EXHIBIT (3)(a)
UNDERWRITING AGREEMENT DATED DECEMBER 12, 1998 BETWEEN
THE LIFE INSURANCE COMPANY OF VIRGINIA
AND CAPITAL BROKERAGE CORPORATION
UNDERWRITING AGREEMENT
AGREEMENT dated December 12, 1997, by and between THE LIFE INSURANCE
COMPANY OF VIRGINIA (" Life of Virginia"), a Virginia corporation, on its own
behalf and on behalf of Life of Virginia Separate Account I, Life of Virginia
Separate Account II, Life of Virginia Separate Account III, and Life of Virginia
Separate Account 4 (the "Separate Accounts"), and CAPITAL BROKERAGE CORPORATION
(doing business in Indiana, Minnesota, New Mexico, and Texas as GE Capital
Brokerage Corporation) ("CBC"), a Washington corporation with its principal
office at 6630 West Broad Street, Post Office Xxx 00000, Xxxxxxxx, XX 00000.
W I T N E S S E T H:
WHEREAS, the Separate Accounts are segregated asset accounts
established and maintained by Life of Virginia pursuant to the laws of the
Commonwealth of Virginia for certain variable annuities and variable life
insurance policies to be issued by Life of Virginia (hereinafter referred to as
the "Variable Contracts"), under which income, gains and losses, whether or not
realized, from assets allocated to such Separate Accounts, will be, in
accordance with the Variable Contracts, credited to or charged against such
Separate Accounts without regard to other income, gains or losses of Life of
Virginia;
WHEREAS, Life of Virginia has registered the Separate Accounts as a
unit investment trust-type investment companies under the Investment Company Act
of 1940 (the"1940 Act");
WHEREAS, CBC has registered as a broker-dealer under the Securities
Exchange Act of 1934 (the "1934 Act") and is a member firm of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, Life of Virginia has registered the Variable Contracts under
Securities Act of 1933 (the "1933 Act") and proposes to issue and sell the
Variable Contracts to the public through CBC, acting as the principal
underwriter of the Variable Contracts;
NOW, THEREFORE, in consideration of the mutual agreements made herein,
Life of Virginia and CBC hereby agree as follows:
1. Underwriter.
(a) Life of Virginia grants to CBC the exclusive right, during the term
of this Agreement, subject to the registration requirements of the 1933 Act and
the 1940 Act and the provisions of the 1934 Act, to be the principal underwriter
of the Variable Contracts. CBC agrees to use its best efforts to distribute the
Variable Contracts, and to undertake to provide sales and services relative to
the Variable Contracts and otherwise to perform all duties and functions
necessary and proper for the distribution of the Variable Contracts. It is the
intent of the parties hereto that substantially similar successor variable
deferred annuity contracts hereafter issued by Life of Virginia in addition to
or in substitution for the Variable Contracts shall be covered by this Agreement
so long as this Agreement has not been previously terminated prior to date of
introduction thereof.
(b) To the extent necessary to offer the Variable Contracts, CBC shall
be duly registered or otherwise qualified under the securities laws of any state
or other jurisdiction. All registered representatives of CBC soliciting
applications for the Variable Contracts shall be duly and appropriately
licensed, registered or otherwise qualified for the sale of such Variable
Contracts (and the riders offered in connection therewith) under the federal
securities laws, the state insurance laws and any applicable state securities
laws of each state or other jurisdiction in which such Variable Contracts may
lawfully be sold and in which Life of Virginia is licensed to sell the Variable
Contracts. CBC shall be responsible for the training, supervision, and control
of its own registered representatives for purposes of the Rules of the NASD and
federal and state securities law requirements applicable to them in connection
with the offer and sale of the Variable Contracts.
(c) CBC agrees to offer the Variable Contracts for sale in accordance
with the prospectuses therefor then in effect. CBC is not authorized to give any
information or to make any representations concerning the Variable Contracts
other than those contained in the current prospectuses therefor filed with the
Securities and Exchange Commission ("Commission") or in such sales literature as
may be authorized by Life of Virginia.
(d) Payments made in connection with the Variable Contracts whether
premium or otherwise are the exclusive property of Life of Virginia. Such
payments received by CBC shall be held in a fiduciary capacity and shall be
transmitted immediately to Life of Virginia or its designated servicing agent in
accordance with the administrative procedures of Life of Virginia. Life of
Virginia will credit all payments made by or on behalf of Policyowners to their
respective accounts, and will allocate amounts to the investment subdivisions of
the Separate Accounts in accordance with the instructions of Policyowners and
the provisions of the Variable Contracts.
2. Sales and Services Agreement.
CBC is hereby authorized to enter into separate written sales or
services agreements, on such terms and conditions as CBC may determine not
inconsistent with this Agreement, with broker-dealers that are registered as
such under the Securities Exchange Act and are members of the NASD and that
agree to participate in the distribution of the Variable Contracts. All
broker-dealers that agree to participate in the distribution of the Variable
Contracts shall act as independent contractors and nothing herein contained
shall constitute the directors, officers, employees, agents, or registered
representatives of such broker-dealers as employees of CBC or Life of Virginia
for any purpose whatsoever.
3. Suitability.
Life of Virginia and CBC each wish to ensure that the Variable
Contracts distributed by CBC will be issued to purchasers for whom the Variable
Contracts will be suitable. CBC shall take reasonable steps to ensure that its
own registered representatives shall not make recommendations to an applicant to
purchase a Variable Contract in the absence of reasonable grounds to believe
that the purchase of the Variable Contract is suitable for such applicant under
the NASD Conduct Rules regarding Recommendations to Customers. While not limited
to the following, a determination of suitability shall be based on information
furnished to a registered representative after reasonable inquiry of such
applicant concerning the applicant's financial status, tax status and insurance
and investment objectives and needs.
4. Prospectuses and Promotional Material.
Life of Virginia shall furnish CBC with copies of all prospectuses,
statements of additional information, financial statements and other documents
and materials which CBC reasonably requests for use in connection with the
distribution of the Variable Contracts. Life of Virginia shall have
responsibility for the preparation, filing and printing of all required
prospectuses and/or registration statements in connection with the Variable
Contracts, and the payment of all related expenses. CBC and Life of Virginia
shall cooperate fully in the design, drafting and review of sales promotion
materials, and with respect to the preparation of individual sales proposals
related to the sale of the Variable Contracts. CBC shall not use or distribute
any such materials not provided or approved by Life of Virginia.
5. Records and Reports.
CBC shall have the responsibility for maintaining records relating to
its registered representatives that are licensed, registered and otherwise
qualified to sell the Variable Contracts and relating to broker-dealers engaged
in the distribution of the Variable Contracts, and shall provide periodic
reports thereof to Life of Virginia as requested.
6. Administrative Services.
Life of Virginia agrees to maintain all required books of account and
related financial records on behalf of CBC. All such books of account and
recorded shall be maintained and preserved pursuant to Rule 17a-3 and 17a-4
under the 1934 Act (or the corresponding provisions of any future Federal
securities laws or regulations). In addition, Life of Virginia will maintain
records of all sales commissions paid to registered representatives of CBC in
connection with the sale of the Variable Contracts. All such books and records
shall be maintained by Life of Virginia on behalf of and as agent for CBC, whose
property they are and shall remain for all purposes, and shall at all times be
subject to reasonable periodic, special, or other examination by the Commission
and all other regulatory bodies having jurisdiction. Life of Virginia also
agrees to send to CBC's customers all required confirmations on customer
transactions relating to Variable Contracts. Life of Virginia shall also make
commission and such other disbursements as may be requested by CBC, in
connection with the operations of CBC, for the account and risk of CBC.
7. Compensation.
(a) For the sale of the Variable Contracts, unless otherwise expressly
agreed to in writing by the parties, sales commissions shall be paid by Life of
Virginia, and CBC authorizes such payment, directly to those registered
representatives of CBC who are also agents of Life of Virginia and to those
broker-dealers (or their affiliated insurance agencies) who have entered into
sales agreements with CBC. Such payment shall be made pursuant to the insurance
agent/agency agreement between the agent/agency and Life of Virginia, and CBC
shall not pay any sales commissions itself to such persons upon their sale of
the Variable Contracts.
(b) In recognition of the administrative services to be rendered by CBC
in coordinating the distribution activities required by this Agreement, Life of
Virginia shall pay to CBC such administrative fees as may be mutually agreed
upon in separate writings exchanged from time to time between Life of Virginia
and CBC.
8. Investigation and Proceedings.
(a) CBC and Life of Virginia agree to cooperate fully in any insurance
regulatory investigation or proceeding or judicial proceeding arising in
connection with the Variable Contracts distributed under this Agreement. CBC and
Life of Virginia further agree to cooperate fully in any securities regulatory
inspection, inquiry, investigation or proceeding or any judicial proceeding with
respect to Life of Virginia or CBC to the extent that such inspection, inquiry,
investigation or proceeding is in connection with the Variable Contracts
distributed under this Agreement. Without limiting the foregoing:
(i) CBC will be notified promptly of any customer complaint or
notice of any regulatory inspection, inquiry, investigation or
proceeding or judicial proceeding received by Life of Virginia
with respect to Life of Virginia or CBC or any broker-dealer
in connection with any Variable Contracts distributed under
this Agreement or any activity in connection with any Variable
Contracts.
(ii) CBC will promptly notify Life of Virginia of any customer
complaint or notice of any regulatory inspection, inquiry,
investigation or proceeding received by CBC with respect to
Life of Virginia or CBC or any broker-dealer in connection
with any Variable Contracts distributed under this Agreement
or any activity in connection with any such Variable
Contracts.
(b) In the case of any such customer complaint, CBC and Life of
Virginia will cooperate in investigating such complaint and arrive at a mutually
satisfactory response.
9. Termination.
This Agreement shall be effective upon its execution and shall remain
in force for a term of one (1) year from the date hereof, and shall
automatically renew from year to year thereafter, unless either party notifies
the other in writing six (6) months prior to the expiration of an annual period.
This Agreement may not be assigned and shall automatically terminate if it is
assigned. Upon termination of this Agreement all authorizations, rights and
obligations shall cease except (i) the obligation to settle accounts hereunder,
including commissions due or to become due and payable on Variable Contracts in
effect at the time of termination or issued pursuant to applications received by
Life of Virginia prior to termination, and (ii) the obligations contained in
Paragraph 8 hereof.
10. Exclusivity.
The services of CBC hereunder are not to be deemed exclusive and CBC
shall be free to render similar services to others so long as its services
hereunder are not impaired or interfered with thereby.
11. Regulation.
This Agreement shall be subject to the provisions of the 1940 Act and
the 1934 Act and the rules, regulation, and rulings thereunder and of the NASD,
from time to time in effect, including such exemptions from 1940 Act as the
Securities and Exchange Commission may grant. CBC shall submit to all regulatory
and administrative bodies having jurisdiction over the operations of CBC, Life
of Virginia or the Separate Accounts, 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. Without limiting the generality of the
foregoing, CBC shall furnish the Virginia State Corporation Commission or the
Bureau of Insurance thereof with any information or reports which the Commission
or the Bureau of Insurance may request in order to ascertain whether the
variable annuity operations of Life of Virginia are being conducted in an manner
consistent with the Commission's variable annuity contract regulations and any
other applicable law or regulations.
12. Indemnities.
(a) Life of Virginia agrees to indemnify and hold harmless CBC and each
person who controls or is associated with CBC within the meaning of the 1933 Act
or the 1934 Act against any losses, claims, damages or liabilities, joint or
several, to which CBC or such controlling or associated 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 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 the 1933 Act Registration Statements covering the Variable
Contracts or in any related Prospectuses included thereunder,
or
(ii) in any written information or sales material authorized for,
and supplied or furnished by Life of Virginia to CBC and its
sales representatives.
Life of Virginia will reimburse CBC and each such controlling person, for any
legal or other expenses reasonably incurred by CBC or such controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action covered by this Paragraph 12(a); provided that Life of
Virginia 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 omission or alleged untrue statement or omission made in reliance upon
information (including, without limitation, negative responses to inquiries)
furnished to Life of Virginia by or on behalf of CBC or its affiliates
specifically for use in the preparation of the said Registration Statements or
any related Prospectuses included therein or any amendment thereto or supplement
thereto. This indemnity agreement will be in addition to any liability which
Life of Virginia may otherwise have, the premises considered.
(b) CBC agrees to indemnify and hold harmless Life of Virginia and each
of its directors (including any person named in the 1933 Act Registration
Statements covering the Variable Contracts, with his/her consent, as nominee for
directorship), each of its officers who signed a Registration Statement and each
person, if any, who controls Life of Virginia within the meaning of the 1933 Act
or the 1934 Act, against any losses, claims, damages or liabilities to which
Life of Virginia and 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 in the
Registration Statements or in any related Prospectuses
included therein, to the extent, but only to the extent, that
such untrue statement or omission or alleged untrue statement
or omission was made in reliance upon information (including,
without limitation, negative responses to inquiries) furnished
to Life of Virginia by or on behalf of CBC or its affiliates
as the case may be, specifically for use in the preparation of
the Registration Statements or related Prospectuses included
therein or any amendment thereto or supplement thereto; or
(ii) any unauthorized use of sales materials or any verbal or
written misrepresentations or any unlawful sales practices
concerning the Variable Contracts by CBC.
CBC will reimburse Life of Virginia and any director or officer or controlling
person Life of Virginia for any legal or other expenses reasonably incurred by
Life of Virginia or such director, officer or controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
action covered by this Paragraph 12(b). This indemnity agreement will be in
addition to any liability which CBC may otherwise have, the premises considered.
(c) After receipt by a party entitled to indemnification ("indemnified
party") under this Section 12 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 Section 12 ("indemnifying party"), such indemnified
party will notify the indemnifying party in writing of the commencement thereof
as soon as practicable thereafter, and the omission so to notify the
indemnifying party will not relieve it from any liability under this Section 12,
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 indemnified party shall be entitled, to the extent it may wish,
jointly with any other indemnified 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 itself or himself, except for such expenses incurred after the
indemnifying party 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.
The indemnity agreements contained in this Section 12 shall remain
operative and in full force and effect, regardless of (i) any investigation made
by or on behalf of CBC or any controlling person thereof or by or on behalf of
Life of Virginia, (ii) delivery of any Variable Contracts and payments therefor,
or (iii) any termination of this Agreement. A successor by law of CBC or of any
the parties to this Agreement, as the case may be, shall be entitled to the
benefits of the indemnity agreements contained in this Section 12.
13. Severability.
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.
14. Applicable Law.
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
THE LIFE INSURANCE COMPANY OF VIRGINIA
Attest: By: _____________________________________
_____________________________ Title: __________________________________
Secretary
Date: ___________________________________
CAPITAL BROKERAGE CORPORATION
Attest: By: _____________________________________
_____________________________ Title: __________________________________
Secretary
Date: ___________________________________
