BROKER-DEALER SALES AND
SUPERVISION AGREEMENT
This Broker-Dealer Sales and Supervision Agreement ("Agreement") dated
is made by and between Hartford Life Insurance Company and ITT
Hartford Life and Annuity Insurance Company (referred to collectively as
"Companies"), Hartford Securities Distribution Company, Inc. ("Distributor"), a
broker-dealer registered with the Securities and Exchange Commission ("SEC")
under the Securities and Exchange Act of 1934 ("1934 Act") and a member of the
National Association of Securities Dealers, Inc. ("NASD") and ,
who is also a broker-dealer registered with the SEC under the 1934 Act and a
member of the NASD ("Broker-Dealer"), and any and all undersigned insurance
agency affiliates ("Affiliates") of Broker- Dealer.
WHEREAS, Companies offer certain variable life insurance policies and variable
and modified guaranteed annuity contracts which are deemed to be securities
under the Securities Act of 1933 (the "Registered Products"); and
WHEREAS, Companies wish to appoint the Broker-Dealer and Affiliates as agents of
the Companies for the solicitation and procurement of applications for
Registered Products; and
WHEREAS, Distributor is the principal underwriter of the Registered Products;
and
WHEREAS, Distributor anticipates having registered representatives who are
associated with Broker-Dealer ("Registered Representatives"), who are NASD
registered and are duly licensed under applicable state insurance law and
appointed as life insurance agents of Companies solicit and sell the Registered
Products; and
WHEREAS, Distributor acknowledges that the Broker-Dealer will provide certain
supervisory and administrative services to Registered Representatives who are
associated with the Broker-Dealer in connection with the solicitation, service
and sale of the Registered Products; and
WHEREAS, Broker-Dealer agrees to provide the aforementioned supervisory services
to its Registered Representatives who have been appointed by the Companies to
sell the Registered Products.
NOW THEREFORE, in consideration of the mutual covenants contained in this
Agreement, the parties agree to the following:
I. APPOINTMENT OF THE BROKER-DEALER
The Companies hereby appoint Broker-Dealer as an agent of the
Companies for the solicitation and procurement of applications for the
Registered Products offered by the Companies, as outlined in Exhibit A
attached herein, in all states in which the Companies are authorized
to do business and in which Broker-Dealer or any Affiliates are
properly licensed. Distributor hereby authorizes Broker-Dealer under
the securities laws to supervise Registered Representatives in
connection with the solicitation, service and sale of the Registered
Products.
II. AUTHORITY OF THE BROKER-DEALER
Broker-Dealer has the authority to represent Distributor and Companies
only to the extent expressly granted in this Agreement. Broker-Dealer
and any Registered Representatives shall not hold themselves out to be
employees of Companies or Distributor in any dealings with the public.
Broker-Dealer and any Registered Representatives shall be independent
contractors as to Distributor or Companies. Nothing contained herein
is intended to create a relationship of employer and employee between
Broker-Dealer and Distributor or Companies or between Registered
Representatives and Distributor or Companies.
III. BROKER-DEALER REPRESENTATION
Broker-Dealer represents that it is a registered broker-dealer under
the 1934 Act, a member in good standing of the NASD, and is registered
as a broker-dealer under state law to the extent necessary to perform
the duties described in this Agreement. Broker-Dealer represents that
its Registered Representatives, who will be soliciting applications
for the Registered Products, will be duly registered representatives
associated with Broker- Dealer and that they will be representatives
in good standing with accreditation as required by the NASD to sell
the Registered Products. Broker-Dealer agrees to abide by all rules
and regulations of the NASD, including its Rules of Fair Practice, and
to comply with all applicable state and federal laws and the rules and
regulations of authorized regulatory agencies affecting the sale of
the Registered Products.
IV. BROKER-DEALER OBLIGATIONS
(a) TRAINING AND SUPERVISION
Broker-Dealer has full responsibility for the training and
supervision of all Registered Representatives associated with
Broker-Dealer and any other persons who are engaged directly or
indirectly in the offer or sale of the Registered Products.
Broker- Dealer shall, during the term of this Agreement,
establish and implement reasonable procedures for periodic
inspection and supervision of sales practices of its Registered
Representatives.
If a Registered Representative ceases to be a Registered
Representative of Broker-Dealer, is disqualified for continued
registration or has their registration suspended by the NASD or
otherwise fails to meet the rules and standards imposed by
Broker- Dealer, Broker-Dealer shall immediately notify such
Registered Representative that he or she is no longer authorized
to solicit applications, on behalf of the Companies, for the sale
of Registered Products. Broker-Dealer shall immediately notify
Distributor of such termination or suspension.
(b) SOLICITATION
Broker-Dealer agrees to supervise its Registered Representatives
so that they will only solicit applications in states where the
Registered Products are approved for sale in accordance with
applicable state and federal laws. Broker-Dealer shall be
notified by Companies or Distributor of the availability of the
Registered Products in each state.
(c) NO CHURNING
Broker-Dealer and any Registered Representatives shall not make
any misrepresentation or incomplete comparison of products for
the purpose of inducing a policyholder to lapse, forfeit or
surrender its insurance in favor of purchasing a Registered
Product.
(d) PROSPECTUS DELIVERY AND SUITABILITY REQUIREMENTS
Broker-Dealer shall ensure that its Registered Representatives
comply with the prospectus delivery requirements under the
Securities Act of 1933. In addition, Broker-Dealer shall ensure
that its Registered Representatives shall not make
recommendations to an applicant to purchase a Registered Product
in the absence of reasonable grounds to believe that the
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purchase is suitable for such applicant, as outlined in the
suitability requirements of the 1934 Act and the NASD Rules of
Fair Practice. Broker-Dealer shall ensure that each application
obtained by its Registered Representatives shall bear evidence of
approval by one of its principals indicating that the application
has been reviewed for suitability.
(e) PROMOTIONAL MATERIAL
Broker-Dealer and its Registered Representatives are not
authorized to provide any information or make any representation
in connection with this Agreement or the solicitation of the
Registered Products other than those contained in the prospectus
or other promotional material produced or authorized by Companies
or Distributor.
Broker-Dealer agrees that if it develops any promotional material
for sales, training, explanatory or other purposes in connection
with the solicitation of applications for Registered Products,
including generic advertising and/or training materials which may
be used in connection with the sale of Registered Products, it
will obtain the prior written consent of Distributor, and where
appropriate, approval of Companies, such approval not to be
unreasonably withheld.
(f) RECORD KEEPING
Broker-Dealer is responsible for maintaining the records of its
Registered Representatives. Broker-Dealer shall maintain such
other records as are required of it by applicable laws and
regulations. The books, accounts and records maintained by
Broker-Dealer that relate to the sale of the Registered Products,
or dealings with the Companies, Distributor and/or Broker-Dealer
shall be maintained so as to clearly and accurately disclose the
nature and details of each transaction.
Broker-Dealer acknowledges that all the records maintained by
Broker-Dealer relating to the solicitation, service or sale of
the Registered Products subject to this Agreement, including but
not limited to applications, authorization cards, complaint files
and suitability reviews, shall be available to Companies and
Distributor upon request during normal business hours. Companies
and Distributor may retain copies of any such records which
Companies and Distributor, in their discretion, deems necessary
or desirable to keep.
(g) REFUND OF COMPENSATION
Broker-Dealer agrees to repay Companies the total amount of any
compensation which may have been paid to it within thirty (30)
business days of notice of the request for such refund should
Companies for any reason return any premium on a Registered
Product which was solicited by a Registered Representative of
Broker-Dealer.
(h) PREMIUM COLLECTION
Broker-Dealer only has the authority to collect initial premiums
unless specifically set forth in the applicable commission
schedule. Unless previously authorized by Distributor, neither
Broker-Dealer nor any of its Registered Representatives shall
have any right to withhold or deduct any part of any premium it
shall receive for purposes of payment of commission or otherwise.
V. COMPANIES AND/OR DISTRIBUTOR OBLIGATIONS
(a) PROSPECTUS/PROMOTIONAL MATERIAL
Companies and/or Distributor will provide Broker-Dealer with
reasonable quantities of the currently effective prospectus for
the Registered Products and appropriate sales promotional
material which has been filed with the NASD, and applicable state
insurance departments.
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(b) COMPENSATION
Distributor will pay Broker-Dealer as full compensation for all
services rendered by Broker-Dealer under this Agreement,
commissions and/or service fees in the amounts, in the manner and
for the period of time as set forth in the Commission Schedules
attached to this Agreement or subsequently made a part hereof,
and which are in effect at the time such Registered Products are
sold. The manner of commission payments (I.E. fronted or trail)
is not subject to change after the effective date of a contract
for which the compensation is payable.
Distributor or Companies may change the Commission Schedules
attached to this Agreement at any time. Such change shall become
effective only when Distributor or Companies provide the
Broker-Dealer with written notice of the change. No such change
shall affect any contracts issued upon applications received by
Companies at Companies' Home Office prior to the effective date
of such change.
Distributor agrees to identify to Broker-Dealer for each such
payment, the name of the Registered Representative of
Broker-Dealer who solicited each contract covered by the payment.
Distributor will not compensate Broker-Dealer for any Registered
Product which is tendered for redemption after acceptance of the
application. Any chargebacks will be assessed against the
Broker-Dealer of record at the time of the redemption.
Distributor will only compensate Broker-Dealer or Affiliates, as
outlined below, for those applications accepted by Companies, and
only after receipt by Companies at Companies' Home Office or at
such other location as Companies may designate from time to time
for its various lines of business, of the required premium and
compliance by Broker-Dealer with any outstanding contract and
prospectus delivery requirements.
In the event that this Agreement terminates for fraudulent
activities or due to a material breach by the Broker-Dealer,
Distributor will only pay to Broker-Dealer or Affiliate
commissions or other compensation earned prior to discovery of
events requiring termination. No further commissions or other
compensation shall thereafter be payable.
(c) COMPENSATION PAYABLE TO AFFILIATES
If Broker-Dealer is unable to comply with state licensing
requirements because of a legal impediment which prohibits a
non-domiciliary corporation from becoming a licensed insurance
agency or prohibits non-resident ownership of a licensed
insurance agency, Distributor agrees to pay compensation to
Broker-Dealer's contractually affiliated insurance agency, a
wholly-owned life agency affiliate of Broker-Dealer, or a
Registered Representative or principal of Broker-Dealer who is
properly state licensed. As appropriate, any reference in this
Agreement to Broker-Dealer shall apply equally to such Affiliate.
Distributor agrees to pay compensation to an Affiliate subject to
Affiliates agreement to comply with the requirements of Exhibit
B, attached hereto.
VI. TERMINATION
(a) This Agreement may be terminated by any party by giving thirty
(30) days' notice in writing to the other party.
(b) Such notice of termination shall be mailed to the last known
address of Broker-Dealer appearing on Companies' records, or in the
event of termination by Broker-Dealer, to the Home Office of
Companies at X.X. Xxx 0000, Xxxxxxxx, Xxxxxxxxxxx 00000-0000.
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(c) Such notice shall be an effective notice of termination of this
Agreement as of the time the notice is deposited in the United
States mail or the time of actual receipt of such notice if
delivered by means other than mail.
(d) This Agreement shall automatically terminate without notice upon
the occurrence of any of the events set forth below:
(1) Upon the bankruptcy or dissolution of Broker-Dealer.
(2) When and if Broker-Dealer commits fraud or gross negligence
in the performance of any duties imposed upon Broker-Dealer
by this Agreement or wrongfully withholds or misappropriates,
for Broker-Dealer's own use, funds of Companies, its
policyholders or applicants.
(3) When and if Broker-Dealer materially breaches this Agreement
or materially violates state insurance or Federal securities
laws and administrative regulations of a state in which
Broker-Dealer transacts business.
(4) When and if Broker-Dealer fails to obtain renewal of a
necessary license in any jurisdiction, but only as to that
jurisdiction.
(e) The parties agree that on termination of this Agreement, any
outstanding indebtedness to Companies shall become immediately due
and payable.
VII. GENERAL PROVISIONS
(a) COMPLAINTS AND INVESTIGATIONS
Broker-Dealer shall cooperate with Distributor and Companies in
the investigation and settlement of all complaints or claims
against Broker-Dealer and/ or Distributor or Companies relating
to the solicitation or sale of the Registered Products under this
Agreement. Broker-Dealer, Distributor and Companies each shall
promptly forward to the other any complaint, notice of claim or
other relevant information which may come into either one's
possession. Broker-Dealer, Distributor and Companies agree to
cooperate fully in any investigation or proceeding in order to
ascertain whether Broker-Dealer's, Distributor's or Companies'
procedures with respect to solicitation or servicing is
consistent with any applicable law or regulation.
In the event any legal process or notice is served on
Broker-Dealer in a suit or proceeding against Distributor or
Companies, Broker-Dealer shall forward forthwith such process or
notice to Companies at its Home Office in Hartford, Connecticut,
by certified mail.
(b) WAIVER
The failure of Distributor or Companies to enforce any provisions
of this Agreement shall not constitute a waiver of any such
provision. The past waiver of a provision by Distributor or
Companies shall not constitute a course of conduct or a waiver in
the future of that same provision.
(c) INDEMNIFICATION
Broker-Dealer shall indemnify and hold Distributor and Companies
harmless from any liability, loss or expense sustained by
Companies or the Distributor (including reasonable attorney fees)
on account of any acts or omissions by Broker-Dealer or persons
employed or appointed by Broker-Dealer, except to the extent
Companies' or Distributor's acts or omissions caused such
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liability Indemnification by Broker-Dealer is subject to the
conditions that Distributor or Companies promptly notify
Broker-Dealer of any claim or suit made against Distributor or
Companies, and that Distributor or Companies allow Broker-Dealer
to make such investigation, settlement, or defense thereof as
Broker-Dealer deems prudent. Broker-Dealer expressly authorizes
Companies to charge against all compensation due or to become due
to Broker-Dealer under this Agreement any monies paid or
liabilities incurred by Companies under this Indemnification
provision.
Distributor and Companies shall indemnify and hold Broker-Dealer
harmless from any liability, loss or expense sustained by the
Broker-Dealer (including reasonable attorney fees) on account of
any acts or omissions by Distributor or Companies, except to the
extent Broker-Dealer's acts or omissions caused such liability.
Indemnification by Distributor or Companies is subject to the
condition that Broker-Dealer promptly notify Distributor or
Companies of any claim or suit made against Broker-Dealer, and
that Broker-Dealer allow Distributor or Companies to make such
investigation, settlement, or defense thereof as Distributor or
Companies deems prudent.
(d) ASSIGNMENT
No assignment of this Agreement, or commissions payable
hereunder, shall be valid unless authorized in writing by
Distributor. Every assignment shall be subject to any
indebtedness and obligation of Broker-Dealer that may be due or
become due to Companies and any applicable state insurance
regulations pertaining to such assignments.
(e) OFFSET
Companies may at any time deduct, from any monies due under this
Agreement, every indebtedness or obligation of Broker-Dealer to
Companies or to any of its affiliates.
(f) CONFIDENTIALITY
Companies, Distributor and Broker-Dealer agree that all facts or
information received by any party related to a contract owner
shall remain confidential, unless such facts or information is
required to be disclosed by any regulatory authority or court of
competent jurisdiction.
(g) PRIOR AGREEMENTS
This Agreement terminates all previous agreements, if any,
between Companies, Distributor and Broker-Dealer. However, the
execution of this Agreement shall not affect any obligations
which have already accrued under any prior agreement.
(h) CHOICE OF LAW
This Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut.
By executing this Broker-Dealer Sales and Supervision Agreement Specifications
Page, Broker-Dealer acknowledges that it has read this Agreement in its entirety
and is in agreement with the terms and conditions outlining the rights of
Distributor, Companies and Broker-Dealer and Affiliates under this Agreement.
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement to be
effective as set forth above, upon the later of the execution date below or
approval of Distributor's registration by all appropriate state securities
commissions.
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BROKER-DEALER HARTFORD SECURITIES DISTRIBUTION
COMPANY INC.
By: By:
Title: Title:
Date: Date:
AFFILIATE (IF APPLICABLE) HARTFORD LIFE INSURANCE COMPANY
By: By:
Title: Title:
Date: Date:
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
By:
Title:
Date:
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EXHIBIT B
In accordance with Section V.(c) of the Broker-Dealer-Dealer Sales and
Supervision Agreement, no compensation is payable unless Broker-Dealer and
Registered Representative have first complied with all applicable state
insurance laws, rules and regulations. Distributor must ensure that any
Broker-Dealer with whom Distributor intends to enter into an Agreement and any
Registered Representatives meet the licensing and registration requirements of
the state(s) Broker-Dealer operates in and the NASD.
Companies are required by the Insurance Department in all 50 states to pay
compensation only to individuals and entities that are properly insurance
licensed and appointed. For registered products, Distributor must also comply
with NASD regulations that require Distributor to pay compensation to an NASD
registered Broker-Dealer. Distributor must comply with both state and NASD
requirements.
Distributor requires confirmation that Broker-Dealer holds current state
insurance licenses or markets insurance products through a contractual affiliate
or wholly owned life agency, which is properly insurance licensed. If
Broker-Dealer is properly state licensed then compensation may be paid to
Broker-Dealer in compliance with both state and NASD requirements.
If Broker-Dealer is not state insurance licensed and relies on the licensing of
a contractual affiliate or wholly owned life agency, the SEC has issued a number
of letters indicating that, under specific limited circumstances, it will take
"no action" against insurers (Distributor) paying compensation on registered
products to Broker-Dealer's contractual affiliate or wholly owned life agency.
At the request of Broker-Dealer, Distributor will provide copies of several of
these letters as well as a summary of their requirements.
If Broker-Dealer intends to rely on one of these "no-action" letters, legal
counsel for Broker-Dealer must confirm to Distributor in writing that all of the
circumstances of any one of the SEC no-action letters are applicable.
Broker-Dealer's counsel must summarize each point upon which the no-action
relief was granted and represent that Broker-Dealer's method of operation is
identical or meets the same criteria. Broker-Dealer's counsel must also confirm
that, to the best of counsel's knowledge, the SEC has not rescinded or modified
its no-action position since the letter was released.
The Broker-Dealer Sales and Supervision Agreement will not be finalized and no
new applications for registered products will be accepted or no new compensation
will be payable unless the appropriate proof of state licensing or no-action
relief is confirmed. In addition to a letter from Broker-Dealer's counsel,
copies of the following documentation is required:
- life insurance licenses for all states in which Broker-Dealer holds
these licenses and intends to operate and/or;
- life insurance licenses for any contractual affiliate or wholly owned
life agency; and
- the SEC No-Action Letter that will be relied upon.
If you have any questions regarding these matters, please contact your Life
Licensing and Contracting representative.
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