EXHIBIT 99.(3)(b)
DISTRIBUTION AGREEMENT
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AGREEMENT made as of the day of 2000, by and Between United
Investors Life Insurance Company (the "Insurance Company") and
________________________________ a ____________________ corporation (the
"Distributor"), on its own behalf and on behalf of the individuals and entities
listed on Schedule 1 to this Agreement (the "Distributor Agency Affiliates"), as
that Schedule may be amended from time to time in accordance with this
Agreement.
RECITALS:
WHEREAS, the Insurance Company issues certain variable annuity
contracts and variable life insurance policies ("Variable Products"); and
WHEREAS, the Distributor is registered as a broker-dealer with the
Securities and Exchange Commission (the "SEC" or the "Commission") under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member in
good standing of the National Association of Securities Dealers, Inc. (the
"NASD") that engages in the distribution of insurance products; and
WHEREAS, the Insurance Company desires to retain the Distributor to
distribute Variable Annuities and Variable Life Insurance Policies (the
"Variable Products") through it's registered representatives
("Representatives"); and
WHEREAS, the Distributor desires to be retained by the Insurance
Company to distribute the Variable Products on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of mutual promises contained herein,
the parties hereto agree as follows:
1. Additional Definitions
----------------------
(a) Affiliate -- With respect to a person, any other person controlling,
controlled by, or under common control with, such person.
(b) Applications -- The forms used by the prospective purchaser to apply
for a variable life insurance policy or a variable annuity contract.
(c) Contracts -- The variable annuity contracts and certificates set forth
in Schedule 2 to this Agreement, as amended from time to time.
(d) Policies -- The variable life insurance policies set forth in Schedule
2 to this Agreement as in effect at the time this Agreement is executed,
and such other variable life insurance products that may be added to
Schedule 2 from time to time.
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(e) Premium -- A payment made under a Policy by an applicant or purchaser
to purchase Variable Products.
(f) Prospectus -- The prospectus if any, included within a Registration
Statement or, if more recent, the prospectus filed pursuant to Rule 497
under the Securities Act of 1933 (the "1933 Act"). For purposes of Section
11 of this Agreement, the term "any Prospectus" means any document which is
or at any time was a Prospectus within the meaning of this Section 1(i).
(j) Purchase Payment -- A payment made under a Contract by an applicant or
purchaser to purchase benefits under the Contract.
(k) Registration Statement -- At any time that this Agreement is in effect,
each currently effective registration statement, or currently effective
post-effective amendment thereto, relating to the Contracts or Policies,
including financial statements included in, and all exhibits to, that
registration statement or post-effective amendment. For purposes of Section
11 of this Agreement, the term "Registration Statement" means any document
which is or at any time was a Registration Statement within the meaning of
this Section 1(k).
(l) Regulations -- The rules and regulations promulgated by the Commission
under the 1933 Act, the 1934 Act and the Investment Company Act of 1940
(the "1940 Act") as in effect at the time this Agreement is executed or
thereafter promulgated.
(m) Variable Accounts -- Separate accounts established pursuant to Missouri
state insurance law supporting the Variable Products specified in Schedule
2 as in effect at the time this Agreement is executed, or as it may be
amended from time to time.
2. Distribution Activities -- Authority
------------------------------------
(a) The Insurance Company authorizes the Distributor, and the Distributor
accepts the authority, to act as a distributor of the Variable Products,
subject to any applicable requirements of the 1933 Act and the 1940 Act.
The Insurance Company hereby authorizes the Distributor to select
persons that will be authorized to engage in solicitation activities with
respect to the Variable Products including the recruitment and appointment
of Representatives who in turn may be authorized to engage in solicitation
activities involving the solicitation of Applications, Premiums and
Purchase Payments directly from prospective purchasers.
(b) Nothing in this Agreement precludes additional mutually agreeable
distribution and compensation arrangements among the parties to this
Agreement, including ones that may have compensation arrangements that
reward the Insurance Company for identifying and recruiting new broker-
dealers to sell the Variable Products, or
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identifying potential purchasers of the Variable Products, or for providing
superior support under this Agreement.
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3. Distribution Activities -- Appointment
--------------------------------------
(a) Where required by applicable state insurance law, the Insurance Company
hereby appoints the Distributor as its agent under that state insurance law
to represent the Insurance Company in the distribution activities
contemplated by this Agreement. The Insurance Company hereby authorizes the
Distributor under applicable securities laws to engage in the activities
contemplated by this Agreement relating to the distribution of the Variable
Products.
(b) In states where the Distributor is not licensed as an insurance agent
and applicable state insurance law requires that the Distributor be so
licensed, the Insurance Company hereby appoints each Distributor Agency
Affiliate listed on Schedule 1 to this Agreement (as that Schedule may be
amended from time to time by the Distributor when required by applicable
state insurance law to reflect changes in the licensing status of the
Distributor or the Distributor Agency Affiliates) as its agent under
applicable state insurance laws to represent the Insurance Company in the
distribution activities contemplated by this Agreement.
4. Distribution Activities -- Duties
---------------------------------
(a) The Distributor shall use its best efforts to market the Variable
Products actively through Representatives in accordance with the terms and
conditions of this Agreement, subject to applicable material market and
regulatory conditions.
(b) The Distributor shall assist and provide information to Representatives
in connection with servicing the Variable Products sold or marketed by
those Representatives.
(c) Under no circumstances shall the Insurance Company be responsible under
this Agreement for any failure by Distributor or Representatives to comply
with applicable law.
(d) Under no circumstances shall the Distributor be responsible under this
Agreement for any failure by the Insurance Company to comply with
applicable law.
5. Limitations on Authority
------------------------
(a) The Distributor shall not have the authority, and shall not grant
authority to Representatives, on behalf of the Insurance Company:
(1) to make, alter or discharge any Variable Product or other contract
entered into pursuant to a Variable Product;
(2) to waive any Variable Product forfeiture provision;
(3) to extend the time of paying any Purchase Payments, or Premiums
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due under the Variable Products; and
(4) to receive any monies, Purchase Payments or Premiums (except for
the sole purpose of forwarding monies, Purchase Payments or Premiums to
the Insurance Company).
(b) The Distributor shall not expend, nor contract for the expenditure of,
funds of the Insurance Company.
(c) The Distributor shall not possess or exercise any authority on behalf
of the Insurance Company other than that expressly conferred on the
Distributor by this Agreement.
6. Forms, Applications, and Licensing
----------------------------------
(a) The Insurance Company, or its agent, shall forward to the Distributor,
Applications, Policies, Contracts, subscription agreements, certificates,
other administrative forms, and any amendments or supplements to the
foregoing, necessary to carry out the Distributor's distribution authority
and responsibilities with respect to the Variable Products.
(b) The Insurance Company shall obtain all requisite regulatory approvals
of such materials furnished to the Distributor and shall comply with all
applicable laws, rules, regulations and orders of any governmental
authority relating to the issuance or sale of the Variable Products.
(c) All premiums and Purchase Payments paid by check or money order that
are collected by the Distributor, any agent or affiliate shall be remitted
promptly, and in any event not later than two business days, in full,
together with Applications, forms, and any other required documentation, to
the Insurance Company. Checks or money orders in payment of Premiums and
Purchase Payments shall be drawn to the order of "United Investors Life".
If any Premium or Purchase Payment is held at any time by the Distributor,
registered representatives, agents, or any affiliates, the Distributor, the
registered representatives, the agents or the affiliates shall hold that
Premium or Purchase Payment in a fiduciary capacity. All Premiums and
Purchase Payments whether by check, money order or wire, shall be the
property of the Insurance Company.
(d) The Distributor acknowledges that the Insurance Company shall have the
unconditional right to reject, in whole or in part, any application. The
Insurance Company shall return any monies received by it or from an
applicant or purchaser whose Application has been rejected. The Insurance
Company shall notify the Distributor in writing one business day prior to
taking any action to return any such Monies, which notice shall identify,
if applicable, the agent who submitted the rejected Application.
(e) If a purchaser exercises its "free look right" under a Variable
Product, any refund of premiums or Purchase Payments due as provided in
that Variable Product, shall be made by the Insurance Company to the
purchaser. The Insurance Company shall notify the
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Distributor in writing one business day prior to taking any action to
refund any such Premiums or Purchase Payments, which notice shall identify,
if applicable the registered representative or the agent through which the
Variable Product had been purchased.
(f) The Distributor agrees to maintain at its expense all registrations,
licenses, and qualifications under federal and state securities laws that
are applicable to its activities and those of its registered
representatives in connection with the performance of this Agreement. The
Distributor also agrees to maintain at its expense all registrations,
licenses, and qualifications under state insurance laws that are applicable
to the activities of the Distributor, the Insurance Agency Affiliates and
their agents in performing this Agreement.
(g) The Distributor agrees to notify the Insurance Company within [three
(3) business days] of obtaining actual knowledge of any changes in the
registrations, licenses, or qualifications of the Distributor, the
Insurance Agency Affiliates, or the agents or representatives of the
Distributor or Insurance Agency Affiliates that would adversely affect its
performance of this Agreement.
(h) The Insurance Company agrees to obtain and maintain at its expense all
registrations, licenses, qualifications and approvals under federal
securities laws and state blue sky and insurance laws in connection with
qualifying the Variable Products for sale.
(i) The Insurance Company agrees to notify the Distributor within [three
(3) business days] of obtaining actual knowledge of any changes in the
registrations, licenses, qualifications, or approvals of the Variable
Products that would adversely affect the offering of the Variable
Contracts.
8. Marketing Materials
-------------------
The Insurance Company and its broker/dealer acting as the principal
underwriter of the Variable Products shall design, develop, produce, and
make the determination whether to file and, if necessary, file for and
obtain all necessary regulatory approvals for, all advertising, sales
literature, and other promotional materials required in connection with the
distribution, sale and marketing of the Variable Products. The Insurance
Company shall work closely with the Distributor to ensure that the
marketing materials achieve their desired purpose.
9. The Distributor's Compensation
------------------------------
(a) In consideration for the services rendered by the Distributor pursuant
to this Agreement, the Insurance Company shall pay the Distributor the
compensation set forth in Schedule 3 to this Agreement. Schedule 3 and/ or
Schedule 2 may be modified at any time, and from time to time, by adding or
deleting contracts and changing the compensation payable for those
contracts, provided, that, any such modifications are mutually agreed upon
by both the Insurance Company and the Distributor, in writing, and
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signed by both parties. Modifications to the Variable Products listed in
Schedule 2 and the compensation described in Schedule 3 may be requested by
the Insurance Company in the event that pricing objectives are not achieved
due to adverse experience, and the Distributor's consent shall not be
unreasonably withheld. Any such modification shall apply only to contracts
applied for after the effective date of each such modification.
(b) With respect to Variable Products in connection with which the
Insurance Company has advanced sales commissions paid to the Distributor or
to a Representative, in the event a Contract or Policy on a Variable
Product terminates prior to the Insurance Company's having received
sufficient premiums to recover any outstanding sales commissions, the
Insurance Company reserves the right to recover: (1) one hundred percent
(100%) of the outstanding advanced sales commission paid to Distributor or
Representative respecting the sale of the Variable Product; (2) fifty
percent (50%) of the compensation paid if a Variable Annuity Product
terminates due to death during the first twelve (12) months following
issue; and (3) nothing (i.e., no charge back) if the Variable Product
terminates thereafter. However, notwithstanding any other provision of this
Agreement, if termination of a Variable Product at any time is due to the
willful or negligent wrongful actions or representations of the
Distributor, or Representative, the Insurance Company reserves the right to
recover one hundred percent (100%) of the compensation paid to Distributor
respecting the sale of the Variable Product.
With respect to any other terminations, the Insurance Company has no
right to recover any portion of the compensation paid to the Distributor.
In no event shall the Insurance Company have the right to recover any
portion of any compensation received by the Distributor as a basis point
charge against investment values under the contracts. The Insurance Company
shall have the right to set off any amounts owed by the Distributor under
this Section 9(b) against any amounts owed by the Insurance Company to the
Distributor.
10. Representations and Warranties
------------------------------
(a) By the Distributor
The Distributor represents and warrants to, and covenants with, the
Insurance Company as follows:
(1) The Distributor has taken all action necessary including without
limitation, those necessary under its articles of incorporation, by-
laws and applicable state corporate law, to authorize the execution,
delivery and performance of this Agreement and all transactions
contemplated hereunder.
(2) Prior to the sale of any Variable Product hereunder, the
Distributor will be, and shall thereafter remain during the term of
this Agreement, registered as a
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broker-dealer under the 1934 Act, a member in good standing of the
NASD, and duly registered under applicable state securities laws.
(3) Prior to the sale of any Variable Product hereunder, the
Distributor will be, and shall thereafter remain during the term of
this Agreement, in compliance with the eligibility requirements for
certain affiliated persons and underwriters found in Section 9(a) of
the 0000 Xxx.
(4) Prior to the sale of any Variable Product hereunder, the
Distributor and each Distributor Agency Affiliate and Representative
will have all necessary licenses and regulatory approvals to perform
the services required by this Agreement and the Distributor will
notify the Insurance Company within three business days of obtaining
actual knowledge of any change in the status of such licenses or
regulatory approvals.
(5) During the term of this Agreement and for any reason, the
Distributor and the Distributor Agency Affiliates agree that they will
not take any action designed or calculated to result in the transfer
or exchange of the policies.
(6) Insurance Company and Distributor each wish to ensure that the
Variable Products distributed by Distributor will be issued to
purchasers for whom the Variable Products will be suitable.
Distributor shall therefore take reasonable steps to ensure that the
various sales representatives appointed by it shall not make
recommendations to an applicant to purchase a Policy or Contract in
the absence of reasonable grounds to believe that the purchase of the
Policy or Contract is suitable for such applicant. While not limited
to the following, a determination of suitability shall be based on
information furnished to a sales representative after reasonable
inquiry of such applicant concerning the applicant's insurance and
investment objectives and financial situation and needs.
(b) By the Insurance Company
The Insurance Company represents and warrants to, and covenants with, the
Distributor as follows:
(1) All necessary regulatory approvals and licenses from any state or
federal governmental body having jurisdiction over the Insurance
Company or the Variable Products have been obtained, and the Insurance
Company will notify the Distributor within one business day of
obtaining actual knowledge of any change in the status of any
approvals or licenses related to the marketing, sale or distribution
of the Variable Products.
(2) The Insurance Company has taken all action necessary including,
without limitation, those necessary under its articles of
incorporation, bylaws and applicable
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state corporate law, to authorize the execution, delivery and
performance of this Agreement and all transactions contemplated
hereunder.
(3) The Insurance Company is and shall remain during the term of this
Agreement in compliance with the eligibility requirements for certain
affiliated persons and underwriters found in Section 9(a) of the 1940
Act.
11. Indemnification
-------------------
(a) By the Distributor
(1) The Distributor agrees to indemnify and hold harmless the Insurance
Company and each director, officer, employee or agent of the Insurance
Company, and each person, if any, who controls the Insurance Company within
the meaning of the federal securities laws (collectively, the "Indemnified
Parties" for purposes of this Section 11 (a)) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of the Insurance Company) or litigation (including legal
and other expenses) to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the offer or sale of the Variable
Products or the operation of the Variable Accounts and:
(i) arise out of, or are based upon, violation(s) by the
Distributor of federal or state securities law(s) or regulation(s),
applicable banking law(s) or regulation(s), insurance law(s) or
regulation(s) or any rule or requirement of the NASD; or
(ii) arise out of, or are based upon, any tortious conduct
(including oral or written misrepresentation), or any unlawful sales
practices concerning the Variable Products by the Distributor or the
Distributor's Representatives; or
(iii) arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact or omission or alleged
omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, in light of
the circumstances in which they were made, contained in any
advertising, sales literature, or other promotional material
designed, developed, and produced by the Distributor and used by it
in the distribution of the Variable Products; provided that the
Distributor shall not be liable in any such case to the extent that
such losses, claims, damages, liabilities or expenses arises out of,
or are based upon, an untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon information
furnished in writing to the Distributor by the Insurance Company
specifically for use in the preparation of any such promotional
material; or
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(iv) arise out of, or are based upon, claims by the Representatives
or agents or representatives of the Distributor for commissions or
other compensation or remuneration of any type; or
(v) arise as a result of any failure on the part of the
Distributor to submit Premiums, Purchase Payments, or Applications to
the Insurance Company, or to submit the correct amount of a Premium
or Purchase Payment, on a timely basis and in accordance with this
Agreement, subject to applicable law; or
(vi) arise as a result of any failure on the part of the
Distributor to deliver the Variable Products to purchasers thereof on
a timely basis; provided that the Distributor shall not be liable in
any such case to the extent that such losses, claims, damages,
liabilities or expenses arise as a result of any failure on the part
of the Insurance Company to perform its obligations under this
Agreement on a timely basis; or
(vii) arise as a result of a material breach by the Distributor of
any provisions of this Agreement; or
(viii) arise as a result of actions of a Broker-Dealer or its
Representatives;
as limited by and in accordance with the provisions of Sections 11(a)(2) and 11
(a)(3) hereof.
(2) The Distributor shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation ("Losses"
for purposes of this Section 11 (a)(2)) incurred or assessed against an
Indemnified Party that may arise from any Indemnified Party's willful
misfeasance or bad faith. The Distributor's liability for Losses in the event of
its breach of this Agreement shall be limited to that portion of Losses
caused by its breach, and the Distributor shall not be liable for that portion
of Losses caused by breach of this Agreement by an Indemnified Party or from any
act or omission by an Indemnified Party.
(3) The Distributor shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless that
Indemnified Party shall have notified the Distributor in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon that
Indemnified Party (or after the Indemnified Party shall have received notice of
such service on any designated agent). Notwithstanding the foregoing, the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Distributor of its obligations hereunder except to the extent that
the Distributor has been prejudiced by such failure to give notice. In addition,
any failure by the Indemnified Party to notify the Distributor of any such claim
shall not relieve the Distributor from any liability which it may have to the
Indemnified Party against whom the action is brought otherwise than on account
of this indemnification provision. In case any such action is brought against
the Indemnified Parties, the Distributor shall be entitled to participate, at
its own expense, in the defense of the action. The Distributor also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action; provided, however, that if the
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Indemnified Party shall have reasonably concluded that there may be defenses
available to it which are different from or additional to those available to the
Distributor, the Distributor shall not have the right to assume said defense,
but shall pay the costs and expenses thereof (except that in no event shall the
Distributor be liable for the fees and expenses of more than one counsel for
Indemnified Parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances). After notice from the Distributor to the
Indemnified Party of the Distributor's election to assume the defense thereof,
and in the absence of such a reasonable conclusion that there may be different
or additional defenses available to the Indemnified Party, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Distributor will not be liable to that party under this Agreement for any
legal or other expenses subsequently incurred by the party independently in
connection with the defense thereof other than reasonable costs of
investigation.
(4) The Indemnified Parties will notify the Distributor within a reasonable
time, not to exceed fifteen (15) business days, of the receipt of service of
process in any litigation or proceedings against them in connection with the
offer or sale of the Variable Products or the operation of the Variable
Accounts.
(b) By the Insurance Company
(1) The Insurance Company agrees to indemnify and hold harmless the
Distributor and each director, officer, employee or agent of the
Distributor, and each person, if any, who controls the Distributor within
the meaning of the federal securities laws (collectively, the "Indemnified
Parties" for purposes of this Section 11(b)) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of the Insurance Company) or litigation (including legal
and other expenses) to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the offer or sale of the Variable
Products or the operation of the Variable Accounts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact or omission or alleged omission
to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, in light of the
circumstances in which they were made, contained in any: (A)
Registration Statement or Prospectus; (B) blue-sky application or
other document executed by the Insurance Company specifically for the
purpose of qualifying any or all of the Variable Products for sale
under the securities laws of any jurisdiction; or (C) information
furnished in writing to the Distributor specifically for the purpose
of being included in any advertising, sales literature, or other
promotional material to be used in connection with the distribution
of the Variable Products; provided that the Insurance Company shall
not be liable in any such case to the extent that such losses,
claims, damages, liabilities or expenses arise out of, or are based
upon, an untrue statement or alleged untrue statement or omission or
alleged
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omission made in reliance upon information furnished in writing to
the Insurance Company by the Distributor specifically for use in the
preparation of any such document, application, or promotional
material; or
(ii) result because of the provisions of any Variable Product or
because of any material breach by the Insurance Company of any
provision of this Agreement or of any Variable Product or which
result from any wrongful activities of the Insurance Company's
officers, directors, employees or agents or their wrongful failure to
take any action in connection with the sale, processing or
administration of the Variable Products including, without
limitation, obtaining auditors' reports, computing accurate separate
account and/or underlying fund performance data, preparation and
timely filing and delivery, as required, of annual and semiannual
reports and reports on Form NSAR and the timely payment of all state
and federal registration fees; as limited by and in accordance with
the provisions of Sections 11 (b)(1) and 11 (b)(2) hereof.
(2) The Insurance Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
("Losses" for purposes of this Section 11 (b)(2)) incurred or assessed against
an Indemnified Party that may arise from any Indemnified Party's willful
misfeasance or bad faith. The Insurance Company's liability for Losses in the
event of its breach of this Agreement shall be limited to that portion of Losses
caused by its breach, and that party shall not be liable for that portion of
Losses caused by breach of this Agreement by an Indemnified Party or from any
act or omission by an Indemnified Party.
(3) The Insurance Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless the
Indemnified Party shall have notified the Insurance Company in writing within a
reasonable time after receiving the summons or other first legal process giving
information of the nature of the claim against the Indemnified Party (a
"Claim"). Notwithstanding the foregoing, the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Insurance Company of its
obligations hereunder except to the extent that the Insurance Company has been
prejudiced by the failure of the Indemnified Party to give notice. In addition,
any failure by the Indemnified Party to notify the Insurance Company of any
Claim shall not relieve the Insurance Company from any liability which it may
have to the Indemnified Party against whom the action is brought otherwise than
on account of this indemnification provision. In case any Claim is brought
against the Indemnified Parties, the Insurance Company shall be entitled to
participate, at its own expense, in the defense of the Claim. The Insurance
Company also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the Claim. After notice from the Insurance
Company to the Indemnified Party of the Insurance Company's election to assume a
defense to a Claim, the Indemnified Party shall bear the fees and expenses of
any additional counsel retained by it, and the Insurance Company will not be
liable to the Indemnified Party under this Agreement for any legal or other
expenses subsequently incurred by the Indemnified Party independently in
connection with the defense of a Claim other than the reasonable costs of
investigation.
12. Records
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The parties to this Agreement shall maintain such accounts, books and
records and other documents as are required to be maintained under
applicable laws and regulations and shall preserve such accounts, books and
records, and other documents for the periods prescribed by such laws and
regulations. Each party shall have the right to inspect and audit the
accounts, books and records and other documents of the other party that
pertain to the Variable Products during normal business hours upon
reasonable written notice to the other party. Any party requesting such an
audit shall bear the expense of the audit, including the reasonable costs
(other than overhead costs or costs for time spent on audit-related matters
by officers, directors, or employees of the other party) borne by the other
party in connection with the audit.
13. Investigations and Proceedings
------------------------------
The parties to this Agreement shall notify each other promptly of any
insurance or securities regulatory investigation, administrative or
judicial proceeding, or material complaint arising in connection with the
offer or the sale of the Variable Products. The parties shall cooperate
fully in the resolution of any insurance or securities investigation,
administrative or judicial proceeding, or material complaint.
14. Term and Termination
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(a) Term -- This Agreement shall be effective from the date hereof through
December 31, 2004, which term shall automatically be extended for a period
of 5 years unless this Agreement is sooner terminated in accordance with
the termination provisions in Section 14(b) of this Agreement.
(b) Termination -- No party hereto may terminate this Agreement except as
expressly provided in this Section 14(b).
(1) Any party hereto may terminate this Agreement effective the date
that the term of this Agreement would otherwise automatically be
renewed upon written notice delivered to the other party not less than
30 nor more than 60 days prior to such effective date, which notice
shall specify that it is being given pursuant to this Section 14(b)(1).
(2) A party (the "Terminating Party") may terminate this Agreement for
cause if:
(i) another party (the "Breaching Party") materially breaches this
Agreement,
(ii) the Terminating Party has delivered to the Breaching Party a
notice specifying the nature of the breach and that this notice is
being given pursuant to this Section 14(b)(2), and
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(iii) the Breaching Party has not cured the breach within 30 days
after the delivery of the notice.
(3) A Terminating Party may terminate this Agreement immediately for
cause in the event of:
(i) the voluntary institution by the Distributor of bankruptcy
proceedings or the voluntary institution by the Insurance Company
of insolvency or rehabilitation proceedings under any state
insurance laws or regulations (each an "Insolvent Party") or
(ii) a formal order or written finding by a court of competent
jurisdiction that the Insolvent Party is bankrupt or insolvent,
there is a degradation of the Insolvent Party's reputation that
would materially impair the ability of the Insolvent Party to carry
out its obligations under this Agreement or
(iii) the SEC institutes a formal cease and desist order or
proceeding prohibiting the offer of the sale of the Variable
Products or the operation of the Separate Account, or a
governmental or regulatory authority of a state or other
jurisdiction institutes a formal order or proceeding prohibiting
the offer or the sale of the Variable Products or the operation of
the Separate Account; provided that, this Agreement will be
terminated only with respect to the particular state or
jurisdiction issuing such order or proceeding or
(iv) the SEC, the NASD, or any other government authority or self-
regulatory organization revokes or suspends the registration or
license of the Distributor, or the Distributor's ability to do
business is so materially impaired, in the reasonable view of the
Insurance Company, that it could not perform its obligations under
this Agreement or
(v) a state insurance commissioner suspends or revokes the
Insurance Company's ability to do business or the Insurance
Company's ability to do business is so materially impaired, in the
reasonable view of the Distributor, that it could not perform its
obligations under this Agreement.
(c) Solicitation after Termination -- Upon termination of this Agreement
for any reason, the Distributor and the Distributor Agency affiliates agree
that they will not take any action designed or calculated to result in the
transfer or exchange of the policies.
(d) Survival -- The provisions of Sections 10, 11, 15, 18 and 19
(Representations and Warranties, Indemnification, Rights Upon Termination,
Arbitration, and Confidentiality, respectively) shall survive the
termination of this Agreement.
15. Rights Upon Termination
-----------------------
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(a) In no event will any further compensation be paid to the Distributor
should the Insurance Company terminate this Agreement for cause pursuant to
Section 14(b)(2) or Section 14(b)(3).
(b) As of the date of termination, the Insurance Company shall have the
right to set off against any monies it owes the Distributor any amounts
owed by the Distributor to the Insurance Company. In the event that the
amounts owed by the Distributor exceed the amounts owed by the Insurance
Company, the difference shall become immediately due and payable by the
Distributor.
(c) In the event that either party does not pay within 45 days after
resolution of net amount payable, then the net amount owed will accrue
interest, compounded daily, at the fluctuating prime interest rate charged
by The Chase Manhattan Bank, N.A., plus two percent (2%).
16. Independent Contractor
----------------------
The Distributor shall act as an independent contractor in the performance
of its duties and obligations under this Agreement and nothing herein contained
shall constitute the Distributor, Representatives or employees or officers of
the Distributor as employees of the Insurance Company in connection with the
distribution of the Variable Products.
17. Notices
-------
Any notice required or permitted under this Agreement shall be delivered
personally or sent by facsimile or by registered or certified mail, return
receipt requested, with all postage prepaid:
(a) To the Distributor:
(b) To the Insurance Company:
United Investors Life Insurance
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Fax:
A party may change its address or fax number for the delivery of notices by
delivering a written notice to the other party at its last specified address.
All notices shall be effective upon delivery; provided that any notice sent by
facsimile shall be deemed ineffective unless a copy of
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the notice is also delivered personally or sent by express courier or mail for
delivery on the same or next business day.
18. Arbitration
-----------
Any dispute between the Distributor and the Insurance Company arising under
or relating to this Agreement shall be settled by compulsory arbitration before
a single arbitrator experienced in the insurance industry in accordance with the
Commercial Arbitration Rules then in force of the American Arbitration
Association. The arbitration shall take place in Birmingham, Alabama, unless
some other location is mutually agreed upon by the parties in dispute. Each
party shall bear its own costs and expenses in any such arbitration, except that
the Distributor and the Insurance Company shall bear the expenses of the
arbitrators' services equally.
19. Confidentiality
---------------
(a) Generally. Each party will hold the other party's Confidential
Information (as defined below) in confidence and will safeguard it as
provided herein. The party receiving Confidential Information will not,
directly or indirectly, report, publish, distribute, disclose, or otherwise
disseminate the Confidential Information, or any portion thereof, to any
third party including its affiliates, and will not use the Confidential
Information, or any portion thereof, for the benefit of itself or any third
party including its affiliates or for any purpose, except only as necessary
to perform its duties and exercise its rights hereunder, or as expressly
authorized in writing by the party who owns such Confidential Information.
Disclosure of Confidential Information internally by a recipient will be
limited to those of its and its affiliates' officers, directors, employees,
and agents on a "need to know" basis who must have access to the
Confidential Information to enable such party to perform its duties and
exercise its rights hereunder. In order to safeguard the Confidential
Information, each party shall (i)-inform each recipient of the Confidential
Information of the confidential nature thereof and of the requirements of
this Agreement, (ii) direct such recipients to comply with the terms of
this Agreement, and (iii) exercise any other precautions necessary to
prevent any improper use or disclosure of Confidential Information.
(b) Definition. "Confidential Information" shall mean: (i) information
regarding a party's or such party's affiliates', financial condition,
information systems, business operations, plans and strategies, products or
services, customers and prospective customers, and marketing and
distribution plans, methods and techniques; (ii) information that is marked
"confidential", "proprietary" or in like words, or that is summarized in
writing as being confidential Prior to or promptly after disclosure to the
other party; (iii) any and all related research; and (iv) any and all
designs, ideas, concepts, and technology embodied therein. Confidential
Information of the Distributor or its affiliates that is to be kept
confidential by the Insurance Company shall also include (v) any
information of the Distributor or its affiliates in any form whatsoever
that is covered by a patent issued by the United States Patent and
Trademark Office;
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Information is not considered confidential or proprietary if such
information: (1) is or becomes generally available to the public other than
as a result of disclosure by the recipient; (2) was available to or already
known by the recipient on a non-confidential basis prior to its receipt
from the party claiming confidentiality; (3) is developed by the recipient
independently of any information or data acquired from the party claiming
confidentiality; or (4) is, or is required to be, disclosed pursuant to a
court order or the requirement of any federal or state regulatory,
judicial, or government authority.
(c) Remedies. Each party acknowledges and agrees that monetary damages
would not be a sufficient or adequate remedy for a breach or anticipated
breach of this Section and that, in addition to any other legal or
equitable remedies which may be available, each party shall be entitled to
specific performance and injunctive relief for any breach or anticipated
breach of this Section.
(d) Survival. The provisions of this Section shall survive the expiration
or other termination of this Agreement.
20. Severability
------------
If any provision of this Agreement is held to be unenforceable or invalid,
that provision shall be severed from this Agreement and the remainder of this
Agreement shall remain in full force and effect.
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21. Choice of Law
-------------
This Agreement and any disputes, actions or other proceedings arising under
or relating to it shall be governed by law of the State of Alabama without
regard to its principles of conflicts of law.
22. No Waiver
---------
No failure or delay on the part of any party hereto in exercising any power
or right under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No waiver by any
party of any provision of this Agreement, nor of any breach or default, shall be
effective unless in writing and signed by the party against whom such waiver is
to be enforced.
23. Agreement Non-Assignable
------------------------
Any assignment of this Agreement in whole or in part by a party without the
prior written consent of the other parties thereto shall be void and shall vest
no rights in the assignee.
24. Exhibits and Schedules
----------------------
The Exhibits and Schedules to this Agreement are a part of this Agreement
as if set forth in full herein.
25. Headings
--------
The headings herein are for the purpose of convenience only and have no
legal force, meaning or effect.
26. Schedules and Attachments
-------------------------
Subject to the provisions of Section 9(a) above, all schedules attached to
this agreement may be revised by the Insurance Company and the Distributor
by mutual agreement in writing.
27. Entire Agreement
----------------
This Agreement constitutes the entire agreement of the parties with respect
to the subject matter hereof and supersedes all prior and contemporaneous
agreements (other than on matters related to confidentiality), understandings,
negotiations and discussions, whether oral or written, of the parties and there
are no warranties, representations and/or agreements between the parties in
conjunction with the subject matter hereof except as set forth in this
Agreement. This Agreement,
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including any Schedule or Exhibit hereto, may be amended or modified only by
written instrument, executed by duly authorized officers of the parties.
IN WITNESS WHEREOF, the parties to this Agreement have caused it to be
executed as of the date first above written.
__________________________ United Investors Life
By: By:
Name: Name:
Title: Title:
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SCHEDULE 1
DISTRIBUTOR AGENCY AFFILIATES
-20-
SCHEDULE 2
VARIABLE PRODUCTS
Product Policy/Certificate Description
Number
Titanium Investor Variable Universal Life
Titanium Variable Annuity
-21-
SCHEDULE 3
COMPENSATION SCHEDULE
Variable Universal Life - Titanium Investor VUL
Year % of Target
1 __ %
2-10 __ %
11+ __ %
Variable Annuity - Titanium Investor Variable Annuity
Year % of Premium
1 __ %
2+ __ %
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