ADMINISTRATION AND MARKETING AGREEMENT
ENTERED INTO BY AND BETWEEN
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
OF MINNEAPOLIS, MINNESOTA
(HEREINAFTER REFERRED TO AS THE "COMPANY")
AND
LIFE USA HOLDING, INC.
OF MINNEAPOLIS, MINNESOTA
(HEREINAFTER REFERRED TO AS "HOLDING")
WHEREAS, Holding, through its subsidiary, LifeUSA Insurance Company
("LifeUSA"), has offered a line of life insurance and annuity products, and the
Company desires to provide a similar line of life insurance and annuity products
utilizing Holding's skills in product design and underwriting; and
WHEREAS, the parties hereto entered into the Joint Marketing Agreement
dated February 16, 1995 (the "Joint Marketing Agreement"); and
WHEREAS, the parties desire to terminate the Joint Marketing Agreement and
substitute in its place this Administration and Marketing Agreement (this
"Agreement") for business written after December 31, 1996;
NOW, THEREFORE, in consideration for the mutual promises and undertakings
set forth herein and for other good and valuable consideration, the parties
hereby agree as follows:
SECTION 1 - TERMINATION OF JOINT MARKETING AGREEMENT
It is hereby agreed, effective January 1, 1997, that the Joint Marketing
Agreement is terminated as to new sales, and this Agreement is substituted in
its place for new sales after December 31, 1996, during the term of this
Agreement.
SECTION 2 - DEFINITIONS
2.1 "Covered Products" shall mean ordinary life insurance policies and
annuities issued on the forms listed on the reinsurance contract dated as of
January 1, 1995 (the "Reinsurance Contract") by and between the Company and
LifeUSA Insurance Company ("LifeUSA"), as amended or replace hereafter. It is
expressly understood and agreed that the Reinsurance Contract may be amended
from time to time to add New Insurance Products.
2.2 "Marketing Services" shall mean identifying prospective agents
("Prospective Agents") of the Company for purposes of marketing the Covered
Products and New Insurance Products, notifying the Company of Prospective Agents
and processing agent appointments and cancellations on behalf of the Company,
and training and supervising all agents appointed with respect to the Covered
Products and New Insurance Products. "Marketing Services" shall also include,
subject to such limitations as the Company may from time to time deem
appropriate, seeking approval on behalf of the Company by appropriate insurance
departments, wherever required, of appointments of Prospective Agents.
2.3 "New Insurance Products" shall be life insurance and annuity products
developed by Holding or its subsidiary, LifeUSA, which are, with the approval of
the Company added to those listed in the Reinsurance Contract. New Insurance
Products shall be products similar to those of LifeUSA written on the Company's
paper.
2.4 "Operating Manuals" shall mean all written rules, regulations,
instructions and directives of the Company regarding its operations, as are in
effect from time to time.
2.5 "Policy Administration Services" shall mean, with respect to the
Covered Products and New Insurance Products, (a) preparation and filing with
state insurance departments, as appropriate all policy form filings, including
premium rates, subject to such limitations as the Company may from time to time
deem appropriate, (b) provision of full administration services, including
billing and collecting premium, monthly processing, loan processing, valuation,
policyholder statements, maintenance of policy records, processing policy
cancellations, policy changes, contractual changes, reinstatements and customer
inquiries, (c) designing, printing and distribution of administrative forms as
they become necessary, and (d) all other administrative activities in connection
with the Covered Products and New Insurance Products, including, but not limited
to, maintaining necessary records and the producing of required reports such
that the cash payments made between Holding and the Company, and between the
Company and its reinsurers, can be accurately computed and recorded. "Policy
Administrative Services" shall not include any activities related to (i)
adjusting or paying claims or (ii) negotiating reinsurance on behalf of the
Company.
2.6 "Services" shall mean Underwriting Services, Policy Administration
Services and Marketing Services.
2.7 "Underwriting Guidelines" shall mean the Company's underwriting
guidelines as in effect from time to time. Holding may recommend changes to the
Underwriting Guidelines, which changes shall be subject to the Company's
approval, which approval shall not be unreasonably withheld.
2.8 "Underwriting Services" shall mean, with respect to the Covered
Products and New Insurance Products, processing and accepting applications and
proposals for insurance, underwriting (including determination of appropriate
rates), policy issuance, policy printing, processing of unscheduled policy
changes, policy cancellations, routing of applications and other papers required
in the underwriting process, routing of issued policies for delivery to
policyholders, and all other related services.
SECTION 3 - SERVICES
3.1 Holding shall provide the Services in the name of and on behalf of the
Company with respect to the Covered Products and New Insurance Products in the
states listed in Schedule A hereto. Holding shall provide the Services in the
name of and on behalf of the Company only as provided in this Agreement or as
directed by the Company in writing. Except as specifically set forth in this
Agreement or as authorized by the Company in writing, Holding shall not have
authority to enter into any agreements on the Company's behalf or to alter or
amend any of the policies relating to the Covered Products and New Insurance
Products or to modify, waive or extend any of their provisions.
3.2 In connection with the Policy Administration Services provided by
Holding under this Agreement, Holding shall:
(a) be responsible for all Company policies entrusted to it whether issued
or not, and shall only issue policies in series;
(b) be responsible for making, or causing to be made, any modifications to
administrative systems required for the ongoing administration of all policies
in force or new policies being issued;
(c) maintain all records, including but not limited to statistical and
accounting records, that a life insurance company would maintain with respect to
the Covered Products and New Insurance Products so as to allow the Company to
make only general ledger entries in its books and records; and
(d) maintain all other data which are necessary to enable the Company to
prepare its annual convention statement and any other reports required by any
governmental agency or reporting bureau or which are reasonably required by the
Company in order that the Company may properly analyze and manage the business
included under this Agreement, provided that such data will be provided by
Holding to the Company upon request by the Company.
3.3 In connection with the Marketing Services provided by Holding under
this Agreement, and subject to such limitations as the Company may from time to
time determine, Holding shall have the authority, on behalf of the Company, to
appoint agents of the Company for the purpose of soliciting and producing the
Covered Products and New Insurance Products and to remove any of such agents.
The purpose of such agent appointment is to enable the agents to sell the
Covered Products and New Insurance Products in those states in which they are
licensed and authorized to sell products for LifeUSA in all jurisdictions listed
in Schedule A hereto. Holding will also use its best efforts to cause such
agents to sell the Covered Products and the New Insurance Products. Holding
shall pay all costs of licensing and appointing such agents on behalf of the
Company.
3.4 Holding shall use reasonable efforts to cause the Company's agents
appointed with respect to the Covered Products and the New Insurance Products,
who are also appointed agents of any insurer affiliate of Holding, to distribute
the Company's variable universal life, variable annuity, term insurance,
long-term care and other mutually agreed products of the Company (the
"Non-covered Products") for compensation to Holding and pursuant to terms as
mutually agreed.
3.5 The Covered Products and the New Insurance Products shall be
differentiated from LifeUSA products through terms as the Company and Holding
mutually agree. The Company will commit to annual first year and single premium
goals for the Covered Products and the New Insurance Products prior to the
beginning of each calendar year during the term of this Agreement. The goal for
1997 is $390,000,000 in first year and single premium. Six months prior to the
beginning of each calendar year commencing with respect to the calendar year
1998, the Company and Holding will mutually agree to the amount of first year
and single premium which can be written on the Covered Products and the New
Insurance Products for the next calendar year.
3.6 Holding shall not:
(e) accept applications for, bind or issue any insurance covering any risk
prohibited in writing by the Company or excluded (whether by exclusion or
warranty) from the Reinsurance Contract, as amended or replaced from time to
time, covering business produced under this Agreement;
(f) have any authority, right or responsibility with respect to any of the
following activities related to the business produced under this Agreement: (i)
adjusting or paying any claims; or (ii) negotiating reinsurance on behalf of the
Company;
(g) mass cancel policies in force that are Covered Products or New
Insurance Products except upon written instructions from the Company to do so;
(h) bind the Company in contravention of its Operating Manuals or
Underwriting Guidelines; or
(i) issue any advertising or promotional material bearing the Company's
name without first obtaining the written approval of the Company.
3.7 Holding shall provide the Services (a) in accordance with all
applicable laws, regulations, bulletins and insurance department requirements,
(b) in accordance with applicable Operating Manuals, or such other service
standards as the parties shall mutually agree in writing from time to time, and
(c) in accordance with Sections 3.1 through 3.6 of this Agreement.
3.8 Holding shall be liable to the Company for any losses to the Company
caused by negligent or intentional acts of Holding, its officers, employees or
agents.
3.9 Holding agrees to indemnify and hold the Company harmless from and
against any and all losses, costs, damages and expenses (including attorney's
fees) which the Company may incur by reason of any demand or action by any
person arising out of the negligence or intentional acts of Holding, and the
Company agrees to indemnify and hold Holding harmless from and against any and
all losses, costs, damages and expenses (including attorney's fees) which
Holding may incur by reason of any demand or action by any person arising out of
the negligence or intentional acts of the Company.
3.10 If Holding does not perform all of its duties and responsibilities
under this Agreement after written notice and a reasonable opportunity to
perform, the Company may adjust the compensation paid under Section 6 of this
Agreement, or other remittances to Holding, in order to restore the Company to
the position it would have occupied had Holding performed all of its duties and
responsibilities.
3.11 This Agreement is not exclusive. The Company reserves the right to
appoint agents in the territory covered by this Agreement for the purpose of
producing business other than the Covered Products and New Insurance Products.
Holding reserves, on behalf of its subsidiaries, the right of such subsidiaries
to appoint agents, including agents appointed with respect to the Covered
Products and New Insurance Products pursuant to this Agreement, for the purpose
of producing business for such subsidiaries.
SECTION 4 - PREMIUMS
4.1 All premiums received by Holding with respect to the Covered Products
and New Insurance Products, either before or after termination of this
Agreement, shall be held by Holding as trustee for the Company. Holding shall
have the authority to draw against said funds held for and on behalf of the
Company, but only for one or more of the following purposes:
a. Payment of return premiums;
b. Payment of policy claims and benefits; or
c. Payment of reinsurance premiums for any related reinsurance the Company
has obtained with respect to any of the Company's policies issued under this
Agreement.
4.2 Premiums temporarily held by Holding as trustee for the Company may be
invested by Holding in demand or time bank accounts as may be authorized by the
Minnesota Insurance Codes as legal bank investments for Life Insurance
Companies, until drawn on for one or more of the purposes set forth in Section
4.1. Holding shall promptly remit all premiums to the Company's reinsurer in
accordance with the terms of the Reinsurance Contract.
4.3 The Company hereby assigns to Holding all income derived from premiums
invested on behalf of the Company by Holding pursuant to the authority granted
herein.
4.4 The keeping of an account with Holding on the Company's books in the
form of a debtor-creditor account is to be deemed merely a record of business
transacted. Neither the keeping of an account in such form, nor the rendering of
same, nor failure to enforce prompt remittance, nor alteration in compensation
rate, nor compromise or settlement, shall be held to waive assertion of the
trust relationship as to premiums collected by Holding. It is further understood
and agreed that Holding is responsible for, and guarantees to the Company,
payment of all premiums on policies due and received on behalf of the Company
with respect to the Covered Products and the New Insurance Products. Should
Holding fail to pay the Company any such premiums received when due, Holding
agrees to bear any collection or other expense, including reasonable attorney's
fees and costs, expended by the Company to enforce collection from Holding.
SECTION 5 - OPERATION AND ACQUISITION EXPENSES
Holding shall be responsible for all operation and acquisition expenses
incurred in connection with the Covered Products and New Insurance Products
subject to this Agreement, including, by way of illustration and not of
limitation, such items as rentals, salaries, supplies not furnished by the
Company, postage, advertising, local license fees, attorney's fees, utilities,
cost of equipment, agents' fees or commissions and assessments or assignments,
if any, lawfully made by governmental authority, the sole liability of the
Company being payment of premium taxes and payment to Holding of the
compensation stipulated in Section 6 hereof.
SECTION 6 - COMPENSATION
6.1 The Company agrees to allow Holding a service fee equal to (a) the
reinsurance allowance or ceding commission (expressed as a percentage) allowed
the Company under the Reinsurance Contract, less 0.1%, multiplied by (b) the
amount of business to which such allowance or commission is applicable. Holding
shall be responsible for paying all commissions due agents appointed by the
Company with respect to business written by the Company and reinsured under the
Reinsurance Contract.
6.2 Holding agrees to reimburse the Company for premium taxes on all
business subject hereto.
6.3 If a policy reinsured under the Reinsurance Contract lapses at any
point in time during the first 13 months, Holding agrees to reimburse the
Company an amount equal to the excess, if any, of the total first year service
fee paid by the Company under Section 6.1 on that policy over the total first
year "initial" premium paid on that policy, as defined in the Reinsurance
Contract.
6.4 Holding will pay all payments assessed by the various state guaranty
associations based on the Covered Products business. The Company will reimburse
Holding for the Company's share of such assessments based on premiums retained,
net of reinsurance cessions to LifeUSA. The Company and Holding agree that
assessments will be sought to be recovered either through future premium tax
offsets or additional margins or inforce business.
SECTION 7 - REPORTS AND REMITTANCES
7.1 Within 10 days after the end of each month, Holding shall provide the
Company with a copy of the report LifeUSA sends the reinsurer under the
Reinsurance Agreement.
7.2 Within 10 days after the end of each month, Holding shall report the
net written premium hereunder for the month of account and remit the provision
for premium taxes as stipulated in Section 6.
SECTION 8 - STATUS OF HOLDING, ITS EMPLOYEES AND AGENTS
While performing its authorities granted herein, Holding shall be deemed an
independent contractor, as the Company reserves no authority or right to control
Holding's method of performance of its duties and responsibilities hereunder. No
employees of Holding shall be regarded as employees of the Company, except as
may be required by governing statutes.
SECTION 9 - EXAMINATION OF BOOKS AND RECORDS
Holding shall, as often as reasonably requested by the Company, submit all
books and records maintained by Holding pursuant hereto for examination and
review by any authorized representative of the Company and/or its quota share
reinsurers; and Holding shall in all things cooperate and render assistance in
such examination. Holding shall make copies of any such books and records and
furnish them to the Company as may be requested by the Company's
representatives.
SECTION 10 - OWNER OF POLICY FORMS, SUPPLIES AND LICENSES
All policy forms, records and supplies furnished by the Company to Holding,
as well as any policy forms or other supplies on which the Company's name
appears, whether supplied by the Company or not, shall be and remain the
property of the Company and shall be turned over to the Company promptly upon
demand. All licenses and other material relating to governmental licensing or
authorization of the Company with respect to this Agreement shall be and remain
the property of the Company and shall be turned over to the Company by Holding
promptly upon demand.
SECTION 11 - COMMENCEMENT AND TERMINATION
11.1 The effective date of commencement of this Agreement shall be January
1, 1997, and this Agreement shall continue for a minimum of one year and will be
subject to termination upon either party giving one year advance notice of
cancellation. In the event of the termination of this Agreement, the Company
shall not directly or indirectly (through reinsurance or otherwise) sell any
life or annuity products similar to the Covered Products or the New Insurance
Products during the one year following such termination.
In the event of a termination of this Agreement, Holding may not directly
or indirectly (through reinsurance or otherwise) sell any products similar to
products of the Company other than Covered Products during one year following
such termination.
11.2 If either party fails to perform substantially and materially the
duties and responsibilities set forth in this Agreement or fails to make
required payments hereunder and such failure continues for more than 30 days
after written notice delivered by the other party, the other party may terminate
this Agreement notwithstanding any other provisions to the contrary.
SECTION 12 - MISCELLANEOUS
12.1 This Agreement, and all rights and interests arising herefrom, shall
be binding upon, and shall inure to the benefit of, the parties hereto, their
representatives, successors and assigns; however, the authorities, duties and
responsibilities of either Holding or the Company may not be assigned by either
of such parties without the written consent of the other.
12.2 This Agreement may not be modified verbally, nor may it be modified by
any subsequent practice or course of dealing by the parties, or in any manner
other than in writing signed by the parties hereto. No forbearance or neglect on
the part of the Company to enforce any of the provisions of this Agreement shall
be construed as a waiver of any of its rights or privileges hereunder, unless in
each instance a written memorandum specifically expressing such waiver be made
and subscribed by the President or a Vice President of the Company. No such
waiver shall modify this Agreement or affect the rights of the Company with
respect to any subsequent default or failure or performance by Holding.
12.3 This Agreement shall be deemed to be a Minnesota contract and
construed in accordance with the laws of the State of Minnesota.
12.4 This Agreement supersedes all previous agreements with respect to the
subject matter herein, either oral or written, between the parties hereto.
IN WITNESS WHEREOF, the parties hereto by their respective duly authorized
representatives have executed this Agreement as of the dates undermentioned at:
Minneapolis, Minnesota, this 30th day of December, 1996.
/s/ Xxxx X. Xxxxxxxx
--------------------
Xxxx X. Xxxxxxxx, Vice President
ALLIANZ LIFE INSURANCE COMPANY
OF NORTH AMERICA
Minneapolis, Minnesota, this 30th day of December, 1996
/s/ Xxxx X. Xxxxxxxx
---------------------
Xxxx X. Xxxxxxxx,
Executive Vice President
LIFE USA HOLDING, INC.
SCHEDULE A
TO THE
ADMINISTRATION AND MARKETING AGREEMENT
BETWEEN
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
AND
LIFE USA HOLDING, INC.
The territory covered by this Agreement includes the following
jurisdictions:
All states* except: New York
No other jurisdiction shall be included in the territory covered without
the express written agreement of both parties.
*Life USA Holding, Inc. (and its affiliates) will not act as Allianz Life
Insurance Company of North America's general agent for insurance sales in the
State of Connecticut and will not perform duties nor have responsibilities
related thereto under this Agreement.
