Exhibit 99.1(A)(3)
THE GUARDIAN INSURANCE & ANNUITY COMPANY
BROKER-DEALER SUPERVISORY AND SERVICE
AGREEMENT
Agreement by and between The Guardian Insurance & Annuity Company, Inc.
("GIAC"), a Delaware corporation, Guardian Investor Services Corporation
("GISC"), a registered broker-dealer with the Securities and Exchange Commission
("SEC") under the Securities Exchange Act of 1934 and a member of the National
Association of Securities Dealers Inc. ("NASD"), and
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("Broker-Dealer") also a registered broker-dealer with the SEC under the
Securities Exchange Act of 1934 and a member of the NASD.
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I. WITNESSETH
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Whereas, GIAC proposes to have Broker-Dealer's registered representatives
("Representatives") who are also insurance agents solicit and sell certain
Insurance and Annuity Contracts (the "Plans") more particularly described in
this Agreement and which are deemed to be securities under the Securities Act of
1933; and
Whereas, GIAC has appointed GISC as the Distributor of the Plans and has agreed
with GISC that GISC shall be responsible for the training and supervision of
such Representatives, with respect to the solicitation and offer or sale of any
of the Plans, and also for the training and supervision of any other "persons
associated" with Broker-Dealer who are engaged directly or indirectly therewith;
and GISC proposes to delegate, to the extent legally permitted, said supervisory
duties to Broker-Dealer; and
Whereas, GIAC and GISC propose to have Broker-Dealer provide certain
administrative services to facilitate solicitation for and sales of the Plans.
Now therefore, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
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II. APPOINTMENT OF BROKER-DEALER
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GIAC and GISC hereby appoint Broker-Dealer to supervise solicitations for and
sales of the Plans and to provide certain administrative services to facilitate
solicitations for and sales of the Plans.
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III. AUTHORITIES AND DUTIES OF BROKER-DEALER
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A. PLANS
The Plans issued by GIAC to which this Agreement applies are listed in Exhibit
A. These Plans may be amended from time to time by GIAC. GIAC, in its sole
discretion and without notice to Broker-Dealer, may suspend sales of any Plans
or may amend any policies or contract evidencing such Plans.
B. LICENSING
Broker-Dealer shall, at all times when performing its functions under this
agreement, be registered as a securities broker with the SEC and NASD and
licensed or registered as a securities broker-dealer in the states and other
local jurisdictions that require such licensing or registration in connection
with variable annuity sales activities or the supervision of Registered
Representatives who perform such activities in the respective location.
Broker-Dealer shall assist GISC in the appointment of Representatives under the
applicable insurance laws to sell the Plans. Broker-Dealer shall fulfill all
requirements set forth in the General Letter of Recommendation, attached as
Exhibit B, in conjunction with the submission of licensing/appointment papers
for all applicants as insurance agents of GIAC. All such licensing/appointment
papers should be submitted to GISC by Broker-Dealer.
C. SECURING APPLICATIONS
All applications for Plans shall be made on application forms supplied by GIAC
and all payments collected by Broker-Dealer or any Representative of
Broker-Dealer shall be remitted promptly in full, together with such
applications, forms and any other required documentation, directly to GIAC at
the address indicated on such application or to such other address as GIAC may,
from time to time, designate in writing. Broker-Dealer shall review all such
applications for completeness. Checks or money orders in payment on any such
Plan shall be drawn to the order of "The Guardian Insurance & Annuity Company."
All applications are subject to acceptance or rejection by GIAC at its sole
discretion.
D. MONEY RECEIVED BY BROKER-DEALER
All money payable in connection with any of the Plans, whether as premium,
purchase payment or otherwise, and whether paid by or on behalf of any
policyholder, contract owner or certificate holder or anyone else having an
interest in the Plans, is the property of GIAC, and shall be transmitted
immediately in accordance with the administrative procedures of GIAC without any
deduction or offset for any reason, including by example, but not limitation,
any deduction or offset for compensation claimed by Broker-Dealer.
E. SUPERVISION OF REPRESENTATIVES
Broker-Dealer shall have full responsibility for the training and supervision of
all Representatives associated with Broker-Dealer who are engaged directly or
indirectly in the offer or sale of the Plans, and all such persons shall be
subject to the control of Broker-Dealer with respect to such persons'
securities-regulated activities in connection with the Plans. Broker-Dealer will
cause the Representatives to be trained in the sale of the Plans: will use its
best efforts to cause such Representatives to qualify under applicable federal
and state laws to engage in the sale of the Plans; and will cause such
Representatives to be registered representatives of Broker-Dealer before such
Representatives engage in the solicitation of applications for the Plans; and
will cause such Representatives to limit solicitation of applications for the
Plans to jurisdictions where GIAC has authorized such solicitation.
Broker-Dealer shall cause such Representatives' qualifications to be certified
to the satisfaction of GISC and shall notify GISC if any Representative ceases
to be a registered representative of Broker-Dealer.
F. REPRESENTATIVES AGREEMENT
Broker-Dealer shall cause each such Representative to execute a Registered
Representative's Agent Agreement with GIAC before a Representative shall be
permitted to solicit applications for the sale of the Plans. GISC shall furnish
Broker-Dealer with copies of Registered Representative's Agent Agreements for
execution by the Representatives.
G. COMPLIANCE WITH NASD RULES OF FAIR PRACTICE AND FEDERAL AND STATE SECURITY
LAWS
Broker-Dealer shall fully comply with the requirements of the NASD and of the
Securities Exchange Act of 1934 and all other applicable federal or state laws
and will establish such rules and procedures as may be necessary to cause
diligent supervision of the securities activities of the Representatives. Upon
request by GISC, Broker-Dealer shall furnish such appropriate records as may be
necessary to establish such diligent supervision.
H. NOTICE OF REPRESENTATIVE'S NONCOMPLIANCE
In the event a Representative fails or refuses to submit to supervision of
Broker-Dealer or otherwise fails to meet the rules and standards imposed by
Broker-Dealer on its Representatives, Broker-Dealer shall certify such fact to
GIAC and shall immediately notify such Representative that he or she is no
longer authorized to sell the Plans, and Broker-Dealer shall take whatever
additional action may be necessary to terminate the sales activities of such
Representative relating to the Plans.
I. PROSPECTUSES, SALES PROMOTION MATERIAL AND ADVERTISING
Broker-Dealer shall be provided, without any expense to Broker-Dealer, with
prospectuses relating to the Plans and such other material as GISC determines to
be necessary or desirable for use in connection with sales of the Plans. No
sales promotion materials or any advertising relating
to the Plans shall be used by Broker-Dealer unless the specific item has been
approved in writing by GISC.
J. RIGHT OF REJECTION
Broker-Dealer and/or GIAC, each at their sole discretion, may reject any
applications or payments remitted by Representative through the Broker-Dealer
and may refund an applicant's payments to the applicant. In the event such
refunds are made, and if Representative has received compensation based on an
applicant's Payment that is refunded, Representative shall promptly repay such
compensation to the Broker-Dealer. If repayment is not promptly made, the
Broker-Dealer may, at its sole option, deduct any amounts due it from
Representative from future commissions otherwise payable to Representative.
K. ASSIGNMENT
Neither this Agreement nor any of its benefits may be assigned by Representative
without the written consent of GIAC and GISC, and any assignment of this
agreement, compensation or other benefits or obligations hereunder shall not be
valid if made without such consent.
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IV. COMPENSATION
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A. SUPERVISORY FEES, SERVICE FEES AND COMMISSIONS
Supervisory and service fees payable to Broker-Dealer and commissions payable to
Representatives in connection with the Plans shall be paid by GIAC to the
person(s) entitled thereto through Broker-Dealer or as otherwise required by
law. GISC will provide Broker-Dealer with a copy of GIAC's current Dealer
Concession and Commissions Schedule. These fees and commissions will be paid as
a percentage of premiums or purchase payments (premiums and purchase payments
are hereinafter referred to collectively as "Payments") received in cash or
other legal tender and accepted by GIAC on applications obtained by the various
Representatives of the Broker-Dealer. Upon termination of this Agreement, all
compensation to the Broker-Dealer hereunder shall cease; however, Broker-Dealer
shall continue to be liable for any chargebacks pursuant to the provisions of
said Dealer Concession and Commissions Schedule or for any other amounts
advanced by or otherwise due GIAC hereunder.
B. TIME OF PAYMENT
GIAC shall pay any compensation due Broker-Dealer and Representatives of
Broker-Dealer within fifteen (15) days after the end of the calendar month in
which Payments upon which such compensation is based are accepted by GIAC.
C. AMENDMENT OF SCHEDULES
GIAC may, upon at least ten (10) days prior written notice to Broker-Dealer
change the Dealer Concession and Commissions Schedule. Any such change shall be
by written amendment of the
particular schedule or schedules and shall apply to compensation due on
applications received by GIAC after the effective date of such notice.
D. PROHIBITION AGAINST REBATES
If Broker-Dealer or any Representative of Broker-Dealer shall rebate or offer to
rebate all or any part of a Payment on a policy or contract or certificate
issued by GIAC, or if Broker-Dealer or any Representative of Broker-Dealer shall
withhold any Payment on any policy or contract or certificate issued by GIAC,
the same may be grounds for termination of this Agreement by GIAC. If
Broker-Dealer or any Representative of Broker-Dealer shall at any time induce or
endeavor to induce any owner of any policy or contract issued hereunder or any
certificate holder to discontinue Payments or to relinquish any such policy or
contract or certificate except under circumstances where there is reasonable
grounds for believing the policy, contract or certificate is not suitable for
such person, any and all compensation due Broker-Dealer hereunder shall cease
and terminate.
E. INDEBTEDNESS
Nothing in this Agreement shall be construed as giving Broker-Dealer the right
to incur any indebtedness on behalf of GIAC. Broker-Dealer hereby authorizes
GIAC to set off liabilities of Broker-Dealer to GIAC against any and all amounts
otherwise payable to Broker-Dealer by GIAC.
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V. GENERAL PROVISIONS
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A. WAIVER
Failure of any party to insist upon strict compliance with any of the conditions
of this Agreement shall not be construed as a waiver of any of the conditions,
but the same shall remain in full force and effect. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute a waiver of
any other provisions, whether or not similar, nor shall any waiver constitute a
continuing waiver.
B. INDEPENDENT CONTRACTORS
GIAC and GISC are independent contractors with respect to Broker-Dealer and to
Representatives.
C. LIMITATIONS
No party other than GIAC shall have the authority on behalf of GIAC to make,
after, or discharge any policy or contract or certificate issued by GIAC, to
waive any forfeiture or to grant, permit, nor to extend the time of making any
Payments, nor to guarantee dividends, nor to alter the forms which GIAC may
prescribe or substitute other forms in place of those prescribed by GIAC, nor to
enter into any proceeding in a court of law or before a regulatory agency in the
name of or on behalf of GIAC.
D. FIDELITY BOND
Broker-Dealer represents that all directors, officers, employees and
Representatives of Broker-Dealer who are licensed pursuant to this Agreement as
GIAC agents for state insurance law purposes or who have access to funds of
GIAC, including but not limited to funds submitted with applications for the
Plans or funds being returned to owners or certificate holders, are and shall be
covered by a blanket fidelity bond, including coverage for larceny and
embezzlement, issued by a reputable bonding company. This bond shall be
maintained by Broker-Dealer at Broker-Dealer's expense. Such bond shall be, at
least, of the form, type and amount required under the NASD Rules of Fair
Practice. GIAC may require evidence, satisfactory to it, that such coverage is
in force and Broker-Dealer shall give prompt, written notice to GIAC of any
notice of cancellation or change of coverage.
Broker-Dealer assigns any proceeds received from the fidelity bonding company to
GIAC to the extent of GIAC's loss due to activities covered by the bond. If
there is any deficiency amount, whether due to a deductible or otherwise,
Broker-Dealer shall promptly pay GIAC such amount on demand and Broker-Dealer
hereby indemnities and holds harmless GIAC from any such deficiency and from the
costs of collection thereof (including reasonable attorneys' fees).
E. BINDING EFFECT
This Agreement shall be binding on and shall inure to the benefit of the parties
to it and their respective successors and assigns provided that Broker-Dealer
may not assign this Agreement or any rights or obligations hereunder without the
prior written consent of GIAC.
F. REGULATIONS
All parties agree to observe and comply with the existing The Guardian In laws
and rules or regulations of applicable local, state, or federal regulatory
authorities and with those which may be enacted or adopted during the term of
this Agreement regulating the business contemplated hereby in any jurisdiction
in which the business described herein is to be transacted.
G. NOTICES
All notices or communications shall be sent to the address shown in sub
paragraph L of Section V of this Agreement or to such other address as the party
may request by giving written notice to the other parties.
H. GOVERNING LAW
This Agreement shall be construed in accordance with governed by the laws of the
state of New York.
I. AMENDMENT OF AGREEMENT
GIAC reserves the right to amend this Agreement at any time and the submission
of an application by a Representative of a Broker-Dealer after notice of any
such amendment has been sent to the other parties shall constitute the other
parties' agreement to any such amendment.
J. SALES PROMOTION MATERIALS AND ADVERTISING
Broker-Dealer shall not print, publish or distribute any advertisement, circular
or any document relating to the Plans or relating to GIAC unless such
advertisement, circular or document shall have been approved in writing by GIAC
or by GISC; and in the case of items within the scope of Section 111,
sub-Paragraph 1, approved in writing by GISC, provided, however, that nothing
herein shall prohibit Broker-Dealer from advertising life insurance and
annuities in general or on a generic basis.
K. TERMINATION
This Agreement may be terminated, without cause, by any party upon thirty (30)
days prior written notice; and may be terminated, for cause, by any party
immediately; and shall be terminated if GISC or Broker-Dealer shall cease to be
registered Broker-Dealers under the Securities Exchange Act of 1934 and members
of the NASD.
L. ADDRESS FOR NOTICES
The Guardian Insurance & Annuity Company
0000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
The Guardian Insurance & Annuity Company, Inc.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X Xxxxxx, Secretary
For Broker-Dealer
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Firm Name
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Address
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City, State, Zip
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Corporate Federal Tax ID#
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Print Name
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Signature Title
Guardian Investor Services Corporation
By
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Xxxx X. Xxxxx, President
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Date
EB-72 5/93
EXHIBIT B
GENERAL LETTER OF RECOMMENDATION
Broker-Dealer hereby certifies to GIAC that all the following requirements will
be fulfilled in conjunction with the submission of licensing/appointment papers
for all applicants as agents of GIAC submitted by Broker-Dealer. Broker-Dealer
will, upon request, forward proof of compliance with same to GIAC in a timely
manner.
1. We have made a thorough and diligent inquiry and investigation relative to
each applicants identity, residence and business reputation and declare that
each applicant is personally known to us, has been examined by us, is known to
be of good moral character, has a good business reputation, is reliable, is
financially responsible and is worthy of a license. Each individual is
trustworthy, competent and qualified to act as an agent for GIAC to hold himself
out in good faith to the general public. We vouch for each applicant.
2. We have on file a U-4 form which was completed by each applicant. We have
fulfilled all the necessary investigative requirements for the registration of
each applicant as a registered representative through our NASD-member firm, and
each applicant is presently registered as a NASD registered representative.
The above information in our files indicates no fact or condition which would
disqualify the applicant from receiving a license and all the findings of all
investigative information is favorable.
3. We certify that all educational requirements have been met for the specific
state each applicant is requesting a license in, and that all such persons have
fulfilled the appropriate examination, education and training requirements.
4. If the applicant is required to submit his picture, his signature, and
securities registration in the state in which he is applying for a license, we
certify that those items forwarded to GIAC are those of the applicant and the
securities registration is a true copy of the original.
5. We hereby warrant that the applicant is not applying for a license with GIAC
in order to place insurance chiefly and solely on his life or property, lives or
property of his relatives, or property or liability of his associates.
6. We certify that each applicant will receive close and adequate supervision,
and that we will make inspection when needed of any or all risks written by
these applicants, to the end that the insurance interest of the public will be
properly protected.
7. We will not permit any applicant to transact insurance as an agent until duly
licensed therefore. No applicants have been given a contract or furnished
supplies, nor have any applicants been permitted to write, solicit business, or
act as an agent in any capacity, and they will not be so permitted until the
certificate of authority or license applied for is received.
