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EXHIBIT 1.A.(3)(a)
DISTRIBUTION AGREEMENT
AGREEMENT dated as of February 1, 1993, by and between Xxxxxxx
Xxxxx Life Insurance Company ("MLLIC"), an Arkansas corporation, on its own
behalf and on behalf of the Xxxxxxx Xxxxx Variable Life Separate Account (the
"Separate Account") and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
("MLPF&S"), a Delaware corporation.
WITNESSETH:
WHEREAS, the Separate Account is an account established and
maintained by MLLIC pursuant to the laws of the State of Arkansas for certain
variable life insurance contracts issued by MLLIC (the "Contracts"), under
which income, gains and losses, whether or not realized, from assets allocated
to such account, are, in accordance with the Contracts, credited to or charged
against such account without regard to other income, gains, or losses of MLLIC;
WHEREAS, MLLIC has registered the Separate Account as a unit
investment trust under the Investment Company Act of 1940 (the "Investment
Company Act");
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WHEREAS, MLPF&S is registered as a broker-dealer under the
Securities Exchange Act of 1934 (the "Exchange Act") and is a member of the
National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, MLLIC has registered the Contracts under the
Securities Act of 1933 (the "1933 Act") and issues and sells the Contracts
through the Separate Account to the public through MLPF&S acting as its general
agent;
NOW, THEREFORE, MLLLIC and MLPF&S hereby agree as follows:
1. Principal Underwriter. MLLIC grants to MLPF&S the
exclusive right, during the term of this Agreement, subject to the registration
requirements of the 1933 Act and the Investment Company Act and the provisions
of the Exchange Act, to be the distributor and principal underwriter of
Contracts issued through the Separate Account. In that connection, MLPF&S
shall arrange for the offer, sale and distribution of the Contracts by persons
or entities acting as general agents ("GAs") of MLLIC at premium rates to be
set by MLLIC.
2. Sales Agreements. MPF&S is hereby authorized to arrange
for persons or entities qualified to act as GAs of MLLIC in various
jurisdictions to enter into separate written
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agreements, on such terms and conditions as MLLIC may determine not
inconsistent with this Agreement, with organizations (including Xxxxxxx Xxxxx
Life Agencies pursuant to sales agreements) which agree to act as GAs of MLLIC
and to participate in the distribution of the Contracts and to use their best
efforts to solicit applications for the Contracts. Such organizations and
their agents or representatives soliciting applications for Contracts shall be
duly and appropriately licensed, registered or otherwise qualified for the sale
of such Contracts (and the riders and other contracts 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 MLLIC is licensed to sell the Contracts. Each such organization shall be
both registered as a broker/dealer under the Exchange Act and a member of the
NASD, or if not so registered or not such a member, then the agents and
representatives of such organization soliciting applications for Contract shall
be agents and registered representative of a registered broker/dealer and NASD
member which is an affiliate of such organization and which maintains full
responsibility for the training, supervision, and control of the agents or
representatives selling the Contracts.
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MLPF&S shall have the responsibility for supervision of all
such organizations to the extent required by law and shall assume any legal
responsibilities of MLLIC for the acts, commissions or defalcations of any such
organizations.
3. Life Insurance Agents. MLPF&S is authorized to help
arrange for the appointment of the organizations described in paragraph 2 above
as independent general agents of MLLIC for the sale of the Contracts and any
riders or contracts in connection therewith. MLLIC will undertake to apply for
life insurance agent licenses in the appropriate states or jurisdictions for
the designated agents or representatives of those GAs so appointed by MLPF&S;
provided that MLLIC reserves the right to refuse to appoint any proposed agent,
or once appointed to terminate the same.
4. Suitability. MLLIC wishes to ensure that Contracts
distributed by MLPF&S will be issued to purchasers for whom the Contract will
be suitable. MLPF&S shall take reasonable steps to ensure that the various
agents which it arranges to be appointed do 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 such applicant.
While not limited to the following, a determination of suitability
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shall be based on information furnished to an agent after reasonable inquiry of
such applicant concerning the applicant's insurance and investment objectives,
financial situation and needs, and the likelihood of whether the applicant will
persist with the Contract for such a period of time that MLLIC's acquisition
costs are amortized over a reasonable period of time.
5. Promotion Materials. MLPF&S shall have the responsibility
for consulting with respect to the design, drafting, legal review and filing of
sales promotion materials, and for the preparation of individual sales
proposals related to the sale of the Contracts.
6. Records. MLPF&S shall maintain and preserve for the
periods prescribed such accounts, books, and other documents as are required of
it by applicable laws and regulations.
7. Independent Contractor. MLPF&S shall act as an
independent contractor and nothing herein contained shall constitute MLPF&S or
its agents or employees as employees of MLLIC in connection with the sale of
the Contracts.
8. Investigation and Proceedings.
(a) MLPF&S and MLLIC agree to cooperate fully in any
insurance regulatory investigation or proceeding or judicial proceeding arising
in connection with the Contracts distributed
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under this Agreement. MLPF&S and MLLIC further agree to cooperate fully in any
securities regulatory investigation or proceeding or judicial proceeding with
respect to MLLIC, MLPF&S, their affiliates and their agents or representatives
to the extent that such investigation or proceeding is in connection with
Contracts distributed under this Agreement. Without limiting the foregoing:
(i) MLPF&S will be notified promptly of any
customer complaint or notice of any regulatory investigation
or proceeding or judicial proceeding received by MLLIC with
respect to MLLIC and/or MLPF&S or any agent or representative
or which may affect MLLIC's issuance of any Contract marketed
under this Agreement.
(ii) MLPF&S will promptly notify MLLIC of any
customer complaint or notice of any regulatory investigation
or proceeding received by MLPF&S or its affiliates with
respect to MLPF&S and/or MLLIC or any agent or representative
in connection with any Contract distributed under this
Agreement or any activity in connection with any such Contract
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(b) In the case of a substantive customer complaint,
MLPF&S and MLLIC will cooperate in investigating such complaint and any
response to such complaint will be sent to the other party to this Agreement
for 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 proposed response shall be communicated by telephone or
telegraph.
9. Indemnification.
(a) MLLIC agrees to indemnify and hold harmless MLPF&S
and each officer and director thereof against any losses, claims, damages or
liabilities, joint or several, to which MLPF&S or such officer or director may
become subject, under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact, required to be stated therein or necessary to make the statements therein
not misleading, contained (i) in any Registration Statement relating to the
Contracts or any post-effective amendment thereof or in the Prospectuses or any
amendment or supplement to the Prospectuses relating to the Contracts, or (ii)
in any blue-sky application or other document
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executed by MLLIC specifically for the purpose of qualifying any or all of the
Contracts for sale under the securities laws of any jurisdiction, and MLLIC
will reimburse MLPF&S and each such officer or director, for any legal or other
expenses reasonably incurred by MLPF&S or such officer or director in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided that MLLIC will 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 and in conformity with information
(including, without limitation, negative responses to inquiries) furnished to
MLLIC by or on behalf of MLPF&S specifically for use in the preparation of any
Registration Statement or any post-effective amendment thereof or any such
blue-sky application or any amendment thereof or supplement thereto.
(b) MLPF&S agrees to indemnify and hold harmless MLLIC and its
directors (including any person named in the Registration Statement, with his
or her consent, as about to become a director), each of its officers who has
signed any of the Registration Statements and each person, if any, who controls
MLLIC within the meaning of the 1933 Act or the Exchange Act,
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against any losses, claims, damages or liabilities to which MLLIC any such
director or officer or controlling person may become subject, under the 1933
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon:
(i) 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 in order to make the
statements therein, in light of the circumstances
under which they were made, not misleading, contained
(i) in any of the Registration Statements or any
post-effective amendments thereof, or (ii) in any
blue-sky application, 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 and in conformity
with information (including, without limitation,
negative responses to inquiries) furnished to MLLIC
by MLPF&S specifically for use in the preparation of
any of the Registration Statements or any such
post-effective
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amendments thereof or any such blue-sky application
or any such amendment thereof or supplement thereto;
or
(ii) Any unauthorized use of sales materials
or any verbal or written misrepresentations or any
unlawful sales practices concerning the Contracts by
MLPF&S; or
(iii) Claims by agents or representatives or
employees of MLPF&S for commissions, service fees,
development allowances or other compensation or
remuneration of any type;
and MLPF&S will reimburse MLLIC and any director or officer or controlling
person for any legal or other expenses reasonably incurred by MLLIC, such
director or officer or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action. This indemnity
agreement will be in addition to any liability which MLPF&S may otherwise have.
(c) Promptly after receipt by a party entitled to
indemnification ("indemnified party") under this paragraph 9 of notice of the
commencement of any action, if a claim in respect thereof is to be made against
any person obligated to provide indemnification under this paragraph 9
("indemnifying party"),
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such indemnified party will notify the indemnifying party in writing of the
commencement thereof, and the omission so to notify the indemnifying party will
not relieve it from any liability under this paragraph 9, except to the extent
that the omission results in a failure of actual notice to the indemnifying
party and such indemnifying party is damaged solely as a result of the failure
to give such notice. In case any such action is brought against any
indemnified party and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled, to the extent it may wish,
jointly with any other indemnifying party similarly notified, to participate in
the defense thereof, with separate counsel. Such participation shall not
relieve such indemnifying party of the obligation to reimburse the indemnified
party for reasonable legal and other expenses incurred by such indemnified
party in defending himself or herself, except for such expenses incurred after
the indemnifying party has deposited funds sufficient to effect the settlement,
with prejudice, of the claim in respect of which indemnity is sought. Any such
indemnifying party shall not be liable to any such indemnified party on account
of any settlement of any claim or action effected without the consent of such
indemnifying party.
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The indemnity agreements contained in this paragraph 9 shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of MLPF&S or any officer or director thereof
or by or on behalf of MLLIC, (ii) delivery of any contracts and payments
therefor, and (iii) any termination of this Agreement. A successor by law of
MLPF&S or of any of the parties to this Agreement, as the case may be, shall be
entitled to the benefits of the indemnity agreements contained in this
paragraph 9.
10. Guarantee. MLLIC undertakes to guarantee the performance
of all of MLPF&S's obligations, imposed by Section 27(f) of the Investment
Company Act, as amended, and paragraph (b) of Rule 27d-2 adopted by the
Securities and Exchange Commission, to make refunds of charges required of the
principal underwriter of Contracts issued in connection with the Separate
Account.
11. Termination. This Agreement shall terminate
automatically if it shall be assigned. This Agreement may be terminated at any
time by either party hereto on 60 days' written notice to the other party
hereto, without the payment of any penalty. Upon termination of this Agreement
all authorizations, rights and obligations shall cease except (i) the
obligation to
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settle accounts hereunder, including commissions on premiums subsequently
received for Contracts in effect at the time of termination; (ii) the
agreements contained in paragraph 8 hereof; and (iii) the indemnity set forth
in paragraph 9 hereof.
12. Regulation. This Agreement shall be subject to the
provisions of the Investment Company Act and the Exchange Act and the rules,
regulations, and rulings thereunder and of the NASD, from time to time in
effect, including such exemptions from the Investment Company Act as the
Securities and Exchange Commission may grant, and the terms hereof shall be
interpreted and construed in accordance therewith. 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.
MLPF&S shall submit to all regulatory and administrative bodies having
jurisdiction over the operations of MLLIC or the Separate Account, present or
future, 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.
13. Severability. If any provision of this Agreement shall
be held or made invalid by a court decision, statute, rule
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or otherwise, the remainder of this Agreement shall not be affected thereby.
14. Applicable Law. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
Attest: XXXXXXX XXXXX LIFE INSURANCE
COMPANY
/s/ XXXXX X. XXXXX By /s/ XXXX X. CIRCINCION
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Xxxxx X. Xxxxx Xxxx X. Circincion
(Title) Vice President & Senior
Counsel
Attest: XXXXXXX LYNCH, PIERCE, XXXXXX
& XXXXX INCORPORATED
/s/ XXXXXXX X. XXXXXXXXXXX By /s/ XXXXXXX X. XXXXXXXXX, XX.
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Xxxxxxx X. Xxxxxxxxxxx Xxxxxxx X. Xxxxxxxxx, Xx.
(Title) First Vice President
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