Exhibit (3)(B)
Dealer Sales Agreement dated December 12, 1997
[GE logo] Capital Brokerage Corporation
0000 Xxxx Xxxxx Xxxxxx
Post Office Xxx 00000
Xxxxxxxx, XX 00000
The Life Insurance Company of Virginia
BROKER-DEALER SALES AGREEMENT
Name of Broker-Dealer: Address of Broker-Dealer:
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This Agreement is made this ___________ day of ___________________, 19___, by
and between Capital Brokerage Corporation (doing business in Indiana, Minnesota,
New Mexico, and Texas as GE Capital Brokerage Corporation), a Washington
corporation with its principal office as listed above ("Capital Brokerage"), and
______________________
___________________________________________________________________________, a
_________________ corporation with its principal office as listed above
("Broker-Dealer").
In consideration of the mutual benefits to be derived and intending to be
legally bound the parties hereby agree to the following terms and conditions:
SECTION I - DEFINITIONS
1.1 The Life Insurance Company of Virginia ("Life of Virginia") is
a Virginia corporation which has developed certain variable life insurance
policies (hereafter referred to as the "Policies", listed in Schedule A, which
is attached hereto and made part of this Agreement) and certain variable annuity
contracts (hereafter referred to as "Annuities", listed in Schedule B, which is
attached hereto and made part of this Agreement) registered with the Securities
and Exchange Commission (the "SEC") under the Securities Act of 1933 (the "1933
Act").
1.2 Capital Brokerage is a Broker-Dealer registered as such under
the Securities Exchange Act of 1934 (the "1934 Act") and a member of the
National Association of Securities Dealers, Inc. ("NASD"). Life of Virginia has
appointed Capital Brokerage as principal underwriter for the Policies and
Annuities.
1.3 Broker-Dealer is registered as a Broker-Dealer under the 1934
Act, is a member of the NASD and is properly licensed and appointed to promote,
offer and sell the Policies and Annuities.
1.4 Registered Representatives are employees of the Broker-Dealer
whom Broker-Dealer wishes to have appointed by Life of Virginia to sell Policies
and Annuities.
2. REPRESENTATIONS AND WARRANTIES OF CAPITAL BROKERAGE
2.1 Capital Brokerage represents and warrants that:
a. it has full power and authority to enter into this
Agreement and that it has all appropriate licenses to carry on its business and
to market the Policies and the Annuities;
b. the 1933 Act Registration Statements pertaining to the
Policies and the Annuities filed with the SEC have been declared effective;
c. the 1933 Act Registration Statements pertaining to the
Policies and the Annuities comply or will comply in all material respects with
the provisions of the 1933 Act, the 1934 Act, the Investment Company Act of 1940
(the "1940 Act") and the rules and regulations of the SEC; and
d. the 1933 Act Registration Statements do not contain an
untrue statement of a material fact or fail to state a material fact required to
be stated.
2.2 Section 2.1c. shall not apply to statements made in or
omissions from Registration Statements and any related materials, which
statements or omissions were made in reliance upon written statements furnished
by Broker-Dealer.
2.3 Capital Brokerage represents and warrants that it, or an
affiliate of Capital Brokerage, will use its best efforts to obtain insurance
licenses and appointments to allow Registered Representatives to sell the
Policies or the Annuities provided Broker-Dealer cooperates in obtaining such
licenses.
3. REPRESENTATIONS OF BROKER-DEALER
3.1 Broker-Dealer represents and warrants that it has full power
and authority to enter into this Agreement and that it has all appropriate
licenses to carry on its business and to market the Policies and the Annuities.
3.2 Broker-Dealer represents and warrants that it is registered as
a Broker-Dealer under the 1934 Act, is a member in good standing of the NASD, is
bonded as required by all applicable laws and regulations, and that it, or a
subsidiary or affiliate, has all insurance licenses required by the states in
which the Broker-Dealer intends to market the Policies and the Annuities.
3.3 Broker-Dealer represents and warrants that all individuals
recommended for licensing and appointment to sell the Policies and Annuities
will be Registered Representatives who are appropriately registered with the
NASD and who possess or can obtain all required insurance licenses.
3.4 Broker-Dealer further represents and warrants that:
a. it made or will make a thorough and diligent inquiry
and investigation relative to each Registered Representative it seeks to have
appointed to sell the Policies and Annuities including an investigation of the
Registered Representative's identity and business reputation;
b. all Registered Representatives are or will be
personally known to Broker-Dealer, are of good moral character, reliable,
financially responsible and worthy of an insurance license;
c. all examinations, training, and continuing educational
requirements have been or will be met for the NASD and the specific state(s) in
which Registered Representative is requesting an insurance license;
d. if Registered Representative is required to submit to
Life of Virginia a picture or a signature in conjunction with an application for
an insurance license, that any such items forwarded to Life of Virginia will be
those of Registered Representative and any evidence of a securities registration
forwarded to Life of Virginia will be a true copy of the original;
e. no Registered Representatives will apply for insurance
licenses with Life of Virginia in order to place insurance on their life or
property, the lives or property of their relatives, or property or lives of
their associates;
f. each Registered Representative will receive close and
adequate supervision consistent with the requirements of the NASD, and
Broker-Dealer will review, when necessary, any Policies or Annuities written by
Registered Representative;
g. Broker-Dealer will be responsible for all acts and
omissions of its Registered Representatives within the scope of their
appointment with Life of Virginia or as Registered Representatives;
h. Broker-Dealer will not permit its Registered
Representatives to act as insurance agents until properly trained (including
training in the Policies and Annuities), licensed and appointed nor will
Broker-Dealer pay compensation to any Registered Representative not properly
licensed and appointed to sell the Policies and Annuities;
i. Broker-Dealer will immediately notify Capital
Brokerage and Life of Virginia of any change in the NASD registration or
insurance licensing status of any Registered Representative and will maintain a
list of all Registered Representatives authorized to sell the Policies or the
Annuities;
j. Broker-Dealer agrees to indemnify, defend and hold
Life of Virginia and Capital Brokerage harmless against any losses, claims,
damages, liabilities or expenses, including reasonable attorneys fees, to which
Capital Brokerage or Life of Virginia may be liable to the extent that the
losses, claims, damages, liabilities or expenses, including reasonable attorneys
fees, arise out of allegations that Broker-Dealer or any of its registered
representatives did not have the right or authority to make discretionary
purchases or to make or change a client's asset allocation; and
k. Broker-Dealer, in the conduct of its business selling
Policies and the Annuities, shall observe high standards of commercial honor
and just and equitable principles of trade consistent with the Conduct Rules of
the NASD.
4. SALE OF POLICIES AND ANNUITIES
4.1 Soliciting Applications.
a. Broker-Dealer is hereby authorized by Capital
Brokerage to solicit applications for the purchase of Policies and Annuities
through its Registered Representatives in states where the Broker-Dealer
and its Registered Representatives are appropriately licensed and appointed.
This authorization is non-exclusive and is limited to the states in which
Policies and Annuities have been approved for sale.
b. Broker-Dealer shall have no authority on behalf of
Capital Brokerage or Life of Virginia to:
(1) make, alter or discharge any contract;
(2) waive or modify any terms, conditions or
limitations of any Policy or Annuity;
(3) extend the time for payment of any premiums,
bind Life of Virginia to the reinstatement of any terminated Policy, or accept
notes for payment of premiums;
(4) adjust or settle any claim or commit Life of
Virginia with respect thereto;
(5) incur any indebtedness or liability, or
expend or contract for the expenditure of funds; or
(6) enter into legal proceedings in connection
with any matter pertaining to Capital Brokerage 's or Life of Virginia's
business without the prior consent of Capital Brokerage or Life of Virginia,
unless Broker-Dealer is named as a party to the proceedings.
c. Broker-Dealer acknowledges that only applications
bearing the signature of a Registered Representative who is on the list of
properly licensed Registered Representatives provided by Broker-Dealer,
according to this Agreement, will be processed by Life of Virginia.
4.2 Suitability.
a. Capital Brokerage wishes to ensure that the Policies
and Annuities solicited by Broker-Dealer through Registered Representatives will
be issued to persons for whom they will be suitable.
b. Broker-Dealer shall take reasonable steps to ensure
that none of its Registered Representatives makes recommendations to any
applicant to purchase a Policy or Annuity in the absence of reasonable grounds
to believe that the purchase is suitable for the applicant under the NASD
Conduct Rules regarding Recommendations to Customers.
c. A determination of suitability for the purchase of a
Policy or Annuity shall include, but not be limited to, a reasonable inquiry of
each applicant concerning the applicant's financial status, tax status, and
insurance and investment objectives and needs.
4.3 Delivery of Prospectus(es) by Broker-Dealer.
a. The current Prospectus(es), the Statement(s) of
Additional Information where required by law, and all Supplements relating to
the Policies and the Annuities shall be delivered by Broker-Dealer to every
applicant seeking to purchase a Policy or Annuity prior to the completion of an
application.
b. Broker-Dealer shall not give any information or make
any representations concerning the Policies or the Annuities, Life of
Virginia or Capital Brokerage unless the information or representations are
contained in the current Prospectus(es) or are contained in sales literature
or advertisements furnished or approved in writing by Life of Virginia and
Capital Brokerage.
4.4 Issuance of Policies or Annuities.
a. Life of Virginia, at its sole discretion, will
determine whether to issue a Policy or an Annuity.
b. Once a Policy or Annuity has been issued:
(1) Life of Virginia will mail it promptly,
accompanied by any required notice of withdrawal rights and any additional
required documents to the individual or entity designated by the Broker-Dealer;
(2) Life of Virginia will confirm to the owner,
with a copy to Broker-Dealer, the allocation of the initial premium under the
Policy or the Annuity; and
(3) Life of Virginia will also notify the owner
of the name of the Broker-Dealer through whom the Policy or the Annuity was
solicited.
4.5 Life of Virginia will administer all Policies and Annuities
issued according to the terms and conditions set forth in the Policy or Annuity.
4.6 Capital Brokerage or Life of Virginia, at their own expense,
will furnish to Broker-Dealer, in reasonably sufficient quantities, the
following materials:
a. The current Prospectus(es) for the Policies and
Annuities and any underlying mutual funds;
b. Any Prospectus Supplement for the Policies and
Annuities and any underlying mutual funds, including any Statement(s) of
Additional Information if requested by client or required by law;
c. Advertising materials and sales literature approved
for use by Capital Brokerage and Life of Virginia; and
d. Applications for Policies and Annuities.
4.7 Money due Life of Virginia or Capital Brokerage.
a. All money payable in connection with the Policies or
the Annuities whether as premium or otherwise is the property of Life of
Virginia.
b. Money due Life of Virginia and received by the
Broker-Dealer under this Agreement shall be held in a fiduciary capacity and
shall be transmitted immediately to Life of Virginia in accordance with the
administrative procedures of Life of Virginia.
c. Unless express prior written consent to the contrary
is given to Broker-Dealer by Life of Virginia, money due Life of Virginia shall
be forwarded without any deduction or offset for any reason, including by
example, but not limitation, any deduction or offset for compensation claimed by
Broker-Dealer.
d. Unless express prior written consent to the contrary
is given to Broker-Dealer by Life of Virginia, checks or money orders in payment
for Policies or Annuities, shall be drawn to the order of "The Life Insurance
Company of Virginia" or "Life of Virginia."
e. Checks drawn by or money orders purchased by the
Registered Representative will not be accepted by Life of Virginia or Capital
Brokerage.
5. INDEMNIFICATION
5.1 Capital Brokerage agrees to indemnify and hold harmless
Broker-Dealer against any losses, claims, damages, liabilities or expenses,
including reasonable attorneys fees, to which Broker-Dealer may be liable to
the extent that the losses, claims, damages, liabilities or expenses,
including reasonable attorneys fees, arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact or omission
or alleged omission of material fact contained in the 1933 Act Registration
Statement covering the Policies or the Annuities or in the Prospectuses for
the Policies or the Annuities or in any written information or sales
materials authorized and furnished to Broker-Dealer by Capital Brokerage or Life
of Virginia.
5.2 Capital Brokerage will not be liable to the extent that such
loss, claim, damage, liability or expense, including reasonable attorneys' fees,
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in reliance upon information provided by
Broker-Dealer, including, without limitation, negative responses to inquiries
furnished to Capital Brokerage or Life of Virginia by or on behalf of
Broker-Dealer, specifically for use in the
preparation of the 1933 Act Registration Statement covering the Policies or the
Annuities or in any related Prospectuses.
5.3 Broker-Dealer agrees to indemnify and hold harmless Capital
Brokerage and Life of Virginia, against any losses, claims, damages, liabilities
or expenses, including reasonable attorney's fees, to which Capital Brokerage,
Life of Virginia and any affiliate, parent, officer, director, employee or agent
may be liable to the extent that the losses, claims, damages, liabilities or
expenses, including reasonable attorneys fees, arise out of or are based upon:
a. Any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission of a material fact contained in
the Registration Statement covering the Policies or the Annuities or related
Prospectuses but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission is made in reliance upon
information, including, without limitation, negative responses to inquiries,
furnished to Capital Brokerage or Life of Virginia by or on behalf of
Broker-Dealer specifically for use in the preparation of the 1933 Act
Registration Statement covering the Policies or the Annuities or in any related
Prospectuses;
b. Any unauthorized use of advertising materials or sales
literature or any verbal or written misrepresentations or any unlawful sales
practices concerning the Policies or the Annuities by Broker-Dealer, its
Registered Representatives or its affiliates; and
c. Claims by Registered Representatives or employees of
Broker-Dealer for commissions or other compensation or remuneration of any type.
5.4 The party seeking indemnification agrees to notify the
indemnifying party within a reasonable time of receipt of a claim or demand. In
the case of a lawsuit, the party seeking indemnification must notify the
indemnifying party within ten (10) calendar days of receipt of written
notification that a lawsuit has been filed.
5.5 Broker-Dealer agrees that Life of Virginia or Capital
Brokerage may negotiate, settle and or pay any claim or demand against them
which arises from:
a. any wrongful act or transaction of Broker-Dealer or
its Registered Representatives. Wrongful act or transaction includes, but is
not limited to, fraud, misrepresentation, deceptive practices, negligence,
errors or omissions;
b. the breach of any provision of this Agreement; or
c. the violation or alleged violation of any insurance or
securities laws.
Upon sufficient proof that the claim or demand arose from the
occurrences listed above, Capital Brokerage or Life of Virginia may request
reimbursement for any amount paid plus any reasonable expenses incurred in
investigating, defending against and/or settling the claim or demand.
Broker-Dealer agrees to reimburse Capital Brokerage or Life of Virginia for
these expenses.
5.6 Broker-Dealer shall immediately notify Capital Brokerage and
Life of Virginia, in writing of any complaint or grievance relating to the
Policies or the Annuities, including, but not limited to any complaint or
grievance arising out of or based on advertising or sales literature approved by
Life of Virginia or the marketing or sale of the Policies or Annuities.
5.7 Broker-Dealer shall promptly furnish all written materials
requested by Capital Brokerage or Life of Virginia in connection with the
investigation of any such complaint and will cooperate in the investigation.
Life of Virginia or Capital Brokerage will notify in a timely manner the
Broker-Dealer of any complaint.
5.8 Broker-Dealer shall immediately notify Capital Brokerage and
Life of Virginia, in writing
of any state, federal, or self regulatory organization investigation or
examination regarding the marketing and sales practices relating to the Policies
or Annuities or any pending or threatened litigation regarding the marketing and
sales practices relating to the Policies or Annuities.
6. TERMINATION
6.1 This Agreement may be terminated by either Capital Brokerage
or Broker-Dealer at any time, for any reason, upon thirty (30) calendar days
advance written notice delivered to the other party under the terms of Section
10.10 of this Agreement.
6.2 This Agreement will terminate immediately:
a. If the Broker-Dealer is dissolved, liquidated, or
otherwise ceases business operations;
b. If the Broker-Dealer fails, in Capital Brokerage's
sole judgment, to comply with any of its obligations under this Agreement;
c. If the Broker-Dealer ceases to be registered under the
1934 Act or a member in good standing of the NASD; or
d. In the event one party assigns or transfers its rights
or liabilities under this Agreement to any third party without the prior written
consent of the other party.
6.3 The following provisions of the Agreement shall survive
termination:
a. Section One - Definitions
b. Section Two - Representations
c. Section Five - Indemnification
d. Section Nine - Recordkeeping
e. Section Ten - General Provisions, Sub-Section 10 -
Notices
7. COMPENSATION
7.1 Unless otherwise expressly agreed to in writing by the
parties, no compensation shall be payable to Broker-Dealer for its services
under this Agreement. All compensation payable with respect to sales of the
Policies and the Annuities by Broker-Dealer shall be paid in accordance with the
terms of the General Agent Agreement in effect between Life of Virginia and
Broker-Dealer, or a duly licensed subsidiary or affiliate thereof.
8. ADVERTISEMENTS
8.1 Broker-Dealer shall not use any advertisements or sales
literature for the Policies or the Annuities or any advertisements or sales
literature referencing Life of Virginia or Capital Brokerage without prior
written approval of Life of Virginia or Capital Brokerage. This includes
brochures, letters, illustrations, training materials, materials prepared for
oral presentations and all other similar materials.
9. RECORDKEEPING
9.1 Each party agrees to keep all records required by federal and
state laws, to maintain its books, accounts, and records so as to clearly and
accurately disclose the precise nature and details of
transactions, and to assist one another in the timely preparation of records.
9.2 Each party grants to the other and/or its representatives the
right and power at reasonable times to inspect, check, make extracts from, and
audit each of its books, accounts and records as they relate to this Agreement,
including, but not limited to advertisements and sales materials, for the
purpose of verifying adherence to each of the provisions of this Agreement.
10. GENERAL PROVISIONS
10.1 Effective. This Agreement shall be effective upon execution
by both parties and will remain in effect unless terminated as provided in
Section Six.
10.2 Assignment. This Agreement may not be assigned or transferred
to any third party by either Capital Brokerage or Broker-Dealer without the
other party's prior written consent.
10.3 Governing Law. This Agreement shall be construed in
accordance with the laws of the Commonwealth of Virginia.
10.4 Severability. If any provision of this Agreement shall be
held or rendered invalid by a court decision, state or federal statute,
administrative rule or otherwise, the remainder of this Agreement shall not be
rendered invalid.
10.5 Complete Agreement. The parties declare that, other than the
General Agent's Agreement between Broker-Dealer (or its affiliated insurance
agency) and Life of Virginia (or its affiliated marketing company) there are no
oral or other agreements or understandings between them affecting this Agreement
or relating to the offer or sale of the Policies or the Annuities and that this
constitutes the entire Agreement between the parties.
10.6 Waiver. Forbearance by Capital Brokerage to enforce any of
the terms of this Agreement shall not constitute a waiver of such terms.
10.7 Counterparts. This Agreement may be executed in two or more
counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.8 Independent contractors. Broker-Dealer is an independent
contractor. Nothing contained in this Agreement shall create, or shall be
construed to create, the relationship of employer and employee between Capital
Brokerage and Broker-Dealer or Broker-Dealer's directors, officers, employees,
agents or Registered Representatives.
10.9 Cooperation. Each party to this Agreement shall cooperate
with the other and with all governmental authorities, including, without
limitation, the SEC, the NASD and any state insurance or securities regulators,
and shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated under this Agreement.
10.10 Notices. All notices, requests, demands and other
communications which must be provided under this Agreement shall be in writing
and shall be deemed to have been given on the date of service if served
personally on the party to whom notice is to be given or on the date of mailing
if sent by United States registered or certified mail, postage prepaid. Notices
should be sent to the parties at the addresses first listed in this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized
representatives.
CAPITAL BROKERAGE CORPORATION ______________________________________
(Name of Broker-Dealer)
-------------------------------------- --------------------------------------
(Signature) (Signature)
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(Name) (Name)
-------------------------------------- --------------------------------------
(Title) (Title)
Tax Identification Number ____________
Date: _________________________________ Date: ________________________________
SCHEDULE A
to
BROKER-DEALER SALES AGREEMENT
VARIABLE LIFE INSURANCE POLICIES:
SCHEDULE B
to
BROKER-DEALER SALES AGREEMENT
VARIABLE ANNUITY CONTRACTS:
