BROKER-DEALER SALES AND
SUPERVISION AGREEMENT
This Broker-Dealer Sales and Supervision Agreement ("Agreement") is made by and
between 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"), Hartford Life
Insurance Company and ITT Hartford Life and Annuity Insurance Company (referred
to collectively as "Companies"), and ___________________________________________
___________________________, an independent 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.
Distributor and Companies are sometimes collectively referred to as "ITT
Hartford".
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, who are NASD registered and are duly licensed
under applicable state insurance law and appointed as life insurance agents of
Companies to solicit and sell the Registered Products ("Registered
Representatives"); 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 NASD
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 for the sale of Registered Products on behalf of the
Companies. Broker-Dealer shall immediately notify ITT Hartford 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 and where the Registered
Representatives are properly licensed and appointed in accordance
with applicable state laws and ITT Hartford's rules and procedures
then in effect. ITT Hartford shall notify Broker-Dealer of the
availability of the Registered Products in each state.
(c) IMPROPER REPLACEMENT
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
his or her insurance contract in favor of purchasing a Registered
Product.
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(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 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 approval of ITT Hartford, 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 or Distributor 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,
supervisory and inspection procedures 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 ITT Hartford 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 and Registered Representatives only have the authority
to collect initial premiums except as 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.
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V. COMPANIES AND/OR DISTRIBUTOR OBLIGATIONS
(a) PROSPECTUS/PROMOTIONAL MATERIAL
ITT Hartford 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.
(b) COMPENSATION
ITT Hartford 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.
ITT Hartford 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 due to fraudulent
activities or a material breach of this Agreement 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.
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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.
(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 ITT Hartford in the investigation
and settlement of all complaints or claims against Broker-Dealer
and/or ITT Hartford 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
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provision.
(c) INDEMNIFICATION
Broker-Dealer shall indemnify and hold Distributor and Companies
harmless from any liability, loss or expense sustained by Distributor
or Companies (including reasonable attorney fees) on account of any
acts or omissions by Broker-Dealer, its employees or Registered
Representatives associated with Broker-Dealer, except to the extent
Companies' or Distributor's acts or omissions caused such 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 or its Affiliates
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.
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(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, 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 effective date below.
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:
Effective 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 must 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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