Exhibit (3)(C)
MASTER DISTRIBUTION AGREEMENT
BETWEEN
MID-AMERICA PARTNERS, INC.
AND
UNITED INVESTORS LIFE INSURANCE COMPANY
MASTER DISTRIBUTION AGREEMENT
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THIS MASTER DISTRIBUTION AGREEMENT (the "Agreement") is made and entered
into this _____ day of _______________, 1998, by and between MID-AMERICA
PARTNERS, INC., a corporation organized under the laws of the State of Oklahoma
("Mid-America") and UNITED INVESTORS LIFE INSURANCE COMPANY, a corporation
organized under the laws of the State of Missouri ("United"):
WHEREAS, United is a life insurance company offering a variety of life and
annuity products and desires to obtain additional distribution of life and
annuity products through Mid-America;
WHEREAS, Mid-America has extensive experience in marketing insurance and
annuity products for non-captive distribution primarily through financial
institutions;
WHEREAS, United and Mid-America desire to join together to create
additional insurance and annuity product distribution;
WHEREAS, Mid-America owns, directly or indirectly, a licensed insurance
agency and a broker dealer, Mid-America Partners Investments, Inc. ("MAPI"),
that is registered with the Securities and Exchange Commission ("SEC") and is a
member of the National Association of Securities Dealers ("NASD");
NOW, THEREFORE, for and in consideration of the mutual covenants set forth
herein and Ten and No/100 Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto do hereby agree as follows:
A. TERM
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A.1 GENERAL. The contractual relationship established between the
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parties by this Agreement shall commence as of the date first above written
and shall continue thereafter until terminated in accordance with the terms
hereinafter set forth in Paragraph F.
B. MID-AMERICA'S OBLIGATIONS.
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B.1 SALE OF INSURANCE AND ANNUITY PRODUCTS. Mid-America hereby
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agrees to devote a sufficient and reasonable amount of time, expertise and
attention to the marketing and sale of Insurance Products, as hereinafter
defined in Paragraph C.1 ("Insurance Products") and to the development of
new business accounts for the Insurance Products in order to meet the
expectations of Xxxxxxxxx X.00. Xxx-Xxxxxxx shall, however, have the right
and authority to engage in sales activities with respect to insurance or
financial services products issued by third parties not affiliated with
United in such amounts and upon such terms as they shall determine, in
their sole discretion. Mid-America shall not be United's agent for any
products or services other than Insurance Products, nor shall it or its
Sales Agents (hereafter defined in Paragraph B.2) hold themselves out as
representing United with respect to such other products or services.
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B.2 MARKETING ORGANIZATION. Mid-American shall be fully responsible
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for all phases of the marketing and distribution of the Insurance Products
including, but not limited to: training, licensing and supervision of its
Sales Agents, designing and developing sales and promotional materials and
advertising and public relations, as well as soliciting and procuring
applications for the Insurance Products. Mid-America shall have sole and
exclusive responsibility to develop, maintain and own the customer base,
subject only to the terms of this Agreement. ("Customer base" shall mean
the policyholder list referred to in Paragraph C.7., consisting of clients
of United who became clients solely through the efforts of Mid-America, and
who were not previously clients of United.) Mid-America shall hold United
harmless from all loss, expense, cost and liability resulting from
unauthorized, unlawful or tortious acts or transactions by it, its
employees, or the members of its Sales Force. Sales representatives under
independent contractor or employment relationships with Mid-America are
herein sometimes called "Sales Agents" or "Agents" and the Sales Agents and
their broker/dealers are herein sometimes referred to as a "Sales Force."
Mid-America shall be responsible for its Sales Force and their acts
committed while they have a relationship with Mid-America.
B.3 DUTIES, PROCEDURES SCOPE OF AUTHORITY. The parties will have
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the following rights and obligations with respect to the appointment of
Sales Agents, the marketing and sales of Insurance Products and the
issuance of Insurance Products:
(i) Mid-America shall refer qualified individuals for
appointment by United as Sales Agents and shall be responsible for
completing all forms necessary for United to process such
appointments. However, United shall have the absolute right, in the
exercise of its reasonable discretion, to accept or reject any Sales
Agent recommended for appointment by Mid-America.
(ii) Mid-America shall maintain proper records and accounts of
business transacted on behalf of United and shall make such records
and accounts available for review and inspection by United or its
representatives upon reasonable notice during regular business hours.
Mid-America shall be responsible for promptly remitting to United, for
credit against the proper accounts, any and all monies received by
Mid-America or its Sales Force as payment of any premium, and until
such monies are remitted, hold them in trust for the benefit of United
in separate accounts, not commingled with other funds except to the
extent that commissions earned by Mid-America are netted from premiums
paid to United under an arrangement mutually acceptable to both
parties.
(iii) Mid-America is not authorized to, and shall not, without
the written consent and authorization of United: alter, modify, waive
or change any of the terms, rates, or product conditions or
descriptions contained in any Insurance Product or documents relating
thereto; insert any advertisement with respect to United in any
publication; collect, or authorize its Sales Force to collect, any
premiums or payments on behalf of United except the initial premiums;
or bind United on any application for an Insurance Product. Mid-
America shall provide United with copies of all materials intended for
use with the public or Sales Force that bears United's name and shall
obtain prior written approval from United before use of such material.
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(iv) In Accordance with standard underwriting procedures, United
reserves the right to disapprove or reject any application for an
Insurance Product submitted to it by Mid-America, to limit or restrict
the amount or plan of any Insurance Product it shall issue, and to
cancel or rescind any existing Insurance Product, all in the exercise
of its sole discretion. This grant of discretion shall not apply to
fixed or variable annuities except as the parties may specifically
agree.
B.4 CONFIDENTIALITY; INTELLECTUAL PROPERTY. Mid-America acknowledges
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that any preferences and methods of operation, management information
reports, pricing and commission policies and details, details of contracts,
operational methods, plans or strategies, business acquisitions plans, and
other business affairs of United and any of its affiliates which United
designates as "confidential" in writing (the "United Confidential
Materials") are and shall be treated as confidential. However,
notwithstanding a "Confidential" designation by United, information or
material which is a matter of public record or which is generally known in
the insurance industry shall not be deemed United Confidential Material for
the purpose of this Agreement. Mid-America further acknowledges United's
exclusive rights to its corporate name and any other names (collectively,
the "United Marks") and any other intellectual property rights on tangible
or intangible assets developed by United for use in connection with or
applicable to the business of United, including all common law rights and
statutory registrations in any of same. Mid-America shall not acquire nor
represent that it has acquired ownership rights in any United Xxxx and
shall refrain from any intentional conduct which might be detrimental to or
reflect adversely upon the name or reputation of United or any companies
with which it is affiliated through ownership. Mid-America agrees that it
shall keep such information and materials confidential and retain them in
strictest confidence both during and after the term of this Agreement. Mid-
America shall be liable to United for damages caused by any breach of this
provision or by any unauthorized disclosure or use of United Confidential
Materials or the United Marks by its officers and employees or third
parties to whom unauthorized disclosure was made. Notwithstanding any other
provision of this Agreement to the contrary, United shall be entitled to
appropriate injunctive relief against Mid-America to prevent unauthorized
disclosure or use of such United Confidential Materials or United Marks.
Mid-America acknowledges and agrees that such unauthorized disclosure or
use or other breach of this provision will cause irreparable injury to
United and that money damages are inadequate. Mid-America shall return to
United all United Confidential Materials and all copies thereof immediately
upon the termination of this Agreement. The terms of this Paragraph B.4
shall survive the termination of this Agreement.
B.5 COMPLIANCE WITH LAW. Mid-America agrees to use its best efforts
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to comply and to cause its Sales Force to comply with all applicable
federal, state or local laws or regulations that apply to its business
operations including maintaining all federal, state or local licenses or
permits required by law and necessary in its corporate status. Mid-America
further agrees to submit its sales and marketing materials to United for
the purpose of its independent review of such materials as to compliance
with all applicable rules and regulations and policy provisions, and shall
not use such materials without prior written consent from United.
B.6 GOOD FAITH. Mid-America agrees to act in good faith and in a
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commercially reasonable manner in connection with its obligations under
this Agreement. Further, Mid-America agrees to instruct its Sales Force to
act in the same manner.
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B.7 MANAGER DUE DILIGENCE. Mid-America shall be the primary contact
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for the various investment firms or money managers (the "Managers")
selected to participate in the Insurance Products. Mid-America shall
consult with United on the performance and business operations of the
Managers from time to time. Following such consultation, Mid-America may
instruct United to delete or add a Manager or portfolio and United agrees
to use its best efforts to follow such instructions with reasonable
dispatch as permitted by applicable law, regulations and governing
contracts that are approved by Mid-America, and by the capabilities of
United or any third-party administrator ("TPA") of the Insurance Products.
B.8 FAILURE TO FULFILL OBLIGATIONS. Mid-America acknowledges that
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its failure to substantially comply with its material obligations as set
forth under this Paragraph B shall constitute a default under this
Agreement.
C. UNITED'S OBLIGATIONS.
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C.1 INSURANCE PRODUCTS. "Insurance Products" shall mean the
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insurance and annuity products set forth in Exhibit A which the parties
may by mutual agreement amend from time to time. "RetireMAP" as used in
this Agreement shall mean the RetireMAP variable annuity issued by United.
With regard to those Insurance Products listed in Exhibit A, United shall
use its best efforts to qualify such products in all states requested by
Mid-America. United agrees to work and counsel with Mid-America as to the
form and content of Insurance Products, industry trends, regulatory
developments and United's experience.
C.2 COMMISSIONS, ADVANCES, CHARGEBACKS. United agrees to pay or
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cause commissions to be paid to Mid-America directly or in that manner
reasonably requested by Mid-America and approved by United with respect to
the "Insurance Products" in the amounts and in the manner set forth on the
Exhibit B. Commissions and Chargebacks of Commissions shall occur in
accordance with Exhibit B, which is attached hereto and made a part hereof.
United may offset any monies that become due from Mid-America from time to
time hereunder, and these debts shall be a first lien against the monies
that become due to Mid-America from time to time under this Agreement. If
Mid-America or its Sales Force receive any payment, commission or other
compensation to which they are not entitled, the same shall be a debt
payable by Mid-America to United upon demand. United shall provide Mid-
America with an accounting of all commissions on a monthly basis and shall
allow Mid-America reasonable access to its books and records to the extent
necessary to verify the amount properly due and payable to Mid-America
under this paragraph.
C.3 COMPLIANCE WITH LAW. United agrees to use its best efforts to
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comply with all applicable federal, state or local laws or regulations that
apply to their business operations including maintaining all federal, state
or local licenses or permits required by law and necessary in carrying out
the provisions of this Agreement and in maintaining their corporate status.
C.4 GOOD FAITH. United agrees to act in good faith and in a
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commercially reasonable manner in connection with its obligations under
this Agreement.
C.5 FAILURE TO FULFILL OBLIGATIONS. United acknowledges that its
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failure to substantially comply with its material obligations as set forth
under this Paragraph C shall constitute a default under this Agreement.
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C.6 TRADE SECRETS AND CONFIDENTIALITY. United acknowledges that
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any preferences and methods of operation, management information reports,
pricing and commission policies and details, details of contracts,
operational methods, plans or strategies, business acquisitions plans, and
other business affairs of Mid-America and any of its affiliates which Mid-
America designates as "confidential" in writing (the "Mid-America
Confidential Materials") are and shall be treated as confidential. However,
notwithstanding a "Confidential" designation by Mid-America, information or
material which is a matter of public record or which is generally known in
the insurance industry shall not be deemed Mid-America Confidential
Material for the purpose of this Agreement. United further acknowledges
Mid-America's exclusive rights to its corporate names and any other names
including, without limitation, the name, "RetireMAP", (collectively, the
"Mid-America Marks") and any other intellectual property rights on tangible
or intangible assets developed by Mid-America for use in connection with or
applicable to the business of Mid-America, including all common law rights
and statutory registrations in any of same. United shall not acquire nor
represent that it has acquired ownership rights in any Mid-America Xxxx and
shall refrain from any intentional conduct which might be detrimental to or
reflect adversely upon the name or reputation of Mid-America or any
companies with which they are affiliated through ownership. United agrees
that it shall keep such information and materials confidential and retain
them in strictest confidence both during and after the term of this
Agreement. United shall be liable to Mid-America for damages caused by any
breach of this provision or by an unauthorized disclosure or use of Mid-
America Confidential Materials or the Mid-America Marks by its officers and
employees or third parties to whom unauthorized disclosure was made.
Notwithstanding any other provision of this agreement to the contrary, Mid-
America shall be entitled to appropriate injunctive relief against United
to prevent unauthorized disclosure or use of such Mid-America Confidential
Materials or Mid-America Marks. United acknowledges and agrees that such
unauthorized disclosure or use or other breach of this provision will cause
irreparable injury to Mid-America and that money damages are inadequate.
United shall return copies thereof immediately upon the termination of this
Agreement. The terms of this Paragraph C.6 shall survive the termination of
this Agreement.
C.7 CONFIDENTIALITY; COVENANT AGAINST REPLACEMENT. It is
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contemplated that United will have a policyholder list (the United
Policyholder List) from applications submitted by Mid-America and its Sales
Force. Mid-America shall have priority rights to the United Policyholder
list and may use it for purposes other than replacement and United will not
use the United Policyholder List for any purpose not required in the
performance of this Agreement or its obligations under the policies. In
particular, and without limiting the generality of the foregoing, United
will not make all or any portion of the United Policyholder List available
to any of its other agents or otherwise use or permit same to be used for
the purpose of solicitation of insurance or other products. Moreover,
neither United or Mid-America will use the relationship or opportunities
created by this Agreement or any information obtained pursuant hereto to
replace an Insurance Product during the term of this Agreement or after its
termination. Except as specifically noted below, replacement of Insurance
Products by either party is strictly prohibited unless the transaction was
initiated by the customer. This prohibition shall survive the termination
of this Agreement. Except as specifically provided herein, an isolated
replacement of an Insurance Product by an agent of either party
unaccompanied by any purposeful or organized effort or breach of the
foregoing covenant on the part of United or Mid-America (as the case may
be) shall not be a violation of this covenant.
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C.8 ADMINISTRATION OF INSURANCE PRODUCTS. Although United may out-
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source some or all administration of the Insurance Products to TPA's, it
shall use its best efforts to cause such TPA's to be bound by
confidentiality restrictions regarding the Mid-America Confidential
Materials and the United Policyholder List identical to those restrictions
set forth in this Agreement. Additionally, United shall use its best
efforts to provide, or cause to be provided, through one or more TPA's,
responsive, courteous and professional policyholder administration and
accounting service to Mid-America, its employees, agents, contracted firms,
independent agents or contractors and customers. In order that Mid-America
may have access to transactions and customer account values as required to
service RetireMAP business in the financial services market, United shall,
on and after August 17, 1998, provide daily electronic transmissions of
such data in a format and by a process that the parties hereto may agree to
from time to time as commercially feasible and appropriate. In addition,
United shall, on and after August 17, 1998, provide 1-800 service, and the
capability to receive daily net wires of deposits from Mid-America and its
broker/dealers. The 1-800 service shall permit policyowners and agents to
call toll free to obtain account values or talk to a customer service
representative. (The August 17, 1998 date listed above may be changed to
any possible earlier date agreed to by the parties.)
C.9 MARKETING SUPPORT. United agrees to provide the following
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marketing support to Mid-America:
(i) A booth or table top display with a lighted header board
for use at conventions and similar marketing functions that are
attended by RetireMAP variable annuity wholesalers.
(ii) An advertising allowance of:
$30,000 during 1998;
$50,000 during 1999;
$50,000 during 2000; and if Mid-America produces $100
million or more in annual annuity deposits for RetireMAP in 2000,
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United shall provide an advertising allowance equal to .05% of
RetireMAP deposits in the year 2001. For each year after 2000, if
Mid-America produces $100 million or more in annual RetireMAP annuity
deposits, United shall provide an advertising allowance of .05% of
RetireMAP deposits received in the preceding year. If Mid-America
produces less than $100 million in such deposits for any year after
2000, United shall provide no advertising allowance for the following
year.
(iii) Provide awards to sales agents according to the following
guidelines:
First Sale: A $15 - $20 Item.
Reach Total Variable Annuity deposits of $100,000 - A $20-
$25 Item.
Reach Total Variable Annuity deposits of $500,000 - A $30-
$35 Item.
Reach Total Variable Annuity deposits of $1,000,000 - A
$40 -$50 Item.
(iv) Print, bind and distribute by mail the RetireMAP sales
brochure, appropriate inserts and related RetireMAP sales material
agreed
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to by the parties hereto.
(v) Make a mailing of up to four items during each 12 month
period to Sales Force promoting RetireMAP and providing sales ideas.
(vi) Assist with RetireMAP promotions for each bank as follows:
a. When a bank is signed up.
b. During the 12 month period following a bank's first
promotion.
c. During the 12 month period following a bank's second
promotion.
United's assistance will consist of reimbursing Mid-America
for 50% of the costs associated with each of the three RetireMAP
promotions described above. The maximum reimbursement by United per
promotion per bank shall be $7,500.00. In order for a promotion
described in C, above, to qualify for reimbursement, the bank must be
on target to produce $12 million of RetireMAP deposits for the
calendar year.
C.10 GENERAL SUPPORT. Mid-America agrees to use its best efforts to
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obtain the sales goals of Paragraph D. United agrees to use its best
efforts to provide administration for the Insurance Products sold by Mid-
America in a professional manner according to industry standards.
C.11 While the final determination of credited interest rates for the
RetireMAP fixed account is to be decided by United, Mid-America and United
shall discuss such credited interest rates on a regular basis.
D. COMPENSATION, EXCLUSION AND REMEDIES.
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D.1 GENERAL. The commission schedule for sale of the Insurance
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Products by Mid-America is attached as Exhibit B (including the "General
Rules Regarding Commissions"). Exhibit B also sets forth the available
methods of payment to Mid-America.
D.2 EXCLUSIVE.
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(i) United agrees that prior to June 30, 2002, it will not
distribute an annuity product or a life insurance product through
banks, savings and loans or credit unions, except through Mid-America
unless Mid-America provides its written consent to a specific United
proposal for such other bank distribution. (The preceding sentence
shall be referred to hereinafter as the "exclusive".) Further,
United agrees that during the term of this Agreement that it will not
distribute a multi-manager variable annuity or other product that
includes any of the RetireMAP fund managers, or any other product
developed jointly by United and Mid-America, without the written
consent of Mid-America. If Mid-America designs or develops a new
product feature that is not available in the industry, United will not
use such feature without the consent and participation of Mid-America
unless and until such feature becomes generally available in the
industry. Notwithstanding anything above to the contrary, the
RetireMAP Variable Annuity listed in Exhibit A shall be for the
exclusive use of Mid-America.
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(ii) The above exclusive, by product, will continue for the 12
month period beginning July 1, 2002 provided that:
a. Mid-America production of RetireMAP deposits is at
least $100 million during the 12 month period beginning July 1,
2001.
b. Mid-America sales of United life insurance produces at
least $1.0 million of first year annualized premium during the 12
month period beginning July 1, 2001.
(iii) a. Mid-America production of RetireMAP deposits in excess
of $50 million in 1998, 1999, and 2000 may be used to help satisfy
production requirements in either 2002, 2003, or 2004.
b. Mid-America sales (first year annualized premium) of
United's life insurance in excess of $500,000 in 1998 may be used
to help satisfy production requirements in either 2002, 2003, or
2004.
(iv) This exclusive, by product, will continue each calendar
year after year 2002 provided that:
a. Mid-America production of RetireMAP deposits is at
least $100 million during calendar year 2002 and each calendar
year thereafter;
b. Mid-America sales (first year annualized premium) of
United life insurance is at least $500,000 during calendar year
2002 and each calendar year thereafter.
(v) If either condition listed above in subsection D.(i) or
(ii) is not met, then the exclusive for the respective product will
terminate permanently.
D.3 REMEDIES UPON DEFAULT. If either United or Mid-America shall
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default under this Agreement (see subparagraphs B.8., C.5., and C10) the
following remedies, in addition to other remedies expressed in this
Agreement, shall be available to the extent permitted by law:
(i) Remedy available to Mid-America: Purchase the assets in the
Insurance Products for the fair market value of United's interest
therein.
(ii) Remedy available to United: Purchase the ownership of the
United Policyholder list (see subparagraph C.7.) for the fair market
value of Mid-America's interest therein.
In the event that either of the remedies provided in this
Paragraph D.3 shall be implemented, each party hereto agrees to use
their best efforts to make certain there is no disruption in sales and
service. In the event that the parties cannot mutually agree on the
respective fair market values required above, the determination shall
be made by arbitration under Paragraph H below.
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E. REPRESENTATIONS AND WARRANTIES.
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E.1 AUTHORITY TO EXECUTE; DUE ORGANIZATION. Each of the parties
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hereto represents and warrants that:
(i) it is a corporation validly formed and existing under the
laws of its state of incorporation, and in good standing under all
required jurisdictions in which it is presently engaging in business
and that it has all necessary power and authority to execute and
deliver this Agreement and to carry out its obligations hereunder;
(ii) that this Agreement constitutes the valid and legally
binding obligation of such party and is enforceable against each of
them in accordance with its terms, except as may be limited by
bankruptcy, reorganization, insolvency, and similar laws of general
application relating to or affecting the enforcement of rights of
creditors; and
(iii) the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby does not and
shall not result in or constitute a default, breach or violation of
any agreement, contract or instrument to which it or any of its
officers, directors, employees or shareholders is or has been a party
or by which any of them may be bound or a violation of any statute,
ordinance, judgment, order, decree, regulation or rule of any court,
or governmental authority applicable or relating to its or their
business.
E.2 MID-AMERICA INDEMNIFICATION. With respect to matters arising
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under this Agreement, Mid-America hereby agrees to indemnify and hold
harmless United, its affiliates, and its respective officers, directors,
employees and agents, against and in respect of:
(i) any and all damages or liabilities that result from the
inaccuracy or breach of any warranty made by Mid-America or resulting
from non-fulfillment of any covenant by Mid-America; and
(ii) any and all actions, suits, proceedings, demands,
assessments, judgments, costs and expenses, including, without
limitation, reasonable attorney's fees, incident to the foregoing.
(iii) Except as provided in Paragraph B.2., punitive or extra
contractual damages are excluded from coverage hereunder.
E.3 UNITED'S INDEMNIFICATION. With respect to matters arising
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under this Agreement, United hereby agrees to indemnify and hold harmless
Mid-America, its affiliates, and its respective officers, directors,
employees and agents, against and in respect of:
(i) any and all damages or liabilities that result from the
inaccuracy or breach of any warranty made by United; and
(ii) any and all actions, suits, proceedings, demands,
assessments, judgments, costs and expenses, including, without
limitation, reasonable attorney's fees, incident to the foregoing.
(iii) Punitive or extra contractual damages are excluded from
coverage hereunder.
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F. TERMINATION.
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F.1 INSOLVENCY. Either United or Mid-America may terminate this
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Agreement upon the institution of insolvency, bankruptcy or similar
proceedings by or against Mid-America or United, respectively, any
assignment or attempted assignment by Mid-America or United, respectively,
for the benefit of creditors, or any appointment, or application for such
appointment, of a receiver for Mid-America or United, respectively, if such
proceeding is not dismissed within 120 days after filing, or if such
creditor assignment or receivership is not reversed within 90 days after
written notice and demand by the non-defaulting party.
F.2. UNCURED DEFAULT. It is the intention of the parties that this
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Agreement may be terminated only for just cause in strict accordance with
the provisions contained herein regarding the respective parties' right to
written notice of a claimed default and the opportunity to cure same. In
the event either party defaults under this Agreement (see subparagraphs
B.8, C.5, and C.10.) in any material respect, the party adversely affected
by such non-performance (the "Non-Defaulting Party") shall provide written
notice to the non-performing party (the "Defaulting Party"), which notice
shall set forth, with reasonable specificity, the facts providing the basis
for the default. Upon receipt of such notice, the Defaulting Party shall
have a period of ninety (90) days to cure such default, unless such default
is of a nature were it is impossible or impractical to cure such default
within such 90 day time period, in which case, the Defaulting party shall
commence to cure such default within the 90 day period and proceed with
reasonable diligence to prosecute such efforts to conclusion. In the event
of such cure within 90 day time period or the commencement of such cure
efforts, the parties shall be restored to their original positions as if
such default had not occurred. If, however, the Defaulting Party fails or
is unable to cure or commence to cure the default as set forth herein, the
Non-Defaulting Party may, by an additional written notice to the Defaulting
Party, terminate this Agreement, with such termination to be effective
thirty (30) days after the date of such second notice letter.
F.3 EFFECT OF TERMINATION. Upon termination of this Agreement in
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accordance with this Paragraph F, neither party, except as otherwise
specified in this Agreement, shall have any further rights or obligations
in respect of each other; provided, however, that any such termination
shall be without prejudice to the rights and obligations of the parties in
respect of any sums of money due or becoming due to a party up through the
date of such termination, nor shall it affect the rights of the parties
with respect to the service fees earned and payable hereunder even though
such amounts may be payable after termination. Anything herein to the
contrary notwithstanding, the parties' obligations under Paragraphs B.4 and
C.6 regarding Confidentiality and Intellectual Property; C.7 regarding
Confidentiality and Replacement; under Paragraphs E.2, E.3 and F.4; and
Exhibit B regarding trail commissions and asset based fees shall survive
the termination of this Agreement. United shall continue to provide the
same level of service for policies in force at the date of termination.
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F.4 RETURN OF SUPPLIES. Immediately upon termination of this
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Agreement, Mid-America shall return to United any application forms or
other forms or supplies which United has previously furnished to Mid-
America pursuant to this Agreement and United shall return to Mid-America
all forms and supplies provided to United by Mid-America.
G. MISCELLANEOUS.
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G.1 ASSIGNMENT. This Agreement may not be assigned by any of the
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parties hereto without the prior written reasonable consent of the others.
Any merger, consolidation or reorganization of United or Mid-America or
sale by Mid-America where D. Xxxx Xxxxxxxxx retains a significant financial
interest shall not be deemed an assignment requiring approval of the other
party.
G.2 RELATIONSHIP OF PARTIES. Nothing contained herein shall be
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construed to create the relationship of employer and employee between
United and Mid-America or any member of its sales force. Mid-America is
acting as an independent contractor only and not as an employee, or
associate of United. Mid-America may exercise its own judgment as to the
time and manner of performance of its services.
G.3 NOTICES. Any notice or other communication required or which
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may be given pursuant to this Agreement shall be in writing, addressed to
the President of each party, and shall be delivered personally or sent by
facsimile with a copy sent contemporaneously by mail, or sent by certified
or registered, return receipt requested, or express mail, postage prepaid,
to the relevant address as set forth below or such other address as may be
designated from time to time by a party hereto and delivered to the other
parties. Any such notice or communication shall be deemed given when so
delivered personally, sent by facsimile, or if mailed, on the earlier of
the date of receipt or two (2) days after the date of mailing.
If to United: United Investors Life Insurance Company
Attn: Xx. Xxxxx Xxxxxxxx
President
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
If to Mid-America: Mid-America Partners, Inc.
Attn: Mr. D. Xxxx Xxxxxxxxx
President
0000 Xxxxx Xxx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
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G.4 WAIVERS AND AMENDMENTS. Any term or provision of this
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Agreement may be waived at any time by the party that is entitled to the
benefits thereof, and any term or provision of this Agreement may be
amended or supplemented at any time by the mutual written consent of Mid-
America and United, except that any waiver of any term or condition, or any
amendment, modification or supplementation, of this Agreement must be in
writing and signed by the parties. A waiver of any breach or failure to
enforce any of the terms or conditions of this Agreement shall not in any
way affect, limit or waive a party's rights hereunder at any time to
enforce strict compliance thereafter with every term or condition of this
Agreement.
G.5 ENTIRE AGREEMENT. This Agreement contains the entire
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understanding of the parties and supersedes or merges all prior and
contemporaneous agreements and discussions between the parties. Any and
all representations or agreements by any agent or representative of any
party not contained in this Agreement shall be null, void, and of no
effect. This Agreement may not be amended, modified or changed in any way,
except by an instrument in writing, signed by all parties.
G.6 CONSTRUCTION. If any one or more of the provisions contained
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herein for any reason are held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not
affect any other provision hereof, and this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had never been
contained herein.
G.7 EXECUTION OF AGREEMENT. This Agreement may be executed in one
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or more counterparts, each of which shall constitute an original but all
together of which shall constitute a single original.
G.8 HEADINGS. All headings in this Agreement are for convenience
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only, are not a part of this Agreement and shall not be used as an aid in
the construction of any provision hereof.
G.9 NUMBER AND GENDER. As used herein, the singular and plural
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each includes the other, and this Agreement shall be read accordingly when
required by the facts.
G.10 GOVERNING LAW. This Agreement shall be governed by the laws of
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the State of Oklahoma.
H. ARBITRATION.
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H. 1 It is anticipated that any disagreements which may arise between
the parties will be resolved by good faith negotiations. If the parties do
not reach a resolution of any such disputed matter(s) within 60 days of the
first notice of disagreement, then upon written notice by either party to
the other, all disputes, claims, questions and controversies of any kind or
nature, subject to the following limitation, arising out of, or relating in
any way to this agreement shall be submitted to non-binding arbitration.
(The parties may mutually agree to exclude any specific dispute from such
arbitration requirement.)
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H.2 ARBITRATION PROCEDURES.
----------------------
(i) A party desiring arbitration of a specific issue shall
make a written demand on the other party stating, with specificity,
the issue and the claimant's position with respect to that issue.
Within 20 days of receipt of such demand, the party against which the
demand is made shall respond in writing indicating the reasons for its
disagreement with the position of the claiming party. Within 10 days
of the responding party's response, each of the parties shall
designate an arbitrator by written notice to the other party. Within
10 days after designation of each party's arbitrator, the two
arbitrators shall agree upon and select an umpire to act as a third
member of the arbitration panel and the two arbitrators shall jointly
advise each of the parties, in writing, of their selection. Either
party may object to the arbitrators' selection of the umpire by
sending a notice in writing to the arbitrators and the other party
within 15 days of receipt of notice of the umpire selected by the
arbitrators.
(ii) If either party fails to name its arbitrator, or if an
umpire cannot be selected, either party may petition the American
Arbitration Association and such arbitrator or umpire shall be
selected at the earliest practicable time pursuant to the rules and
regulations of the American Arbitration Association.
(iii) The arbitrators and umpires shall all be present or prior
officers of insurance or financial services companies, as applicable
to the dispute, and shall not have any direct nor indirect interest in
either party or either party's affiliates.
(iv) The parties shall submit written argument to the
arbitration panel within 20 days following the appointment of the last
member of the panel. The panel shall decide whether the circumstances
of a particular dispute require a hearing. In the event of a hearing,
it shall be scheduled within 30 days after the appointment of the last
member of the arbitration panel. If the panel decides that a hearing
is not necessary, the panel shall proceed to make a determination
based upon the written arguments received from the parties.
(v) The decision of the arbitration panel shall be made
within 30 days after the hearing or receipt of the last written
argument, as the case may be. Decisions of the arbitration panel shall
be made by majority vote, shall be made in writing, shall include the
panel's findings of fact, and shall be delivered to both parties and
each member of the arbitration panel. The panel shall make its
decision with regard to the custom and usage of the insurance
business. The panel shall make its decision based upon evidence
introduced at the hearing, or by other means of submitting evidence,
in which strict rules of evidence need not be followed, but in which
cross examination and rebuttal shall be allowed if requested. Such
decisions shall be non-binding.
(vi) Each party shall bear the fees and costs of its own
arbitrator and the two parties shall share equally in the expenses of
the umpire; provided, however, that the reasonable fees and costs of
the arbitration panel may be awarded to one party or the other as part
of the ruling of the arbitration panel. The fees of the arbitrators
and the umpire shall be set forth in the notice pursuant to which each
of the members of the panel is named.
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IN WITNESS WHEREOF, the parties have affixed their hands and seals as of
the date first above written.
MID-AMERICA PARTNERS, INC., an Oklahoma
corporation
By:_______________________________________________________
Name:_________________________________________________
Title:________________________________________________
UNITED INVESTORS LIFE INSURANCE COMPANY,
a Missouri corporation
By:_______________________________________________________
Name:_________________________________________________
Title:________________________________________________
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EXHIBIT A
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Insurance Products:
RetireMAP Variable Annuity
Select Term 10 and 20 Year Products
Such other products as the parties may from time to time agree should be
added.
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EXHIBIT B
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COMMISSION SCHEDULE: United will allow Mid-America the commissions and
-------------------
compensation specified below and Mid-America agrees to accept such commissions
and compensation as payment in full for all services performed and all expenses
incurred, except for specific items of reimbursement mentioned elsewhere in this
schedule or the Agreement to which it is attached. Commissions are based on life
insurance premium and annuity consideration received by United.
The parties hereto may mutually agree to change the commissions and
compensation for RetireMAP and if so, sales after the date of any such agreed on
change shall be governed by the amended Exhibit B.
With regard to life insurance products, other than variable annuities,
United may at any time and from time to time modify this Commission Schedule by
adding or deleting policy forms and changing the commission rates applicable to
its policy forms. Any such modification or change shall be effective thirty
(30) days after written notice thereof is deposited in the United States mail,
postage pre-paid, addressed to the last known address of Mid-America and shall
apply only with regard to policies applied for after the effective date of such
notice.
RETIREMAP VARIABLE ANNUITY
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. Commission on all deposits received:
7.250% To Issue Age 80
4.500% For Issue Ages 81 - 85
Trail commissions (i.e., a commission on a policy by policy
basis, paid at an annualized rate of .25% of the mean contract
value during the quarter) may be elected and when elected,
commissions are reduced from 7.250% to 6.250% and from 4.500% to
3.500%. Trail commissions are .25% and shall be paid quarterly,
following the fifteenth month after the policy issue date.
. Asset Based Fees (Paid quarterly on average assets as defined below):
Policy Years 1 - 6: 0%
Policy Years 7 & Later: .4% annually, paid quarterly by calendar
quarter
. Bonus (Paid quarterly on average assets as defined below):
Policy Years 1 - 6: 0%
Policy Years 7 and later: .1% annually, paid quarterly by calendar
quarter
Bonus determination: Each calendar year, beginning January 1, 2004, that
Mid-America produces $150 million of RetireMAP deposits, Mid-America will
receive the Bonus outlined above. The Bonus shall be paid quarterly by
calendar quarter as long as Mid-America has produced an average of $37.5
million in annuity deposits per calendar quarter during the year under
review. The asset based fees and the bonus shall be based on the average
assets attributable to RetireMAP Variable Annuities which have reached
their sixth policy anniversaries. Average assets shall be defined as the
mean of assets at the end of the calendar quarter under review and the end
of the previous calendar quarter.
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SELECT TERM PRODUCTS
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1st Policy 2nd - 10th
Year Policy Years
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. Select 10 & 20
Band 1 (Face Amount of: $100,000 - $249,999) 80% 5%
Band 2 (Face Amount of: $250,000 - $499,999) 80% 5%
Band 3 (Face Amount of: $500,000 - $999,000) 60% 5%
Band 4 (Face Amount of: $1,000,000 & Above) 50% 4%
. First Year Commissions are payable on the original issue date and at each re-
entry ("reentry" shall mean the ability of an insured to exchange, with such
evidence of insurability as United may require, an existing Select policy to a
new Select policy as provided in such policy form.).
. For purposes of renewal commission, "Policy Years" are measured from the date
of original issue.
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EXHIBIT B (CONTINUED)
GENERAL RULES REGARDING COMMISSIONS
-----------------------------------
1. ALL PRODUCTS
A. When the COMPANY charges a temporary flat extra premium, no commission
is payable on the extra premium charged. Commissions on the extra
premium charged for other substandard risks shall be as shown above.
B. Commission rates are not applicable to the policy fee or to premiums
paid by automatic policy loan unless otherwise stated in the
commission schedule.
C. Commissions are based on premiums received by the COMPANY and are not
payable until the policy has been issued, delivered and accepted by
the applicant.
D. Commissions are payable twice a month.
2. CHARGEBACKS
A. Should UNITED INVESTORS LIFE, for any reason, refund any life premium
or portion thereof (not applicable to RetireMAP or other variable
annuity developed jointly by United and Mid-America), all commissions
paid or credited on the amount refunded shall be immediately due and
payable to the COMPANY.
B. Chargebacks of commissions paid or credited on RetireMAP shall be
limited to cancellations of applications, and policy cancellations
either due to "not takens" (i.e., refusal of an applicant to accept a
contract) or due to misrepresentations by a Sales Agent, whether
intentional, negligent or innocent. United shall make such chargebacks
within 45 days of receipt of a validated request for an application
cancellation or policy cancellation.
3. COMPANY RULES REGARDING SELECT SERIES:
Upon re-entry, first year commissions are not payable on any riders. If
you are licensed with UNITED INVESTORS LIFE and provide such service and
assistance as the COMPANY may require, each time an insured re-enters on
the Select Series, you are entitled to receive first year commissions as
set forth above in this Exhibit B.
4. REPLACEMENT OF AN EXISTING COMPANY POLICY:
A. Replacement occurs when an existing UIL policy or rider terminates as
the result of a new UIL policy or rider being issued, in a transaction
other than one which meets the definition of conversion.
B. Replacement is presumed when an existing policy or rider is lapsed six
months before or six months after the date of issue of the new policy
or rider.
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C. Unless otherwise provided, if the face amount of the new policy or
rider is less than the face amount of the replaced policy or rider,
only renewal commissions on the new policy are payable. When the face
amount of the new policy or rider is equal to or greater than the face
amount of the replaced policy or rider, an adjusted first year
commission is payable. The adjusted first year commission is
determined by subtracting the first year commission paid on the
replaced policy or rider from the first year commission otherwise
payable on the new policy or rider.
5. CONVERSIONS:
A. Conversion is a transaction pursuant to a contractual right contained
in a UIL term policy whereby the term policy is converted without
evidence of insurability to any "level premium whole life plan" for an
amount of insurance not greater than the amount of the term policy.
B. Full first year commissions will be paid on conversions that meet both
of the following conditions:
(1) The policy being converted has paid at least the 12th month
premium, and
(2) The premium on the new policy exceeds the premium on the existing
policy.
C. On all other conversions, only renewal commissions on the new policy
are payable.
6. OPTION TO SUSPEND PREMIUM PAYMENTS (IF APPLICABLE):
When a policyholder elects the option to suspend premium payments, no
commission or service fee is payable while such option is in force.
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