SELLING GROUP AGREEMENT
Effective May 30, 2000, [hereinafter "the Effective Date"] this
Agreement is made between AnnuityNet Insurance Agency, Inc.
[hereinafter called the "Broker"] and The Lincoln National Life Insurance
Company, located at 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxx 00000, an
Indiana corporation [hereinafter called the "Company"]. It supersedes and
replaces in its entirety that certain Selling Group Agreement dated October
8, 1999, by and between Sagemark Consulting, Inc. and Company.
In consideration of the mutual promises contained herein, the parties
hereto agree as follows:
A. Definitions
(1) Contract--variable annuity, and variable universal life insurance
contracts described in the Marketing Agreement and as shown on
Schedule A attached hereto and incorporated herein which are
issued by the Company and for which the Company acts as the
principal underwriter. From time to time the Marketing Agreement
and Schedule A may be amended. Such amendments will be effective
as provided in the Marketing Agreement.
(2) Account--segregated investment accounts in which the Company sets
aside and invests the assets to fund the benefits under the
Contracts.
(3) Funds--Any of the mutual funds in which net purchase payments are
invested at net asset value pursuant to the directions of the
Contract owner.
(4) Marketing Agreement - that certain agreement entitled Marketing
Agreement between Broker and Company dated May 4, 2000.
(5) Registration Statement--the Registration Statements and
amendments thereto on file with the SEC relating to the
Contracts, the Account, and the Funds, including financial
statements and all exhibits, as applicable.
(6) Prospectus--the prospectus included within the Registration
Statements referred to herein.
(7) 1933 Act--the Securities Act of 1933, as amended.
(8) 1934 Act--the Securities and Exchange Act of 1934, as amended.
(9) 1940 Act--the Investment Company Act of 1940, as amended.
(10) SEC--the Securities and Exchange Commission.
B. Agreements of Company
(1) Company hereby authorizes Broker during the term of this
Agreement to receive applications for Contracts from eligible
persons, provided that there is an effective Registration
Statement relating to such Contracts and provided further that
Broker has been notified by Company that the contracts are
qualified for sale under all applicable securities and insurance
laws of the state or jurisdiction in all applicable
jurisdictions. In connection with the receipt of applications for
Contracts, Broker is hereby authorized to offer riders that are
available with the Contracts in accordance with instructions
furnished by Company.
(2) Company, during the terms of this Agreement, will notify Broker
of the issuance by the SEC of any stop order with respect to the
Registration Statement or any amendments thereto or the
initiation of any proceedings for that purpose or for any other
purpose relating to the Registration and/or offering of the
Contracts and of any other action or circumstance that may
prevent the lawful sale of the Contracts in any state or
jurisdiction.
(3) During the term of this Agreement, Company shall advise Broker of
any amendment to the Registration Statement or any amendment or
supplement to any Prospectus.
C. Agreements of Broker
(1) Broker represents that it is a properly registered and licensed
broker or dealer under federal and state securities laws and
regulations and a member in good standing of the National
Association of Securities Dealers, Inc. [hereinafter "NASD"] and
agrees to notify Company immediately if Broker ceases to be so
registered or licensed or a member in good standing of the NASD.
Further, Broker represents that each of its agents licensed to
sell contracts [each respectively referred to hereinafter as "the
Agent"] will be soliciting applications for Contracts under this
Agreement. Broker represents that the Agent is a fully-registered
representative of the Broker and moreover that the Agent is a
registered representative in good standing with the NASD, with
accreditation to sell the Contracts as required by the NASD.
(2) Commencing at such time as Company and Broker shall agree upon,
Broker agrees to use its best efforts (as provided in the
Marketing Agreement) to find purchasers for the Contracts
acceptable to the Company. In meeting its obligation, Broker
shall, during the term of this Agreement, engage in the following
activities:
(a) Continuously utilize training, sales, and only such
promotional materials which have been developed or provided
pursuant to the
Marketing Agreement.
(b) Abide by all rules and regulations of the NASD, including
its Conduct Rules (which shall control and override any
provision to the contrary in this Agreement), and company
with all applicable federal and state laws, rules and
regulations. Broker is responsible for supervision of Agent
and other associated persons which will enable Broker to
assure that Agent and associated persons are in compliance
with applicable securities laws, rules, regulations and
statements of policy promulgated thereunder.
(3) All payments for Contracts which may be collected by the Agent or
Broker shall be held at all times in a fiduciary capacity and
shall be remitted promptly, in full, together with such
applications, forms, and other required documentation to the
designated office of the Company. Checks or money orders in
payment of initial premiums shall be drawn to the order of The
Lincoln National Life Insurance Company. Broker acknowledges that
the Company retains the ultimate right to control the sale of the
Contracts and that the Company shall have the unconditional right
to reject, in whole or in part, any application for the Contract.
In the event Company rejects an application, Company will
immediately return all payments directly to the purchaser, and
the Broker will be notified of such action. In the event that any
purchaser of a Contract elects to return such Contract, as
allowed by the applicable state law, federal law or NASD Conduct
Rules, the purchaser will receive a refund in accordance with the
provisions of the applicable law or rule.
(4) Broker shall return any related sales commission to the Company,
if a Contract is tendered for redemption under the Contract's
right of review provision.
(5) Broker shall act as an independent contractor, and nothing
contained herein shall make Broker or any one of its employees an
employee of Company.
(6) Broker agrees that any material it develops, approves or uses for
sales, training, explanatory or other purposes including
illustrations in connection with the solicitation of applications
for Contracts hereunder (other than generic advertising materials
which do not make specific reference to the Contracts) will be
used in accordance with the Marketing Agreement.
(7) Solicitation and other activities by Broker shall be undertaken
only in accordance with applicable laws and regulations. The
Agent shall not solicit applications for the Contracts until duly
licensed and appointed by the Company as a life insurance and
variable contract broker or agent of Company in the appropriate
states or other jurisdictions. Broker shall ensure that the Agent
fulfills any training requirements necessary to be licensed to
sell such products. Broker understands and acknowledges that
neither it nor the Agent is authorized by Company to give any
information or make any representation in connection with
this Agreement or the offering of the Contracts other than those
contained in the Prospectus or other solicitation material
authorized in writing by Company.
(8) Broker shall not have authority on behalf of Company to make,
alter, or discharge any Contract or other form; waive any
forfeiture; extend the time of paying any premium; or receive any
monies or premiums due, or to become due, to Company, except as
set forth in Section C (3) of this Agreement. Broker shall not
expend, nor contract for the expenditure of the funds of Company,
nor shall Broker possess or exercise any authority on behalf of
the Company under this Agreement.
(9) Broker shall have the responsibility for maintaining the records
of the Agent. Broker shall maintain such other records as are
required of it by applicable laws and regulations. The books,
accounts and records of Company, the Account and Broker relating
to the sale of the Contract shall be maintained so as to clearly
and accurately disclose the nature and details of the
transactions. All records maintained by the Broker in connection
with this Agreement shall be the property of the Company and
shall be returned to the Company upon termination of this
Agreement, free from any claims or retention of rights by the
Broker. Nothing in this Section C (9) shall be interpreted to
prevent the Broker from retaining copies of any such records
which the Broker, in its discretion, deems necessary or desirable
to keep. The Broker shall keep confidential any information
obtained pursuant to this Agreement, and shall disclose such
information, only if the Company has authorized such disclosure,
or if such disclosure is expressed or required by an applicable
federal or state regulatory authority.
D. Compensation
(1) Company shall arrange for the payment of commissions to the
Broker as compensation for the sale of each Contract sold by the
Agent. Compensation shall be paid according to the terms of
Schedule B attached hereto and incorporated herein. Payment to
Agent shall be the duty of Broker pursuant to terms agreed upon
between them.
(2) Neither Broker nor the Agent shall have any right to withhold or
deduct any part of any premium it may receive for the purposes of
the payment of commission or otherwise.
(3) Upon termination of this Agreement the Company will pay
commissions only to the extent specified in Schedule B.
(4) No commissions will be paid for the sale of Contracts not listed
in Schedule A.
(5) No commissions will be paid for the sale of Contracts in
jurisdictions in which the Broker and/or its Agents are not duly
licensed.
E. Complaints and Investigations
(1) Broker and Company jointly agree to cooperate fully in any
insurance regulatory investigation or proceeding or judicial
proceeding arising in connection with the contracts marketed
under this Agreement. Broker and Company further agree to
cooperate fully in any securities regulatory investigation or
proceeding or judicial proceeding with respect to Broker,
Company, their affiliates and the Agent to the extent that such
investigation or proceeding is in connection with Contracts
marketed under this Agreement. Broker and Company shall furnish
applicable federal and state regulatory authorities with any
information or reports in connection with their services under
this Agreement which such authorities may request in order to
ascertain whether the Company's or Broker's operations are being
conducted in a manner consistent with any applicable law or
regulation.
(2) Broker warrants and represents that as of the date of execution
of this Agreement, it has no knowledge of any pending or
threatened complaint or investigation instituted against any of
its Agents relating to the sale of any Contracts listed in
Schedule A.
F. Term and Termination.
(1) Term. The initial term of this Agreement will begin on the
Effective Date and end five (5) years thereafter. Thereafter this
Agreement will automatically renew annually for an additional one
year, unless either party notifies the other to the contrary in
writing, not less than ninety (90) days before the scheduled
renewal, in which case this Agreement will terminate at the end
of the then current term (the duration of the initial term and
any renewals, the "Term"). As long as the Company continues to
own, directly or indirectly, 10% or more of the issued and
outstanding stock of AnnuityNet Insurance Agency, Inc., or
AnnuityNet, Inc., and continues to offer a Contract for sale over
the Internet on an AnnuityNet Web Site, Broker may not terminate
this Agreement unilaterally during the first ten years of the
Term, except for the reasons set out in Section F (2) below.
(2) Termination. In addition to the parties' termination rights set
forth elsewhere in this Agreement, either party may terminate
this Agreement:
(a) At any time during the Term, upon at least thirty (30) days
prior Written notice to the other party if such other party
materially breaches any of the provisions of this Agreement
and fails to cure such material breach within such thirty
(30) days;
(b) Immediately upon written notice to the other party, if such
other party: (i) ceases to conduct business in the normal
course; (ii) makes an assignment for the benefit of
creditors; (iii) is liquidated or otherwise dissolved; (iv)
becomes insolvent, is adjudicated bankrupt, or a receiver,
trustee or custodian is appointed for it; or (v) such other
party materially breaches any of the provisions of this
Agreement and such breach is not reasonably likely to be
cured.
(c) Upon termination for any reason of the Marketing Agreement.
In such case the termination of this Agreement shall be
effective on the last day Broker is obligated to provide
service to Company under such agreement.
(d) If the other party consents in writing to such termination.
(3) Effect of Termination. Upon the termination or expiration of this
Agreement for any reason:
(a) Each party will immediately cease holding itself out as
having any commercial relationship with the other party.
(b) Upon termination of this Agreement, all authorizations,
rights and obligations themselves shall cease except (a) the
agreements contained in Section E hereof; and (b) the
indemnity agreement set forth in Section G hereof.
(c) Upon termination of this Agreement, the Marketing Agreement
between Company and Broker shall terminate.
G. Indemnity
(1) Broker shall be held to the exercise of reasonable care in
carrying out the provisions of this Agreement.
(2) Company agrees to indemnify and hold harmless Broker and each
officer or director of Broker against any losses, claims, damages
or liabilities, joint or several, to which Broker or such officer
or director becomes subject, under the 1933 Act or otherwise,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of, or are based upon, any
untrue statement or alleged untrue statement of a material fact,
required to be stated therein or necessary to make these
statements therein not misleading, contained in any Registration
Statement or any post-effective amendment thereof or in the
Prospectus, or any sales literature provided by the Company.
(3) Broker agrees to indemnify and hold harmless Company and each of
its current and former directors and officers and each person, if
any, who controls or has controlled the Company within the
meaning of the 1933 Act, or of the 1934 Act, against any losses,
claims, damages or liabilities to which Company and any such
director or officer or controlling person may become subject,
under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect there) arise out
of, or are based upon:
(a) Any unauthorized use of sales materials outside the scope of
the Marketing Agreement or any verbal or written
misrepresentations or any unlawful sales practices
concerning the Contracts by Broker, its agents and its
employees; or
(b) Claims by the Agent, Broker or their employees for
commissions, service fees, development allowances or other
compensation or remuneration of any type; or
(c) The failure of Broker, its officers, employees, or the Agent
to comply with the provisions of this Agreement; or
(d) The fraudulent, malicious, intentional, reckless, knowing or
negligent acts or omissions of Broker's employees, officers,
agents or sales persons;
and Broker will reimburse Company and any director or officer or
controlling person of either for any legal or other expenses
reasonably incurred by Company, or such director, officer of
controlling person in connection with investigating or defending
any such loss, claim, damage, liability, or action. .
H. Assignability
(1) This Agreement shall not be assigned by either party without the
written consent of the other.
I. Governing Law
(1) This Agreement shall be governed by and construed in accordance
with the laws of the State of Indiana.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed this 30th day of May, 2000.
The Lincoln National Life Insurance Company AnnuityNet Insurance Agency, Inc.
[COMPANY] [BROKER]
By: /s/ G. Xxxxxxx Xxxxxxxx By: /s/ Xxxx X. Xxxx
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G. Xxxxxxx Xxxxxxxx Xxxx X. Xxxx
Its: Second Vice President Its: Vice President
Schedule A
to the
Selling Group Agreement
Between
The Company and The Broker
The following is a list of Contracts that Broker has been granted authority
by the Company to sell:
1. Lincoln National Variable Account C (eAnnuity)
Schedule B
Commissions
1. Company will pay as commission to Broker an amount equal to 1.4% of the
initial and subsequent premium(s) received by Company for an eAnnuity
contract issued by Company as a result of submission by Broker to Company
of an application for such contract.
2. Upon termination of this Agreement, no commissions will be payable to
Broker for eAnnuity contracts issued pursuant to this Agreement.
