BROKER-DEALER AGREEMENT
IT IS HEREBY AGREED by and between NORTH AMERICAN LIFE AND CASUALTY COMPANY
(hereinafter referred to as "INSURANCE COMPANY"), a Minnesota Corporation, and
NALAC FINANCIAL PLANS, INC. (hereinafter referred to as "BROKER/DEALER"), an
Iowa Corporation, as follows:
I
BASIS FOR THE AGREEMENT
A. INSURANCE COMPANY
INSURANCE COMPANY is a life insurance company licensed to issue
various life insurance policies and annuity contracts.
B. BROKER/DEALER
BROKER/DEALER is a wholly-owned subsidiary of INSURANCE COMPANY.
BROKER/DEALER was organized to function as a broker-dealer
registered under the provisions of the Securities Exchange Act of
1934 (hereinafter referred to as the "34 Act") for the sale of
certain variable contracts issued by separate accounts of
INSURANCE COMPANY. Such variable contracts may be deemed to be
securities within the meaning of the Securities Act of 1933 and
will be registered thereunder.
C. PURPOSE OF AGREEMENT
INSURANCE COMPANY desires BROKER/DEALER to act as the distributor
for all of the said variable contracts which require distribution
under the auspices of a registered broker-dealer. The parties
desire INSURANCE COMPANY to maintain certain accounting books and
records of BROKER/DEALER and to send purchasers of such variable
contracts required confirmations of transactions on behalf of
BROKER/DEALER and to pay any commissions which may be due on sales
of such variable contracts to any selling broker-dealers and any
registered representative of BROKER/DEALER who are also licensed
INSURANCE agents (or agencies) of INSURANCE COMPANY. The parties
also desire to make arrangements for adequate
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facilities and financing for the carrying on of the business of
BROKER/DEALER.
II
DUTIES OF BROKER/DEALER
A. REGISTRATION UNDER THE '34 ACT
BROKER/DEALER shall register itself as a broker-dealer under the
provisions of the '34 Act and will secure whatever
authorizations, licenses, qualifications, permits and the like as
may be necessary to perform its obligations under this agreement
in those states requested by INSURANCE COMPANY.
B. MEMBERSHIP IN THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
BROKER/DEALER shall apply for membership in the National
Association of Securities Dealers, Inc. (NASD), and shall
maintain its membership therein.
C. RESPONSIBILITY FOR SECURITIES ACTIVITIES
BROKER/DEALER shall assume full responsibility for the securities
activities of all persons engaged directly or indirectly in the
variable contract operations of INSURANCE COMPANY, including but
not limited to training, supervision and control as contemplated
under appropriate provisions of the '34 Act, any regulations
thereunder, or by the rules of the NASD. To the extent necessary
and appropriate, those persons directly or indirectly involved in
such variable contract operations shall be registered
representatives or registered principals of BROKER/DEALER as
appropriate to their activities.
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D. APPOINTMENT OF REGISTERED PERSONS AND MAINTENANCE OF PERSONNEL RECORDS
BROKER/DEALER shall have the authority and responsibility for the
appointment and registration of those persons who will be
registered representatives and registered principals.
BROKER/DEALER shall likewise have the responsibility for
maintenance of all the appropriate records of such registered
person.
E. MAINTENANCE OF NET CAPITAL
BROKER/DEALER shall have the authority and responsibility for
maintenance of appropriate net capital and for limiting aggregate
indebtedness as may be required under the provisions of the '34
Act, any regulations thereunder, or by NASD rules.
F. REQUIRED REPORTS
BROKER/DEALER shall have the responsibility for preparation and
submission of any reports or other materials required by any
regulatory authority having proper jurisdiction.
III
DUTIES OF INSURANCE COMPANY
A. MAINTENANCE OF ACCOUNTING RECORDS
INSURANCE COMPANY shall be responsible for the maintenance of all
books and records in connection with the said variable contracts.
Such books and records shall be maintained and preserved in
conformity with any requirements under the '34 Act, any
regulations thereunder, or under NASD rules to the extent that
such requirements are applicable to variable contract operations.
All such books and records shall be maintained and held by
INSURANCE COMPANY on behalf of and as agent for BROKER/DEALER. All
such books and records are, and shall at all times remain, the
property of BROKER/DEALER and shall at all times be subject to
inspection by duly authorized officers, auditors or
representatives of BROKER/DEALER and by
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the Securities and Exchange Commission, the NASD, or other
regulatory authority having proper jurisdiction.
B. PAYMENT OF COMMISSIONS
INSURANCE COMPANY shall pay on behalf of BROKER/DEALER all
commissions which may be due on sales of such variable contracts
to any selling broker-dealers and registered representatives of
BROKER/DEALER who are also licensed insurance agents (or agencies)
of INSURANCE COMPANY. Such commissions shall be payable from funds
made available for such and shall be subject to approval before
payment by duly authorized personnel of BROKER/DEALER. The payment
of commissions hereunder on behalf of BROKER/DEALER is intended by
the parties to be a purely ministerial act by INSURANCE COMPANY
and all such payments shall be properly reflected on the books and
records maintained on behalf of BROKER/DEALER. In computing any
amounts owed to BROKER/DEALER, INSURANCE COMPANY shall take into
account any sales loads that may be payable to BROKER/DEALER
because of any surrenders of variable products.
C. CONFIRMATION OF TRANSACTIONS
INSURANCE COMPANY shall provide that confirmations will be issued
on behalf of BROKER/DEALER, acting as agent for INSURANCE COMPANY,
regarding all transactions required to be confirmed, and in the
form and manner required for such confirmations, under the '34
Act, any regulations thereunder, or by NASD rules.
D. PROVISION OF CAPITALIZATION
INSURANCE COMPANY shall provide BROKER/DEALER with adequate
capitalization and shall, when needed, supplement such
capitalization in amounts sufficient to insure that at all times
minimum net capital is available to meet the requirements of the
'34 Act, any regulations thereunder or NASD rules.
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E. PAYMENT OF EXPENSES OF BROKER/DEALER
In the event BROKER/DEALER should expend any of its own funds for
any reason, INSURANCE COMPANY shall reimburse BROKER/DEALER upon
demand. INSURANCE COMPANY's obligations under the terms of this
paragraph shall be limited solely to payment or reimbursement of
expenses incurred by BROKER/DEALER in performance of services for
INSURANCE COMPANY.
F. PROVISIONS OF FACILITIES AND PERSONNEL
INSURANCE COMPANY shall provide BROKER/DEALER with facilities and
personnel sufficient to perform BROKER/DEALER's obligations
hereunder and to carry on its business in conformity with
provisions of the '34 Act, any regulations thereunder or NASD
rules.
G. TERMINATION
This Agreement may be terminated at any time by either party upon
written notice to the other stating the date when such termination
shall be effective provided that this Agreement may not be
terminated or modified by either party if the effect would be to
put BROKER/DEALER out of compliance with the "net-capital"
requirements of the '34 Act. In addition, no default of any kind
shall have the effect of terminating this Agreement unless such
termination is subject to this termination provision.
EXECUTED at Minneapolis, Minnesota effective
November 19, 1987.
INSURANCE COMPANY
NORTH AMERICAN LIFE AND CASUALTY COMPANY
By: /s/ XXXXXX XXXXXXXX
Its President
BROKER/DEALER
NALAC FINANCIAL PLANS, INC.
By: /s/ XXXXXX X. XXXXXXXX
Its Executive Vice-President
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[AMENDMENT #1]
AMENDMENT TO BROKER/DEALER AGREEMENT
WHEREAS, North American Life and Casualty Company has changed its name to
Allianz Life Insurance Company of North America; and
WHEREAS, NALAC Financial Plans, Inc. has changed its name to USAIlianz Investor
Services, LLC;
NOW, THEREFORE, the Broker/Dealer Agreement dated November 19, 1987 by and
between North American Life and Casualty Company (hereinafter referred to as
"Insurance Company"), a Minnesota Corporation, and NALAC Financial Plans, Inc_
(hereinafter referred to as "Broker/Dealer"), an Iowa Corporation, hereby agree
to amend the Broker/Dealer Agreement as follows:
1. The name of the "Insurance Company" is changed to Allianz Life Insurance
Company of North America.
2. The name of the "Broker/Dealer" is changed to USAIlianz Investor Services,
LLC.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers to
execute this Amendment to the Broker/Dealer Agreement as of April 12, 2000.
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Vice President & Secretary
USALLIANZ INVESTOR SERVICES, LLC
By: /s/ Xxxxxx X Xxxxxxxx
Name: Xxxxxx X Xxxxxxxx
Title: Vice President
[AMENDMENT #2]
SECOND AMENDMENT TO BROKER/DEALER AGREEMENT
The Broker Dealer Agreement dated November 19, 1987 by and between Allianz Life
Insurance Company of North America (formerly known as North American Life and
Casualty Company) and USAIIianz Investor Services, LLC (formerly known as NALAC
Financial Plans, Inc.), as amended by the amendment dated April 12, 2000, is
hereby amended by adding the following paragraph under the Section entitled
"DUTIES OF INSURANCE COMPANY":
RECEIPT OF SERVICE FEES AND DISTRIBUTION FEES
INSURANCE COMPANY, as agent for BROKER/DEALER, shall receive and apply for any
permissible purposes, any service fees or distribution fees payable to
BROKER/DEALER. The receipt of such fees on behalf of BROKER/DEALER is intended
by the parties to be a purely ministerial act by INSURANCE COMPANY and any and
all such fees shall be properly reflected on the books and records maintained on
behalf of BROKER/DEALER. INSURANCE COMPANY shall, upon request by BROKER/DEALER,
provide documentation of the receipt and application of such fees.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers to
execute this amendment to the Broker/Dealer Agreement as of September 30, 2002.
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
By /s/ XXXXX XXXXXXX
Name XXXXX XXXXXXX
Title Vice President
USALLIANZ INVESTOR SERVICES, LLC
By /s/ XXXXXXX X. XXXXX
Name XXXXXXX X. XXXXX
Title SVP, TREASURER
[AMENDMENT #3]
THIRD AMENDMENT TO BROKER/DEALER AGREEMENT
THIS THIRD AMENDMENT TO BROKER DEALER AGREEMENT (the third Amendment") is
entered into as of the 1st day of October 2003 ((he "Effective Date") by and
between Allianz Life Insurance Company of North America, a Minnesota corporation
("insurance Company"), and USAllianz Investor Services, LLC, a Minnesota limited
liability company wholly owned by Insurance Company ("Broker/Dealer").
WITNESSETH:
WHEREAS, Insurance Company and Broker/Dealer entered into that certain
Broker-Dealer Agreement dated November 19, 1987 (the "Agreement") as amended by
an Amendment to Broker/Dealer Agreement dated April 12, 2000 (the "First
Amendment") and a Second Amendment to Broker/Dealer Agreement dated September
30, 2002 (the "Second Amendment"); and
WHEREAS, the Agreement as amended by the First Amendment and the Second
Amendment shall hereinafter be referred to as the "Amended Agreement"; and
WHEREAS, Insurance Company and Broker/Dealer desire to further amend
the Amended Agreement in the manner set forth below by executing this Third
Amendment;
NOW, THEREFORE, in consideration of the foregoing recitals and other
good and valuable consideration, the receipt and sufficiency of which the
parties acknowledge, Insurance Company and Broker/Dealer hereby agree as
follows:
1. DEFINITION OF TERMS. All capitalized terms not defined herein shall
have the meanings ascribed to them in the Amended Agreement. The following terms
shall have the meanings set forth below:
"12b-1 Fees" shall have the meaning set forth in the ICA.
"Accounts Receivable" means any receivables Broker/Dealer
records on its books to reflect any 12b-I Fees owed to Broker/Dealer
by any Investment Company relative to any products manufactured by
Insurance Company or Allianz Life Insurance Company of New York, as
the case may be.
"Cash Receipts" means any payments Broker/Dealer receives
from any Investment Company in satisfaction of the Accounts
Receivable.
"ICA" means the Investment Company Act of 1940, as amended
from time to time, and the rules and regulations promulgated
thereunder.
"Investment Company" means an investment company registered under
the ICA.
2. PAYMENT OF EXPENSES OF BROKER/DEALER. Paragraph E of section III of
the Amended Agreement shall be amended and restated in its entirety as follows:
"E. PAYMENT OF EXPENSES OF BROKER/DEALER. In the event
BROKER/DEALER should expend any of its own funds for any reason
including, but not limited to, the payment of any of the expenses set
forth on the schedule attached hereto ("Schedule A"), INSURANCE COMPANY
shall reimburse BROKER/DEALER immediately upon receipt of written demand
for payment of such expenses from BROKER/DEALER. Notwithstanding the
generality of the foregoing, INSURANCE COMPANY'S obligations under this
Paragraph E shall be limited solely to payment or reimbursement of
expenses incurred by BROKER/DEALER in the performance of services for
INSURANCE COMPANY or Allianz Life Insurance Company of New York, as the
case may be."
3. PAYMENT OF FEES TO INSURANCE COMPANY. Paragraphs F and G OF section
III of the Amended Agreement shall be changed to "G" and "H", respectively, and
a new Paragraph F stating the following shall be inserted immediately following
Paragraph E of section Ill:
"F. PAYMENT OF FEES TO INSURANCE COMPANY. BROKER/DEALER shall
transfer to INSURANCE COMPANY all of BROKER/DEALER's rights, title and
interest in and to all Accounts Receivable immediately following the
recording of such Accounts Receivable in BROKER/DEALER's accounting
records to the extent the aggregate amount OF all such Accounts
Receivable recorded by BROKER/DEALER during any fiscal year of
BROKER/DEALER is equal to or less than the aggregate amount of
distribution and marketing expenses paid by INSURANCE COMPANY on behalf
of BROKER/DEALER during such fiscal year. BROKER/DEALER shall also
transfer to INSURANCE COMPANY all Cash Receipts immediately following
BROKER/DEALER's receipt of such Cash Receipts."
4. GOVERNING LAW. This Third Amendment shall be governed by and
construed in accordance with the Iaws of the State of Minnesota.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Third Amendment as OF the EFFECTIVE Xxxx.
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
By /s/ XXXXXXXXXXX X XXXXXXXXX
Its Senior Vice President
USALLIANZ INVESTOR SERVICES, LLC
By /s/ XXXXXXX X XXXXX
Its Sr. VP & Treasurer
SCHEDULE A
EXPENSES RELATING TO ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
COMMISSIONS
All commission expense related to the sale of Allianz Life Variable Annuity &
Life products.
EXPENSES RELATING TO ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA AND ALLIANZ
LIFE INSURANCE COMPANY OF NEW YORK
SALES COST CENTER
The external wholesalers primary function is to sell our products through
registered representative (Rep) visits, phone calls, and workshops. All external
wholesaler expenses are directly attributable to the distribution of products
thus, 100% of the external wholesaler expenses are allocated to the
Broker/Dealer.
SALES SUPPORT COST CENTER
The Sales Support Cost Center supports the external wholesalers by taking
incoming phone calls from Reps, registering Reps for USAllianz workshops, making
follow up calls to Reps, & updating representative information in our system.
All of these activities are directly attributable to the distribution of
products, thus 100% of the Sales Support expenses are allocated to the
Broker/Dealer.
KEY ACCOUNTS COST CENTER
The Key Accounts Cost Center develops relationships with outside Broker/Dealer's
in order to get product approval for our wholesalers to visit their Reps,
promote USAllianz at seminars, promote CE programs and Academy workshops, and
provide leads to wholesalers. All of these activities are directly attributable
to the distribution of products, thus 100% of Key Account expenses are allocated
to the Broker Dealer_
ACADEMY COST CENTER
The Academy Cost Center conducts workshops for Reps of USAllianz which provide
CE credits and information about USAllianz products. These activities are
directly attributable to the distribution of products, thus 100% of the
Academy's expenses are 100% allocated to the Broker/Dealer.
TRAINING COST CENTER
The Training Cost Center is responsible for training the new wholesalers,
existing wholesalers, and the Sales Support employees. These activities are
directly attributable to the distribution of products, thus 100% of Training
expenses are allocated to the Broker/Dealer.
FINANCIAL COST CENTER
2% OF the Financial Cost Center is allocated to the Broker/Dealer as one fourth
OF a full time accountant (market price point is $47K) is spent on calculating
wholesaler commissions, supporting the wholesalers with expense management
questions and recording and reporting the financial results of the Broker
Dealer.
ITS COST CENTER
The ITS Support Team provides ITS support for TeamPoint (Distribution System)
which is used by our sales force. This includes providing technical support to
the external Sales employees and the agency/licensing system as well as writing
programs for wholesalers that have special tracking needs. 1/2 of Director of
Business Systems time and 100% of ITS Support Manager and the 6 employees
reporting to him make up 78% of the ITS Support Team in the ITS cost center. The
activities of the ITS Support Team directly support the distribution of the
products, thus 78% of the total Cost Center expenses, with the exception of
Fixed IS Consulting and DVFS (USAllianz Service Center) project fees, are
allocated to the Broker/Dealer. Fixed IS Consulting is allocated at 14% of total
Consulting expenses as one external consultant supports the distribution 100%
and the fee for this consultant makes up 14% OF the total consulting fees. DVFS
project fees are allocated 100% to Allianz LIFE as the project fees are not
directly related to the distribution of products.
BUSINESS DEVELOPMENT COST CENTER
The Production Support Team is responsible for providing various territory
reports on production, Reps, & appointments, TeamPoint Administration, and
generating distribution lists for workshops. The Production Support Manager &
the 7 employees in the Production Support team make up 53% of the cost center.
The activities of the Production Support Team, with the exception of Maintenance
& Licensing, are directly attributable to the distribution of the products, thus
53% of the cost center expenses are allocated to the Broker/Dealer. Maintenance
& Licensing, which is allocated 100% to Allianz Life for DST FanMail fees, is
not related to the distribution of products.
SR. MANAGEMENT COST CENTER
USAllianz Sr. Management Cost Center manages all the activities for the
USAllianz Division OF Allianz Life.
o Sr. VP of Sales and the Sales assistant manages Sales Support, Training,
and the Academy.
o VP of Sales manages the workshops, Sales Support, & Training.
o Sr. VP of Marketing manages Key Accounts.
o President of USAllianz oversees 6 people with 2.75 of them allocated to the
Broker/Dealer.
o CFO spends 10% of his time working on distribution activity.
SR. MANAGEMENT COST CENTER (CONT.)
The above positions, related to the distribution of our investment products,
represent 42% of the total salary expense in the Sr. Management Cost Center. All
other expenses in the Sr. Management Cost Center, with the exception of Special
Agency Meetings & O/S Consulting, directly reflect the activities of the Sr.
Management team, thus are allocated at 42% to the Broker/Dealer. Special Agency
Meetings & O/S Consulting, which is 100% allocated to Allianz Life, is not
related to the distribution of products.
