BROKER-DEALER SELLING AGREEMENT
AGREEMENT by and between Connecticut General Life Insurance Company, a
Connecticut corporation ("CG Life"); CIGNA Life Insurance Company, a Connecticut
corporation ("CLIC"); CIGNA Financial Advisors, Inc. ("CFA"), 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"); [ ] ("Broker-Dealer"), also a
registered Broker-Dealer with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 and a member of the NASD; and [ ]
("Agency"); and each additional insurance agency signatory hereto (each of which
shall also be referred to herein as "Agency"). (CG Life and CLIC are affiliated
life insurers. Either or both may be signatories to the Agreement. Where only
one is a party the term "Company" as used herein shall refer to that party.
Where both CG Life and CLIC are parties, the term "Company" shall mean CG Life
and/or CLIC, except that for purposes of paragraph 21 it shall mean CG Life and
CLIC.)
WITNESSETH:
WHEREAS, the Company proposes to have Broker-Dealer's registered
representatives ("Representatives") who are also licensed to sell insurance in
appropriate jurisdictions solicit and sell certain variable insurance contracts
(the "Insurance Securities") more particularly described in this Agreement and
which are deemed to be securities under the Securities Act of 1933, and to sell
certain non-variable insurance contracts (the "Fixed Policies") more
particularly described in this Agreement (collectively the "Policies"); and
WHEREAS, the Company has appointed CFA as the principal distributor of the
Insurance Securities and has agreed with CFA that CFA shall be responsible for
the training and supervision of persons involved with the solicitation and offer
or sale of any of the Insurance Securities, and CFA proposes to delegate, to the
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extent legally permitted, said supervisory duties to Broker-Dealer; and
WHEREAS, as full compensation, CG Life will pay to Broker-Dealer the
commissions provided for in Schedule A-1 on premiums paid to CG Life on Policies
issued by CG Life and sold by Broker-Dealer after this Agreement becomes
effective; and
WHEREAS, as full compensation, CLIC will pay to Broker-Dealer the
commissions provided for in Schedule A-2 on premiums paid to CLIC on Policies
issued by CLIC and sold by Broker-Dealer after this Agreement becomes effective;
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. APPOINTMENT OF BROKER-DEALER. The Company and CFA hereby appoint
Broker-Dealer to sell the Policies through its Representatives and to provide
certain administrative services to facilitate solicitations for and sales of the
Policies.
Broker-Dealer agrees that its authority is limited to the solicitation and
marketing of the Policies in accordance with this Agreement and Broker-Dealer
agrees that it will not make, alter, modify or discharge any contract or extend
any provision thereof, or extend the time for payment of premiums or waive any
forfeiture or guarantee dividends or estimate future interest, mortality or
expense factors except through the use of authorized illustrations and
projections approved by the Company, or deliver any life insurance contract
unless the applicant is at the time of delivery in good health and insurable
condition, or incur any debts or liability against the Company or CFA. Nothing
in this Agreement shall create or be construed to create an exclusive authority
to represent the Company or CFA or to effect sales of Policies, either with
respect to a specific geographic territory, or otherwise.
2. THE POLICIES.
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(a) The Policies issued by CG Life to which this Agreement applies
are listed in Schedule B-1. Schedule B-1 may be amended at any time by CG Life.
CG Life in its sole discretion and without notice to Broker-Dealer, may suspend
sales of any Policies or amend any policies or contracts evidencing such
Policies if, in CG Life's opinion, such suspension or amendment is: (1)
necessary for compliance with federal, state, or local laws, regulations, or
administrative order(s); or, (2) necessary to prevent administrative or
financial hardship to CG Life. In all other situations, CG Life shall provide
30 days notice to Broker-Dealer prior to suspending sales of any Policies or
amending any policies or contracts evidencing such Policies.
(b) The Policies issued by CLIC to which this Agreement applies are
listed in Schedule B-2. Schedule B-2 may be amended at any time by CLIC. CLIC
in its sole discretion and without notice to Broker-Dealer, may suspend sales of
any Policies or may amend any policies or contracts evidencing such Policies if,
in CG Life's opinion, such suspension or amendment is: (1) necessary for
compliance with federal, state, or local laws, regulations, or administrative
order(s); or, (2) necessary to prevent administrative or financial hardship to
CLIC. In all other situations, CLIC shall provide 30 days notice to Broker-
Dealer prior to suspending sales of any Policies or amending any policies or
contracts evidencing such Policies.
3. SECURITIES LICENSING. Broker-Dealer shall, at all times when
performing its functions under this agreement, be registered as a securities
broker with the SEC and a member of 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 insurance
contract sales activities or the supervision of Representatives who perform such
activities in the respective location.
4. INSURANCE LICENSING. Broker-Dealer shall, at all times when
performing its functions under this agreement, be validly licensed as an
insurance agency in the states and other local jurisdictions that require such
licensing or registration in connection with Broker-Dealer's variable or fixed
insurance contract sales activities; or, in those states in which Broker-
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Dealer cannot or does not obtain a corporate agent's license, shall maintain
a contractual relationship with an agency, which shall be validly licensed as
an insurance agency in such jurisdiction or jurisdictions. Such contractual
relationship shall be set forth in an agreement substantially equivalent to
that set forth as Exhibit A. Broker-Dealer shall provide the Company with a
list of all licensed insurance agencies relied upon by Broker-Dealer to
comply with this paragraph and covenants to maintain the completeness and
accuracy of such list, and to cause each such agency to become a signatory
hereto (each of which shall thereupon also be an "Agency" hereunder).
5. APPOINTMENTS. Broker-Dealer shall assist the Company in the
appointment of Representatives under the applicable insurance laws to sell the
Policies. Broker-Dealer shall fulfill all requirements set forth in the General
Letter of Recommendation, attached as Schedule C, in conjunction with the
submission of licensing/appointment papers for all applicants as insurance
agents of the Company. All such licensing/appointment papers should be
submitted by Broker-Dealer to the Company or the Company's duly appointed agent.
Notwithstanding such submission, the Company shall have sole discretion to
appoint, refuse to appoint, discontinue, or terminate the appointment of any
Representative as an insurance agent of the Company.
6. SECURING APPLICATIONS.
(a) All applications for Policies issued by the Company shall be made
on application forms supplied by the Company and all payments collected by
Broker-Dealer or any Representative of Broker-Dealer shall be remitted promptly
in full, together with such application forms and any other required
documentation, directly to the Company at the address indicated on such
application or to such other address as the Company may, from time-to-time,
designate in writing. Broker-Dealer shall review all such applications for
completeness. Checks in payment on any such Policy shall be drawn to the order
of the Company. All applications are subject to acceptance or rejection by the
Company at its sole discretion.
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(b) All records or information obtained hereunder by Broker-Dealer
shall not be disclosed or used except as expressly authorized herein, and
Broker-Dealer will keep such records and information confidential, to be
disclosed only as authorized or if expressly required by federal or state
regulatory authorities.
7. MONEY RECEIVED BY BROKER-DEALER. All money payable in connection with
any of the Policies, whether as premium or otherwise, and whether paid by or on
behalf of any policyholder, contract owner or anyone else having an interest in
the Policies, is the property of the Company and shall be transmitted
immediately in accordance with the administrative procedures of the Company
without any deduction or offset for any reason, including, by way of example but
not limitation, any deduction or offset for compensation claimed by Broker-
Dealer.
8. 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 Insurance Securities, and all such persons shall be subject
to the control of and supervision of Broker-Dealer with respect to such persons'
securities regulated activities, and to the control of Broker-Dealer or its
appropriate licensed insurance agency subsidiary with respect to such person's
insurance regulated activities, in connection with the solicitation and sale of
and other communication with respect to the Policies. Broker-Dealer will cause
the Representatives to be trained in the sale of the Insurance Securities; will
insure that such Representatives qualify under applicable federal and state laws
to engage in the sale of the Insurance Securities; will cause such
Representatives to be registered representatives of Broker-Dealer before such
Representatives engage in the solicitation of applications for the Insurance
Securities; and will cause such Representatives to limit solicitation of
applications for the Policies issued by the Company to jurisdictions where the
Company has authorized such solicitation. Broker-Dealer shall cause such
Representatives' qualifications to be certified to the satisfaction of CFA and
shall notify CFA if any Representative ceases to be a registered representative
of Broker-Dealer or ceases to maintain the proper licensing required for the
sale of any of the Policies. Each
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party shall be liable for its own negligence and misconduct hereunder.
9. REPRESENTATIVES INSURANCE LICENSES AND APPOINTMENTS. Broker-Dealer,
prior to allowing its Representatives to solicit or sell the Policies, shall
require such Representatives to be validly insurance licensed, registered and
appointed by the Company as fixed and/or variable contract agents in accordance
with the jurisdictional requirements of the place where the solicitations and
sales take place as well as the solicited person's or entity's place of
residence.
10. COMPLIANCE WITH NASD RULES OF FAIR PRACTICE AND FEDERAL AND STATE
SECURITIES LAWS. Broker-Dealer shall fully comply with the requirements of the
National Association of Securities Dealers, Inc. 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 CFA, Broker-
Dealer shall furnish such appropriate records as may be necessary to establish
such diligent supervision.
11. 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 advise CFA of this fact and shall
immediately notify such Representative that he or she is no longer authorized to
sell any of the Policies and Broker-Dealer shall take whatever additional action
may be necessary to terminate the sales activities of such Representative
relating to the Policies.
12. PROSPECTUSES, SALES PROMOTION MATERIAL AND ADVERTISING.
(a) Broker-Dealer shall be provided with prospectuses relating to the
Insurance Securities and such other material as CFA determines to be necessary
or desirable for use in connection
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with sales of the Insurance Securities. No sales promotion materials or any
advertising relating to the Insurance Securities shall be used by Broker-Dealer
unless the specific item has been approved in writing by CFA, which consent
shall not be unreasonably withheld or delayed.
(b) Broker-Dealer shall be provided with advertising and sales
material relating to the Fixed Policies and such other material as the Company
determines to be necessary or desirable for use in connection with sales of such
Policies. No sales promotion materials or any advertising relating to the Fixed
Policies shall be used by Broker-Dealer unless the specific item has been
approved in writing by the Company, which consent shall not be unreasonably
withheld or delayed.
(c) In addition, Broker-Dealer shall not print, publish or distribute
any advertisement, circular or any document relating to the Company unless such
advertisement, circular or document shall have been approved in writing by the
Company; provided, however, that nothing herein shall prohibit Broker-Dealer
from advertising fixed or variable insurance in general or on a generic basis.
(d) Broker-Dealer agrees that all computer software containing the
rates and values of products issued by the Company, whether or not distributed
through CFA, all rate books, computer printouts, client files, policies,
brochures, prospectuses, sales promotion materials, whether in hard copy or
computer format containing the name/logo of the Company, CFA, CIGNA or any
affiliated company, are furnished to Broker-Dealer in confidence, and Broker-
Dealer agrees to refrain from reproducing, publishing, or disclosing such
material other than in the ordinary course of business. Broker-Dealer further
agrees that all such property shall be returned to the Company upon demand or
upon termination of this Agreement.
13. RIGHT OF REJECTION. The Company or CFA, in its or their sole
discretion, may reject any applications or payments remitted by Representative
through Broker-Dealer and may refund an applicant's payments to the applicant.
In the event such refunds are made and if Broker-Dealer has received
compensation based on
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an applicant's payment that is refunded, Broker-Dealer shall promptly repay such
compensation to the Company. If repayment is not promptly made, the Company may
at its sole option deduct any amounts due it from Broker-Dealer from future
commissions otherwise payable to Broker-Dealer pursuant to this agreement. This
provision shall survive termination of this Agreement.
14. COMPENSATION.
(a) COMMISSIONS, FEES AND ALLOWANCES. Sales commissions payable to
Broker-Dealer in connection with the Policies shall be paid to the Agency, and
Broker-Dealer hereby appoints Agency to receive on its behalf any and all
compensation that may be due and payable to Broker-Dealer in accordance with the
provisions set forth in Schedule A-1 or Schedule A-2, as appropriate. The
Company will provide Broker-Dealer or Agency with a copy of it's current
Schedule of Sales Commissions. These fees and commissions will be paid as a
percentage of premiums received and accepted by the Company on applications
obtained by the various Representatives of Broker-Dealer. Upon termination of
this Agreement all compensation to the Agency hereunder shall cease; however,
Broker-Dealer and/or Agency shall continue to be liable for any chargebacks or
for any other amounts advanced by or otherwise due to the Company hereunder.
(b) CHANGES TO COMMISSION SCHEDULE. The Company may, upon at least
ten (10) days prior written notice, change its Schedule of Sales Commissions.
Any such change shall apply to compensation due on applications received by the
Company after the effective date of such notice.
(c) RESTRICTIONS.
(i) If Broker-Dealer, Agency or any Representative shall rebate
or offer to rebate all or any part of a premium on a policy issued by the
Company in violation of applicable state insurance laws or regulations, or if
Broker-Dealer, Agency or any Representative shall withhold any premium on any
Policy issued by the Company, or if Broker-Dealer, Agency or any Representative
rebates or offers to rebate all or any part of
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a commission paid or payable upon the sale of a Policy, the Company may, at its
option, terminate this Agreement.
(ii) If Broker-Dealer, Agency or any Representative shall at any time
induce or endeavor to induce any owner of a Policy to relinquish the Policy
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 hereunder shall cease and terminate.
(iii) Nothing in this Agreement shall be construed as giving
Broker-Dealer or Agency the right to incur any indebtedness on behalf of the
Company. Broker-Dealer and Agency each hereby authorizes the Company to set off
their respective liabilities to the Company against any and all amounts
otherwise payable to them by the Company.
15. POLICY DELIVERY. The Company may, upon written request of Broker-
Dealer, transmit Policies to Broker-Dealer for delivery to Policyowners.
Broker-Dealer hereby agrees to deliver all such Policies to policyowners
promptly upon its receipt thereof from the Company. Broker-Dealer agrees that
the indemnification provisions of paragraph 16(a) herein include any and all
costs, expenses, loss, damages and attorneys' fees resulting from Broker-
Dealer's failure to perform or inability to prove performance of the
undertakings described in this paragraph, and authorizes the Company to set off
any amount it owes the Company under this paragraph against any and all amounts
otherwise payable to or on behalf of Broker-Dealer by the Company pursuant to
this agreement. The Company reserves the right to revoke or withdraw this
privilege, in whole or in part, at any time, and without prior notice.
16. INDEMNIFICATION.
(a) Broker-Dealer and Agency shall indemnify and hold CG Life, CLIC
and CFA harmless from any and all costs, expenses, loss or damages, including
reasonable attorneys' fees, resulting from any negligent, fraudulent or
unauthorized acts or omissions of Broker-Dealer or its Representatives.
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(b) CG Life, CLIC and CFA shall indemnify and hold Broker-Dealer and
Agency harmless from any and all cost, expense, loss or damages, including
reasonable attorneys' fees, resulting from any negligent, fraudulent or
unauthorized acts or omissions by CG Life, CLIC and CFA, their employees or
authorized agents.
17. 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.
18. INDEPENDENT CONTRACTORS.
(a) The Company and CFA are independent contractors with respect to
Broker-Dealer, Representatives and Agency. Nothing contained in this Agreement
shall create, or shall be construed to create, the relationship of employer and
employee between the Company or CFA and Broker-Dealer or Agency.
(b) Broker-Dealer shall, in its sole discretion, select the persons
from whom it will solicit applications for Policies, as well as the time, manner
and place of solicitation.
19. LIMITATIONS. No party other than the Company shall have the authority
to make, alter, or discharge any policy, contract, or certificate issued by the
Company, to waive any forfeiture or to grant, permit, nor extend the time for
making any payments nor to guarantee earnings or rates, nor to alter the forms
which the Company may prescribe or substitute other forms in place of those
prescribed by the Company, nor to enter into any proceeding in a court of law or
before a regulatory agency in the name of or on behalf of the Company.
20. FIDELITY BOND.
(a) The Broker represents that all of its directors, officers,
employees and Representatives who are appointed pursuant to this Agreement as
agents of the Company for state insurance law
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purposes or who have access to funds of the Company, including but not limited
to funds submitted with applications for the Policies or funds being returned to
owners, shall at all times 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. Broker-Dealer shall maintain Errors and Omissions
insurance coverage in an amount and with a company satisfactory to the Company
and CFA. The Company may require evidence, satisfactory to it, that such
coverage is in force and Broker-Dealer shall give prompt written notice to the
Company of any notice of cancellation or change of coverage.
(b) Broker-Dealer assigns any proceeds received from the fidelity
bonding company to CG Life to the extent of any loss to CG Life due to
activities covered by the bond, and to CLIC to the extent of any loss to CLIC
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 CG
Life or CLIC such amount on demand and Broker-Dealer hereby indemnifies and
holds harmless CG Life and CLIC from any such deficiency and from the costs of
collection thereof (including reasonable attorneys' fees).
21. 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 however, that Broker-Dealer may not assign this Agreement or any rights
or obligations hereunder without the prior written consent of the Company.
22. REGULATIONS. The parties agree to observe and comply with all
applicable local, state, and federal laws and rules or regulations, and to fully
co-operate with any regulatory authority having jurisdiction with respect
thereto.
23. NOTICES. All notices or communications shall be sent in writing and
to the addresses shown below or to such other address as the party may request
by giving written notice to the
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other parties. Notices shall be effective immediately upon deposit in the mail,
unless otherwise specifically provided.
Connecticut General Life Insurance Company
Xxxxxxxx, XX 00000-0000
Attn: Financial Institutions Department
S-251
CIGNA Life Insurance Company
Xxxxxxxx, XX 00000-0000
Attn: Financial Institutions Department
S-251
CIGNA Financial Advisors, Inc.
Xxxxxxxx, XX 00000-0000
[BROKER-DEALER]
[INSURANCE AGENCY]
24. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of Connecticut.
25. AMENDMENT OF AGREEMENT. The Company reserves the right to amend this
Agreement at any time, and the submission of an application by Broker-Dealer
after notice of any such amendment shall constitute agreement to any such
amendment.
26. TERMINATION.
(a) This Agreement may be terminated immediately by any party upon
written notice or if CFA or Broker-Dealer shall cease
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to be registered Broker-Dealers under the Securities Exchange Act of 1934 and
members of the NASD. In the event of such termination, commissions, fees and
allowances shall be payable, based upon the commission schedule set forth in
Schedules A-1 and A-2.
(b) This Agreement will automatically terminate:
(i) Upon the death or total and permanent physical or mental
disability of Broker-Dealer, if an individual.
(ii) Upon dissolution of Broker-Dealer, if a corporation or a
partnership, including LLC and LLP.
(iii) At the end of any calendar year during which Broker-Dealer
has not maintained the minimum life premium and persistency requirements (if
any) as set forth in either Schedule A-1 or Schedule A-2.
(c) Termination of this Agreement will result in the termination of all
agreements with representatives recruited by Broker-Dealer.
(d) Payment of broker compensation at a level that is higher than the
level of broker compensation set forth in Schedule A-1 or A-2 will, at the
option of the Company, result in the termination of this Agreement.
27. EFFECTIVE DATE. This Agreement shall be effective on the
_____________ day of_____________________ 19____ .
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By:
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Print Name:
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Title:
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CIGNA LIFE INSURANCE COMPANY
By:
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Print Name:
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Title:
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CIGNA FINANCIAL ADVISORS, INC.
By:
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Print Name:
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Title:
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[ ] BROKER-DEALER CORP.
By:
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Print Name:
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Title:
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Date:
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[ ] INSURANCE AGENCY, INC.
By:
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Print Name:
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Title:
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Date:
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