Principal Underwriting Agreement
AMENDED AND RESTATED PRINCIPAL UNDERWRITING AGREEMENT
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This AGREEMENT dated January ___, 2000 by and between United Investors Life
Insurance Company ("United Investors"), a Missouri corporation, on its own
behalf and on behalf of United Investors Life Variable Account, United Investors
Annuity Variable Account and United Investors Universal Life Variable Account
(together with all future variable accounts created by United Investors for
products to be sold by Xxxxxxx & Xxxx hereunder, collectively referred to herein
as the "Variable Accounts"), and Xxxxxxx & Xxxx, Inc. ("W&R"), a Delaware
corporation;
WITNESSETH:
WHEREAS, existing Variable Accounts are segregated asset accounts
established and maintained by United Investors pursuant to the laws of the State
of Missouri for certain flexible premium variable life insurance policies and
deferred variable annuity policies now or to be issued by United Investors (the
"Policies"), under which income, gains, and losses, whether or not realized,
from assets allocated to such account, will be, in accordance with the Policies,
credited to or charged against such account without regard to other income,
gains, or losses of United Investors; and
WHEREAS, United Investors has registered existing Variable Accounts as unit
investment trusts under the Investment Company Act of 1940 (the "Investment
Company Act"); and
WHEREAS, W&R has registered as a broker/dealer under the Securities
Exchange Act of 1934 (the "Exchange Act") and is a member firm of the National
Association of Securities Dealers, Inc. (The "NASD"); and
WHEREAS, United Investors has registered the existing Policies under the
Securities Act of 1933 (the "Securities Act"); and
WHEREAS, W&R has served as the distributor and principal underwriter of the
existing Policies continuously since May 1, 1990, pursuant to a Principal
Underwriting Agreement between W&R and United Investors; and
WHEREAS, W&R and United Investors desire to restate, modify and supplement
their understandings and agreements as more fully set forth herein;
NOW THEREFORE, United Investors and W&R hereby mutually agree as follows:
1. Underwriter.
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(a) United Investors grants to W&R the right, during the term of this
Agreement, subject to the registration requirements of the Securities Act and
the Investment Company Act and the provisions of the Exchange Act, to be the
distributor and principal underwriter of the Policies. W&R agrees to use its
best efforts to distribute the Policies, and to undertake to provide sales
services relative to the Policies and otherwise to perform all duties and
functions necessary and proper for the distribution of the Policies.
(b) To the extent necessary to offer the Policies, W&R shall be duly
registered or otherwise qualified under the securities laws of any state or
other jurisdiction. Any sales representatives of W&R soliciting applications
for the Policies shall be duly and appropriately licensed, registered or
otherwise qualified for the sale of such Policies under the federal securities
laws, any applicable insurance laws and securities laws of each state or other
jurisdiction in which such Policies may lawfully be sold and in which United
Investors is licensed to sell Policies. Such direct sales representatives of W&R
shall be independent contractors. W&R shall be responsible for the training,
supervision, and control of its representatives for the purposes of the NASD
Rules of Fair Practice and federal and state securities law requirements
applicable in connection with the offering and sale of the Policies. In this
connection, W&R shall maintain written supervisory procedures in compliance with
NASD Rules of Fair Practice, Section 27, Paragraph 2177.
(c) W&R agrees to offer the Policies for sale in accordance with the
prospectus therefor filed with the Securities and Exchange Commission
("Commission") then in effect. W&R is not authorized to give any information or
to make any representations concerning the Policies other than those contained
in such current prospectus or in such sales literature as may be authorized by
United Investors.
(d) All purchase payments made or other monies payable under the Policies
shall be paid or remitted by or on behalf of Policyowners directly to United
Investors or its designated servicing agent and shall become the exclusive
property of United Investors. United Investors will retain all such payments
and monies except to the extent such payments and monies are allocated to the
Variable Accounts.
2. Sales Agreement.
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(a) W&R is hereby authorized to enter into separate written agreements, on
such terms and conditions as W&R may determine to be not inconsistent with this
Agreement, with broker/dealers registered as such under the Exchange Act which
agree to participate in the distribution of the Policies and to use their best
efforts to solicit applications for the Policies.
(b) It is understood and agreed to by United Investors and W&R that United
Investors may from time to time propose that the Policies be distributed through
broker/dealers other than W&R. In such circumstances, W&R will agree to enter
into a
sales agreement with another broker/dealer, subject to W&R's reasonable
satisfaction, through its customary review, with such other broker/dealer's
credentials and practices. W&R agrees that, if reasonably satisfied with the
credentials and practices of such other broker/dealer, a sales agreement will
not be withheld. If W&R withholds a sales agreement without substantiating its
reasons for doing so, United Investors may terminate this agreement by giving
W&R thirty (30) days written notice, notwithstanding any other provision of this
Agreement.
(c) All such sales agreements shall provide that each broker/dealer will
assume full responsibility for continued compliance by itself and its
representatives with applicable federal and state securities laws and state
insurance laws, and shall be in such form and contain such other provisions as
United Investors may from time to time require. Such broker/dealer shall assume
any legal responsibility of United Investors for the acts, commissions, or
defalcations of such representatives insofar as they relate to the sale of the
Policies. Such broker/dealers and their representatives soliciting applications
for the Policies shall be duly and appropriately licensed, registered, or
otherwise qualified for the sale of such Policies under the federal securities
laws, any applicable insurance and securities laws of each state or other
jurisdiction in which such Policies may be lawfully sold and in which United
Investors is licensed to sell the Policies. Each such organization shall be
both registered as a broker/dealer under the Exchange Act and a member of the
NASD, or if not so registered or not such a member, then the representatives of
such organization soliciting applications for Policies shall be registered
representatives of a registered broker/dealer and NASD member which is an
affiliate of such organization and which maintains full responsibility for the
training, supervision, and control of the representatives selling the Policies.
(d) Applications for the Policies solicited by such organizations through
their representatives shall be forwarded to United Investors. All payments for
Policies shall be made by check or money order payable to "United Investors Life
Insurance Company" and remitted promptly by such organizations to United
Investors as agent for W&R. United Investors may also accept wire transfers via
Federal Funds to an account designated by United Investors. All broker/dealers
who agree to participate in the distribution of the Policies shall act as
independent contractors and nothing herein contained shall constitute such
broker/dealers or their agents or employees as employees of United Investors or
W&R in connection with the sale of the Policies.
3. Compensation.
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(a) For the sales services rendered by W&R and its sales representatives
and the continuing obligations spelled out herein, United Investors shall pay
W&R the commissions set forth in Schedule A to this Agreement, which Schedule
may be hereafter amended from time to time by mutual agreement of United
Investors and W&R.
(b) For Policies sold under sales agreements that W&R enters into with
other
broker/dealers pursuant to paragraph 2, above, United Investors shall pay W&R
the commissions which are set forth in Schedule B to this Agreement, which
Schedule may be hereafter amended from time to time by mutual agreement of
United Investors and W&R.
4. Administrative Services.
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(a) United Investors agrees to maintain all required books of account and
related financial records on behalf of W&R. All such books of account and
records shall be maintained and preserved pursuant to Rules 17a-3 and 17a-4
under the Exchange Act (or the corresponding provisions of any future applicable
federal securities laws or regulations). In addition, United Investors will
maintain records of all sales commissions paid to sales representatives of W&R
in connection with the sale of the Policies. All such books and records shall
be maintained by United Investors on behalf of and as agent for W&R whose
property they are and shall remain for all purposes, and shall at all times be
subject to reasonable periodic, special, or other examination by the Commission
and all other regulatory bodies having jurisdiction. United Investors also
agrees to send to W&R's customers all required confirmations on customer
transactions.
(b) United Investors agrees to commit the reasonable resources necessary,
including, but not limited to, personnel, systems and technology, to develop
and/or acquire and implement the services necessary to support and service
clients who purchase products jointly offered by W&R and United Investors, and
to enhance and improve such services in order to remain fully competitive.
5. Product Development and Features.
---------------------------------
(a) United Investors agrees to make commercially reasonable efforts to
obtain regulatory approval of and to offer, as soon as reasonably practical
after January 1, 2000, a new deferred variable annuity product with product
features similar to the existing Advantage II Variable Annuity, but with the
specific product features set forth in Schedule C to this Agreement. United
Investors agrees to fully support and service this product with sufficient
resources, including personnel, systems and technology.
(b) United Investors will cooperate with W&R and commit the reasonable
resources necessary (i) to design, create, implement and introduce products and
product features that will be first-class and competitive, and (ii) to enhance
and improve such products and product features as the market for insurance
products and variable insurance products evolves.
6. Reports.
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W&R shall have the responsibility for maintaining the records of sales
representatives licensed, registered, and otherwise qualified to sell the
Policies and for
furnishing periodic reports thereof to United Investors.
7. Regulation.
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(a) This Agreement shall be subject to the provisions of the Investment
Company Act and the Exchange Act and the rules, regulations, and rulings
thereunder and of the NASD, from time to time in effect, including such
exemptions from the Investment Company Act as the Commission may grant, and the
terms hereof shall be interpreted and construed in accordance therewith.
Without limiting the generality of the foregoing, the term "assigned" shall not
include any transactions exempted from section 15(b)(2) of the Investment
Company Act.
(b) W&R shall submit to all regulatory and administrative bodies having
jurisdiction over the present and future operations of United Investors or
Variable Accounts any information, reports or other material which any such body
by reason of this Agreement may request or require pursuant to applicable laws
or regulations. Without limiting the generality of the foregoing, W&R shall
furnish the State of Missouri, Secretary of State and/or the Director of
Insurance with any information or reports which the Secretary of State and/or
the Director of Insurance may request in order to ascertain whether the variable
life operations of United Investors are being conducted in a manner consistent
with any other applicable law or regulations.
8. Suitability.
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United Investors and W&R each wish to ensure that the Policies distributed
by W&R will be issued to purchasers for whom the Policy will be suitable. W&R
shall take reasonable steps to ensure that the various sales representatives
appointed by it shall not make recommendations to an applicant to purchase a
Policy in the absence of reasonable grounds to believe that the purchase of the
Policy 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. W&R will require that the applicant complete the Confidential Owner's
Information and Suitability sections of the application for the Policy.
9. Prospectuses and Promotional Material.
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United Investors shall furnish W&R with copies of all prospectuses,
financial statements, and other documents and materials which W&R reasonably
requests for use in connection with the distribution of the Policies. United
Investors shall have responsibility for the preparation, filing, and printing of
all required prospectuses and/or registration statements in connection with the
Policies, and the payment of all related expenses. W&R and United Investors
shall cooperate fully in designing, drafting, and reviewing sales promotion
materials, and with respect to the preparation of individual
sales proposals related to the sale of the Policies. W&R shall not use any such
materials not provided or approved by United Investors.
10. Investigation and Proceedings.
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(a) W&R and United Investors agree to cooperate fully in any insurance
regulatory investigation or proceeding or judicial proceeding arising in
connection with the Policies distributed under this Agreement. W&R and United
Investors further agree to cooperate fully in any securities regulatory
inspection, inquiry, investigation or proceeding or any judicial proceeding with
respect to United Investors, W&R, their affiliates and their representatives to
the extent that such inspection, inquiry, investigation or proceeding is in
connection with Policies distributed under this Agreement. Without limiting the
foregoing:
(i) United Investors will promptly notify W&R of any customer
complaint or notice of any regulatory inspection, inquiry, investigation or
proceeding or judicial proceeding received by United Investors with respect
to W&R or any representative or which may affect United Investors' issuance
of any Policies marketed under this Agreement; and
(ii) W&R will promptly notify United Investors of any customer
complaint or notice of any regulatory inspection, inquiry, investigation or
judicial proceeding received by W&R or any representative with respect to
United Investors or its affiliates in connection with any Policies
distributed under this Agreement or any activity in connection with any
Policies.
(b) In the case of a customer complaint, W&R and United Investors will
cooperate in investigating such complaint and shall arrive at a mutually
satisfactory response.
11. Exclusivity.
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The services of W&R and United Investors under this Agreement are not
deemed to be exclusive and W&R and United Investors shall be free to render
similar services to others, including, without implied limitation, such other
separate investment accounts as are now or hereafter established by United
Investors, W&R, or any affiliate of W&R so long as the services of W&R and
United Investors hereunder are not impaired or interfered with thereby.
12. Benefit.
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This Agreement shall inure to the benefit of and be binding upon the
successors of the parties hereto.
13. Liability.
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Neither party hereto shall be liable to the other for any action taken or
omitted by it, or any of its officers, agents or employees, in performing their
responsibilities under this Agreement in good faith and without gross
negligence, willful misfeasance or reckless disregard of such responsibilities.
14. Notices.
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All notices and other communications provided for hereunder shall be in
writing and shall be delivered by hand or mailed first class, postage prepaid,
addressed as follows:
(a) If to United Investors:
United Investors Life Insurance Company
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: President
(b) If to W&R:
Xxxxxxx & Xxxx, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxx 00000
Attention: General Counsel
and to such other address as United Investors or W&R shall designate by written
notice to the other.
15. Amendment.
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This Agreement may be amended from time to time by the mutual agreement and
consent of the parties hereto.
16. Severability.
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If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby.
17. Termination.
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This Agreement shall be effective upon its execution. It may be terminated
at any time by either party hereto on 60 days' written notice to the other party
hereto, without the payment of any penalty. Upon termination of this Agreement,
all
authorizations, rights and obligations shall cease except (i) the obligation to
settle accounts hereunder, issued pursuant to applications received by United
Investors prior to the termination and (ii) the agreements contained in
paragraph 9 hereof.
18. Applicable Law.
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This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Missouri.
19. Counterparts.
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This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original and all of which shall be deemed an instrument.
20. Restatement.
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This Agreement amends, restates and supercedes the Principal Underwriting
Agreement between the parties dated May 1, 1990.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
(seal)
Attest: UNITED INVESTORS LIFE
INSURANCE COMPANY
____________________________ By:_______________________________
Title:______________________ Title:____________________________
(seal)
Attest: XXXXXXX & XXXX, INC.
____________________________ By:_______________________________
Title:______________________ Title:____________________________
SCHEDULE A
W&R COMMISSION SCHEDULE
For Applications Dated January 1, 1999 through December 31, 1999
First 2nd-10th 11th-20th
Product Policy Year Policy Years Policy Years
------- ----------- ------------ ------------
Advantage Plus
Advantage Plus Target Premium 75.0% 5.0% 2.0%
Advantage Plus Excess Premium 5.0% 5.0% 2.0%
(Target Premium is determined as described in the Target Annual Premium Chart in
Attachment A. If a policy owner elects to increase the face amount, the first
year commission rate will be paid on premiums received in the year after the
increase that are attributable to the increase, up to the Target Premium for the
increase.)
Product Commission Rates
------- ----------------
Advantage I Variable Life 7.39% of premiums received, payable semi-monthly
Advantage II Variable Annuity
Issue Ages 0-80 7.75% of premiums received, payable semi-monthly
Issue Ages 81-85 3.88% of premiums received payable semi-monthly
For Period Commencing January 1, 2000
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Product Commission Rates
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Advantage Plus Same as above.
Advantage I Variable Life Same as above.
Variable Annuities:
(1) United Investors agrees to pay W&R a commission of 7.75% of premiums
received on variable annuities issued on or after January 1, 2000. These
commissions are payable semi-monthly. In addition, United Investors agrees
to pay W&R Incentive Compensation and a Mortality and Expense Sharing Fee
as follows:
(a) Monthly incentive compensation ("Incentive Compensation") is equal to
.20% x 1/12 x (A), where (A) is:
The Net Asset Value of the United Investors Annuity Variable Account
under
that certain Variable Accounts Distribution Contract
between United Investors and Target/United Funds, Inc., dated
April 4, 1997, as amended, (the "Distribution Contract"), but
only for variable annuities issued by United Investors prior to
January 1, 2000.
(b) The monthly mortality and expense sharing fee ("Mortality and
Expense Sharing Fee") is equal to .25% x 1/12 x (B), where (B) is:
The Net Asset Value of the United Investors Annuity Variable
Account under the Distribution Contract, but only for variable
annuities issued by United Investors issued on or after January
1, 2000.
(c) Net Asset Value for any calendar month is the average of the net
asset value on the opening of business on the first day of that month
and the close of business on the last day of that month. The
Incentive Compensation and the Mortality and Expense Sharing Fee are
payable by the last day of the month following the month they are
earned.
(d) United Investors' obligation to pay the Incentive Compensation
terminates upon termination of this Agreement, effective in the month
in which notice of termination is given, but United Investors'
obligation to pay the Mortality and Expense Sharing Fee survives
termination of this Agreement, except as provided in section 2.4 of
the "Agreement" of even date herewith between United Investors, and
W & R and W & R Insurance Agency, Inc. (referred to collectively
therein as the "W & R Group").
SCHEDULE B
THIRD PARTY BROKER/DEALER COMMISSION SCHEDULE
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[To be provided by UILIC]
ATTACHMENT A
TARGET PREMIUM CHART
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[To be provided by UILIC]
SCHEDULE C
REQUIRED PRODUCT FEATURES
OF NEW DEFERRED VARIABLE ANNUITY PRODUCT
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Mortality and Expense 1.25%
Risk Charge
Administrative Charge .15%
Withdrawal Charge 7% of amounts withdrawn during the first year after
deposit, decreasing by 1% on each anniversary of the
deposit to 0% seven years after deposit. The
withdrawal charge is calculated on each deposit from
the date of that deposit, on a "first in-first out"
basis.
Annual Policy Fee $25.00 per policy, waived for account values
(greater than) $25,000.
