Exhibit 3(b)
BROKER-DEALER SALES AND
SUPERVISION AGREEMENT
This Broker-Dealer Sales and Supervision Agreement ("Agreement") is made by and
between [DISTRIBUTORS] ("Distributors"), each 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"), [INSURANCE COMPANIES] (referred to collectively as
"Companies"), and ___________________________ [BROKER-DEALER], an independent
broker-dealer registered with the SEC under the 1934 Act and a member of the
NASD ("Broker-Dealer"), or a bank as defined by Section 3(a)(6) of the 1934 Act
and Article I(b) of the NASD By-Laws, and any and all undersigned insurance
agency affiliates ("Affiliates") of Broker-Dealer. Distributors and Companies
are sometimes collectively referred to as "Hartford Life".
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 other
nonregistered life policies and annuity contracts ("Nonregistered Products, and
with the "Registered Products, collectively the "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 those
specific Products listed on the lines of business page(s) hereto, as the same
may be amended from time to time; and
WHEREAS, Distributors are the principal underwriters of the Products; and
WHEREAS, Distributors anticipate having representatives who are associated with
Broker-Dealer, who are NASD registered and are duly licensed under applicable
state insurance law and who are, where required, appointed as insurance agents
of Companies to solicit and sell the Registered and Nonregistered Products
("Registered Representatives"); and
WHEREAS, Distributors and the Companies acknowledge that 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 and Nonregistered Products; and
WHEREAS, Broker-Dealer agrees to provide the aforementioned supervisory and
administrative services to its Registered Representatives who have been
appointed by the Companies to sell the Registered and Nonregistered Products.
NOW THEREFORE, in consideration of the mutual covenants contained in this
Agreement, the parties agree to the following:
1. APPOINTMENT OF THE BROKER-DEALER
Companies hereby appoint, effective upon compliance with individual state
requirements, Broker-Dealer and Affiliates, if any, as an agent of the
Companies for the solicitation and procurement of applications for the
Products offered by the Companies, as outlined in the lines of business
page(s) attached herein, in all states in which the Companies are
authorized to do business and in which Broker-Dealer or any Affiliates
are properly insurance licensed. Broker-Dealer shall
1
supervise Registered Representatives in the solicitation, servicing and
sale of the Products in accordance with all applicable securities laws.
The Companies hereby authorize Broker-Dealer under applicable state
insurance laws to supervise Registered Representatives in connection with
the solicitation, servicing and sale of the Companies Registered and
Nonregistered Products.
2. AUTHORITY OF THE BROKER-DEALER
Broker-Dealer has the authority to represent Distributors and Companies
only to the extent expressly granted in this Agreement. Broker-Dealer
and any associated Registered Representatives shall not hold themselves
out to be employees of Companies or Distributors in any dealings with the
public. Broker-Dealer and any Registered Representatives shall be
independent contractors as to Distributors or Companies. Nothing
contained herein is intended to create a relationship of employer and
employee between Broker-Dealer and Distributors or Companies or between
Registered Representatives and Distributors or Companies.
3. BROKER-DEALER REPRESENTATION
Broker-Dealer represents that it is either:_____ a registered
broker-dealer under the 1934 Act, a member in good standing of the NASD,
and a registered broker-dealer under applicable state law to the extent
necessary to perform the duties described in this Agreement or _____ a
bank as defined by Section 3(a)(6) of the 1934 Act. 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 Conduct Rules, and
to comply with all applicable state and federal laws and the rules and
regulations of authorized regulatory agencies affecting the sale of the
Products by Broker-Dealer or any of its associated Registered
Representatives.
4. BROKER-DEALER OBLIGATIONS
4.1 TRAINING AND SUPERVISION
Broker-Dealer has full responsibility for the training and
supervision of all Registered Representatives and any other
persons associated with Broker-Dealer and any other persons who
are engaged directly or indirectly in the offer or sale of the
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 including all applicable continuing education
requirements. Companies and Distributors reserve the right to
monitor the Broker-Dealer's Registered Representatives as to sales
supervision and continuing education.
If a Registered Representative ceases to be a Registered
Representative of Broker-Dealer, is disqualified for continued
NASD registration or has its 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 Products on behalf of the
Companies. Broker-Dealer shall immediately notify the Companies
of such termination or suspension or failure to abide by he rules
and standards of Broker-Dealer.
4.2 SOLICITATION
Broker-Dealer agrees to supervise its Registered Representatives
so that they will only solicit applications in states where the
Products are approved for sale and where the Registered
Representatives are properly licensed and appointed in accordance
with applicable state laws
2
and Companies' rules, procedures and ethical standards then in
effect. Companies shall notify Broker-Dealer of the availability
of the Products in each state.
4.3 IMPROPER REPLACEMENT
Broker-Dealer and its Registered Representatives shall not make
any misrepresentation or in complete comparison of products for
the purpose of inducing a current or potential contract owner or
policyholder to lapse, forfeit or surrender his or her current
insurance contract in favor of purchasing Companies' or other
insurer's product. Communication with clients shall include
sufficient information regarding the appropriateness of the
transaction to allow the client to make an informed decision.
4.4 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 Product in the absence of reasonable
grounds to believe that the purchase is suitable for such
applicant, as required by applicable state insurance laws, the
suitability requirements of the 1934 Act and the NASD Conduct
Rules. 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.
4.5 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
Products other than those contained in the prospectus or in other
promotional material produced or authorized by Companies and
Distributors.
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 Products, including
generic advertising, illustrations and/or training materials which
may be used in connection with the sale of Products, it will
obtain the prior written approval of Companies, such approval not
to be unreasonably withheld. Broker-Dealer agrees that it has
full responsibility for any training or other promotional material
it distributes to sales personnel unless the prior written
approval of Companies has been obtained.
4.6 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 Products, or dealings
with the Companies or Distributors 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
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 Distributors upon request during normal
business hours. Companies and Distributors may retain copies of
any such records which Companies and Distributors, in their
discretion, deem necessary or desirable to keep.
4.7 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 Product which was
solicited by a Registered Representative of Broker-Dealer.
3
4.8 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 Distributors, 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.
5. COMPANIES' AND/OR DISTRIBUTORS' OBLIGATIONS
5.1 PROSPECTUS/PROMOTIONAL MATERIAL
Companies 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, approved by Companies and filed as applicable with state
insurance departments.
5.2 COMPENSATION
Companies 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 Products are sold. The
manner of commission payments (I.E. including without limitation
fronted or trail) is not subject to change after the effective
date of a contract for which the compensation is payable.
Companies may change the Commission Schedules attached to this
Agreement at any time. Such change shall become effective only
when Distributors or Companies provide the Broker-Dealer with
written notice of the change. No such change shall affect
first-year commissions on any contracts issued as a result of
applications received by Companies at Companies' Home Office prior
to the effective date of such change.
Distributors agree 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.
Distributors will not compensate Broker-Dealer for any 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.
Distributors will only compensate Broker-Dealer or Affiliates, as
outlined below, for those applications accepted by Companies, and
only after receipt of the required premium 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, 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, Distributors will only pay to Broker-Dealer or
Affiliates commissions or other compensation earned prior to
discovery of events requiring termination. No further commissions
or other compensation shall thereafter be payable.
5.3 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, Distributors agree to pay compensation to Broker-Dealer's
contractually affiliated insurance
4
agency, a wholly-owned agency affiliate of Broker-Dealer, or a
Registered Representative or principal of Broker-Dealer who is
properly state licensed and/or appointed. As appropriate, any
reference in this Agreement to Broker-Dealer shall apply equally
to such Affiliate. Distributors agree to pay compensation to an
Affiliate subject to Affiliate's agreement to comply with the
requirements of Exhibit A attached hereto. All other obligations
of Broker-Dealer continue to apply.
5.4 APPOINTMENT OF AGENT/REGISTERED REPRESENTATIVES
Companies, subject to internal standards for appointment of
agents/Registered Representatives, shall appoint all
agents/Registered Representatives designated by Broker-Dealer
prior to any solicitation of Products, unless specifically allowed
by state law. Such appointments shall be at the Companies
expense. The Companies shall not terminate any designated
agent/Registered Representative for non-production without prior
written notice to Broker-Dealer.
6. TERMINATION
6.1 This Agreement may be terminated by Distributors or Broker-Dealer
by giving sixty (60) days' notice in writing to the other parties.
6.2 Such notice of termination shall be sent by registered mail 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, Hartford Life, P.O. Box 5085, Hartford, Connecticut
06104-5085.
6.3 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.
6.4 This Agreement shall automatically terminate without notice upon
the occurrence of any of the events set forth below:
6.4.1 Upon the bankruptcy or dissolution of Broker-Dealer.
6.4.2 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.
6.4.3 When and if Broker-Dealer materially breaches this
Agreement or materially violates any applicable state or
federal law and/or administrative regulation in a
jurisdiction where Broker-Dealer transacts business.
6.4.4 When and if Broker-Dealer fails to obtain renewal of a
necessary license in any jurisdiction, but only as to that
jurisdiction and only until Broker-Dealer renews its
license in such jurisdiction.
6.5 The parties agree that on termination of this Agreement, any
outstanding indebtedness to Companies shall become immediately due
and payable.
7. GENERAL PROVISIONS
5
7.1 COMPLAINTS AND INVESTIGATIONS
Broker-Dealer shall cooperate with Companies in the investigation
and settlement of all complaints or claims against Broker-Dealer
and/or Companies relating to the solicitation or sale of the
Products under this Agreement. Broker-Dealer, Distributors and
Companies each shall promptly forward to the others any complaint,
notice of claim or other relevant information which may come into
its possession. Broker-Dealer, Distributors and Companies agree
to cooperate fully in any investigation or proceeding in order to
attempt to achieve a prompt and equitable resolution to all
complaints or claims and to ensure that Broker-Dealer's,
Distributors' and Companies' procedures with respect to related
solicitation or servicing are 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 Distributors or
Companies, Broker-Dealer shall forward forthwith such process or
notice to Hartford Life at its Home Office in Hartford,
Connecticut, by registered mail.
7.2 WAIVER
The failure of Distributors 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 Distributors or
Companies shall not constitute a course of conduct or a waiver in
the future of that same provision.
7.3 INDEMNIFICATION
7.3.1 INDEMNITY DEFINITIONS. The following definitions shall
apply for purposes of this Article VII (c):
"Claim" means any civil, administrative and/or criminal
action, claim, suit, and/or legal proceeding of any kind
that is brought against an Indemnitee by a third party (the
"Claimant") unaffiliated with such Indemnitee.
"Costs" means any damages, settlements, judgments, losses,
expenses interest, penalties, reasonable legal fees and
disbursements (including without limitation fees and costs
for investigators, expert witnesses and other litigation
advisors) and other costs incurred by an Indemnitee to
investigate, defend or settle a Claim, except that no
settlement payments shall be included in Costs unless the
applicable Indemnitor has given its prior express written
consent to the settlement, which consent shall not be
unreasonably withheld. Costs shall not include any
expenses for any investigation or defense of a Claim
incurred by Indemnitee after the date on which Indemnitor
gives notice of its election to assume the defense of such
Claim.
7.3.2 PARTIES LIABILITY.
(i) Broker-Dealer shall indemnify and hold Distributors and
Companies, and each of their respective directors,
officers, and employees, harmless from any Costs sustained
by Companies and/or the Distributors (including reasonable
attorneys' fees) on account of any claim, arising out of,
based upon, or otherwise relating to: (a) any breach of any
representation, warranty, covenant, agreement or other
obligation of Broker-Dealer or any Affiliate contained in
this Agreement; (b) a violation of state and/or federal
laws, regulations or rules, or the rules and regulations of
any applicable self-regulatory organizations by
Broker-Dealer or any Affiliate; (c) negligent, fraudulent,
illegal or wrongful action or inaction by Broker-Dealer or
any Affiliate or by persons employed or appointed by
Broker-Dealer. In any of the foregoing cases Broker-Dealer
or any Affiliate shall be an "Indemnitor" as such term is
used in this Agreement and each of the Distributors and the
Companies, and each of their directors, officers and
employees, as applicable, shall be an "Indemnitee" as such
term is used in this Agreement.
6
(ii) Each Affiliate shall indemnify and hold Distributors
and Companies, and each of their respective directors,
officers, and employees, harmless from any Costs sustained
by Companies or Distributors (including reasonable
attorneys' fees) on account of any claim, arising out of,
based upon, or otherwise relating to: (a) any breach of any
representation, warranty, covenant, agreement or other
obligation of the Affiliate contained in this Agreement;
(b) a violation of state and/or federal laws, regulations
or rules, or the rules and regulations of any applicable
self-regulatory organizations by Affiliate; (c) negligent,
fraudulent, illegal or wrongful action or inaction by the
Affiliate or by persons employed or appointed by the
Affiliate. In any of the foregoing cases the Affiliates
shall be an "indemnitor" as such term is used in this
Agreement and each of the Distributors and the Companies,
and each of their directors, officers and employees, as
applicable, shall be an "indemnitee" as such term is used
in this Agreement.
(iii) Distributors shall indemnify and hold Broker-Dealer,
and its directors, officers, and employees, harmless from
any Costs sustained by Broker-Dealer (including reasonable
attorneys' fees) on account of, arising out of, based upon,
or otherwise relating to: (a) any breach of any
representation, warranty, covenant, agreement or other
obligation of Distributors contained in this Agreement; (b)
a violation of state and/or federal laws, regulations or
rules, or the rules and regulations of any applicable
self-regulatory organizations by Distributors; (c)
negligent, fraudulent, illegal or wrongful action or
inaction by Distributors or by persons employed or
appointed by Distributors other than Broker-Dealer or its
employees or appointees. In any of the foregoing cases
Distributors shall be an "Indemnitor" as such term is used
in this Agreement and Broker-Dealer, and each of its
directors, officers and employees, as applicable, shall be
an "Indemnitee" as such term is used in this Agreement.
(iv) Companies shall indemnify and hold Broker-Dealer, and
its directors, officers, and employees, harmless from any
Costs sustained by Broker-Dealer (including reasonable
attorneys' fees) on account of, arising out of any claim,
based upon, or otherwise relating to: (a) any breach of any
representation, warranty, covenant, agreement or other
obligation of Companies contained in this Agreement; (b) a
violation of state and/or federal securities or insurance
laws, regulations or rules, or the rules and regulations of
any applicable self-regulatory organizations by
Companies(c) negligent, fraudulent, illegal or wrongful
action or inaction by Companies or by persons employed or
appointed by Companies other than Broker-Dealer or its
employees or appointees. In any of the foregoing cases
Companies shall be an "Indemnitor" as such term is used in
this Agreement and Broker-Dealer, and each of its
directors, officers and employees, as applicable, shall be
an "Indemnitee" as such term is used in this Agreement.
7.3.3 INDEMNIFICATION CLAIM NOTICE AND CASE MANAGEMENT.
Indemnitor shall not be liable under this indemnification
provision with respect to any Claim made against an Indemnitee
unless that Indemnitee shall have notified the Indemnitor in
writing within a reasonable time after the summons or other first
legal process giving information of the nature of the Claim shall
have been served upon that Indemnitee (or after the Indemnitee
shall have received notice of such service on any designated
agent). At any time after such notice, any Indemnitor may deliver
to the Indemnitee its written acknowledgment that Indemnitee is
entitled to indemnification under this Article VII (c) for all
Costs associated with the Claim. The Indemnitor shall thereafter
be entitled to assume the defense of the Claim and shall bear all
expenses associated therewith, including without limitation,
payment on a current basis of all previous Costs incurred by the
Indemnitee in relation to the Claim from the date the Claim was
brought. After notice from any Indemnitor to the Indemnitee of an
election to assume the defense of any Claim, the Indemnitee shall
not be liable to the Indemnitors for any Costs related to the
Claim. Until such time as Indemnitee receives notice of an
Indemnitor's election to assume the defense of any Claim,
Indemnitee may defend itself against the Claim and may
7
hire counsel and other experts of its choice and Indemnitors,
jointly and severally, shall be liable for payment of counsel and
other expert fees on a current basis as the same are billed.
7.3.4 COOPERATION AND UPDATES. To the extent that an Indemnitee
makes a claim for indemnification against an Indemnitor,
Indemnitee and Indemnitor shall each give the other reasonable
access during normal business hours to its books, records and
employees and those books, records and employees within its
control in connection with the Claim for which indemnification is
sought hereunder and shall otherwise cooperate with one another in
the defense of any such Claim. Regardless of which party defends
a particular Claim, the defending party shall give the other
parties written notice of any significant development in the case
as soon as practicable, but in any event within five (5) business
days after such development. In no event shall either Indemnitor
or Indemnitee be required to divulge any privileged information.
7.3.5 SETTLEMENT. If an Indemnitee is defending a Claim and: (1)
a settlement proposal is made by the Claimant, or (2) the
Indemnitee desires to present a settlement proposal to the
Claimant, then the Indemnitee promptly shall notify the
Indemnitors of such settlement proposal together with its
counsel's recommendation and shall request the consent of
Indemnitor(s). Indemnitee, in making such request, shall make
available complete access, during normal business hours, to any
and all discovery up to the date of such request. If the
Indemnitee desires to enter into the settlement and less than all
of the Indemnitors consent within five (5) business days (unless
such period is extended, in writing, by mutual agreement of the
parties hereto), then Indemnitors, from the time they fail to
consent forward, shall defend the Claim and shall further
indemnify the Indemnitees for all Costs associated with the Claim
which are in excess of the proposed settlement amount even if the
same were not originally covered under this Article VII. If an
Indemnitor is defending a Claim and a settlement requires an
admission of liability by Indemnitee or would require Indemnitee
to either take action (other than purely ministerial action) or
refrain from taking action (due to an injunction or otherwise),
Indemnitor may agree to such settlement only after obtaining the
express, written consent of Indemnitee.
7.3.6 INDEMNIFICATION DISPUTES. In the event that there is a
dispute between an Indemnitee and an Indemnitor over whether the
Indemnitor is liable for a Claim, then:
(i) Indemnitee shall defend the Claim in accordance with
the provisions of Article VII(c)(3) hereof in the same
manner and under the same terms as though there were no
dispute and Indemnitor had failed to elect to defend the
Claim itself and Indemnitee shall have the right to settle
such Claim pursuant to Article VII(c)(5) hereof;
(ii) In addition, Indemnitor must advise Indemnitee of
such a dispute and the reasons therefor, in writing, within
thirty (30) days after the Claim is first tendered to
Indemnitor, unless the Indemnitee and Indemnitor mutually
agree, in writing, to extend the time; and
(iii) The Indemnitee and the Indemnitor shall use good
faith efforts to resolve any dispute as to Indemnitor's
indemnification obligation. Should those efforts fail to
resolve the dispute, the ultimate resolution shall be
determined in a DE NOVO proceeding, separate and apart from
the underlying Claim brought by the Claimant, before a
court of competent jurisdiction. No finding or judgment in
any litigation on the underlying Claim, except for Cost
amounts, shall be given any weight in the court proceedings
on the indemnification issue. Either party may initiate
such proceedings with a court of competent jurisdiction at
any time following the termination of the efforts by such
parties to resolve the dispute (termination of such efforts
shall be deemed to have occurred 30 days from the
commencement of the same unless such time period is
8
extended by the written mutual agreement of the parties).
The prevailing party in such a proceeding shall be entitled
to recover reasonable attorneys' fees, costs and expenses.
From and after the date on which responsibility for a
disputed indemnity Claim is resolved: (I) Indemnitor shall
continue to pay all Costs that are determined by the
parties or the court, as the case may be, to be allocable
to any such Claim which is determined to be a Claim subject
to indemnity, and (II) Indemnitee shall (i) pay all future
Costs that are determined by the parties or the court, as
the case may be, to be allocable to any such Claim which is
determined to be a Claim not subject to indemnity and (ii)
reimburse Indemnitor for all Costs previously paid by
Indemnitor which are allocable to such Claim determined to
be a claim not subject to indemnity.
Broker-Dealer and Affiliates expressly authorize Companies
Distributors 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 or Distributors
under this Indemnification provision.
7.4 ASSIGNMENT
No assignment of this Agreement, or commissions payable hereunder,
shall be valid unless authorized in writing by each of the
non-assigning parties. Every assignment shall be subject to any
indebtedness and obligation of the assigning parties that may be
due or become due to non-assigning parties and any applicable
state insurance regulations pertaining to such assignments.
7.5 OFFSET
Broker-Dealer expressly authorizes Companies to deduct, from any
monies due under this Agreement, every indebtedness or obligation
of Broker-Dealer to Companies or to any of its affiliates under
this agreement.
7.8 CONFIDENTIALITY
Companies, Distributors 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.
7.9 PRIOR AGREEMENTS
This Agreement terminates all previous agreements, if any, between
Companies, Distributors and Broker-Dealer with respect to the
Products set forth in the lines of business page(s). However, the
execution of this Agreement shall not affect any obligations which
have already accrued under any prior agreement.
7.10 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 Distributors, 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.
9
EXHIBIT A
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. Distributors must ensure that any
Broker-Dealer with whom Distributors intend 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, in some states, appointed. For registered products, Distributors
must also comply with NASD regulations that require Distributors to pay
compensation to an NASD registered Broker-Dealer. Distributors must comply with
both state and NASD requirements.
Distributors require confirmation that Broker-Dealer holds current state
insurance licenses or markets insurance products through a contractual affiliate
or wholly-owned agency, which is properly insurance licensed and, if applicable,
appointed. 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 agency, the SEC has issued a number of
letters indicating that, under specific limited circumstances, it will take "no
action" against insurers (Distributors) paying compensation on registered
products to Broker-Dealer's contractual affiliate or wholly-owned agency. At
the request of Broker-Dealer, Distributors 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 Distributors in writing that all of
the circumstances of any one of the SEC no-action letters are applicable,
specifically including the jurisdictions for which Broker-Dealer does not hold
current state insurance licenses. 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 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:
insurance licenses for all states in which Broker-Dealer holds
these licenses and intends to operate and/or;
insurance licenses for any contractual affiliate or wholly-owned
agency; and
the SEC No-Action Letter that will be relied upon.
10