Exhibit (3)(a)
Underwriting Agreement dated December 13, 1997 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 ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇.
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.
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(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.
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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.
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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.
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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.
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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.
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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.
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(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.
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(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.
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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.
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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.
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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.
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(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.
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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.
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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: ___________________________________
