EXHIBIT (3) (B): FORM OF BROKER/DEALER SUPERVISION AND SALES AGREEMENT
VARIABLE PRODUCT DISTRIBUTION AGREEMENT
(Retail Broker-Dealer)
This Distribution Agreement ("Agreement") effective _______________________,
is between _____________________________________________ ("Broker-Dealer"), an
NASD-licensed Broker-Dealer and Mutual of Omaha Investor Services, Inc.
("Company"). This Agreement shall not be effective unless approved by an
authorized representative of Company in Omaha, Nebraska.
This Agreement, including the Attachments incorporated from time to time by
reference, is the entire agreement and supersedes any prior agreement, whether
oral or written, between the parties relating to the subject matter of this
Agreement.
In consideration of the mutual covenants contained herein, the parties agree as
follows:
A. DEFINED AGREEMENT TERMS.
1. "ATTACHMENT" means any Company distributed document signed by an
authorized representative which is intended to modify or alter the
terms or conditions of this Agreement. An Attachment is automatically
incorporated into and becomes part of this Agreement.
2. "AUTHORIZED AFFILIATED COMPANY" means any organization identified as
such in the Attachments.
3. "CLIENT" means any individual or organization directly or individually
utilizing one or more Products.
4. "COMPANY" means Mutual of Omaha Investor Services, Inc. and the
Authorized Affiliated Companies.
5. "BROKER-DEALER" means an organization authorized herein as a
NASD-licensed securities broker-dealer for the sale of Products
registered with the Securities Exchange Commission and is performing
those duties requiring such authorization.
6. "PRODUCT" means any variable annuity or variable life insurance
product, investment vehicle or other offering identified in any
Attachment.
7. "PROPRIETARY INFORMATION" means all complete or partial copies of
information which relates to Clients and the business of Company
including without limitation: sales and rate information; computer
software and related documentation; business plans and operating
strategies; Product information; Client information, including policy
expirations; and material identifying an association with Company.
9. "REPRESENTATIVE" means any agent, representative, broker or other
sales agency for which Broker-Dealer has supervisory obligations
relating to its regulatory licensure and/or is assigned to
Broker-Dealer.
10. "VESTED COMPENSATION" means compensation which remains payable to
Broker-Dealer as long as (a) policies related to the Products sold
remain in force, and (2) the premiums for such policies are paid to
and accepted by Company.
B. LICENSING AND APPOINTMENT.
1. LICENSE. Broker-Dealer is responsible for securing and keeping in
effect any licenses required to represent Company, shall provide
evidence of such licenses upon request, and shall provide immediate
notice to Company of any change in the status of such licenses or
regulatory approval.
2. APPOINTMENT. Company hereby appoints Broker-Dealer to solicit
Products. This appointment is not exclusive and may be changed or
cancelled by Company.
3. APPOINTMENT FEES. Company shall pay, or arrange for the Product issuer
to pay, the fees for Broker-Dealer's and Representative's appointment
with the state insurance department.
C. BROKER-DEALER'S DUTIES. Broker-Dealer shall:
1. Comply with all applicable laws, rules, regulations and orders of
governmental authorities and Company written policies, rules and
procedures where each sale occurs relating to its duties hereunder, and
use its best effort to ensure that representatives and employees,
including any employee Representatives, similarly comply.
2. Be responsible for all money collected by Broker-Dealer or by
Broker-Dealer's employees and shall promptly remit to Company all
payments and collections received for or payable to Company from
Representatives, applicants, policy owners, or others, without
deduction. All money tendered as payment shall always be the property of
Company and shall be held by Broker-Dealer purely in a fiduciary
capacity and only for Company's own benefit. Broker-Dealer is not
authorized to expend or cash or deposit for any purpose any portion of
such money.
3. Keep regular and accurate records of all transactions related to this
Agreement, which records shall be preserved for a period of at least
five (5) years and, upon request, shall be open to examination and
available for copying by Company.
4. Secure Company's written approval prior to using any material or script
identifying Company or Products except such material provided by Company
and used pursuant to Company's directions.
5. Preserve and protect the confidentiality of all Proprietary Material
to which they, their employees, or any Representative may have access.
6. Pay, with their own funds, all expenses, fees and taxes incurred by them
in the performance of this Agreement, whether imposed on Company, them
or Representative, unless otherwise expressly provided in Section B.3.
7. Upon receipt of notice from Company of the postponement or rejection of
any application, counter offer of insurance not accepted by an
applicant, or the cancellation or refusal to renew a policy, immediately
return to the applicant or policy owner any money in their possession as
advanced payment of premium; and Company shall be immediately furnished
with evidence that such return has been made.
8. Promptly notify Company on receiving notice of potential or threatened
litigation with respect to a claim. Company shall have final
decision-making authority and assume administration and defense of any
claim.
9. Promptly notify Company of the receipt of any regulatory inquiry or any
regulatory complaint promulgated by an insurance department or other
regulatory agency with authority to regulate the parties, in connection
with the solicitation, sale or, administration of a Product. Each notice
shall be accompanied by a copy of the correspondence or document
received.
10. Cooperate fully with Company in any insurance or securities regulatory
investigation or proceeding or judicial proceeding arising in connection
with any transaction connected to this Agreement.
11. Solicit, recruit, instruct and train Representatives on an ongoing basis
for Company in the marketing of Products.
12. Assist Representative in all phases of the distribution process of
Products and perform all necessary services.
13. Use its best efforts to promptly secure its or the Representative's
return of all agency supplies and authorizations to represent Company,
upon termination of their appointment with Company.
14. Deliver or have delivered all Products in accordance with the
applicable rules and procedures of Company.
15. Instruct its Representatives that they shall deliver to Company,
immediately upon receipt by the Representative, such proof of loss or
other evidence of claim as is presented by any insured or beneficiary or
other claimant. Broker-Dealer shall have the same responsibility to the
extent such information is received by Broker-Dealer, and shall assist
its Representatives in obtaining such information.
16. Not give any information or make any representation in connection with
the marketing of Products other than those contained in the Prospectus
or other solicitation material authorized by Company.
17. Carry out all obligations hereunder in compliance with the NASD Rules of
Fair Practice, and federal and state securities laws.
18. Be a duly registered Broker-Dealer under the Securities Act of 1934 and
be a member in good standing with the NASD. Broker-Dealer shall maintain
appropriate securities licensure and registration and, where required,
state insurance licensure.
19. Have filed and keep current Form BD with the SEC and agree to provide a
current copy of it to Company upon request.
20. Not have any noted material deficiency in any inspection letters or
similar findings issued by the SEC or NASD, and immediately notify
Company upon having knowledge that such a finding is imminent.
21. Not have any pending litigation, arbitration or other regulatory
proceeding or an adverse decision which would materially affect the
financial condition of the Broker-Dealer. Broker-Dealer will immediately
notify Company upon having knowledge that such action or proceeding is
imminent.
22. Control, supervise and assume responsibility for all securities
activities in connection with Products identified in this Attachment,
including those activities carried out by Insurance Agency.
23. Accurately reflect all compensation payable hereunder on its FOCUS
reports.
D. LIMITATIONS. Broker-Dealer is without authority to do or perform and
expressly agrees not to do or perform personally or through
Representatives or employees the following acts on behalf of Company:
1. Incur any expense or liability on account of, or otherwise bind, Company
without specific written approval from an officer of Company.
2. Make, alter, or discharge contracts or Products.
3. Waive forfeitures or any other terms or conditions of any Products.
4. Quote rates other than as specified or published by Company.
5. Extend the time for payment of any premium or waive payment thereof in
cash, or bind Company to reinstate any terminated contract, or accept
notes or any other funds as payment of premium.
6. Institute or file a response to any legal or regulatory proceeding on
behalf of Company in connection with any matter pertaining to any
Product.
E. COMPENSATION.
1. Broker-Dealer's compensation for all acts performed hereunder are
specified in the Attachments. No compensation shall be payable until the
Broker-Dealer and Representative are appropriately licensed and
appointed, the Product on which such compensation is claimed is actually
issued, all delivery requirements are fulfilled and the premium paid.
Company has the right to change any commission on any Product at any
time. However, any change in commission shall only affect those policies
issued after the effective date of the commission change.
2. Company is obligated to pay compensation due under this Agreement only
while (A) this Agreement is in effect; and (B) Broker-Dealer is
performing the duties specified in Section C; provided, however, that
Company agrees to continue to pay Vested Compensation and compensation
defined as "deferred" in an Attachment, and such compensation shall not
be withheld pursuant to this provision.
3. Company will account at least monthly to Broker-Dealer for commissions
based upon initial and renewal premiums paid and accepted by Company for
policies issued upon applications submitted by or through Broker-Dealer.
4. If any premium or premiums shall be returned by Company on any policy,
or should Company become liable for the return thereof for any cause
either before or after termination of this Agreement, Broker-Dealer
shall pay to Company the amounts of commissions or overwrite commissions
previously paid or credited to any Broker-Dealer's or Representative's
account on such returned premium.
5. Company shall at all times, whether before or after termination of this
Agreement, have the right to offset any amounts owed by Broker-Dealer or
any Representative to Company under this Section against any amounts
owed by Company to any of them.
6. Broker-Dealer shall be responsible to Company for any indebtedness of
their employees or Representatives when such indebtedness shall have
been incurred in the conduct of Company business and while under their
supervision.
7. Company shall at all times, whether before or after termination of this
Agreement, have a first lien on commissions, fees, allowances, or other
moneys due or to become due hereunder to any other party hereto to the
extent of that party's indebtedness to Company, including interest
thereon.
8. In the event that any party does not pay any moneys as are due within
two (2) months after termination of this Agreement, the net amount such
party owes will accrue interest, compounded daily at the fluctuating
prime interest rate charged on the date of termination by Xxxxxx Trust
and Savings Bank, Chicago, Illinois plus one percent (1%). If a party is
owed money after termination and any arbitration, action, or proceeding
is brought to recover that money, the indebted party shall also be
liable for all reasonable collection costs, including but not limited
to, attorneys' fees incurred by the party seeking to collect the debt.
F. TERMINATION.
1. Company may, in its sole discretion, terminate this Agreement as to any
party or all of them, effective on the date Broker-Dealer or such party
receives the termination notice, or on a later date, if any, specified
in the termination notice, if such party commits any of the following
"Wrongful Acts":
(A)Commits a fraudulent act or commits malfeasance related to the
performance of any duty under this Agreement.
(B)Fails to comply with any obligation described in Section C.2.
(C)Violates any law or regulation that materially or adversely affects
Company's ability to sell Products, unless such violation results
from following instructions by Company or from a failure by Company
to perform any of its obligations hereunder.
(D)Has its regulatory licensure required to perform its duties hereunder
revoked by any governmental regulatory agency.
(E)Postpones delivery to Company of premium paid to reinstate a lapsed
policy in an attempt to gain a commission advantage.
(F)Directly or indirectly induces any policy owner to (1) discontinue
premium payment required to keep policies in force or (2) relinquish
any policy in order to sell such policy owner insurance with another
insurer.
(G)Intentionally misrepresents, or intentionally induces any
Representative to misrepresent, any provision, benefit, or premium of
any Product.
(H)Breaches any material provision of this Agreement other than those
set forth in the preceding subparagraphs of this Section J.1., if the
breach remains uncured for twenty (20) days after receipt of notice
from Company that a breach has occurred.
2. If Company elects to terminate this Agreement pursuant to Section
G.1., all compensation related to those actions which caused Company
to elect to terminate this Agreement shall be forfeited, and
notwithstanding Section E.2., all rights to receive any and all Vested
Compensation and deferred compensation otherwise payable after
termination shall also be forfeited.
3. If Broker-Dealer is a corporation, partnership, or joint venture and
becomes generally unable to pay its debts as they mature, files a
voluntary petition of bankruptcy, seeks reorganization or to effect a
plan or other arrangement with the creditors, files an answer
admitting the jurisdiction of the court and the material allegations
of an involuntary petition filed pursuant to any act of Congress
relating to bankruptcy or reorganization, is adjudicated a bankrupt,
makes a general assignment for the benefit of creditors or applies for
or consents to the appointment of a receiver or trustee for all or a
substantial part of its property, then this Agreement will immediately
terminate as to that party upon the occurrence of one of these events.
4. This Agreement may be terminated by any party without cause by
delivering to the other party(ies) written notice within thirty (30)
days prior to the effective date of such termination.
5. Upon termination of this Agreement, Broker-Dealer shall immediately
return to Company all Proprietary Information, material identifying
their association with Company, and property owned by Company.
G. INDEPENDENT CONTRACTOR. Broker-Dealer is an independent contractor and
nothing contained in this Agreement shall create or shall be construed to
create the relationship of employer and employee between Company and
Broker-Dealer.
H. INSPECTION OF BOOKS AND RECORDS. During and after the term of this
Agreement, Company and Broker-Dealer shall each have the right, during
normal working hours and with reasonable notice, to inspect, audit and make
copies from the books and records of the other party relating to the
Products, for the purpose of verifying adherence to the provisions of this
Agreement.
I. INDEMNITY AND HOLD HARMLESS.
1. Each party shall indemnify and hold the other party harmless from any
liability, loss, costs, expense (including reasonable attorneys' fees
incurred by the indemnified party), or damages, resulting from any act
or omission by indemnifying party or any of its employees or
representatives in the performance of its services under this
Agreement, provided that such claim does not arise out of an act or
omission by the indemnified party, or its employees, contrary to the
terms and provisions of this Agreement. The indemnified party may, in
its sole discretion, require the indemnifying party to assume
responsibility for and control over the defense of any claim, action,
or proceeding to which this indemnity provision is applicable by
delivering to the indemnifying party a written notice so requesting
within ten (10) days after notice of the commencement or assertion of
any such claim, action or proceeding is received by the indemnified
party. The indemnifying party shall select counsel of its own
choosing, but subject to the approval of the indemnified party, which
approval shall not be unreasonably withheld.
2. Broker-Dealer specifically agrees to indemnify and hold harmless
Company in connection with any losses, claims, damages or liabilities,
joint or several, to which Company becomes subject under the
Securities Act of 1933, or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon (a) any unauthorized use of sales and promotional
materials or any verbal or written misrepresentations or any unlawful
sales practices or other improper conduct concerning any Products by
Broker-Dealer or a Representative; or (b) claims by a Broker-Dealer's
employees or Representatives for compensation or remuneration of any
type.
J. GENERAL.
1. WITHDRAWAL OF PRODUCT. Company reserves the right to withdraw, limit,
restrict or change any Product at any time.
2. NOTICES. Any notice required or permitted under this Agreement shall
be delivered personally or sent by Certified Mail with all postage
prepaid or by express mail delivery system:
to Broker-Dealer
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to Company:
MUTUAL OF OMAHA COMPANIES
SUPPLEMENTAL DISTRIBUTION ORGANIZATION
ADMINISTRATION
DODGE AT 33RD STREET - 7TH FLOOR
XXXXX, XXXXXXXX 00000
3. ENTIRE AGREEMENT. This Agreement and any Attachments constitute the
entire contract between the parties hereto and shall be construed in
accordance with the laws of the State of Nebraska and subject to the
courts of Nebraska.
4. ORDER OF PREFERENCE. This Agreement and its Attachments shall be
construed as being consistent with each other. When such construction
is unreasonable, the order of preference shall be: (a) Attachment
signed by all parties; (b) Attachment signed by Company's authorized
representative; and (c) this Agreement.
5. SEVERABILITY. This Agreement is subject to all laws and regulations in
the state or states where it is to be effective, but any provision
which may be inconsistent with or in violation of such laws or
regulations shall merely be unenforceable and will not effect the
validity of the NO remaining provisions.
6. WAIVER. No failure or delay on the part of either party hereto in
exercising any power or right under this Agreement shall operate as a
waiver thereof. This Agreement may be amended or modified only by
written instrument, executed by duly authorized officers of the
parties.
7. MODIFICATION/ ASSIGNMENT. This Agreement may not be modified or
assigned without the prior written consent of the other party.
8. HEADINGS. Headings herein are for convenience only and have no legal
force.
9. SURVIVING PROVISIONS. In addition to the provisions of this Agreement
which set forth post-termination obligations, the provisions of
Section C.2-5, 8-10, and 15, E, and I-J survive termination of this
Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed in duplicate by the
parties.
MUTUAL OF OMAHA INVESTOR SERVICES, INC.
By:
(Print or Type name)
Title:
Date:
BROKER DEALER
By:
(Print or Type name)
Title:
Date:
PRODUCT AND COMPENSATION ATTACHMENT
TO THE
VARIABLE PRODUCT DISTRIBUTION AGREEMENT
WITH
---------------------------------------------------
(BROKER-DEALER)
PRODUCTS
This Attachment amends the above-referenced Agreement and applies only to
Products for which Mutual of Omaha Investor Services ("MOIS") is the Principal
Underwriter and which are sold on or after the effective date of this Attachment
and while it is in effect.
COMPENSATION
PRODUCT: Variable Annuity
ISSUER: United of Omaha Life Insurance Company, Omaha, NE
AUTHORIZED
CONTRACT: Variable Annuity Ultrannuity Series I (United Separate Account C)
Variable Annuity Ultrannuity Series V (United Seperate Account C)
[COMPENSATION TABLES INSERTED HERE]
In the event an Authorized Contract is surrendered during the first 12
contract months, 100% of the compensation paid will be charged back to
Broker-Dealer.
Broker-Dealer shall look solely to MOIS for payment of compensation
payable for Products identified in this Schedule. MOIS may arrange for
certain terms of this Agreement, including receipt of payment and
payment of compensation hereunder, to be administered on its behalf by
the Product Issuer.
IN SIGNING THIS ATTACHMENT, BROKER-DEALER AGREES TO BE BOUND BY THE TERMS OF THE
AGREEMENT TO WHICH IT IS ATTACHED EFFECTIVE AS OF
_______________________________, 19____. THE AGREEMENT AND THIS ATTACHMENT SHALL
SUPERSEDE ANY PRIOR SCHEDULES RELATING TO ANY OF THE PRODUCTS ADDRESSED HEREIN.
THIS ATTACHMENT SHALL REMAIN EFFECTIVE UNTIL CANCELLED OR OTHERWISE MODIFIED BY
MOIS.
BROKER-DEALER:
By:
Title:
Date:
PRINCIPAL UNDERWRITER:
MUTUAL OF OMAHA INVESTOR SERVICES
By:
Title:
Date:
