Exhibit c.3.
SELLING AGREEMENT
--------------------------------------------------------------------------------
THIS AGREEMENT is effective as of this ______ day of __________, 2006 by and
among The Travelers Insurance Company ("TIC"), The Travelers Life and Annuity
Company ("TLAC") (collectively the "Insurance Companies") Travelers
Distribution LLC. ("Underwriter") and ((BDNAME)) ("Broker/Dealer") together
with its affiliated insurance agencies (collectively the "Selling Entities") as
are designated on the signature pages to this agreement.
This agreement supercedes any previous selling agreements in force among the
parties with respect to the subject matter herein, either oral or written. In
consideration of the mutual promises contained in this agreement, the parties
agree as follows:
1. PURPOSE AND BACKGROUND. The Underwriter, the Insurance Companies,
Broker/Dealer and Selling Entities enter into this agreement for the purpose of
authorizing Broker/Dealer, through certain of its life insurance licensed
agents to solicit applications for such life insurance (including variable
life), annuity contracts (including fixed, variable, and modified guaranteed
annuity products), and such other insurance products as shall be mutually
agreed upon (collectively the "Insurance Contracts") as are listed on the
Schedule Pages attached to this agreement as Exhibit 1 (the "Schedule Pages").
The Schedule Pages may be amended from time to time to add other Insurance
Contracts.
2. LICENSING AND APPOINTMENT. The Insurance Companies have each respectively
appointed Underwriter to serve as the distributor and principal underwriter of
the variable Insurance Contracts. The Underwriter is registered with the
Securities and Exchange Commission ("SEC"), the National Association of
Securities Dealers, Inc. ("NASD") and all other appropriate state securities
regulatory authorities as a broker/dealer. Broker/Dealer possesses (or
affiliated insurance agencies under its control - defined as "Selling Entities"
in this agreement - possess) all required insurance licenses necessary to sell
the Insurance Contracts.
Accordingly Underwriter hereby appoints Broker/Dealer to distribute the
variable Insurance Contracts listed on the Schedule Pages through its
Registered Representatives ("Registered Representatives").
3. SECURITIES LICENSING/NASD COMPLIANCE. Broker/Dealer shall at all times, when
performing its functions under this agreement, be registered and in good
standing as a securities broker/dealer with the SEC and the 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
sales of Variable Insurance Contracts.
Broker/Dealer and Selling Entities agree to abide by all applicable state and
federal rules and regulations promulgated thereunder. For the purpose of
compliance with any such laws or regulations, Broker/Dealer acknowledges and
agrees that, in performing broker/dealer services covered by this Agreement, it
is acting in the capacity of an independent broker as defined by the by-laws of
the NASD and not as an agent or employee of either Underwriter or any
registered investment company.
4. INSURANCE LICENSING. Broker/Dealer represents and warrants that it is
authorized and licensed as an agent under applicable state insurance laws to
solicit the Insurance Contracts. In
1
the event Broker/Dealer is not licensed as such, an insurance agency affiliated
with Broker/Dealer shall be licensed as an agent under applicable state
insurance laws to solicit the contracts of insurance contemplated hereunder.
Such Selling Entity will be designated as a party to this Agreement. Without
limiting the foregoing, Broker/Dealer and Selling Entities represent that they
are in compliance with the terms and conditions of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ (SUB. NOM.
FIRST OF AMERICA BROKERAGE SERVICE, INC.) (avail. Sept. 28, 1995) issued by the
staff of the Securities and Exchange Commission with respect to the
non-registration as a broker-dealer of an insurance agency associated with a
registered broker-dealer. Broker/Dealer and Selling Entities shall notify
Underwriter and Insurance Companies immediately in writing if Broker/Dealer
and/or Selling Entities fail to comply with any such terms and conditions and
shall take such measures as may be necessary and as promptly as practicable
under the circumstances to cure any such non-compliance.
Broker/Dealer and Selling Entities each represent that they will engage in the
solicitation and sale of Insurance Contracts in accordance with applicable
insurance and securities laws and regulations and in conformity with the
Insurance Companies' Compliance Manual and Policies as they may be communicated
from time to time. Broker/Dealer agrees to supervise its Registered
Representatives so that they will only solicit applications in states where the
Insurance Products are approved for sale and where the Registered
Representatives are properly licensed and appointed in accordance with
applicable state laws and Insurance Companies' rules and procedures then in
effect. Insurance Companies shall notify Broker/Dealer of the availability of
the Insurance Products in each state.
5. APPOINTMENT OF BROKER/DEALER. The Insurance Companies hereby authorize the
Broker/Dealer to sell those Insurance Contracts listed on the Schedule Pages,
as such pages may be amended from time to time, including the variable
Insurance Contracts, through its Registered Representatives. Broker/Dealer and
Selling Entities are also appointed to perform certain administrative services
necessary to facilitate the solicitation and sales of such Insurance Contracts.
Broker/Dealer or, if applicable, Selling Entities, each are appointed general
agencies of Insurance Companies and each are authorized to sell the Insurance
Contracts listed on the Schedule Pages.
Pursuant to the appointments described in this Section 5, Broker/Dealer and
Selling Entities must comply with the following requirements:
(a) All securities activities provided in connection with the sale of
variable Insurance Contracts will be through Registered
Representatives of Broker/Dealer;
(b) Unregistered employees of Broker/Dealer will neither engage in
securities activities nor receive any compensation based on
transactions in variable Insurance Contracts or the provision of
securities advice;
(c) Broker/Dealer will maintain all necessary books and records relating
to transactions in variable Insurance Contracts in accordance with
applicable securities and insurance laws and regulations;
2
(d) Customers purchasing Insurance Contracts will make their checks
payable to Insurance Companies. Cash, money orders and/or travelers
checks are not acceptable methods of payment. Broker/Dealer will
comply with Insurance Companies' Anti-Money Laundering policies as are
communicated from time to time. Broker/Dealer agrees that it will not
net its commissions from any premium payment, except by prior written
agreement with Insurance Companies and Underwriter, which agreement
must be attached hereto as an addendum, prior to any such netting of
commissions, and that agreement with respect thereto may be withheld
by Insurance Companies for any reason or for no reason.
(e) Broker/Dealer will notify Insurance Company if the writing agent for
any policy changes, or if the writing agent or customer requests that
the writing agent for a policy be changed. Travelers will honor all
such customer requests.
For the purpose of compliance with any applicable state insurance laws or
regulations promulgated under them, Broker/Dealer (and, if applicable, Selling
Entities) acknowledges and agrees that, solely in performing the
insurance-selling functions reflected by this Agreement, it or its Registered
Representative is acting as the agent of the Insurance Companies and, in that
capacity, is authorized only to solicit applications from the public for the
Insurance Contracts.
6. RESPONSIBILITY FOR REGISTERED REPRESENTATIVES' ACTIVITIES. Broker/Dealer is
responsible to select, train, supervise and control persons whom it will allow
to solicit applications for the Insurance Contracts in conformance with
applicable state and federal laws and regulations. Persons engaged in the sale
of variable Insurance Contracts will be Registered Representatives of
Broker/Dealer in accordance with the rules of the NASD. To the extent a
Registered Representative of Broker/Dealer is accompanied by other persons
during the sales process, including, e.g., registered representatives of other
broker-dealers or any unregistered person, Broker/Dealer shall nonetheless be
fully responsible for all sales activities in which its Registered
Representative in any way participates.
The Insurance Companies shall have authority to determine whether to appoint or
terminate each Registered Representative or licensed agent as an insurance
agent of the Insurance Companies. Broker/Dealer agrees to cooperate in
supplying information or making recommendations necessary to complete such
insurance agent appointments.
Unless otherwise agreed upon, in jurisdictions which require that Insurance
Companies perform background investigations of agents prior to appointment,
Broker/Dealer agrees to provide such information as may be necessary to perform
such review, including but not limited to obtaining permission from each
Registered Representative who seeks such appointment.
To the extent agreed upon by the parties to this agreement, Broker/Dealer (and
Selling Entities) will certify as to the fitness of each individual that it
presents for appointment with the Insurance Companies. Such certification will
take the form of a General Letter of Recommendation which will describe the
representations Broker/Dealer will make for each agent. If applicable, a
General Letter of Recommendation will be added to this Agreement and
incorporated hereunder. Insurance Companies will have the right to periodically
request assurances or otherwise audit Broker/Dealer's records to ensure
compliance with the terms of the General Letter of Recommendation. Such
assurances may take the form of a questionnaire requesting updated assurances
about the representations contained in the General Letter of Recommendation and
made for each agent presented to the Insurance Companies for appointment.
3
Upon request by Insurance Companies, Broker/Dealer and/or Selling Entities
shall furnish such appropriate records and permit such reasonable audit
procedures as may be necessary to establish supervision of its Registered
Representatives in connection with sales of the Insurance Contracts. Upon
Insurance Companies' review of such supervisory materials, Broker/Dealer shall
make such changes to its Registered Representatives' rules of conduct as
Insurance Companies may reasonably request but only to the extent that such
requests relate to sale of the Insurance Contracts.
Broker/Dealer shall notify Insurance Companies if any Registered Representative
ceases to be a Registered Representative of Broker/Dealer or ceases to maintain
the proper licensing required for the sale of the Insurance Contracts or fails
to meet material rules and standards imposed by either Broker/Dealer or the
Selling Entities including but not limited to continuing education requirements.
7. SUITABILITY OF SALES OF INSURANCE CONTRACTS. With regard to variable
Insurance Contracts, Broker/Dealer will review all contract and policy
applications for suitability, completeness and correctness as to form.
Broker/Dealer shall also be responsible for ensuring compliance with NASD
suitability rules and standards applicable to sales of variable Insurance
Contracts. Broker/Dealer is also responsible for ensuring that all sales are in
compliance with applicable state insurance laws and regulations.
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 an Insurance 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 Securities Exchange Act of 1934 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.
Broker/Dealer will promptly, but in no case later than the end of the business
day that Broker/Dealer receives applications and payment, forward to the
applicable Insurance Company, at addresses provided, all such applications
found suitable and in good form, together with any payments received with such
applications. Broker/Dealer will immediately return to the applicant all
applications deemed by Broker/Dealer to be unsuitable or not complete and
correct as to form together with any payments received. The Insurance Companies
reserve the right to reject any Insurance Policy application and return any
payment made in connection with an application which is rejected.
Delivery to the Insurance Companies of Insurance Contract applications, any
initial payment in connection therewith, as well as any subsequent payments or
transactions processed through the Broker/Dealer or Selling Entities, shall
remain the sole responsibility of Broker/Dealer and Selling Entities until such
time as such applications and payments are actually received by Insurance
Companies in good order. Any reversal and reprocessing requested by
Broker/Dealer subsequent to a transaction processed by Insurance Companies in
accordance with instructions and/or data received from Broker/Dealer, as well
as any failure of the method (e.g., utilization of an electronic order entry
vendor) chosen by Broker/Dealer to transmit such applications, transactions and
payments, is the sole responsibility of the Broker/Dealer and Broker/Dealer
4
shall indemnify the Underwriter and Insurance Companies against any demands by
Broker/Dealer, Selling Entities and/or its, or their, customers for
reimbursement of any losses related thereto.
Insurance Contracts issued will be forwarded to Broker/Dealer or, at the
direction of Broker/Dealer, to the Registered Representative for delivery to
the Contract Owner, or directly to the Contract Owner. Broker/Dealer shall
obtain and retain a written receipt for each Insurance Contract which
Broker/Dealer or its Registered Representatives deliver (which, if appropriate,
will also document that there is no apparent change in the Contract Owner's
health or that the policy was not so delivered due to an apparent change in the
Contract Owner's health) and warrants that it will deliver such documents on a
timely basis.
The parties acknowledge that sales and solicitations may, where agreed to in
advance by Insurance Companies and consistent with state insurance laws and
regulations and Insurance Companies' administrative practices, be conducted
either without an application or on a basis where an application or premium is
submitted subsequent to a sale. If such sales procedures are permitted,
Broker/Dealer agrees that it will continue to be responsible for compliance
with applicable laws concerning, among other things, suitability and policy
delivery requirements and for returning any compensation paid which was based
upon premium prior to receipt thereof by Insurance Companies if such premium is
not subsequently received by Insurance Companies within the time frames allowed
therefore in accordance with Insurance Companies' administrative practices then
in effect. Broker/Dealer agrees to hold Insurance Companies and Underwriter
harmless for any failure to follow such rules, regulations or practices.
8. SOLICITATION/REPRESENTATIONS CONCERNING THE INSURANCE CONTRACTS.
Broker/Dealer will perform the selling functions required by this Agreement in
accordance with the terms and conditions of any applicable prospectus(es).
Broker/Dealer will make only representations included in the prospectus or in
any authorized supplemental material. No sales solicitations, including the
delivery of supplemental sales literature or other such materials, shall occur,
be delivered to, or used with a prospective purchaser unless accompanied or
preceded by appropriate and then current prospectuses. Neither Broker/Dealer
nor Selling Entities will make representations concerning an Insurance Contract
contrary to the terms of the particular Insurance Contract.
Broker/Dealer and Selling Entities understand, acknowledge, and represent that
Insurance Contracts and Purchase Payments thereunder shall not be solicited,
offered, or sold in connection with any so-called market timing or asset
allocation program, plan, arrangement or service that has not been approved in
advance in writing by Insurance Companies and Underwriter. Should Underwriter
or Insurance Companies determine at their sole discretion that Broker/Dealer or
a Selling Entity is soliciting, offering, or selling, or has solicited,
offered, or sold, Insurance Contracts or Purchase Payments subject to any
so-called market timing or asset allocation program, plan, arrangement or
service, Underwriter or Insurance Companies may take such action which is
necessary, at its sole discretion, to halt such solicitations, offers or sales.
Furthermore, in addition to any indemnification provided in Section 12 of this
Agreement and any other liability that Broker/Dealer and Selling Entities might
have, Broker/Dealer and Selling Entities shall each be liable to Underwriter
and Insurance Companies and each Fund affected by any so-called market timing
or asset allocation program, plan, arrangement or service, for any damages or
losses, actual or consequential, sustained by Underwriter or Insurance
Companies or
5
any Fund, as a result of any so-called market timing or asset allocation
program, plan, arrangement or service which causes such losses or damages
following solicitation, offer, or sale of an Insurance Contract or Purchase
Payment subject to market timing or asset allocation or similar service by
Broker-Dealer, Selling Entities, Registered Representatives or any agents
thereof.
Any material prepared or used by Broker/Dealer or its Registered
Representatives, which describes in whole or in part or refers by name or form
to any of the Insurance Companies' Insurance Contracts or underlying funds or
uses the name of the Insurance Companies, Underwriter, or Citigroup Inc., or
the logos or service marks of any of them, or the name, logos or service marks
of any "Affiliated Company" of any of them, as that term is defined in
Section 2(a)(2) of the Investment Company Act of 1940, other than the
Broker/Dealer or any subsidiary of it, must be approved by Underwriter in
writing prior to any such use.
Broker/Dealer and Selling Entities acknowledge that information pertaining to
Underwriter and Insurance Companies is proprietary in nature. Broker/Dealer and
Selling Entities agree that they will not disclose or provide access to any
information concerning Insurance Companies or Underwriter's products, services
or programs to any person, other than such Registered Representatives who are
appointed as agents of Insurance Companies, for consideration or otherwise,
unless Insurance Companies or Underwriter consent to such use in writing.
Broker/Dealer and Selling Entities agree that, following the termination of
this Agreement for any reason, they will not enter into any plan, program,
scheme or course of action which would systematically attempt to induce any
Contract Owner(s) away from Insurance Companies, except that Broker/Dealer may
always recommend a move to another company's product if such move would be more
suitable than Insurance Companies' product for a particular client or clients
or in the event of a detrimental change in the financial stability of Insurance
Companies which Broker/Dealer believes would jeopardize its clients.
9. USE OF CONFIDENTIAL INFORMATION. The parties to this Agreement agree to
safeguard customer information provided during the application and underwriting
process by Contract Owners. Specifically, the parties understand that the
Insurance Companies provide a "Privacy Notice" substantially in the form
provided to Broker/Dealer from time to time as may be required by applicable
law. The parties agree to cooperate with each other to comply with the terms of
this Privacy Notice. The Companies and Underwriter represent that they shall
not use consumers' or customers' non-public personal information in any way not
anticipated under this Agreement, or in any way not permitted under applicable
statutes or regulations or the rules of any self-regulatory organization having
jurisdiction over the parties.
10. COMPENSATION. Compensation payable to Broker/Dealer on sales of the
Insurance Contracts sold by Registered Representatives will be paid to
Broker/Dealer or, as necessary to meet any legal requirements, to Selling
Entities in accordance with the Compensation Schedule(s) set forth on the
Schedule Pages. Such Schedule Pages may be amended from time to time and,
except as otherwise announced in writing by Insurance Companies in advance in
connection with a commission special, compensation will always be paid in
accordance with the Compensation Schedule in effect at the time the premium
payments are received by the applicable Insurance Company (in the case of
annuities) or in effect as of the contract date (in the case of life
insurance). The Insurance Companies reserve the privilege of amending the
Compensation Schedules set forth in the Schedule Pages at any time with prior
written or electronic notice (either by electronic mail or by changing the
commission schedules as posted
6
on the Insurance Companies' web site for producers) to Broker/Dealer.
Continuing compensation, of any form, on any Insurance Contract, is subject to
the condition precedent that Broker/Dealer remains the broker of record for
such contract and is servicing such contract to Insurance Companies'
satisfaction. Payment of compensation to Registered Representatives of
Broker/Dealer is the sole responsibility of Broker/Dealer.
11. ASSIGNMENT OF AGREEMENT. This Agreement may not be assigned except by
mutual consent and will continue, subject to the termination by any party on
written notice to the other party except that, in the event Broker/Dealer
ceases to be a registered Broker/Dealer or a member in good standing of the
NASD, this Agreement will immediately terminate. Underwriter reserves the right
to designate, at its sole discretion, an alternative Principal Underwriter for
the distribution of the Contracts covered by this Agreement with prior written
notice to Broker/Dealer except in the event that TIC and/or TLAC replaces
Underwriter as discussed below.
The parties understand that, should TIC and/or TLAC replace Underwriter, any
such substituted party will automatically assume all of Underwriter's rights
and duties under this Agreement. TIC and or TLAC may assume such functions
itself, or assign these to affiliated, properly licensed broker-dealers. TIC
and/or TLAC will notify Broker/Dealer if any such substitution occurs.
12. INDEMNIFICATION
a. Broker-Dealer and Selling Entities, jointly and severally, shall
indemnify and hold harmless Underwriter and Insurance Companies and each
person who controls or is associated with Underwriter or Insurance
Companies within the meaning of such terms under the federal securities
laws, and any officer, director, employee or agent of the foregoing,
against any and all losses, claims, damages or liabilities, joint or
several (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to
which they or any of them may become subject under any statute or
regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon:
(1) violation(s) by Broker/Dealer, Selling Entities, or a Registered
Representative of federal or state securities law or regulation(s),
insurance law or regulation(s), or any rule or requirement of the
NASD;
(2) any unauthorized use of promotional, sales or advertising material,
any oral or written misrepresentations, or any unlawful sales
practices concerning the Insurance Contracts, by Broker/Dealer,
Selling Entities or Registered Representatives;
(3) claims by the Registered Representatives or other agents or
representatives of Selling Entities or Broker/Dealer for commissions
or other compensation or remuneration of any type;
(4) any failure on the part of Broker/Dealer, Selling Entities or a
Registered Representative to submit Purchase Payments or
applications to Insurance
7
Companies, or to submit the correct amount of a Purchase Payment, on
a timely basis and in accordance with this Agreement and the
Compliance Manual as communicated from time to time, subject to
applicable law;
(5) any failure on the part of Broker/Dealer, Selling Entities, or a
Registered Representative to deliver Insurance Contracts to
purchasers thereof on a timely basis and in accordance with this
Agreement; or
(6) a breach by Broker/Dealer, Selling Entities or a Registered
Representative of any provision of this Agreement.
This indemnification will be in addition to any liability which
Broker/Dealer and Selling Entities may otherwise have.
b. Underwriter and Insurance Companies, jointly and severally, shall
indemnify and hold harmless Broker/Dealer and Selling Entities and each
person who controls or is associated with Broker/Dealer or Selling
Entities within the meaning of such terms under the federal securities
laws, and any officer, director, employee or agent of the foregoing,
against any and all losses, claims, damages or liabilities, joint or
several (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to
which they or any of them may become subject under any statute or
regulation, NASD rule or regulation, at common law or otherwise, insofar
as such losses, claims, damages or liabilities arise out of or are based
upon any breach by Underwriter or Insurance Companies of any provision
of this Agreement. This indemnification will be in addition to any
liability which Underwriter and Insurance Companies, jointly and
severally, may otherwise have.
c. Promptly after receipt by a party entitled to indemnification
(indemnified person) under this Section 12 of notice of the commencement
of any action as to which a claim will be made against any person
obligated to provide indemnification under this Section 12 (indemnifying
party), such indemnified person shall notify the indemnifying party in
writing of the commencement thereof as soon as practicable thereafter,
but failure to so notify the indemnifying party shall not relieve the
indemnifying party from any liability which it may have to the
indemnified person otherwise than on account of this Section 12. The
indemnifying party will be entitled to participate in the defense of the
indemnified person but such participation will not relieve such
indemnifying party of the obligation to reimburse the indemnified person
for reasonable legal and other expenses incurred by such indemnified
person in defending himself or itself. The indemnifying party shall not
be liable for any indirect, consequential or punitive damages.
13. FUND TRANSFER REQUESTS. Broker/Dealer is responsible for, and will
supervise the activities of its Registered Representatives with regard to,
requests for investment option transfers and transactions subsequent to the
issuance of any Insurance Product, requested on behalf of Contract Owners.
Broker/Dealer will not permit its Registered Representatives to request
investment option transfers unless such authority has been granted in writing
to the
8
Registered Representative by a Contract Owner and proof of such authority has
been provided to and acknowledged by the Insurance Companies. Broker/Dealer
agrees that it will cause its Registered Representatives to use such forms as
may be reasonably required by Insurance Companies.
Broker/Dealer represents that it will indemnify Insurance Companies, their
employees, agents and affiliated parties from any loss occasioned by any
claimed or actual improper or unauthorized investment option transfer,
subsequent transaction or surrender request made by Broker/Dealer or its
Registered Representative on behalf of a Contract Owner.
9
14. NOTICES. All notices to the Insurance Companies or Underwriter relating to
this Agreement should be sent to the attention of:
If sent via U.S. mail: If sent via overnight mail:
Travelers Life & Annuity Travelers Life & Annuity
P.O. Box 990026 One Cityplace, ▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel Attention: General Counsel
All notices to Broker/Dealer will be duly given if mailed or faxed to the
address provided to Insurance Companies by Broker/Dealer from time to time.
15. INDEPENDENT CONTRACTORS. Underwriter and Insurance Companies are
independent contractors with respect to Broker/Dealer, Selling Entities, and
Registered Representatives.
16. GOVERNING LAW. This Agreement shall be construed in accordance with and
governed by the laws of the state of Connecticut.
17. AMENDMENT OF AGREEMENT. Insurance Companies reserve the right to amend this
Agreement at any time, and the submission of an application by Broker/Dealer
after notice of any such amendment has been received by the other parties shall
constitute the other parties' agreement to any such amendment.
18. TERMINATION. This Agreement may be terminated, without cause, by any party
upon thirty (30) days' prior written notice, and may be terminated, for failure
to perform satisfactorily or other cause, by any party immediately and shall be
terminated if Broker/Dealer shall cease to be a registered broker/dealer under
the Securities Exchange Act of 1934, as amended, or a Member in good standing
of the NASD. Notwithstanding, the following sections shall survive any such
termination: Sections 3, 4, 6, 8, 10 (unless termination is for cause), 12, 14,
16, 19, 20, 21 and 24.
19. WAIVER UPON TERMINATION. Failure of any party to terminate this Agreement
for any of the causes set forth in this Agreement will not constitute a waiver
of the right to terminate this Agreement at a later time for any of these
causes.
20. BOOKS AND RECORDS. Broker/Dealer shall maintain all books and records
required by applicable laws, regulations and self regulatory organizations
(e.g. the National Association of Securities Dealers) in connection with the
offer and sale of the Insurance Contracts. The books, accounts and records of
Broker/Dealer relating to the sale of the Insurance Contracts shall be
maintained so as to clearly and accurately disclose the nature and details of
all transactions. Underwriter and Insurance Companies reserve the right to
(i) request reasonable periodic inspection of such books and records as relate
to the sale and solicitation of the Insurance Contracts and (ii) to audit all
records pertaining to any Registered Representative of Broker/Dealer who is or
was appointed an insurance agent of Insurance Companies.
21. COOPERATION WITH REGULATORY INVESTIGATIONS. Broker/Dealer, Selling
Entities, Insurance Companies and Underwriter agree to cooperate fully in any
insurance, securities or other regulatory investigation, inquiry, inspection,
or proceeding or in any judicial proceeding arising
10
in connection with the Insurance Contracts. Broker/Dealer and Insurance
Companies shall cooperate with each other to resolve any customer complaint and
each agrees to promptly notify the other, upon receipt of notice, of any
investigation, claim or proceeding involving the Insurance Contracts or any
situation which would materially affect the respective party's ability to
perform its obligations hereunder. Each of the parties to this Agreement agrees
that it will promptly notify the other parties of any material claim of which
it becomes aware involving the sale or solicitation of the Insurance Contracts.
22. FIDELITY BOND AND ERRORS AND OMISSIONS COVERAGE. Broker/Dealer represents
that all of its directors, officers, employees and Registered Representatives
are and shall be continuously covered by a blanket fidelity bond covering for
larceny and embezzlement and issued by a reputable bonding company. This bond
shall be maintained at Broker/Dealer's expense and shall be at least of the
form, type and amount required under the NASD Conduct Rules. Broker/Dealer and
Selling Entities each represent and warrant that its agents are covered by
Errors and Omissions insurance.
23. ANTI-MONEY LAUNDERING. Broker-Dealer acknowledges that certain provisions
of the USA PATRIOT Act, and all applicable implementing regulations promulgated
by either the Secretary of the United States Treasury or the Securities and
Exchange Commission are applicable to it, including but not limited to: (a) The
development and implementation of an anti-money laundering program; (b) "Know
Your Customer" and "source of funds" identification and verification procedures
in compliance with implementing regulations promulgated pursuant to the USA
PATRIOT Act; (c) Financial transaction monitoring/surveillance procedures to
determine whether any client is engaging in suspicious activities that should
be reported to the United States Treasury Department's Financial Crimes
Enforcement Network office; and (d) A protocol to facilitate appropriate
federal regulatory examiners obtaining information and records regarding
Broker/Dealer's anti-money laundering program and to conduct inspections for
purposes of the program.
Broker-Dealer agrees to not sell any product issued by Insurance Companies to:
(1) any investor listed on the U.S. Treasury Department's Office of Foreign
Assets Control ("OFAC") list of prohibited persons, entities, and countries,
and for which any Insurance Companies' transactions with such investor are
prohibited under the various economic sanctions laws and regulations
administered by OFAC, or (2) a foreign shell bank. A foreign shell bank is
defined as a bank that (a) does not maintain a physical presence, in any
jurisdiction; and (b) is not (i) an affiliate of a bank that maintains a
physical presence, and (ii) subject to regulation by the governmental authority
that regulates the non-shell bank affiliate.
Broker-Dealer and Insurance Companies each agree to cooperate and share
information with one another pursuant to Section 314 of the USA PATRIOT Act so
as to enable each of us to reasonably assess customer activity and determine
whether that activity is suspicious and warrants reporting to the Treasury
Department. We all agree to cooperate and share information with one another
pursuant to Section 312 and 313 of the USA PATRIOT Act so as to enable each of
us to conduct enhanced due diligence monitoring of customer activity involving
any customer identified as a senior foreign political figure or maintaining a
residence in a jurisdiction deemed non-cooperative in the fight against
international money laundering by the Financial Action Task Force.
11
24. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed in all respects an original.
25. ARBITRATION. The parties to this Agreement agree to refer any dispute
arising under this Selling Agreement to arbitration. Such arbitration
proceeding will be held in Hartford, Connecticut (or such other location as may
be mutually agreed upon) and will be governed by the Code of Arbitration
Procedures of the National Association of Securities Dealers.
[THIS SPACE INTENTIONALLY LEFT BLANK]
12
In reliance on the representations set forth and in consideration of the
undertakings described herein, the parties represented below do hereby contract
and agree. IN WITNESS WHEREOF, the parties have signed this agreement as
indicated above.
BROKER/DEALER
THE TRAVELERS INSURANCE COMPANY ((BDNAME))
By: By:
-------------------------------- ------------------------------
Name: Name:
-------------------------------- ------------------------------
Title: Title:
-------------------------------- ------------------------------
Date: Date:
-------------------------------- ------------------------------
((ADDRESS1))
TRAVELERS DISTRIBUTION LLC ((ADDRESS2))
((CITY)), ((STATE)) ((POSTALCODE))
By:
--------------------------------
Name:
--------------------------------
Title: AFFILIATED INSURANCE AGENCY
-------------------------------- ((GANAME))
Date:
--------------------------------
By:
------------------------------
THE TRAVELERS LIFE AND ANNUITY Name:
COMPANY ------------------------------
Title:
------------------------------
By: Date:
-------------------------------- ------------------------------
Name:
--------------------------------
Title:
--------------------------------
Date:
--------------------------------
13
EXHIBIT 1
SELLING AGREEMENT SCHEDULE PAGE
Broker/Dealer and Selling Entities are authorized to solicit applications for
the life insurance contracts, annuity contracts, and the other insurance
products listed below:
I. Annuity
{insert product name}
II. Life Insurance
{insert product name}
All products described herein are subject to state availability. Compensation
Schedules for each product described above are listed on the following pages.
The Compensation Schedules may be changed at any time, consistent with the
terms of this Selling Agreement. Compensation shall consist of commission plus
any expense allowance available for a particular product.
Payment of compensation for any product is subject to the following conditions
and limitations, in addition to any applicable provision of the Selling
Agreement:
Compensation for products no longer available for new sales and renewals
thereon shall be determined by the compensation schedule in effect at the time
premiums were paid, except as may be later modified by written notice from the
Insurance Company.
1. CHARGEBACKS OF COMPENSATION. If the Insurance Companies return all or a
portion of a premium paid with respect to an Insurance Contract, Broker/Dealer
(and/or Selling Entity if applicable) shall be obligated to refund to Insurance
Companies compensation (within thirty (30) days of demand therefore if not
already charged back) received as follows:
(a) consistent with the Selling Agreement, the Insurance Contract solicited
is returned as not taken under the policy or contract "free look"
provisions;
(b) premiums are refunded due to overpayments, errors in billing or in the
timing of automatic premium collection deductions, or errors resulting
in policy reissue;
(c) the check delivered in payment of any contract premium does not clear;
(d) the Insurance Contract is terminated or the premium is refunded because
the Broker/Dealer, Selling Entity or Registered Representative who sold
the Insurance Contract committed an act, error or omission that
contributed to the termination of the Insurance Contract or the need to
return premium;
14
(e) the issuing Insurance Company rejects the application;
(f) a judicial or regulatory authority directs the issuing Insurance Company
to return premium payments with or without assessment of a surrender
charge;
(g) the applicant's initial premium on a 1035 exchange is returned because
the expected rollover amount from another policy or contract is not
transferred due to the exchange not meeting the legal requirements to
qualify for a tax-free exchange;
(h) the issuing Insurance Company returns unearned premium on a life
insurance contract as required by the provisions of the Insurance
Contract;
(i) the issuing Insurance Company determines that it has a legal liability
to return premiums on a life insurance contract after the Insurance
Contract is issued;
(j) the issuing Insurance Company and Broker/Dealer mutually agree to return
all or a portion of a premium with respect to a particular Insurance
Contract;
(k) the Insurance Policy is surrendered within six months from the date of
issuance. (unless waived in advance in writing by the issuing Insurance
Company). In the event of a full or partial surrender within twelve
months of a purchase payment, the Insurance Companies reserve the right
to impose a chargeback proportionate to the amount of any purchase
payment withdrawn/surrendered, or as otherwise provided herein. In any
case, Insurance Companies may offset amounts paid in compensation on
surrendered contracts from future sales in the event that a chargeback
is triggered by operation of this Agreement; or
(l) Broker/Dealer engages in any fraudulent or illegal activity in
connection with the sale or administration of Insurance Contracts.
15
2. FREE LOOK PROVISION: If any Contract is redeemed at any time or if within
the applicable free look period after confirmation by the Insurance Companies
of any premium payments credited to a Contract, that Contract is tendered for
full or partial surrender, or the life at risk thereunder dies, then, at the
option of the Insurance Companies, no compensation will be payable with respect
to such premium payments and any compensation previously paid for said premium
payments must be refunded to the applicable Insurance Company. Insurance
Companies agree to notify Broker/Dealer within ten (10) business days after the
request for repurchase or redemption or notification of death of the life at
risk is received by the applicable Insurance Company.
3. REBATING: If Broker/Dealer or Selling Entity or any Registered
Representative or agent of Broker/Dealer or Selling Entity rebates or offers to
rebate all or any part of a premium on an Insurance Contract issued by the
Insurance Companies in violation of applicable state insurance laws or
regulations, or if Broker/Dealer or any Registered Representative of
Broker/Dealer shall withhold any premium on an Insurance Contract issued by the
Insurance Companies, the same may be grounds for termination of this Selling
Agreement by Insurance Companies.
4. CHURNING: If Broker/Dealer induces or attempts to induce any Contract Owner
to relinquish an Insurance Contract except under circumstances where there is
reasonable grounds for believing the contract or certificate is not suitable
for such person, Broker-Dealer's right to receive any compensation under this
Agreement shall cease and terminate.
5. CONTRACT DELIVERY RECEIPTS: Unless selected in the box below, all annuity
contracts sold by Broker/Dealer will be sent directly to Contract Owners. Life
insurance contracts will be sent to the Broker/Dealer or, if applicable, to its
supporting General Agent, for delivery to the Contract Owners. Be advised that
for all contracts sent to the Broker/Dealer, a contract delivery receipt signed
by both the financial representative and the client must be returned to the
Insurance Company.
16
COMMISSION AND EXPENSE ALLOWANCE ("COMPENSATION")
SCHEDULE FOR ANNUITY CONTRACTS
A 1
This Schedule is attached to and is made a part of the Agreement. It is subject
to the terms and conditions contained in the Agreement. In no event will either
TIC or TLAC be liable for the payment of any compensation with respect to any
solicitation made, in whole or in part, by any person not appropriately
licensed to conduct such activities.
Pursuant to the Agreement, the Insurance Companies may terminate or amend this
Schedule at their sole discretion. If any such changes are made, we will notify
you prior to the effective date.
The compensation arrangements described below shall govern compensation
payouts. Compensation based on premium will be calculated only on premiums
actually received in good order by the Insurance Companies. Compensation will
be paid only on an as-earned basis. Compensation will be paid to Broker/Dealer
unless state insurance laws require that compensation payments be made to an
insurance agency.
1. Compensation based on premium payments will be based only on premium
actually received and accepted by the Insurance Companies.
2. No compensation will be earned on the initial exchange of any TIC or TLAC
contract. Subsequent premium payments may be eligible for compensation
payments.
3. The Insurance Companies reserve the right to reduce first year compensation
and renewal compensation if necessary, on any annuity contracts sold to
residents of any jurisdiction which imposes new and/or additional premium or
similar taxes or charge. In such event, the Insurance Companies will notify
Broker/Dealer.
4. If within forty-five (45) days (one year for Tax Sheltered Annuities) after
confirmation of any premium credited to an Annuity Contract by either of the
Insurance Companies the Annuity Contract is canceled or surrendered, or if
the Annuitant shall die, then, at the option of the Company, no compensation
will be payable with respect to that premium and any compensation previously
paid on that premium must be refunded to the Company.
17
COMPENSATION SCHEDULES FOR
LIFE INSURANCE PRODUCTS
A2
This Schedule is attached to and is made a part of the Agreement. It is subject
to the terms and conditions contained in the Agreement.
The compensation arrangements described below shall govern compensation
payouts. Compensation based on premium will be calculated only on premiums
actually received in good order by the Insurance Companies. Compensation will
be paid only on an as-earned basis. Compensation will be paid to Broker/Dealer
unless state insurance laws require that compensation payments be made to an
insurance agency.
1. Insurance Companies will pay compensation and allowances on premiums paid
for additional benefits or increases in benefits of any kind at the same
rate as is being allowed at the time of addition, or increase for the
premiums of the contracts to which they are added. Insurance Companies will
not pay compensation: on premiums for a policy which is a conversion of
employee Special Protection Plan, Employee Life Insurance-Plan 1 or group
life insurance; on extra premiums for a policy which are charged due to
temporary flat substandard rating because of physical impairments; or on
premiums of a policy which are waived under any provision of such policy.
2. If a Life Insurance Contract is converted to a different Contract, Insurance
Companies will pay compensation in accordance with our rules applying to
such contracts at the time of conversion.
3. Where, in Insurance Companies' judgment, a policy replaces a policy
previously issued by Insurance Companies on the same policyholder (other
than as a term conversion), the compensation payable for the first year of
insurance on the new policy will be adjusted in accordance with Insurance
Companies' procedures in effect at the time of such replacement.
4. Compensation on all universal life and variable universal life policies
which would otherwise be payable, will not be paid on remittances received
for contracts following a partial withdrawal until the sum of such
remittances equals the amount of the withdrawal at which time Insurance
Companies will pay compensation on subsequent remittances.
5. While recognizing the opportunity for flexibility in policyholder service
options inherent to universal life forms of insurance, evidence of
manipulation by any Registered Representative of universal life contracts,
contributions, loans, surrenders or replacements, not deemed by Insurance
Companies to be in the best interest of the then policyholder will result in
chargeback of compensation and/or termination of this Agreement.
6. Initial compensation payable under this Schedule will be payable at the time
of the receipt and acceptance of premium by the Insurance Companies. The
amount, if any, and the time of payment of compensation on replacements,
changes, exchanges, term renewals, premium payments paid in advance, or
similar policy issuance situations shall be governed by the Insurance
Companies' underwriting and administrative rules then in effect.
18
7. As used in the attached compensation schedules, the following definitions
apply:
"FLEXIBLE PREMIUM POLICY" means a policy under which the policyholder can
unilaterally vary the amount or timing of premium.
"NEW PREMIUM" means the premium paid in the first year of the Flexible
premium policy that is compensated at the first year rate. Increases in
coverage after policy issue may also generate new premium. For Term
contracts, New premium is the premium required to be paid in the first year.
Certain term contracts may have non-compensated policy fees in the first
policy year.
"EXCESS PREMIUM" is the premium credited to a Flexible Premium policy in the
first year that is greater than New premium.
"RENEWAL PREMIUM" is the premium credited to a Flexible premium policy in
all years following the first policy year with the exception of that portion
of the Renewal premium designated by the Insurance Companies in their sole
discretion
19