Exhibit 1.A. (3)(b)
Broker-Dealer Agreement
Exhibit 1.A. (3)(b)
BROKER-DEALER AGREEMENT
IT IS HEREBY AGREED by and between FIRST VARIABLE LIFE INSURANCE COMPANY
(hereinafter referred to as "INSURANCE COMPANY"), an Arkansas corporation,
and FIRST VARIABLE CAPITAL SERVICES, INC. (hereinafter referred to as
"BROKER/DEALER"), an Arkansas corporation, as follows:
I
BASIS FOR THE AGREEMENT
A. INSURANCE COMPANY
INSURANCE COMPANY is a life insurance company licensed to issue
various life insurance policies and annuity contracts.
B. BROKER/DEALER
BROKER/DEALER is an affiliate of INSURANCE COMPANY. BROKER/DEALER
was organized to function as a broker-dealer registered under the
provisions of the Securities Exchange Act of 1934 (hereinafter
referred to as the "34 Act") for the sale of certain variable
contracts issued by separate accounts of INSURANCE COMPANY. Such
variable contracts may be deemed to be securities within the
meaning of the Securities Act of 1933 and will be registered
thereunder.
C. PURPOSE OF AGREEMENT
INSURANCE COMPANY desires BROKER/DEALER to act as the distributor
for all of the said variable contracts which require distribution
under the auspices of a registered broker-dealer. The parties
desire INSURANCE COMPANY to maintain certain accounting books and
records of BROKER/DEALER and to send purchasers of such variable
contracts required confirmations of transactions on behalf of
BROKER/DEALER and to pay any commissions which may be due on sales
of such variable contracts to any selling broker-dealers and any
registered representative of BROKER/DEALER who are also licensed
insurance agents (or agencies) of INSURANCE COMPANY. The parties
also desire to make arrangements for adequate facilities and
financing for the carrying on of the business of BROKER/DEALER.
II
DUTIES OF BROKER/DEALER
A. REGISTRATION UNDER THE '34 ACT
BROKER/DEALER shall maintain its registration as a broker-dealer
under the provisions of the '34 Act and will secure whatever
authorizations, licenses, qualifications, permits and the like as
may be necessary to perform its obligations under this agreement
in those states requested by INSURANCE COMPANY.
B. MEMBERSHIP IN THE NATIONAL ASSOCIATION
OF SECURITIES DEALER, INC.
BROKER/DEALER shall maintain its membership in the National
Association of Securities Dealer, Inc. (NASD).
C. RESPONSIBILITY FOR SECURITIES ACTIVITIES
BROKER/DEALER shall assume full responsibility for the securities
activities of all persons engaged directly or indirectly (within
the meaning of Section 3(a)(18) of the '34 Act) in the variable
contract operations of INSURANCE COMPANY, including but not
limited to training, supervision and control as contemplated under
appropriate provisions of the '34 Act, any regulations thereunder,
or by the rules of the NASD. To the extent necessary and
appropriate, those persons directly or indirectly involved in such
variable contract operations shall be registered representatives
or registered principals of BROKER/DEALER as appropriate to their
activities.
D. APPOINTMENT OF REGISTERED PERSONS
AND MAINTENANCE OF PERSONNEL RECORDS
BROKER/DEALER shall have the authority and responsibility for the
appointment and registration of those persons who will be
registered representatives and registered principals.
BROKER/DEALER shall likewise have the responsibility for
maintenance of all the appropriate records of such registered
person.
E. MAINTENANCE OF NET CAPITAL
BROKER/DEALER shall the authority and responsibility for
maintenance of appropriate net capital and for limiting aggregate
indebtedness as may be
required under the provisions of the '34 Act, any regulations
thereunder, or by NASD rules.
F. REQUIRED REPORTS
BROKER/DEALER shall have the responsibility for preparation and
submission of any reports or other materials required by any
regulatory authority having proper jurisdiction.
III
DUTIES OF INSURANCE COMPANY
A. MAINTENANCE OF ACCOUNTING RECORDS
INSURANCE COMPANY shall be responsible for the maintenance of all
books and records in connection with the offer and sale of said
variable contracts. Such books and records shall be maintained
and preserved in conformity with any requirements under the '34
Act, any regulations thereunder, or under NASD rules to the extent
that such requirements are applicable to variable contract
operations. All such books and records shall be maintained and
held by INSURANCE COMPANY on behalf of and as agent for
BROKER/DEALER. All such books and records are, and shall at all
times remain, the property of BROKER/DEALER and shall at all times
be subject to inspection by duly authorized officers, auditors or
representatives of BROKER/DEALER and by the Securities and
Exchange Commission, the NASD, or other regulatory authority
having proper jurisdiction. Nothing herein shall preclude
INSURANCE COMPANY from engaging the services of third parties to
perform ministerial, clerical or computer services with respect to
its duties hereunder.
B. PAYMENT OF COMMISSIONS
INSURANCE COMPANY shall provide for the payment on behalf of
BROKER/DEALER of all commissions which may be due on sales of such
variable contracts to any selling broker-dealers and registered
representatives of BROKER/DEALER who are also licensed insurance
agents (or agencies) of INSURANCE COMPANY. Such commissions shall
be payable from funds made available for such and shall be subject
to approval before payment by duly authorized personnel of
BROKER/DEALER. The payment of commissions hereunder on behalf of
BROKER/DEALER is intended by the parties to be a purely
ministerial act by INSURANCE COMPANY and all such payments shall
be properly reflected on the books and records maintained on
behalf of BROKER/DEALER. In computing any amounts owned to
BROKER/DEALER, INSURANCE COMPANY shall take into account any sales
loads that may be payable to BROKER/DEALER because of any
surrenders of variable products.
C. CONFIRMATION OF TRANSACTIONS
INSURANCE COMPANY shall provide for the issuance of confirmations
on behalf of BROKER/DEALER, acting as agent for INSURANCE COMPANY,
regarding all transactions required to be confirmed, and in the
form and manner required for such confirmations, under the '34
Act, any regulations thereunder, or by NASD rules.
D. PROVISION OF CAPITALIZATION
INSURANCE COMPANY shall provide BROKER/DEALER with adequate
capitalization and shall, when needed, supplement such
capitalization in amounts sufficient to insure that at all times
minimum net capital is available to meet the requirements of the
'34 Act, any regulations thereunder or NASD rules.
E. PAYMENT OF EXPENSES OF BROKER/DEALER
In the event BROKER/DEALER should expend any of its own funds,
INSURANCE COMPANY shall reimburse BROKER/DEALER upon demand.
INSURANCE COMPANY's obligations under the terms of this paragraph
shall be limited solely to payment or reimbursement of expenses
incurred by BROKER/DEALER in performance of services for INSURANCE
COMPANY.
F. PROVISIONS OF FACILITIES AND PERSONNEL
INSURANCE COMPANY shall provide BROKER/DEALER with facilities and
personnel sufficient to perform BROKER/DEALER's obligations
hereunder and to carry on its business in conformity with
provisions of the '34 Act, any regulations thereunder or NASD
rules.
G. TERMINATION
This Agreement may be terminated at any time by either party upon
written notice to the other stating the date when such termination
shall be effective provided that this Agreement may not be
terminated or modified by either party if the effect would be to
put BROKER/DEALER out of compliance with the "net-capital"
requirements of the '34 Act. In addition, no default of any kind
shall have the effect of terminating this Agreement unless such
termination is subject to this termination provision.
EXECUTED at Springfield, Massachusetts effective November 30, 1992.
INSURANCE COMPANY
FIRST VARIABLE LIFE INSURANCE COMPANY
BY: /S/ XXXX X. XXXXXXX
-----------------------------------------
lts Vice President and General Counsel
BROKER/DEALER
FIRST VARIABLE CAPITAL SERVICES, INC.
BY: /S/ XXXX X. XXXXXXX
-----------------------------------------
lts President
