REGISTERED REPRESENTATIVE/AGENT AGREEMENT
CONTENTS
1. PLACE OF AGREEMENT - LAW GOVERNING . . . . . . . . . . . . . . . . . . .1
2. TERRITORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
3. INDEPENDENT CONTRACTOR STATUS - RIGHTS
AND RESPONSIBILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . .1
4. RULES AND AGREEMENTS AS TO OBLIGATIONS,
AUTHORITY, AND PROHIBITIONS . . . . . . . . . . . . . . . . . . . . . . .2
5. LIABILITY FOR COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . .2
6. CONFLICTS OF INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . .3
7. TRADE SECRETS AND PROPRIETARY INFORMATION . . . . . . . . . . . . . . . .3
8. COMMISSIONS AND ASSIGNMENTS . . . . . . . . . . . . . . . . . . . . . . .3
9. PRODUCTION CREDIT (PC) . . . . . . . . . . . . . . . . . . . . . . . . .4
10. TERMINATION; RETURN OF PROPERTY . . . . . . . . . . . . . . . . . . . . .4
11. COMMISSIONS AFTER TERMINATION . . . . . . . . . . . . . . . . . . . . . .4
12. AGREEMENT AS TO POST-TERMINATION ACTIVITY . . . . . . . . . . . . . . . .5
13. REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
14. ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
15. SOLE AGREEMENT; CONDITIONS NOT WAIVED;
CONTINUING APPLICABILITY; SEVERABILITY. . . . . . . . . . . . . . . . . .6
ANNEX A - XXX AGENT COMMISSION . . . . . . . . . . . . . . . . . . . . . . .A-1
ANNEX B - USPA RR COMMISSION . . . . . . . . . . . . . . . . . . . . . . . .B-1
ANNEX C - QUARTERLY PROFESSIONAL COMMISSION . . . . . . . . . . . . . . . .C-1
ANNEX E - DEFERRED CAREER COMMISSION PLAN . . . . . . . . . . . . . . . . .E-1
ANNEX N - SPECIAL COMMISSION AVAILABLE TO "NEW
RR/AGENTS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .N-1
This Agreement is made between _______ ("RR/Agent"), United Services Planning
Association, Inc. ("USPA"), and Independent Research Agency for Life Insurance,
Inc. ("XXX"). As detailed on the following pages, this is an agreement under
which RR/Agent will represent USPA&IRA in offering products to the public which
USPA&IRA are authorized to sell, for which RR/Agent will be paid sales
commissions. RR/Agent will represent USPA&IRA as an independent contractor and
not as an employee, and will be financially responsible for RR/Agent's own
taxes, social security, benefit plans, business expenses, and liability
insurance. RR/Agent acknowledges that RR/Agent must observe the policies and
procedures of any business organization that RR/Agent represents and agrees to
do so in representing USPA&IRA, and the insurance companies and securities
distributors whose products are sold. RR/Agent additionally recognizes that the
insurance and securities industries are highly regulated, and RR/Agent agrees to
be responsible for knowledge of, and compliance with, the laws and regulations
governing these businesses as they affect RR/Agent.
Accordingly, USPA hereby appoints RR/Agent to represent it as its Registered
Representative in soliciting and selling securities for which USPA may act as
dealer, underwriter, or broker, and XXX hereby appoints RR/Agent to represent it
as its Agent in soliciting and selling insurance, and RR/Agent hereby accepts
these appointments subject to the terms and conditions stated above and
following:
1. PLACE OF AGREEMENT - LAW GOVERNING.
This Agreement is made in Fort Worth, Tarrant County, Texas (or if not
actually made in Fort Worth, Tarrant County, Texas, is not binding until
accepted and approved at the Home Office of USPA&IRA in Fort Worth, Tarrant
County, Texas). Any and all sums of money due or becoming due to RR/Agents
under this Agreement shall be payable at USPA&IRA's Home Office, in Fort
Worth, Tarrant County, Texas. Any claim for such money shall be made to
USPA&IRA's Home Office, and, subject to paragraph "14." below, any lawsuit
filed to collect such money shall be filed in Fort Worth, Texas, and
determined under Texas law.
2. TERRITORY.
The geographical area within 100 miles of any border of the following
United States military installation(s) and auxiliary installation(s), shall
be the territory in which RR/Agent agrees to represent USPA&IRA:
3. INDEPENDENT CONTRACTOR STATUS - RIGHTS AND RESPONSIBILITIES.
a. Within the territory in which RR/Agent agrees to represent USPA&IRA,
the RR/Agent shall use RR/Agent's own judgment as to the time, place,
and means of exercising authority under the terms of this Agreement.
RR/Agent is not required to personally provide the services described
herein but may delegate the performance of such services to RR/Agent's
employees or others, provided RR/Agent is not personally required to
perform such services by insurers, securities distributors, or
applicable laws and rules, and further provided that RR/Agent remains
fully responsible for all obligations agreed to herein.
b. It is specifically understood and agreed that RR/Agent's
appointment under this Agreement constitutes RR/Agent as an
independent contractor, and that the status of RR/Agent hereunder
shall not be that of an employee or full-time life insurance
salesperson under the terms of any federal, state, or local law.
Neither USPA nor XXX will withhold any deductions for social
security, income taxes, unemployment, or other taxes imposed upon
an employer/employee relationship. Thus, the RR/Agent shall be
responsible for all self-employment taxes and all other related
governmental obligations, including all
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local fees and taxes incidental to doing business as a Registered
Representative and insurance Agent.
c. The RR/Agent agrees to pay all business expenses incurred in
representing USPA&IRA. Such expenses include those incurred in the
operation of RR/Agent's office, and for all USPA&IRA sales materials
used by RR/Agent. The RR/Agent further agrees to pay $50 for each
Family Financial Program prepared on his/her behalf, for the purpose
of defraying the costs associated with Program production. However, in
any calendar quarter in which 15 to 19.5 Programs are produced (as
defined in Annex C of this Agreement), $25 per Program produced will
be refunded to the Agent as a Quarterly Program Refund (QPR); in any
quarter in which 20 to 24.5 Programs are produced, $30 per Program
will be so refunded; and in any quarter in which 25 or more Programs
are produced, $35 per Program will be so refunded.
4. RULES AND AGREEMENTS AS TO OBLIGATIONS, AUTHORITY, AND PROHIBITIONS.
a. The RR/Agent agrees to:
(1) Treat all monies received from clients on behalf of USPA&IRA
as trust funds, and to pay over such monies to USPA, or to
appropriate insurance companies on behalf of XXX, promptly upon
receipt.
(2) Place through USPA&IRA all business in which the prospect's
interest was generated by advertising, Seminars, Programs,
proposals, and/or sales presentations prepared by USPA&IRA or
other RR/Agents, or by referrals from other USPA&IRA clients,
prospects, or RR/Agents, giving USPA&IRA and companies
represented by them first opportunity for acceptance or refusal
of all investment or insurance business generated from members of
military families and/or families of existing clients.
(3) Make timely and proper delivery to the policyowner of all
insurance policies, and notify the Director of Insurance of XXX
if such delivery cannot be accomplished within 30 days after
receipt by the RR/Agent of the policy to be delivered.
b. The RR/Agent acknowledges that:
(1) RR/Agent shall have no authority to make, alter, or discharge an
investment contract, to waive forfeitures, or to incur any
liability on behalf of USPA or any securities distributor
represented by USPA.
(2) RR/Agent shall have no authority on behalf of XXX or any
insurance company represented by XXX to make, alter, or discharge
any policy or annuity contract, to extend the time for applying a
premium or consideration, to waive forfeitures, nor allow the
delivery of any policy unless the proposed insured is in good
health and the first premium is paid in full or an appropriate
military allotment has been duly filed.
(3) RR/Agent shall not have any right to bind USPA&IRA in any way
or make any contract, promise, or representation on behalf of
USPA&IRA except as set forth in this Agreement. RR/Agent is
particularly not authorized to enter into any lease for any
type of property, establish any bank account, or contract in
any way, in the name of "USPA&IRA," "USPA," "XXX," "United
Services Planning Association, Inc.," or "Independent Research
Agency for Life Insurance, Inc."
(4) Client information is confidential and should only be used by a
client's servicing RR/Agent for sales and client service.
Accessing and/or using client information by any, other party for
any other purpose shall be considered a breach of this Agreement
by an RR/Agent allowing such access or doing such accessing.
c. RR/Agent further acknowledges that RR/Agent is subject to and agrees
to abide by the policies and procedures of USPA&IRA, as well as the
rules and regulations of the Federal Securities and Exchange
Commission (SEC), the National Association of Securities Dealers
(NASD), applicable state securities laws, the rules and regulations of
the insurance companies represented, applicable state insurance laws
and regulations, applicable Department of Defense (DoD) and
subordinate Army, Navy, Air Force, and Marine Corps directives, Coast
Guard directives, and any other regulatory agencies as to securities
or insurance sold by RR/Agent.
5. LIABILITY FOR COMPLIANCE.
RR/Agent further agrees:
a. To hold USPA&IRA harmless and indemnify them fully from any and all
losses, expenses, damages, costs, and attorney fees that USPA&IRA may
incur by reason of any unauthorized act, omission, misrepresentation,
or misinformation by RR/Agent, be it intentional or resulting from
RR/Agent's negligence, by failure to reveal fully on an investment
application any information which is known the RR/Agent and required
by the securities distributor, or by failure to reveal fully on an
insurance application any pertinent information bearing on the health,
hazardous duty, profession, or practices of the applicant which is
known to the RR/Agent and required by the insurance company.
b. That USPA&IRA shall have the right to deduct any such losses from any
and all commissions or other monies otherwise payable to RR/Agent
under the terms of this Agreement, and RR/Agent further agrees to
reimburse USPA&IRA for any such losses in excess of commissions due.
Additionally, in the event either USPA or XXX shall determine, in
their sole discretion, that RR/Agent has committed any of the acts
described in subparagraph "5.a.," above, USPA or XXX, as applicable,
shall have the right to charge back any amounts previously earned on,
or as a result of, the sale in question, REGARDLESS of whether any
loss has been experienced by USPA, XXX, or the providers of the
product sold.
c. To fully and accurately complete and sign any "Compliance Checklist,"
which is a listing in plain language of some emphasis items designed
to communicate and confirm USPA&IRA policy and procedures as well as
general regulatory compliance, which USPA&IRA may from time to time
provide, and that RR/Agent's failure to do so shall be considered a
breach of this Agreement.
d. In the event RR/Agent observes or otherwise has knowledge of the
violation by any other RR/Agent of USPA&IRA of any law, rule, or
regulation pertaining to the conduct of the
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investment or insurance businesses, or of the terms of this Agreement,
to report such violation to the Presidents of USPA&IRA, through
RR/Agent's District Agent and Regional Office, and acknowledges that
failure to do so may be considered as a breach of this Agreement.
e. That, for the purpose of assuring that any RR/Agent's actions are in
compliance with securities and insurance laws, rules, and regulations,
District Agents, Regional Agents, and Home Office personnel are
authorized and expected to periodically visit and observe operations,
offices, records, and activities of RR/Agents, and to monitor RR/Agent
appointments with prospects and clients so as to observe sales
presentations and techniques.
f. To pay for, assume responsibility for, and indemnify and hold USPA&IRA
harmless from, any and all damage to property and/or injury or
injuries to other persons occurring on the business premises of
RR/Agent in representing USPA&IRA or from the use of RR/Agent's
automobile or the use by RR/Agent of the automobile of another person,
or any other damages, expenses, and attorney fees, incurred by USPA,
XXX, or the investment or insurance companies represented by the
RR/Agent, as a result of any unauthorized, unlawful, or negligent acts
of the RR/Agent.
g. To carry, in full force at all times, bodily injury and property
damage insurance on RR/Agent's automobile to indemnify against loss of
this nature, in limits of not less than $50,000 for damage to property
of other persons in any one accident, and not less than $200,000 for
the death of or injury to one person in any one accident, and not less
than $500,000 for more than one person in any one accident.
6. CONFLICTS OF INTEREST.
a. RR/Agent acknowledges that all information concerning the identity and
productivity of RR/Agents or employees of USPA&IRA is confidential and
proprietary to USPA&IRA and to those RR/Agents or employees. RR/Agent
acknowledges that RR/Agent will not, directly or indirectly, use,
disclose, or make available in any manner, to persons other than duly
authorized USPA&IRA RR/Agents or employees, such confidential and
proprietary information.
b. RR/Agent further agrees that RR/Agent will not, in the territory in
which RR/Agent has represented USPA&IRA (specifically described in
numerical paragraph "2" of this Agreement), during the term of this
Agreement and for two (2) years after its termination:
(1) Solicit or induce any RR/Agent or employee of USPA&IRA to
terminate with USPA&IRA.
(2) Enter into or invest in any business directly or indirectly
competing with USPA&IRA with any RR/Agent or employee of USPA, or
with any former RR/Agent or employee of USPA&IRA who has
performed any services for USPA&IRA within any of the twelve (12)
preceding months.
7. TRADE SECRETS AND PROPRIETARY INFORMATION.
a. SALES MATERIAL. USPA&IRA may make available to RR/Agent sales
materials, including computer software, created and/or compiled by
them. It is further agreed and understood that all such items created
and/or compiled by USPA&IRA, whether or not copyrighted, are
confidential and proprietary to USPA&IRA. RR/Agent shall safeguard all
such materials, including, but not limited to, forms, books, tapes,
manuals, rosters, and software, in a confidential manner, and shall
not disclose or make available to persons other than duly authorized
USPA&IRA RR/Agents or employees, such confidential or proprietary
information of USPA&IRA and their clients.
b. INSURANCE AND CLIENT INFORMATION. RR/Agent acknowledges that as an
RR/Agent, he/she will become acquainted with confidential and
proprietary information of USPA&IRA relating to persons, firms, and
organizations which are clients of USPA&IRA. This confidential
information may include, but is not necessarily limited to, the names
and addresses of clients and prospective clients of USPA&IRA, computer
software, compilations of census data, information concerning the
policies and procedures of the United States Military Services, policy
expiration dates, policy terms, conditions and rates, and client risk
characteristics. RR/Agent agrees to safeguard all such materials in a
confidential manner and will not, without the prior written approval
of the Presidents of USPA&IRA, directly or indirectly use, disclose,
or make available in any manner to persons other than duly authorized
USPA&IRA RR/Agents or employees, such confidential or proprietary
information of USPA&IRA and their clients.
C. PRODUCT AND MARKETING INFORMATION. It is agreed that USPA&IRA have a
proprietary interest in all information concerning their products,
processes, and services, including information relating to research,
development, programming, computer software, accounting, marketing and
pricing techniques, briefings, charts, films, slides, presentations,
merchandising, and clients, which information is not generally known
in the industries in which USPA&IRA are engaged, and which may become
known by, or disclosed to, RR/Agent solely as a consequence of
RR/Agent's dealings with USPA&IRA. RR/Agent agrees not to use,
disclose, or make available in any manner to persons other than duly
authorized USPA&IRA RR/Agents or employees, such confidential or
proprietary information of USPA&IRA and their clients.
8. COMMISSIONS AND ASSIGNMENTS.
a. RR/AGENT COMMISSIONS. The RR/Agent's sole sources of remuneration
under this Agreement are the commissions and, as to certain
investments, service fees, scheduled in the attached Annexes, which
are incorporated in this Agreement for all purposes. USPA&IRA RESERVE
THE RIGHT TO CHANGE THE PORTION OF THIS AGREEMENT PERTAINING TO
RR/AGENT COMMISSIONS AND SERVICE FEES, AS WELL AS ANY OF THESE
ANNEXES, PROVIDED THAT WRITTEN NOTICE OF ALL CHANGES IS POSTED TO THE
RR/AGENT PRIOR TO THE EFFECTIVE DATE OF THE CHANGES. No other
compensation - such as payment for franchise rights, ownership
interest, goodwill, or other remuneration or consideration - shall be
due to an RR/Agent, District Agent, Assistant Regional Agent, or
Regional Agent, from USPA and/or XXX, notwithstanding the fact that
RR/Agent has established an office, has maintained administrative
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facilities, has relocated, or for any other reasons during the term of
this Agreement or thereafter.
b. COMMISSION ASSIGNMENTS. RR/Agent agrees that:
(1) All monies payable to him/her from the securities distributors or
insurance companies represented by USPA or XXX are hereby
assigned to USPA or XXX, respectively, for payment in accordance
with the Annexes attached hereto and the other terms and
provisions contained herein.
(2) No assignment to third parties of commissions earned, accrued, or
to accrue under this Agreement shall be binding upon USPA or XXX
unless said assignment is approved in advance in writing and
signed by a duly authorized officer of USPA or XXX.
9. PRODUCTION CREDIT (PC).
PC is defined as the total commissions which are expected to be paid by
USPA or XXX to an RR/Agent on a particular sale. PC is used to determine
current individual production, to measure qualification for sales meeting
attendance, to determine annualized production, and to qualify for the
Quarterly Professional Commission and other incentives. PC will be granted
by USPA or XXX upon the receipt of acceptably documented details of a sale.
CREDIT WILL BE GRANTED IN THE MONTH THAT THE ENVELOPE TRANSMITTING THE
DOCUMENTATION TO USPA OR XXX IS POSTMARKED (IF THAT ENVELOPE IS RECEIVED AT
THE USPA&IRA HOME OFFICE ON OR PRIOR TO THE FIFTH DAY OF THE FOLLOWING
MONTH). UNDER NO CIRCUMSTANCES CAN PC BE AWARDED RETROACTIVELY. Additional
information concerning the award of PC for insurance and investment sales
is provided in Annexes A and B, respectively. However:
a. Whenever an investment amount or insurance premium is to be paid by
military allotment, PC will be granted only after an authentic copy of
the properly registered military allotment (or a suitable substitute)
is received by USPA or XXX at their Home Office.
b. The submission of any insurance or investment application, or the
causing of any existing insurance policy or investment plan to be
continued in force, under any circumstances when it is known by the
RR/Agent that the client does not genuinely intend to retain the
account or policy for any reason, and specifically when such action by
the RR/Agent results in, or is for the purpose of, attaining or
maintaining production or persistency minimums, for earning certain
incentive commissions, or for any other purpose of monetary gain,
constitutes a breach of this Agreement.
c. "CONTROLLED BUSINESS." Insurance policies or investment products sold
by an RR/Agent for RR/Agent's own account, or to RR/Agent's spouse,
parents, children, employee(s), or to another USPA&IRA RR/Agent, or to
the spouse, parents, children, or employee(s) of said RR/Agent, shall
be identified as "controlled business" on the Cover Memo provided to
USPA&IRA by the RR/Agent and shall be subject to the following special
rules:
(1) If any such "controlled business" becomes nonpersistent (as
described in Annexes A and B), the PC penalty normally applicable
to such "nonpersistent business" shall be double that described
in the respective Annexes.
(2) In addition, USPA&IRA may retroactively apply the PC penalty to
the date of the original sale and adjust accordingly any
commissions which may have been awarded as a result of the
originally credited PC.
(3) If any insurance sale defined as "controlled business" directly
or indirectly replaces existing insurance sold through ERA, no
commissions shall be paid or PC credited as a result of the
issuance of the "controlled business." For purposes of this
provision, an indirect replacement will be deemed to have
occurred if insurance sold through XXX was terminated by the
purchaser within six (6) months prior to the issuance of the
"controlled business."
10. TERMINATION; RETURN OF PROPERTY.
a. This Agreement can be terminated by either RR/Agent or USPA&IRA at any
time without cause upon the giving of 30 days written notice to the
other parties. This Agreement may be terminated immediately for cause
by either USPA&IRA or RR/Agent upon the giving of written notice. Such
notice may, in either case, be delivered personally or mailed to the
last known address of the recipient of such notice, via United States
mail or its equivalent. This Agreement shall automatically terminate
in the event of death of RR/Agent.
b. RR/Agent agrees that, within three (3) days of the termination of this
Agreement, RR/Agent shall return all USPA&IRA property to USPA&IRA,
including all copies of information within RR/Agent's possession or
subject to RR/ Agent's control pertaining to the business and clients
of USPA&IRA, whether prepared by RR/Agent or others. RR/ Agent
specifically agrees that computer software in his/her possession at
termination shall either be turned over in its entirety to USPA&IRA's
designated representative (usually RR/Agent's District Agent) or
permanently destroyed. Until it has been established to the
satisfaction of USPA&IRA that all of the foregoing has occurred, any
commissions otherwise payable to the terminating RR/Agent may be
withheld by USPA&IRA.
c. RR/Agent specifically agrees that the provisions of paragraphs "6,"
"7," "ll," "12," "13," "14," and "15" shall survive termination of
this Agreement.
11. COMMISSIONS AFTER TERMINATION.
a. TERMINATION AT ANY TIME. Upon termination of this Agreement,
commissions due and to become due shall be retained by USPA&IRA as
follows:
(1) USPA&IRA shall determine and retain amounts necessary to cover
possible refunds of commissions previously paid on insurance
policies and on systematic (contractual) investment plans sold
which may subsequently lapse or be liquidated. These amounts may
be retained for a period of 25 months following the issue date of
the last insurance policy sold, or 30 days following the
expiration of the 18-month (28-month in states which have adopted
the NASAA Guidelines for contractual plans) liquidation period
allowed by the last
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systematic (contractual) investment plan sold, whichever shall
occur last.
(2) Amounts necessary for the repayment of any loans (including
interest accruing on such loans until paid in full) made by USPA
and/or XXX to the RR/Agent.
b. RETENTION OF COMMISSION BY USPA&IRA. Commissions retained by USPA may
be used to cover refunds and/or repayments due to both USPA&IRA.
Commission retained by XXX may be used to cover refunds and/or
repayments due to both USPA&EPA.
c. PAYMENT OF REMAINING COMMISSIONS. After all repayments have been made
and at the end of the above-defined periods, all remaining accrued
commissions will be paid to the RR/Agent, together with interest at a
rate equal to the passbook savings rate at Central Bank & Trust, Fort
Worth, Texas, on the amount remaining, computed from the date said
remaining amounts were received by USPA and/or XXX until payment. In
the event termination has resulted from the death of the RR/Agent,
such commissions shall be paid to RR/Agent's estate. A terminated
RR/Agent or the estate of a deceased RR/Agent is qualified to receive
commissions payable on systematic (contractual) plans and insurance
policies after satisfaction of the above-described claims. However, NO
COMMISSIONS ARE PAYABLE ON PAYMENTS MADE INTO VOLUNTARY ACCOUNTS AFTER
TERMINATION OF THIS AGREEMENT.
12. AGREEMENT AS TO POST-TERMINATION ACTIVITY.
In addition to paragraphs "6," "7," "11," "13," and "14," of this
Agreement as they affect RR/Agent's post-termination activity, RR/Agent
specifically agrees that for a period of two (2) years following
termination of this Agreement, RR/Agent will not, in the territory in which
RR/Agent has represented USPA&IRA:
a. Solicit, directly or indirectly, or assist or train others in the
solicitation of active duty members of the United States Military
Services or their immediate families, in connection with the purchase
or sale of life insurance of a type which is sold by or competes with
XXX, or investments of a type which is brokered or sold by or competes
with USPA, unless RR/Agent has obtained the prior written consent of
the Presidents of USPA and/or XXX.
b. Induce, solicit, or assist others in the inducement or solicitation
of, any client of USPA&IRA to liquidate, partially liquidate, or
transfer to any other broker/dealer, USPA investment accounts, or to
cancel or replace insurance policies sold by or through XXX, unless
RR/Agent has obtained the prior written consent of the Presidents of
USPA&IRA.
13. REMEDIES.
If, as a result of any activity constituting a violation of any provision
of this Agreement, any commission or fee becomes payable to RR/Agent or to
any other person, firm, or organization with whom RR/Agent is then
associated, contracted, or employed, RR/Agent agrees that USPA&IRA will
have been damaged in the amount of this commission or fee and agrees to pay
promptly to USPA&IRA an amount equal to such damages plus interest at the
legal rate. Such restitution shall not, however, limit the amount of any
monetary damage or the availability of any equitable remedies, including
injunctive relief, to which USPA&IRA may become entitled, and USPA&IRA may
withhold payment of commission otherwise due to RR/Agent during the period
required to determine whether USPA&IRA are entitled to the restitution
described above. In the event this determination is in favor of RR/Agent,
these withholdings shall be paid to RR/Agent, with interest at a rate equal
to the passbook savings rate at Central Bank & Trust, Fort Worth, Texas.
14. ARBITRATION.
All controversies, disputes or claims between RR/Agent and USPA&IRA arising
out of and/or relating to this Agreement shall be submitted for binding
arbitration to the National Association of Securities Dealers, Inc.
("NASD"), and such arbitration proceedings shall be heard in accordance
with the then current NASD Uniform Code of Arbitration; provided, however,
that if such controversy, dispute or claim is not eligible for submission
to arbitration before the NASD, such matters shall be submitted for binding
arbitration to the American Arbitration Association ("AAA") and such
proceedings shall be heard in accordance with the then current commercial
arbitration rules of the AAA.
Except as limited by this Agreement, the arbitrator will have the right to
award or include in the arbitrator's award any relief which the arbitrator
deems proper in the circumstances, including, without limitation, money
damages (with interest on unpaid amounts from the date due), specific
performance, injunctive relief, and attorneys' fees and costs, provided
that the arbitrator will not have the right to award exemplary or punitive
damages. The award and decision of the arbitrator will be conclusive and
binding upon all parties hereto and any arbitration award may be entered as
a judgment in any court of competent jurisdiction.
The parties hereto agree to be bound by the provisions of any limitation on
the period of time in which claims must be brought under applicable law or
this Agreement, whichever expires earlier. The parties further agree that,
in connection with any such arbitration proceeding, each must submit or
file any claim which would constitute a compulsory counterclaim (as defined
by Rule 13 of the Federal Rules of Civil Procedure) within the same
proceeding as the claim to which it relates. Any such claim which is not
submitted or filed as described above will be forever barred.
The parties hereto agree that arbitration will be conducted on an
individual, not a class-wide, basis and that an arbitration proceeding
between RR/Agent and USPA&IRA may not be consolidated with any other
arbitration proceeding between USPA&IRA and any other person. The costs of
arbitration shall be borne equally by the parties pending a final award by
the arbitrator.
Notwithstanding anything to the contrary contained in this paragraph 14,
RR/Agent and USPA&IRA each have the right in a proper case to obtain
temporary restraining orders and temporary or preliminary injunctive relief
from a court of competent jurisdiction, provided, however, that the parties
agree to contemporaneously (or as soon thereafter as is reasonably
possible) submit the dispute for arbitration on the merits as provided
herein.
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The laws of the state of Texas shall govern with respect to any
controversies, disputes or claims arbitrated or litigated hereunder.
15. SOLE AGREEMENT; CONDITIONS NOT WAIVED; CONTINUING APPLICABILITY;
SEVERABILITY.
a. SOLE AGREEMENT. This Agreement supersedes all prior Agreements between
RR/Agent and USPA or XXX and, along with its Annexes, contains all of
the terms and understanding between the parties hereto as of this
date. The parties agree that said terms and provisions shall not be
altered or modified in any manner except by mutual written agreement
between RR/Agent and the Presidents of USPA&IRA, provided, however,
that USPA&IRA reserve the unilateral right to change the portions of
this Agreement pertaining to commissions and the Annexes attached upon
prior written notice, as described in paragraph "8.a." above.
b. CONDITIONS NOT WAIVED. The failure by USPA&IRA to exact strict
compliance with the terms of this Agreement or to declare any default
when such shall become known to USPA&IRA, shall neither operate as a
waiver of such terms nor release RR/Agent from RR/Agent's obligation
to perform this Agreement in accordance with its terms.
c. CONTINUING APPLICABILITY. This Agreement shall be binding upon the
parties, their legal representatives, successors, and assignees. It is
expressly agreed that the provisions contained herein which affect the
RR/Agent's activities, both before and after termination, shall
continue in full force and effect after this Agreement is otherwise
terminated.
d. SEVERABILITY. If for any reason any provision or portion of any
provision of this Agreement is held by proper judicial authority to be
invalid and/or unenforceable, said holding shall not invalidate any
other portion of this Agreement which is otherwise valid and
enforceable.
IN WITNESS WHEREOF, the parties to this Agreement have executed it as of the
date first written above.
By
---------------------------------------------------
Signature of Registered Representative/Agent
Form of business entity of RR/Agent:
/ / Corporation / / Partnership / / Sole Proprietorship
United Services Planning Association, Inc.
and
Independent Research Agency for Life Insurance, Inc.
By
---------------------------------------------------
Signature of President
--------------------------------------------------------------------------------
6
ANNEX A
USPA&IRA RR/AGENT AGREEMENT
XXX AGENT COMMISSION
1. INSURANCE COMMISSIONS.
Insurance commissions will be paid and Production Credit (PC) will be
granted to an appropriately licensed Agent who makes persistent sales of
the products shown in this Annex, under the following conditions:
a. Commissions are paid on the first-year premium only, are paid to an
Agent only after XXX receives commissions from the insurance
companies.
b. As noted in paragraph "8.a." of this Agreement, this Annex may be
changed upon prior written notice by XXX.
2. INSURANCE COMMISSION AMOUNTS.
Agents will be paid commissions and be granted PC amounting to 80% of the
first-year premium on each sale made of the "standard" insurance products
described in this Annex.
3. PRODUCTION CREDIT.
As defined in paragraph "9" of this Agreement, XXX grants PC to the Agent
upon its receipt of acceptably documented details of a sale. For insurance
sales, this documentation is transmitted using the XXX "Cover Memo"
designed for that purpose. For purposes of awarding PC, a "sale" is deemed
to have occurred only after the appropriately supported "Cover Memo" is
received and processed at the Home Offices of USPA&IRA. Further, the award
of PC is subject to the following additional conditions:
a. The sale must be made to either an existing client* or an immediate
family member of said existing client, or to an individual who is an
active duty member of the U.S. military with the rank of E-6 or above,
or the immediate family member of an active duty E-6 or above; and the
sale must occur within 24 months after the scheduled presentation of a
Family Financial Program which recommended the products sold.
b. Subject to "a.," above, XXX will xxxxx full PC, equal to the amount of
first-year commissions to be paid to the selling Agent, ONLY if:
(1) A military allotment has been completed and properly registered,
or an automatic bank draft plan has been established with the
required initial premium, or if full payment of the first annual
premium has been received by the insurance company; and
(2) A completed Cover Memo and, if applicable, a copy of the properly
filed military allotment (or a suitable substitute) have been
received by XXX at its Home Office.
c. Otherwise, but also subject to "a.," above, XXX will xxxxx partial PC
to the selling Agent to the extent of the commissions due on the
premium amounts received by the insurance company, either in
conjunction with the initial application or subsequently during the
first policy year.
d. XXX will grant PC on a "trial" or "C.O.D." application only after the
policy is issued by the insurance company and the first payment or
copy of a duly filed military allotment (or suitable substitute) or
bank draft authorization (with initial premium) is received by the
insurance company. The granting of PC in such cases shall also be
subject to the requirements stated in "a.," above.
4. TERM CONVERSIONS.
When a full or partial term conversion is made and the in-force term
coverage is converted to whole life insurance, PC is granted and
commissions are paid on the full amount of the new (converted) policy's
premium. However, if ANY of the in-force term coverage is canceled, NO PC
or commissions will be paid on the converted policy. Also, a conversion
made during the first policy year is treated as follows:
a. CONVERTING AGENT IS SAME AS SELLING AGENT. Full PC and commissions are
paid on the converted policy. A 100% chargeback of PC and commissions
is made on the amount of term that was converted;
b. CONVERTING AGENT IS DIFFERENT FROM SELLING AGENT. Converting Agent is
paid PC and commissions on the increase in premium (new policy plus
remaining policy minus original policy). No chargeback of PC or
commissions is made to the selling Agent.
5. NONPERSISTENT BUSINESS.
Chargebacks of paid commissions and granted PC will be made for
nonpersistent business--policies and riders which are not issued, issued
but not taken, canceled, lapsed, or otherwise terminated for whatever
reason (excluding the death of the insured). In the event of a policy
cancellation involving a refund of all premiums paid, the selling Agent
will incur a 100% PC and commission chargeback. In the event of a
cancellation not involving a refund of all premiums paid, no PC or
commission chargeback will be made if the cancellation occurs after 25
monthly premiums have been paid. However, cancellations not involving a
refund of all premiums paid but occurring before 25 premium payments
have been made will result in a chargeback, computed as follows:
a. COMMISSION CHARGEBACK. Commissions are considered to be earned as they
are paid, but are subject to recoupment should the policy become
nonpersistent prior to receipt of the 25th monthly premium. Upon
termination or lapse, commissions already paid on a nonpersistent
insurance policy will be charged back as follows:
(1) 100% of commissions paid will be charged back if termination
occurs at or prior to the fifth monthly premium;
(2) Thereafter, commissions paid will be charged back at a rate of 5%
per month for each month less than 25 months that the policy was
in force.
------------------------
* A client who was in the USPA&IRA Home Office computer database as of June
30, 1996.
--------------------------------------------------------------------------------
A-1
b. PRODUCTION CREDIT CHARGEBACKS. Similarly, PC is considered to be
earned as each commission payment is received. WHENEVER COMMISSIONS
ARE CHARGED BACK, PC WILL ALSO BE CHARGED BACK SUCH THAT THE AMOUNT OF
PC RETAINED FOLLOWING THE PC CHARGEBACK WILL EQUAL THE AMOUNT OF
COMMISSIONS RETAINED FOLLOWING THE COMMISSION CHARGEBACK.
c. TIMING OF CHARGEBACKS. As a general rule, both commission and PC
chargebacks will take effect in the month FOLLOWING that in which the
chargeback is processed, unless the Agent otherwise requests that it
be applied immediately.
6. INSURANCE COMPANIES AND PRODUCTS.
The following are the standard insurance products upon which the
commissions described in paragraph "2" of this Annex are paid:
ALL AMERICAN LIFE INSURANCE COMPANY
Preferred Whole Life
Preferred Uniform Decreasing Term (PUDT-65)
*Specified riders attached at time of policy issue
LIBERTY NATIONAL LIFE INSURANCE COMPANY
Whole Life (BANDED SERIES ONLY)
Decreasing Term to Ages 65, 70, 75, 80, and 85
(last 5 years level) (DT-65, 70, 75, 80, and 85)
All riders attached at time of policy issue and DT-65, 70,
75, 80, or 85 riders added to existing policies.
MONUMENTAL LIFE INSURANCE COMPANY
Whole Life
Uniform Decreasing Term to Ages 65 and 85
(UDT-65 and 85)
Decreasing Term to Age 80 (DT-80)
All riders attached at time of policy issue and UDT-65,
DT-80, or UDT-85 riders added to existing policies.
THE OLD LINE LIFE INSURANCE COMPANY OF AMERICA
Preferred Whole Life
Preferred Uniform Decreasing Term (PUDT-65)
*Specified riders attached at time of policy issue
SECURITY BENEFIT LIFE INSURANCE COMPANY**
Whole Life
Decreasing Term to Age 65 (DT-65)
All riders attached at time of policy issue
---------------------------
* Only PUDT-65 may be written as a rider on Preferred Whole Life (PWL). Other
decreasing term riders are not authorized. Child rider, OPAI, GIO (AL
only), and WP may be written on both PUDT-65 and PWL.
** No commission is paid on the portion of first year premium which is a
policy fee.
Commissions to be paid and PC granted on products other than those listed
above shall be 40% of the first-year premiums.
Subject to satisfying the requirements in paragraph "3.a.," above, PC and
commissions shall be credited/paid to the original Agent on riders added to
an existing policy during the first policy year, and will be credited/paid
pro rata during the BALANCE of the first policy year after such addition.
NO PC OR COMMISSION SHALL BE CREDITED/PAID ON RIDERS ADDED TO A POLICY
AFTER THE FIRST POLICY YEAR, except for the addition of decreasing term
riders to existing Monumental Life and Liberty National policies, for which
full first-year commission will be paid to the Agent who adds the
decreasing term rider. PC will be granted in accordance with paragraph
"3" above.
--------------------------------------------------------------------------------
A-2
ANNEX B
USPA&IRA RR/AGENT AGREEMENT
USPA RR COMMISSION
1. INVESTMENT COMMISSIONS.
Investment commissions and 12b-1 service fees will be paid and Production
Credit (PC) will be granted to an appropriately licensed RR who makes
persistent sales of the products shown in this Annex, under the following
conditions:
a. For systematic (contractual) investment plans, commissions are based
solely on the first-year sales charges paid by the investor.
Systematic plan 12b-1 fees are not paid to the RR.
b. For voluntary investment accounts, commissions and service fees are a
percentage of investment amounts and subsequent service fees paid to
USPA.
c. For both systematic (contractual) investment plans and voluntary
investment accounts, commissions are paid to an RR only after USPA
receives payment for sales from the respective securities
distributors.
d. As noted in paragraph "8.a." of this Agreement, this Annex may be
changed upon prior written notice by USPA to the RR.
2. INVESTMENT COMMISSION AMOUNTS AND SERVICE FEES.
a. The commission and PC amounts associated with the investment products
most frequently sold by USPA RRs are shown in paragraphs "7" and "8"
of this Annex.
b. Additional payments, termed "service fees" for purposes hereof, may be
payable on certain mutual funds. These service fees will be a portion
of the fees paid to USPA under a 12b-1 distribution plan by the
particular mutual fund. The amount of such 12b-1 fees are described in
paragraph "8" of this Annex. They will normally be paid quarterly
subsequent to receipt by USPA. Of the 12b-1 amounts received by USPA,
the original selling RR may be paid a portion of them depending on the
fund and when purchased. The Current Servicing Agent (CSA), as USPA
defines such for all other purposes, shall, in any event, receive a
portion of such amounts. If the original selling RR and the CSA are
the same person, this individual may be paid both portions of the
12b-1 amounts received by USPA and paid to RRs, depending on the fund
and when purchased. PC shall be credited to an RR in an amount equal
to any service fees paid to the RR, and any such amounts shall be
considered with other commissions in determining Quarterly
Professional Commission qualification. District Agents and Regions
will be paid overrides at the rate payable for all other RR sales
commissions for service fees paid to their RRs.
3. PRODUCTION CREDIT.
As described in paragraph "8" of this Agreement, USPA grants PC to the
RR upon its receipt of acceptably documented details of a sale. For
investment sales, this documentation is transmitted using the USPA
"Cover Memo" designed for that purpose. For purposes of awarding PC, a
"sale" is deemed to have occurred only after the appropriately supported
"Cover Memo" is received and processed at the Home Offices of USPA&IRA.
Further, the award of PC is subject to the following additional
conditions:
a. The sale must satisfy the requirements of USPA&IRA Statement of Policy
(SOP) 13-7, titled "Award of Production Credit," including the
requirement for Form 1340, titled "Market Confirmation for Production
Credit," and must be in accordance with SOP 5-1, titled "Authorized
Sales Procedures."
b. SYSTEMATIC (CONTRACTUAL) INVESTMENT PLANS.
(1) Subject to "a.," above, "Full PC" - equal to the total amount of
first-year commissions payable to the RR, as shown in paragraph
"7" of this Annex - will be granted if the Cover Memo is received
by USPA at its Home Office and
(a) is accompanied by evidence that an acceptable "monthly mode
of payment" has been or is being established on a timely
basis, such evidence to include a copy of a properly
registered military allotment (or a suitable substitute),
automatic bank draft authorization, or approved electronic
funds transfer (EFT) authorization. Payments made pursuant
to such an acceptable mode of payment are hereinafter
referred to as "modal payments." For the purpose of awarding
PC, a mode of payment will be considered timely and
acceptable IF AND ONLY IF the first monthly modal payment is
scheduled to arrive at the fund company within three full
production months following and including the production
month for which the PC is awarded. Modal payments on other
than a monthly frequency (bimonthly, quarterly, etc.) will
be awarded PC on a residual basis.
(b) Plans cannot be opened with partial modal payments.
(2) Residual PC equal to the amount of commissions due to the RR on
any initial cash investment accompanying the application - will
be granted when no mode of payment is established and the Cover
Memo, supporting documentation, and initial investment are
otherwise sufficient to permit opening the account. Residual PC
(and commissions) are awarded for each full monthly unit of the
plan. When partial payments are received by the fund, commissions
are paid to USPA after each full investment unit accrues.
(3) Otherwise, if no valid mode of payment is established and no
acceptable initial investment is received, no PC will be awarded
and the Cover Memo with its supporting documentation will be
returned to the RR.
(4) Once the investor has made the commissionable investments
described in paragraph "7" of this Annex, no further commissions
or PC will be paid or credited to the selling RR.
--------------------------------------------------------------------------------
B-1
c. VOLUNTARY (OPEN) ACCOUNTS:
(1) Commissions on initial lump sum/cash sales which establish
voluntary (open) accounts are paid to the RR after USPA receives
payment for such sales from the investment companies. Subject to
the requirements of paragraph "3a," above, initial PC on these
sales is credited when the Home Office RECEIVES the Cover Memo,
an appropriately executed application, and an acceptable initial
investment. The amount of PC shall be equal to the commission
payable to the RR for the amount of investment actually
transmitted with the Cover Memo. This is normally 50% of the
dealer allowance paid to USPA in accordance with the current
prospectus and dealer agreements. Some examples are shown in
paragraph "8" of this Annex.
(2) If no acceptable initial investment is received and no valid
payments are established, no PC will be awarded and the Cover
Memo and accompanying documents may be returned to the RR.
d. COMMISSIONS/PC FOR SUBSEQUENT INVESTMENTS TO PREVIOUSLY ESTABLISHED
VOLUNTARY ACCOUNTS. The following provisions will be implemented to
the extent that they do not conflict with SEC, NASD, or state
regulations, rules, or laws prevailing at the time:
(1) Commissions will be paid and "residual" PC will be awarded on
subsequent monthly or lump sum investments to previously
established voluntary accounts AFTER the commission on each such
subsequent investment is paid to USPA, and in an amount equal to
the commission payable to the RR on each such investment.
(2) The selling RR will continue to receive commissions and
"residual" PC (in accordance with paragraph "3.c.(1)" above:
(a) on subsequent MODAL investments into previously established
voluntary accounts, so long as this Agreement has not been
terminated AND the modal payments continue without
interruption.
(b) on subsequent CASUAL (non-modal payments not equal to the
anticipated modal amount, if any) investments into
previously established voluntary accounts, so long as this
Agreement has not been terminated and entitlement to such
commissions and PC has not been earned by another RR, as
explained in paragraph "5" below.
e. ADDITIONAL INVESTMENTS TO ACCOUNTS ESTABLISHED BY OTHER RRs. A
servicing RR who causes additional commissionable monthly or lump sum
dollars to be invested in a previously established account MAY be
granted PC and commissions on such additional investments upon receipt
by USPA of properly documented evidence of the sale.
4. NONPERSISTENT BUSINESS.
Chargebacks of paid commissions and granted PC will be made for
nonpersistent business - investment plans and accounts which are not
actually established, which are established but not funded, or which are
canceled, lapsed, discontinued, liquidated, or to which the investor fails
to continue payments for any cause whatsoever (except the death of the
investor) - and will be computed as follows:
a. SYSTEMATIC (CONTRACTUAL) INVESTMENT PLAITS.
(1) 100% of any commissions paid and of the original PC granted will
be charged back if the investment plan is not established or if
it is liquidated within 18 months of the date the plan is
established.
(2) In the event that MONTHLY MODAL payments are discontinued prior
to the end of the commissionable period, the amount of PC
attributable to the remaining commissionable payments will be
charged back.
(3) If a Pioneer Independence Plans modal payment is reduced to a
partial payment, it will be treated as a discontinued mode and
the amount of PC attributable to remaining commissionable
payments will be charged back. PC will then be paid residually on
partial payments, based on the amount of the payment.
b. VOLUNTARY ACCOUNTS. All PC awarded and commissions and service fees
paid in conjunction with an investment into a voluntary account will
be charged back to the extent that the invested monies, for whatever
reason, are subsequently refunded to the investor in whole or in part,
and for which commissions and service fees are recouped from USPA.
c. TIMING OF CHARGEBACKS. As a general rule, both commission and PC
chargebacks will take effect in the month following that in which the
chargeback is processed, unless the RR otherwise requests that it be
applied immediately.
d. RESUMPTION OF MODAL PAYMENTS ON A CONTRACTUAL INVESTMENT PLAN. In the
event modal payments are restarted (or begun) on a contractual plan
which has been dormant for six months and has had a chargeback
applied, commissions and PC will be awarded for any of the remaining
commissionable payments. These commissions and PC will be awarded to
the licensed RR determined to be most responsible for causing the
resumption of modal payments.
5. SERVICING VOLUNTARY ACCOUNTS SOLD BY OTHER RRs.
a. SOLD BY AN RR WHO IS STILL ACTIVE. Upon appropriate notification to
the Home Office, a servicing RR may receive commissions and PC by:
(1) initiating or resuming a mode of payment on an account that has
been dormant for at least six months; or
(2) increasing a monthly mode of payment; or
(3) the servicing RR most responsible for a casual (non-modal)
payment to an active or dormant account will be entitled to
commissions and PC for that transaction only.
--------------------------------------------------------------------------------
B-2
b. SOLD BY AN RR WHO IS NO LONGER ACTIVE. In addition to the provisions
of paragraph "5.a." above, servicing RR may earn entitlement to
receive commissions and PC on subsequent modal and/or casual
investments to voluntary accounts sold by an RR who no longer
represents USPA (and to which entitlement has not already been
transferred to another ACTIVE RR) by:
(1) generating a new sale to the investor of any product offered by
USPA or XXX;
(2) completing a formal Update Program for the investor/planholder;
OR
(3) accomplishing a formal Annual Financial Review of the investor's
Family Financial Program.
6. LETTERS OF INTENT, RIGHTS OF ACCUMULATION, AND AUTHORIZED FUND TRANSFERS.
Commissions will be paid and PC granted only upon the amount of cash
actually invested in an established account, without regard to the full
amount of any planned investments made in conjunction with a Letter of
Intent (LOI) or authorized transfer, and without regard to any amounts
already invested but which are used to establish sales charges under Rights
of Accumulation. As subsequent investments are made pursuant to an LOI or
as fund transfers are actually consummated, the RR will be paid appropriate
commissions and be granted PC on the amounts involved.
7. SYSTEMATIC (CONTRACTUAL) INVESTMENT PLAN COMMISSIONS.
COMMISSION STRUCTURE
AIM Summit (ASF)
Fidelity Destiny I & II (DST)
Pioneer Independence Plans (PIN)
Xxxxxxxxx Capital Accumulation (TCA)
Monthly Investment Applicable Fund Commissions Number of Commission
Amount* Company and PC Monthly Monthly Commissions and PC Total
------------------ --------------- -------------- ------------------- ------------
$50.00 ALL $12.50 12 $150
$75.00 ALL $18.75 12 $225
$100.00 ALL $25.00 12 $300
$125.00 ALL $31.25 12 $375
$150.00 ALL $37.50 12 $450
$166.66 ALL $41.67 12 $500
$200.00 ALL $50.00 12 $600
$250.00 ALL $62.50 12 $750
$300.00 ALL $75.00 12 $900
$350.00 ALL $87.50 12 $1,050
$400.00 ALL $100.00 12 $1,200
$450.00 PIN $109.58 12 $1,315
$500.00 ASF, DST, TCA $112.50 12 $1,350
$500.00 PIN $118.33 12 $1,420
$600.00 ASF $130.00 12 $1,560
$600.00 PIN $137.50 12 $1,650
$700.00 PIN $156.25 12 $1,875
$750.00 ASF, DST, TCA $150.00 12 $1,800
$800.00 PIN $172.92 12 $2,075
$900.00 PIN $182.50 12 $2,190
$1,000.00 PIN $192.50 12 $2,310
$1,000.00 DST $150.00 12 $1,800
$1,000.00 ASF, TCA $175.00 12 $2,100
$1,250.00 PIN $204.17 12 $2,450
$1,500.00 PIN $206.25 12 $2,475
$1,500.00 DST $157.50 12 $1,890
$1,500.00 ASF, TCA $187.50 12 $2,250
$1,750.00 PIN $223.33 12 $2,680
$2,000.00 PIN $240.83 12 $2,890
$2,000.00 DST $162.50 12 $1,950
$2,000.00 TCA $220.00 12 $2,640
$2,500.00 DST $175.00 12 $2,100
$2,500.00 PIN $257.92 12 $3,095
$3,000.00 ASF, TCA $225.00 12 $2,700
$5,000.00 DST $200.00 12 $2,400
$5,000.00 TCA $250.00 12 $3,000
$5,000.00 PIN $275.00 12 $3,300
$6,000.00 ASF $300.00 12 $3,600
$10,000.00 DST $250.00 12 $3,000
$10,000.00 TCA $375.00 12 $4,500
$10,000.00 PIN $412.50 12 $4,950
* When two or more plans are combined to determine reduced sales charges,
commissions and PC are reduced accordingly.
--------------------------------------------------------------------------------
B-3
8. VOLUNTARY INVESTMENT ACCOUNT COMMISSIONS AND SERVICE FEES.
This table lists the commission and service fee rates payable by USPA for
sales of the mutual funds identified. These commission schedules are
representative of the funds and share classes available, it does not list
all the fund groups or individual funds USPA might broker. These rates are
used to calculate commissions and Production Credit (PC) on specific
investment amounts, as explained in this Annex. For products not covered
below, commission information is available from the fund prospectus or upon
request from USPA. "NAV" means the net asset value of shares in the account
at the time service (12b-1) fees are determined. Service (12b-1) fees
received on voluntary accounts by USPA are shared with the Representatives
as follows: 20% of the amount received to the selling Representative and
20% to the Current Servicing Agent (CSA). Payment schedules on 12b-1 are
subject to change in accordance with dealer agreements with and decisions
by the mutual fund distributors.
FRANKLIN XXXXXXXXX EQUITY FUNDS
(GROWTH, WORLD, GLOBAL SMALLER COMPANIES, FOREIGN, ETC.)
(CLASS I SHARES)
Amount Dealer RR's 12b-1
Invested Reallowance Commission Fees
-------- ----------- ---------- -----
$ to $ 49,999 5.00% 2.50% .03% of the NAV of shares in an account which were sold
$ 50K to $ 99,999 3.75% 1.875% prior to January 1, 1993, which amount is payable to CSA
$ 100k to $ 249,999 2.80% 1.40% ONLY. On shares sold subsequent to January 1, 1993, .05%
$ 250K to $ 499,999 2.00% 1.00% of NAV to original selling RR and .05% of NAV to CSA.
$ 500K to $ 999,999 1.60% .80%
$ 1,000K to $ 1,999,999 1.00% .50%
$ 2,000K and Above *
* Available upon request from USPA.
FRANKLIN XXXXXXXXX EQUITY FUNDS
(GROWTH, WORLD, GLOBAL SMALLER COMPANIES, FOREIGN, ETC.)
(CLASS II SHARES)
Amount Dealer RR's 12b- 1
Invested Reallowance Commission Fees
-------- ----------- ---------- ----
0 to $ 999,999 2.00% 1.00% .05 % of the NAV of shares during the first year and .20%
after the first year to the original selling RR and the CSA.
PIONEER EQUITY FUNDS
(PIONEER FUND, PIONEER II, MID-CAP, ETC.)
(CLASS A SHARES)
Amount Dealer RR's 12b-1
Invested Reallowance Commission Fees
-------- ----------- ---------- ----
$ to $ 49,999 5.00% 2.50% .03% of the NAV of shares in an account which were sold
$ 50K to $ 99,999 4.00% 2.00% prior to August 19, 1991, which amount is payable to CSA
$ 100k to $ 249,999 3.00% 1.50% ONLY. On shares sold subsequent to August 19, 1991, .05%
$ 250K to $ 499,999 2.00% 1.00% of NAV to original selling RR and .05% of NAV to CSA.
$ 500K to $ 999,999 1.75% .875%
$ 1,000,000 to $ 5,000,000 1.00% .50%
$ 5,000,001 and Above *
* Available UPON request from USPA.
PIONEER EQUITY FUNDS
(PIONEER FUND, PIONEER II, MID-CAP, ETC.)
(CLASS B SHARES)
Amount Dealer RR's 12b-1
Invested Reallowance Commission Fees
-------- ----------- ---------- ----
0 to $ 250,000 4.00% 2.00% .05% of the NAV to the original
selling RR and .05% of NAV to CSA.
PIONEER EQUITY FUNDS
(PIONEER FUND, PIONEER II, MID-CAP, ETC.
(CLASS C SHARES)
Amount Dealer RR's 12b-1
Invested Reallowance Commission Fees
-------- ----------- ---------- ----
No Limit 1.00% 1.00% Beginning in the second year,
.20% of NAV to original selling
RR and .20% of NAV to CSA.
--------------------------------------------------------------------------------
X-0
XXXXX X
XXXX&XXX XX/XXXXX AGREEMENT
QUARTERLY PROFESSIONAL COMMISSION
A Quarterly Professional Commission (QPC) shall be paid to qualifying RR/Agents
approximately 20 days following the end of each calendar quarter, provided the
RR/Agent has continuously represented USPA&IRA during all of such quarter, in
accordance with the following provisions:
1. COMPLIANCE CRITERIA.
To initially qualify for the QPC, an RR/Agent needs only to satisfy (as
evidenced by District Agent and Regional Agent endorsement of USPA&IRA Form
286) the following professional standards:
a. Maintain a professional office other than in the RR/Agent's home.
b. Prominently display a "USPA&IRA" logo sign at or near the office
and/or on a main access road to the military installation(s) serviced.
c. List "USPA&IRA" in the white pages (only) of the local phone
directory.
d. Not later than the end of the quarter during which the RR/Agent
attends Phase V School, employ and utilize a professional
Administrative Assistant at least 40 hours per week. (Note: A Client
Contact Specialist may be utilized up to 20 hours per week toward
satisfaction of this requirement.)
e. Obtain prior approval from the Regional (or Home) Office of any
written sales proposal and of all sales made, and provide the original
of every fully or partially completed Confidential Check List and
Program Worksheet to the office providing that approval.
f. Maintain adequate client files and otherwise fully cooperate with, and
participate in, the USPA&IRA client service system.
g. Make proper and timely delivery of all insurance policies.
2. AMOUNT OF QPC.
The QPC payable to a qualifying RR/Agent is the product of:
a. The total amount of commissions described in Annexes A and B of the
Agreement paid to the Agent during the calendar quarter for which the
QPC is being computed; and
b. The QPC Rate (described below)
3. QPC RATE.
The QPC Rate is the product of the total net PC generated during the
quarter and the applicable QPC Factor.
a. NET PC. Gross PC less applicable PC chargebacks resulting from
nonpersistent business.
b. QPC FACTOR.
(1) BASIC QPC FACTOR. The basic QPC Factor used to compute any
qualifying RR/Agent's QPC is .375% PER $1000 of total net PC
credited to that RR/Agent in the calendar quarter for which that
QPC is being computed.
(2) INCENTIVE QPC FACTORS. The basic QPC Factor described above is
effectively DOUBLED to .75% PER $1000 of total net PC if EITHER
of the qualifications listed below are met:
(a) QUANTITATIVE STANDARD. If the RR/Agent is credited with at
least $15,000 of total net PC during the calendar quarter.
(b) QUALITATIVE STANDARD. If the RR/Agent satisfies at least
four (4) of the following five (5) requirements.
1) 60 Family Financial Programs must have been produced
during the previous four calendar quarters (excluding
the current quarter), or 15 such Programs must be
produced during the current calendar quarter.
2) 70% of Family Financial Programs to have been presented
during the previous four calendar quarters must have
resulted in the sale of a commissionable product
offered through USPA&IRA.
3) The required percent of the combined insurance and
investment PC programmed in Family Financial Programs
during the previous four calendar quarters must have
been sold. Currently, this required percent is -0-, and
all RR/Agents satisfy this requirement.
4) 91% of the PC awarded on periodic investment plans
completing their 18th month during the previous four
calendar quarters must be persistent.
5) 94% of the insurance premiums sold on policies
completing their 24th month during the previous four
calendar quarters must be persistent.
(3) MAXIMUM QPC FACTOR. By producing at least $15,000 of net PC
AND by satisfying four out of five qualitative requirements,
the RR/Agent can effectively QUADRUPLE the Basic QPC Factor
to 1.5% PER $1000 of total net PC.
c. MAXIMUM QPC RATE. Regardless of the QPC Factor otherwise
computed, the Maximum QPC Rate BASED SOLELY ON QUANTITY OF
PRODUCTION is 12.5%. The Maximum QPC Rate BASED UPON BOTH
QUANTITY AND BY SATISFYING FOUR OUT OF FIVE QUALITATIVE
REQUIREMENTS WILL NOT EXCEED 25%.
d. MINIMUM QPC AMOUNT Notwithstanding the QPC amount calculated
based on actual paid commissions, any RR/Agent who otherwise
qualifies for the QPC at the 1.5% per $1000 QPC Factor will be
paid a minimum QPC of $2000 ($1000 if still eligible to earn the
NASC described in Annex N to this Agreement).
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4. SUMMARY OF QPC COMPUTATIONS.
"QPC FACTOR" PER $1000 OF NET PC*
QUANTITY
$15,000 of Net PC in
Calendar Quarter?
---------------- Maximum
No Yes Rate
QUALITY ---------------------------------
Qualified in at Least No .375% .75% 12.5%
4 of 5 Requirements? Yes .75% 1.5% 25.0%
---------------------------------
*MINIMUM QPC RULES ALSO APPLY.
5. CONTINUOUS QUALIFICATION FOR THE QPC.
Upon qualification for the QPC as described in paragraphs "1" through "3"
above, the RR/Agent may continue to earn the QPC for the following calendar
quarter and each subsequent calendar quarter thereafter by continuing to
satisfy the qualification requirements contained herein for each such
subsequent quarter.
6. NOTICE OF MODIFICATION.
As noted in paragraph "8.a." of this Agreement, USPA&IRA reserves the right
to modify this (or any other) Annex by providing prior written notice to
the RR/Agent.
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XXXXX X
XXXX&XXX XX/XXXXX XXXXXXXXX
XXXXXXXX AGENT COMMISSION
In addition to the RR/Agent commissions elsewhere described in this Agreement, a
USPA&IRA RR/Agent who is designated as a District Agent ("DA") may also earn the
following supplemental commissions based on sales made by RR/Agents assigned to
that DA while said designation is in force:
1. OVERRIDES.
An RR/Agent appointed in writing by USPA&IRA as a DA will receive
commission overrides based upon sales made by, and commissions paid to,
RR/Agents designated to that DA, provided that the DA is properly licensed
in the states in which those designated RR/Agents make such sales.
a. AMOUNT OF COMMISSION OVERRIDES.
(1) In addition to commissions for the DA's own personal sales, each
month a DA will receive override commissions amounting to 30% of
the total commissions (excluding QPC and NASC) paid to each
designated RR/Agent on sales made while that RR/Agent is
designated to the DA.
(2) If an RR/Agent designated to the DA has been appointed a Field
Client Representative (FCR), the override commissions payable to
the DA as to that FCR shall be reduced by the amount commissions
and 12b-1 service fees paid to such FCR exceed commissions and
12b-1 service fees which would be paid for comparable sales or
service to an RR/Agent who was not an FCR. Also, the computation
of overrides on such FCR shall not include any Future Performance
Commission (FPC) paid to such FCR, nor shall such FPC be included
in any override reduction.
b. OVERRIDES WHEN RR/AGENT IS NO LONGER DESIGNATED TO THE DA. The
entitlement of a DA to override commissions on the new sales of a
designated RR/Agent will cease upon the relocation of either the
RR/Agent or the DA, upon the redesignation of the RR/Agent to another
DA or to the Regional Office, or whenever the DA ceases to act as the
DA for such RR/Agent. In these situations, override commissions
granted or to be granted to the DA, based on previous sales made while
the RR/Agent was designated to the DA, will be treated as follows:
(1) DA shall remain entitled to override commissions on insurance and
systematic investment sales (as defined in Annexes A and B
respectively) made while the selling RR/Agent was designated to
the DA for so long as those commissions are earned on such sales
by that RR/Agent.
(2) For voluntary investment sales the DA shall remain entitled to
override commissions on persistent monthly modal payments (paid
via a valid "mode of payment"), initiated while the selling
RR/Agent was designated to the DA, for so long as the valid mode
of payment continues. However, in the event that the DA
terminates as an RR/Agent of USPA&IRA, no override commissions
on monthly voluntary investments shall be payable on such sales
after the date of termination and any overrides payable
thereafter will revert to USPA&IRA.
c. NONPERSISTENT BUSINESS. Override commissions paid to a DA on business
that subsequently becomes nonpersistent shall be charged back to the
DA to whom the selling RR/Agent was designated at the time the sale
to which the chargeback applies was made and shall be 30% of the
amounts charged back to the selling RR/Agent.
2. QUARTERLY PROFESSIONAL COMMISSION (QPC).
Notwithstanding the provisions of Annex C of the Agreement, an RR/Agent who
at any time during a calendar quarter is also designated as a DA may
qualify for the QPC in accordance with the following provisions:
a. A DA with less than four (4) designated RR/Agents no longer considered
"New RR/Agents" earns the QPC if
(1) at least 50% of those designated RR/Agents fully qualify for the
QPC; OR
(2) the DA personally satisfies the requirements of Annex C to this
Agreement, with the exception that said DA is required to satisfy
only three (3) of the five (5) qualitative requirements described
in paragraph "3" of Annex C, AND at least 50% OF ALL RR/AGENTS in
the District, INCLUDING THE PERSONALLY PRODUCING DA, FULLY
QUALIFY for the QPC during the quarter.
b. A DA with four (4) or more designated RR/Agents who are no longer
considered "New RR/Agents" earns the QPC IF AND ONLY IF at least 50%
of those designated RR/Agents, EXCLUDING THE DA, fully qualify for
the QPC.
c. For the purpose of applying subparagraphs "2.a." and "b" above, the
failure of a "New RR/Agent" (defined as one who has not completed
twelve (12) months since the month in which cumulative PC of $5000 was
first credited to that Agent) to fully qualify for the QPC shall not
adversely affect the DA's eligibility for the QPC. However, any such
New RR/Agent who does fully qualify for the QPC shall be included
under the provisions of subparagraphs "2.a." or "b." above, IF such
inclusion enables the DA to qualify for the QPC.
d. The amount of QPC payable to a DA shall be determined in accordance
with paragraph "4" of Annex C to this Agreement, subject to the
following conditions:
(1) The DA's QPC shall be based solely upon that DA's personal sales,
without regard to any override commissions paid to the DA for
sales made by the DA's designated RR/Agents.
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D-1
(2) DAs who qualify for the QPC solely by virtue of the full
qualification of designated Agents are considered to be
themselves fully qualified for the QPC, such that their QPC
amount will be computed using the 1.5% "QPC Factor" described in
paragraph "4" of Annex C to this Agreement.
(3) The minimum QPC described in paragraph "3.d." of Annex C is not
payable to DAs.
3. PROFESSIONAL LEADERSHIP COMMISSION (PLC).
In addition to the commissions a DA may derive from personal sales, from
overrides, and from the QPC, a DA who also qualifies for the QPC in
accordance with paragraph "2" above may also earn a quarterly PLC equal to
30% of the quarterly QPC paid to each of the DA's qualifying designated
RR/Agents.
4. PROFESSIONAL TRAINING COMMISSION (PTC).
In addition to other commissions described above, a DA training an RR/Agent
who has completed twelve (12) or fewer months since his/her first NASC
payment will be paid a non-recoupable PTC equal to 30% of the New Agent
Special Commission (NASC) paid to that New RR/Agent.
5. QUARTERLY SUPPLEMENTAL COMMISSION (QSC).
In addition to the monthly override commissions, PTC, and quarterly
commissions described above, qualifying DAs will also be paid a QSC, based
on district size and the number of remote offices, as follows:
a. DETERMINING DISTRICT SIZE. For the purpose of determining the number
of RR/Agents designated to a DA:
(1) RR/Agents who have not yet received their first NASC will be
counted as zero (0).
(2) Agents who have announced their intention to terminate their
Agreement with USPA&IRA will be counted as zero (0) in and after
the production month in which their termination is effective.
(3) RR/Agents who have completed fewer than twelve (12) production
months since the month of his/her first NASC payment are
considered to be "New Agents" (as defined in Annex N of this
Agreement) and will be counted as one-half (.5) in and after the
production month for which the first NASC is paid [and for eleven
(11) production months thereafter].
(4) Senior RR/Agents who have been officially so designated by the
Executive Committee will be counted as six-tenths (.6) during the
term of their designation as Senior RR/Agents.
(5) All other RR/Agents; not covered by subparagraphs "5.a.(1)"
through "5.a.(4)" above are considered to be "fully qualified"
RR/Agents and will be counted as one (1).
b. QSC PERCENTAGE. The QSC will be calculated on a quarterly basis as a
percentage of the paid commissions used to determine the QPC payable
to each RR/Agent designated to the DA, IAW Annex C of this Agreement.
(1) DISTRICT SIZE, The primary determinant of the QSC percentage will
be the number of RR/Agents designated to the DA.
(2) REMOTE OFFICES, DAs otherwise qualifying for the QSC and
responsible for districts containing multiple offices will
receive an additional 1% QSC on the paid commissions of
designated RR/Agents officed remotely from the principal office
of the DA.
(3) The QSC is determined using the following table:
NUMBER OF RR/AGENTS OFFICED OFFICED
DESIGNATED TO DA WITH DA REMOTELY
Less than two (2) 8% 9%
At least two (2) but 6% 7%
less than three (3)
At least three (3) but 4% 5%
less than four (4)
At least four (4) but 2% 3%
less than five (5)
At least five (5) but 0% 1%
less than six (6)
Six (6) or more 0% 0%
6. SOLE SOURCES OF COMPENSATION.
The commissions described herein are the sole amounts payable to DAs by
USPA&IRA under this Agreement. No other amounts, such as payment for
franchise rights, ownership interests, goodwill, or other remuneration or
considerations, shall be due to a DA from USPA and/or XXX or others as the
result of representing USPA and/or XXX, notwithstanding that DA has
established an office, maintained an administrative facility, relocated, or
for any other reason, before, during, or after termination of or
performance under this Agreement.
7. DISTRICT AGENT OBJECTIVE.
The primary objective of the DA is to establish and maintain -through
LEADERSHIP- the highest possible degree of effectiveness and
professionalism of the RR/Agents designated to that DA. All other
activities, including personal sales, are secondary. In addition, in the
event that the DA observes or has knowledge of the violation of a law,
rule, or regulation pertaining to the conduct of USPA&IRA's investment or
insurance business, or the terms of this RR/Agent Agreement, by any other
RR/Agent, DA, Assistant Regional Agent, or Regional Agent of USPA&IRA, said
DA has the responsibility to report such violation to the Presidents of
USPA&IRA, and any failure to do so may be construed as a breach of said
DA's RR/Agent Agreement with USPA&IRA.
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D-2
ANNEX E
USPA&IRA RR/AGENT AGREEMENT
DEFERRED CAREER COMMISSION PLAN
1. GENERAL.
The financial operating results achieved by USPA&IRA can be expected to
vary somewhat from year to year. Described herein is a Deferred Career
Commission Plan (DCCP) which will allow Independent Research Agency for
Life Insurance, Inc. ("the Company") flexibility in sharing a portion of
the results from a good year of financial operations with its (independent
non-employee) sales representatives. The DCCP is in addition to all other
commissions paid and it is critically important that all members of the
field force understand the Company WILL apply the needed flexibility in its
fiscal strategy to this program FIRST. This means that in some years the
DCCP will be credited in substantial amounts and in other years in reduced
amounts, or not at all. There should be no expectation or implied claim on
any share (proportionate or otherwise) of operating profits or other gains
by participants in the DCCP as opposed to other constituencies of the
Company. This is the program where flexibility will primarily be applied.
The aforementioned Plan is for the benefit of (independent non-employee)
RR/Agents who have more than $15,000 of paid monthly commissions excluding
New Agent Special Commissions (NASC), Quarterly Professional Commissions
(QPC), and Future Incentive Commissions (FIC), during a Plan year, who are
hereafter referred to as "qualified RR/Agents," District Agents (DAs),
Assistant Regional Agents (ARAs), and Regional Agents (RAs). This Plan
recognizes the value of high persistency over time on the profits of the
Company. Longtime RR/Agents with above average sales persistency will be
rewarded at a higher rate than newly established RR/Agents or those with
low persistency. The details of the Plan follow.
2. ADMINISTRATION OF THE PLAN.
a. The Company will annually determine if profits are available to be
credited to participants' account balances under the Plan. This
determination will be based on the Company's and USPA's capital needs,
Future Incentive Commission needs, Profit Sharing Plan needs, a
favorable return to stockholders of Company stock and other factors.
If the Company, in its sole and absolute discretion, decides to credit
deferred commissions under the Plan, prior to the close of each fiscal
year, the amount to be accrued will be identified and carried on the
books of the Company as a liability payable to participants. Deferred
commissions credited under the Plan for any fiscal year will be
allocated to participant accounts as described in paragraph "4."
Notwithstanding any provision of this Plan to the contrary, all assets
and property of the Company will remain available for use by the
Company in its general operations, if needed, and remain at risk to
the participants during any downturn in the operating results of the
Company. All of such assets and property of the Company shall remain
fully subject to the claims of creditors. Nevertheless, it is the
Company's intention to fully invest the reserves set aside to meet
obligations accruing under the Plan in mutual fund products marketed
by USPA. If such reserves set aside to meet obligations accruing under
the Plan are required by the Company for use in its general
operations, the Plan will be credited with a hypothetical interest
growth factor determined by the Company to reflect market conditions,
and Plan participants will be advised accordingly. The growth of
deferred commissions payable under the Plan will be credited to
participant accounts and the Company will absorb the corporate tax
impact of this growth until such time as a participant's Plan account
balance is distributed to him or her.
b. The Plan year runs from October 1 through September 30.
c. The Independent Research Agency for Life Insurance, Inc. (XXX) will
discharge the obligations accruing under the Plan only out of its
general assets. There will be no separate trust fund, insurance
policy, or other source of funding.
d. Annually, a report, including computation of the participant's Plan
credit for the current year as well as a summary of all credits to
date, will be provided to the participant (prior to December 15
following Plan year closeout).
e. Notwithstanding any other provisions of this Annex, any commission
becoming payable under the Plan will be subject to all other
provisions of the RR/Agent Agreement affecting payment of commissions
or offset therefrom, specifically including but not limited to the
rights of USPA&IRA to hold and/or offset commissions as described in
paragraphs "10. Termination; Return of Property.", 11.
Commissions After Termination", and "13. Remedies", of the RR/Agent
Agreement. Any commissions not payable to a participant because of
such an offset will be the property of USPA&IRA and not revert to the
Plan.
3. ENTRY INTO THE PLAN.
Qualified RR/Agents other than new RR/Agents entered the Plan on October 1,
1992. New RR/Agents will enter the Plan in the next full Plan year which
starts after the initial payment of their NASC. Annually, thereafter, in
any year in which the Company credits deferred commissions under the Plan,
a credit will be made to the RR/Agent's account. These amounts will remain
in the Plan until the RR/Agent terminates through retirement or otherwise.
4. ANNUAL CREDIT.
A pooled point system will be used to determine qualified RR/Agent annual
credit. An individual participant's total points will determined as
follows:
a. Qualified RR/Agent paid monthly commissions during the Plan year will
be divided by 1,000. The resulting figure forms the basis for all
further computations.
b. The result of item "a." above will be multiplied by a factor
representing time the RR/Agent has been with the Company, measured
from his first sale (or in the case of Agents who received NASC from
the month of first NASC payment).
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E-1
The time will be measured by month and will maximize at 15 years,
although an RR/Agent may be associated as such as long as willing,
able, and effective. Each month of association with USPA&IRA as an
RR/Agent will add .005556 to a factor of one, so that at 15 years the
maximum factor equals two.
c. The result of the point value determined in "b." above will be then
multiplied by a sales persistency factor as indicated in the table
listed below:
100% = 2
95% = 1.857
90% = 1.714
85% = 1.571
80% = 1.428
75% = 1.285
70% = 1.142
65% and below = 1
Appropriate interpolations will be made for percentages not listed
above. Sales persistency is determined by dividing the total number of
accounts and policies on the books at the end of the Plan year by the
total number of accounts and policies sold by the RR/Agent over the
past fifteen years.
d. Points of all participants to be funded, including DAs, ARAs, and RAs,
will then be added together and divided into total dollars available
to determine point value.
e. The points computed for a specific participant will be multiplied by
point value to determine annual credit to the participant.
5. PARTICIPANT CREDITS - SUBSEQUENT YEARS.
The Plan will be operated and reported thereon, in general terms, similar
to a composite mutual fund. Each subsequent year the earnings/losses will
affect the value of the unit and each year that there are contributions it
will affect the number of units in the Plan and in each account.
6. DISABILITY OR DEATH.
The account balance of a participant who incurs a long-term disability (as
determined by the Company) or dies will be based upon a valuation made at
the end of the month in which such event occurs. The amount in the
participant's Plan account will be paid to the participant within 30 days
of the month of disability, and to the personal representative of the
participant's estate in the event of death. Payment in such a case will
occur within 30 days after the later of the expiration of the month in
which death occurred or the date on which the personal representative of
the deceased's estate is appointed and qualified. For example, a
participant who is determined by the Company to be disabled on March 15
will be paid based upon a valuation as of March 31, and funds will be
distributed by April 30.
7. RETIREMENT OR OTHER TERMINATION.
A participant who retires or otherwise terminates as an RR/Agent other
than as a result of death or disability will be credited for commissions
paid up to the date of termination for purposes of computing allocations to
his/her Plan account balance. However, payment from the participant's Plan
account balance will not be made until up to 75 days after the end of the
Plan year which immediately follows the Plan year in which the termination
occurred. The account value shall be based upon a Plan valuation made at
the end of such following Plan year.
8. EARLY PAYMENTS AND LOANS.
A participant's deferred commission benefits accruing under the Plan are
not available for early payment, and may not be assigned, transferred, or
otherwise conveyed, pledged, mortgaged, or hypothecated, or borrowed by the
participant. Such activity would create a situation of "constructive
receipt" at the time of crediting of participant accounts and make all such
amounts immediately taxable to all RR/Agents, even though not disbursed. A
participant shall have no right to any benefits accruing under the Plan
until such benefits are paid to him or her in cash upon retirement, death,
disability, or other termination as an RR/Agent.
9. TRANSFERS TO THE HOME OFFICE.
A participant who transfers to the Home Office staff during a Plan year
will receive DCCP funding based upon his or her paid commissions prior to
such employment. The participant will remain in the Plan as long as he or
she maintains an active employee or RR/Agent relationship with the Company,
but will not participate in new funding to the Plan while a member of the
Home Office staff.
10. USPA&IRA RIGHT TO AMEND OR TERMINATE.
USPA&IRA reserve the right unilaterally to amend or terminate this Annex
and the Plan created hereby in whole or in part at any time upon the giving
of written notice to RR/Agent, provided, however, and subject to
subparagraph "2.e." of this Annex, any benefit accrued under the Plan prior
to such amendment or termination shall not be reduced or eliminated and
such accrued benefits shall be payable as otherwise provided under the
Plan.
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E-2
ANNEX N
USPA&IRA RR/AGENT AGREEMENT
SPECIAL COMMISSION AVAILABLE TO "NEW RR/AGENTS"
1. INDEPENDENT CONTRACTOR STATUS - RESPONSIBILITIES.
a. As noted in paragraph "3.c." on page 2 of this Agreement,
"The RR/Agent agrees to pay a business expenses incurred in
representing USPA&IRA. Such expenses include those incurred in the
operation of RR/Agent's office, and for all USPA&IRA sales materials
used by RR/Agent."
b. Thus, the RR/Agent is personally responsible for all expenses incurred
in the course of doing business as an independent contractor
representing USPA&IRA, and should expect no direct financial
assistance from USPA&IRA, from any other RR/Agent thereof, or from any
insurance or investment company represented thereby, other than the
commissions described in this Agreement.
c. In addition, the RR/Agent will be eligible to occupy and become
financially responsible for office space and will be eligible to begin
incurring a pro rata portion of office and other shared administrative
expenses on the date upon which the RR/Agent and his/her DA concur (or
the Regional Agent (RA) concurs) that the following conditions have
been met:
(1) RR/Agent is no longer on active duty or terminal leave; and
(2) RR/Agent is "licensed to solicit"; as determined by the Home
Office Licensing Department; and
(3) RR/Agent is available for full-time endeavor as an RR/Agent; and
(4) RR/Agent is qualified to initiate active solicitation of
potential clients on behalf of USPA&IRA.
2. "NEW RR/AGENT" DEFINED.
Wherever used in this Agreement, the term New RR/Agent refers to any
RR/Agent subject to the terms of this Annex whose tenure is less that
twelve (12) full production months since "Month 1" as defined in paragraph
"3." below.
3. NEW AGENT SPECIAL COMMISSION (NASC).
In addition to the commissions described in Annexes A and B of this
Agreement, New RR/Agents will be entitled to the following additional
commission commencing with the month in which the RR/Agent's PC
cumulatively totals $5000. That month shall be "Month 1 " for the purposes
hereof
a. MONTHS #1 THROUGH #12. An NASC equal to 10% of net PC will be paid to
the New RR/Agent on ALL net PC credited in production months #1
through #12, regardless of the total amount generated in any single
month.
b. DOUBLE NASC. The basic NASC rate of 10% will be doubled to 20%, under
the following conditions:
(1) In Month #1 on ALL net PC generated cumulatively up to and during
that month.
(2) In Months #2 through #12, IF net PC credited in that month is at
least $5000.
4. RECOUPMENT OF NASC.
In addition to the provisions described in paragraph "11." on page 4 of
this Agreement pertaining to "Termination at Any Time," the following
special recoupment provisions apply to the NASC:
a. 100% of all NASC paid to any RR/Agent will be recouped from future
commissions due if termination occurs during the 12-month period
described in paragraph "3.a." of this Annex.
b. Thereafter, this 100% recoupment rate will decrease by 8.333% per
month, reaching zero at the end of the 24th month following (and
including) "Month 1," defined above.
c. All recoupable funds are immediately due and payable from the RR/Agent
directly from his/her future earned commissions.
d. Further, any NASC paid based on PC awarded in conjunction with a mode
of payment that is not properly established and, as a result, becomes
nonpersistent, is subject to recoupment.
5. QUARTERLY PROFESSIONAL COMMISSION FOR NEW RR/AGENTS.
In addition to the NASC, a New RR/Agent may also earn the Quarterly
Professional Commission described in Annex C to this Agreement, subject to
the conditions described therein, except as follows:
a. The New RR/Agent is considered qualified in all five (5) "Qualitative
Requirements" of paragraph "3.c." of Annex C, and
b. The New RR/Agent is eligible to earn a Minimum QPC as described in
paragraph "3.d." of Annex C. However, THE AMOUNT OF THE MINIMUM QPC
PAYABLE TO NEW RR/AGENTS (ELIGIBLE FOR THE NASC) IS $1000 (vice $2000
for RR/Agents NOT eligible for the NASC).
c. Any amounts of NASC paid to the New RR/Agent will NOT be included in
"paid commissions" for the purpose of computing the QPC.
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N-1
