BROKER-DEALER AGREEMENT
IT IS HEREBY AGREED by and between PREFERRED LIFE INSURANCE COMPANY OF NEW
YORK (hereinafter referred to as "INSURANCE COMPANY"), a New York Corporation,
and NALAC FINANCIAL PLANS, INC. (hereinafter referred to as "BROKER/DEALER"), an
Iowa Corporation, as follows:
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 a wholly-owned subsidiary of ALLIANZ LIFE
INSURANCE COMPANY OF NORTH AMERICA. 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 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 and appointed insurance agents (or agencies) of
INSURANCE COMPANY.
II
DUTIES OF BROKER/DEALER
A. REGISTRATION UNDER THE '34 ACT
BROKER/DEALER shall register itself 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 state requested by INSURANCE COMPANY.
B. MEMBERSHIP IN THE NATIONAL ASSOCIATION OF SECURITIES DEALERS. INC.
BROKER/DEALER shall apply for membership in the National
Association of Securities Dealers, Inc. (NASD), and shall
maintain its membership therein.
C. RESPONSIBILITY FOR SECURITIES ACTIVITIES
BROKER/DEALER shall assume full responsibility for the securities
activities of all persons engaged directly or indirectly 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
persons. INSURANCE COMPANY will have the right to inspect and/or
copy such records at any time.
E. MAINTENANCE OF NET CAPITAL
BROKER/DEALER shall have 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 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 are, and shall at all times remain,
the joint property of BROKER/DEALER and INSURANCE COMPANY and
shall at all times be subject to inspection by duly authorized
officers, auditors or representatives and INSURANCE COMPANY,
BROKER/DEALER and by the Securities and Exchange Commission, the
NASD, New York State Insurance Department or other regulatory
authority having proper jurisdiction.
B. PAYMENT OF COMMISSIONS
INSURANCE COMPANY shall pay on behalf of BROKER/DEALER 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 and appointed 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 properly be reflected on the books and records
maintained on behalf of BROKER/DEALER. In computing any amounts
owed 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 that confirmations will be issued
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.
IV
GENERAL
A. 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.
B. ARBITRATION
1. If any dispute arises over the terms of this Agreement or
administration thereof which cannot be resolved to the
satisfaction of both INSURANCE COMPANY and BROKER/DEALER,
such dispute shall be referred to a panel of three (3))
arbitrators, one to be chosen by each party, and the third
to be chosen by the two previously chosen arbitrators.
2. If either party refused or neglects to appoint an arbitrator
within thirty (30) days after receipt of written notice from
the other party requesting it to do so, the requesting party
may nominate both arbitrators, who shall then choose the
third arbitrator within thirty (30) days of their
appointments.
3. Each party shall submit its case to the arbitrators within
thirty (30) days of the appointment of the third arbitrator.
4. For the purposes of arbitration, this Agreement shall be
considered an honorable engagement rather than a mere legal
obligation, and the arbitrators are not bound by judicial
formalities or strict rule of law in interpreting this
Agreement.
5. The decision of a majority of the arbitrators shall be final
and binding on both INSURANCE COMPANY and BROKER/DEALER.
6. The expense of arbitration shall be equally divided between
INSURANCE COMPANY and BROKER/DEALER.
7. Any such arbitration shall take place in New York, New York
unless some other location is mutually agreed upon.
8. The laws of New York shall govern the arbitration process in
the event they conflict with 1 through 8 above.
EXECUTED at Minneapolis, Minnesota
INSURANCE COMPANY
PREFERRED LIFE INSURANCE COMPANY OF NEW YORK
By: /s/XXXXXX X XXXX
Its Vice-President
BROKER/DEALER
NALAC FINANCIAL PLANS, INC.
By: /s/XXXXXX X XXXXXXXX
Its President
