTUAL FINANCIAL NETWORK SECURITIES, INC., (hereinafter the
"UNDERWRITER") and FIDELITY AND GUARANTY LIFE INSURANCE COMPANY (hereinafter the
"INSURANCE COMPANY"), on its own behalf and on behalf of OMFN SEPARATE ACCOUNT
VA (hereinafter the "ACCOUNT"), a separate account of the Insurance Company, as
follows:
WHEREAS, the Account was established under authority of resolution of
the Insurance Company's Board of Directors on July 31, 2006, in order to set
aside and invest assets attributable to certain variable annuity contracts
(hereinafter "Contracts") issued by the Insurance Company;
WHEREAS, the Insurance Company has registered or will register the
Account as a unit investment trusts under the Investment Company Act of 1940
(the "Investment Company Act"), and has registered or will register the
Contracts under the Securities Act of 1933 (the "1933 Act").
WHEREAS, the Insurance Company has filed or will file the Contracts
for approval by the state insurance departments in those jurisdictions where it
is authorized to transact business.
WHEREAS, the Underwriter is registered or will become registered as a
broker-dealer with the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934, as amended (the "1934 Act") prior to issuance
of the Contracts, and is or will become a member of the National Association of
Securities Dealer, Inc. (the "NASD") prior to issuance of the Contracts; and
WHEREAS, the Insurance Company and the Account desire to have
Contracts sold and distributed through the Underwriter and the Underwriter is
willing to sell and distribute such Contracts under the terms stated herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Insurance Company grants to the Underwriter the right to be, and the
Underwriter agrees to serve as distributor and principal underwriter of the
Contracts during the term of this Agreement. The Underwriter agrees to use
its best efforts to perform all duties and functions which are necessary and
proper.
2. All premiums for Contracts shall be remitted promptly in full together with
such application, forms and any other documents required by the Insurance
Company. Checks or money orders in payment of premiums shall be drawn to the
order of "Fidelity and Guaranty Life Insurance Company".
3. The Underwriter agrees to offer the Contracts for sale in accordance with
the prospectuses in effect. The Underwriter is not authorized to give any
information or to make any representations concerning the Contracts other
than those contained in the current prospectuses filed with the SEC or in
such sales literature as may be developed and authorized by the Insurance
Company in conjunction with the Underwriter.
4. The Underwriter shall be responsible for any filings of advertisement or
sales literature required to be made with the NASD. All advertising, sales
and marketing materials utilized by or on behalf of the Insurance Company
shall be subject to prior written approval of the Insurance Company and the
Insurance Company shall maintain files of all such materials in accordance
with all applicable Maryland Insurance Laws and Regulations.
5. The Underwriter agrees to join Insurance Company, upon Insurance Company's
request and after independent review of such matters, in any joint
applications required to be filed with the SEC under the "1934 Act," the
"1933 Act" and the Investment Company Act.
6. The Insurance Company shall be responsible for any filings of advertising
and sales literature required to be made state insurance regulators.
7. On behalf of the Accounts, the Insurance Company shall furnish the
Underwriter with copies of all prospectuses, financial statements and other
documents which the Underwriter reasonably requests for use in connection
with the distribution of the Contracts.
8. Insurance Company represents to Underwriter that the prospectus included in
Insurance Company's Registration Statement, post-effective amendments
thereto and any supplements thereto, as filed or to be filed with the SEC,
as of their effective dates, contain or will contain, all statements and
information which are required to be stated therein by the 1933 Act and in
all respects conform or will conform to the requirements thereof. Neither
any prospectus, nor any supplement thereof, includes or will include, any
untrue statement of a material fact, or omits or will omit to state any
material fact required to be stated therein or necessary to make the
statement therein not misleading, provided, however, that the foregoing
representations shall not apply to information contained in or omitted from
any prospectus or supplement in reliance upon, and in conformity with
written information furnished to Insurance Company by Underwriter
specifically for use in the preparation thereof. The foregoing
representation also shall not apply to information contained in or omitted
from any prospectus or supplement of any underlying mutual fund.
9. The Underwriter represents that it is duly registered as a broker-dealer
under the 1934 Act and is a member in good standing of the NASD and, to the
extent necessary to offer the Contracts, shall be duly registered or
otherwise qualified under the securities laws and insurance laws of any
state or other jurisdiction. The Underwriter shall be responsible itself, or
through contracts with others, including Insurance Company, 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
and regulations. Without limiting the generality of the foregoing, the
Underwriter agrees that it shall be fully responsible for:
a. ensuring that no person shall offer to sell the Contracts on its
behalf until such person is duly registered as a representative of the
Underwriter, duly licensed and appointed by the Insurance Company, and
appropriately licensed, registered or otherwise qualified to offer and
sell such Contracts under the federal securities laws and any
applicable securities laws and insurance laws of each state or other
jurisdiction in which such Contracts may be lawfully sold, in which
the Insurance Company is licensed to sell the Contracts and in which
such persons shall offer or sell the Contracts; and
b. training, supervision, and controlling 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 offer and sale of the Contracts.
Underwriter is responsible for all costs associated with this
undertaking. In connection with this undertaking, the Underwriter
shall:
i. conduct such training (including the preparation and utilization
of training materials) as in the opinion of the Underwriter is
necessary to accomplish the purposes of this Agreement;
ii. establish and implement reasonable written procedures for
supervision of sales practices of agents, representatives or
brokers selling the Contracts; and
iii. 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.
10. The Underwriter is hereby authorized to enter into sales agreements with
other independent broker-dealers for the sale of the Contract. All such
sales agreements entered into by the Underwriter shall provide that each
independent broker-dealer will assume full responsibility for continued
compliance by itself and its associated persons with the NASD Rules of Fair
Practice and applicable federal and state securities laws. All associated
persons of such independent broker-dealers soliciting applications for the
Contracts shall be duly and appropriately licensed or appointed for the sale
of the Contracts under the Federal and state securities laws and the
insurance laws of the applicable states or jurisdictions in which such
Contracts may be lawfully sold.
11. The Insurance Company shall apply for the proper insurance licenses in the
appropriate states of jurisdictions for the designated persons associated
with the Underwriter or with other independent broker-dealers which have
entered into agreements with the Underwriter for the sale of the Contracts,
provided that the Insurance Company 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. The cost of licensing for a
designated person will be paid by the party designating such person for
licensing. The Insurance Company will pay the cost of appointing all
designated persons.
12. The Insurance Company and the Underwriter shall cause to be maintained and
preserved for the periods prescribed such accounts, books, and other
documents as are required of them by the Investment Company Act of 1940, the
1934 Act, and any other applicable laws and regulations. The books, accounts
and records of the Insurance Company, the Account and the Underwriter as to
all transactions hereunder shall be maintained so as to disclose clearly and
accurately the nature and details of the transactions. The Insurance Company
shall maintain such books and records of the Underwriter pertaining to the
sale of the Contracts and required by the 1934 Act as may be mutually agreed
upon from time to time by the Insurance company and the Underwriter;
provided that such books and records shall be the property of the
Underwriter, and shall at all times be subject to such reasonable periodic,
special or other examination by the SEC and all other regulatory bodies
having jurisdiction. The Insurance Company shall be responsible for sending
all required confirmations on customer transactions in compliance with
applicable regulations, as modified by any exemption or other relief
obtained by the Insurance Company.
The Underwriter shall cause the Insurance Company to be furnished with such
reports as the Insurance Company may reasonably request for the purpose of
meeting its reporting and record keeping requirements under the insurance
laws of the State of Maryland and any other applicable states or
jurisdictions.
13. The Insurance Company shall have the responsibility for paying (a) all
commissions or other fees to associated persons of the Underwriter which
are due for the sale of the Contract and (b) any compensation to other
independent broker-dealers and their associated persons due under the
terms of any sales agreements between the Underwriter, Insurance Company,
and such broker-dealers. Notwithstanding the preceding sentence, no
associated person or broker-dealer shall have an interest in any
deductions or other fees payable to the Underwriter pursuant to the terms
of this Agreement.
14. If Insurance Company is required to refund premiums or return accumulation
values and waive surrender charges on any Contract for any reason, then no
commission will be payable on such payments, and previously paid
commissions, to the extent they are refunded by the Insurance Company,
must be refunded by the Underwriter.
15. The Insurance Company shall reimburse the Underwriter for all reasonable
and necessary costs and expenses incurred by the Underwriter in furnishing
the services, materials, and supplies required by the terms of this
Agreement and may pay Underwriter a concession for sales of the policies
as may be agreed by the parties in writing from time to time. The
Underwriter agrees to obtain the prior written approval by Insurance
Company of any agreements it may pursue with third party providers of such
services, materials and supplies.
16. Insurance Company shall indemnify Underwriter for any losses to which
Underwriter may become subject, insofar as such losses result from
negligent, fraudulent or unauthorized acts or omissions by Insurance
Company or its employees.
17. That beginning on the date Underwriter obtains licensure as a
broker-dealer registered with the National Association of Securities
Dealers, Insurance Company shall cause to be paid to Underwriter for
performing duties under this Agreement those fees and expenses set forth
in an Exhibit to this Agreement in the time and manner therein stated.
18. Underwriter agrees to indemnify the Insurance Company for any losses to
which Insurance Company may be subject if the losses arise out of or
result from negligent, improper, fraudulent, or unauthorized acts or
omissions by Underwriter, its employees, sales personnel, agents or
principals, including but not limited to improper solicitations of
applications for Policies, unauthorized use of sales materials or
advertisements, or any oral or written misrepresentations or unlawful
sales practices.
19. a. Except as provided by paragraph 19 "b" through "e", this Agreement may
be terminated by either party hereto upon 180 days' written notice to
the other party.
b. This Agreement may be terminated immediately upon written notice of
one party to the other party hereto in the event of bankruptcy or
insolvency of the party to which notice is given.
c. This Agreement may be terminated immediately, at the option of
Insurance Company, in the event that formal administrative proceeding
are instituted against the Underwriter by the NASD, SEC, any state
Insurance Commissioner or any other regulatory body regarding
Underwriter's duties under this Agreement or related to the sale of
Contracts, and that Insurance Company determines in its sole judgment
exercised in good faith, that any such administrative proceedings will
have a material adverse effect upon the ability of the Underwriter to
perform its obligations under this Agreement.
d. This Agreement may be terminated immediately, at the option of
Underwriter, in the event that any of the underlying funds are not
registered, issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such shares as the
underlying investment media of the Contracts issued or to be issued by
Insurance Company.
e. This Agreement may be terminated immediately, at the option of
Underwriter, if the underlying fund(s) ceases to qualify as a
Regulated Investment Company under Subchapter M of the Internal
Revenue Code of 1954, as amended.
f. This Agreement may be terminated, at the option of Insurance Company,
if (i) Insurance Company shall determine in its sole judgment
exercised in good faith that Underwriter has suffered a material
adverse change in its business or financial condition or is subject to
material adverse publicity and such material adverse change or
material adverse publicity will have a material adverse impact upon
the business and operations of Insurance Company, (ii) Insurance
Company shall notify Underwriter in writing of such determination and
its intent to terminate this Agreement and (iii) after considering the
actions taken by Underwriter and any other changes in circumstances
since the giving of such notice, such determination of Insurance
Company shall continue to apply on the sixtieth (60th ) day following
the giving of such notice, which sixtieth day shall be the effective
day of termination.
g. This Agreement may be terminated at any time upon the mutual written
consent of the parties thereto.
h. The Underwriter shall not assign or delegate its responsibilities
under this Agreement without the written consent of the Insurance
Company.
i. Upon termination of the Agreement, all authorizations, rights and
obligations shall cease except the obligations to settle accounts
hereunder, including payments of premiums or contributions
subsequently received for Contract in effect at the time of
termination or issued pursuant to applications received by the
Insurance Company prior to termination.
20. This Agreement is subject to and its terms are to be interpreted and
construed in accordance with the provisions of the Investment Company Act
and the 1934 Act, and the rules, regulations, and rulings thereunder and
is subject to the provisions of the NASD Rules of Fair Practice. Without
limiting the generality of the foregoing, the term "assigned" shall not
include any transaction exempted from section 15(b)(2) of the Investment
Company Act.
The Underwriter shall submit to all regulatory and administrative entities
having jurisdiction over the operation of the Accounts, present or future;
and will provide any information, reports or other material which any such
entity by reason of this Agreement may request or require pursuant to
applicable laws or regulations.
21. 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.
22. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Maryland.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed, and seals to be affixed, as of the day and year first above written.
OLD MUTUAL FINANCIAL NETWORK SECURITIES, INC.
BY: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
VP, Secretary & Chief Compliance Officer
FIDELITY AND GUARANTY LIFE INSURANCE COMPANY
BY: /s/ Xxxxxxx X. XxXxxxx
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Xxxxxxx X. XxXxxxx
SVP, Secretary and General Counsel
[FEE AND EXPENSE SCHEDULE EXHIBIT redacted for confidentiality and proprietary
reasons.]
