Attached files
Exhibit 1(ii)
SELLING AND SERVICES AGREEMENT
FOR
REGISTERED ANNUITY PRODUCTS
THIS SELLING AND SERVICES AGREEMENT (this "Agreement") is entered into as
of _______, ___ (the "Effective Date") by and between MEMBERS Life Insurance
Company, an Iowa insurance company ("MLIC"), CUNA Brokerage Services, Inc., a
Wisconsin corporation ("CUNA Brokerage") and [name of GA/Broker-Dealer , [a/an
__________________], ("General Agent" and "Broker Dealer") with an address of
[insert address]
WHEREAS, MLIC has the requisite authority to provide certain registered
annuity contracts, some of which are securities under the Securities Act of
1933, as amended;
WHEREAS, MLIC has appointed CUNA Brokerage, a registered broker-dealer
with the Securities and Exchange Commission ("SEC") under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and a member of the Financial
Industry Regulatory Authority ("FINRA"), as the principal underwriter and
distributor of its registered annuity contracts;
WHEREAS, General Agent or Broker-Dealer, as the case may be, has the
requisite authority to solicit, sell and service registered annuity contracts
contemplated under this Agreement and Broker-Dealer is a registered
broker-dealer with the SEC under the 1934 Act and a member of FINRA; and
WHEREAS, MLIC and CUNA Brokerage desire to appoint and authorize, on a
non-exclusive basis, General Agent and Broker-Dealer to solicit, sell and
service certain registered annuity contracts (hereinafter collectively referred
to as the "Products"), which are more fully described in the Products and
Compensation Schedule (the "Schedule") attached hereto and incorporated herein,
and to have General Agent and Broker-Dealer provide certain administrative
services as described in this Agreement for purposes of soliciting, selling and
servicing the Products; and General Agent and Broker-Dealer desire to accept
such appointment and authorization pursuant to this Agreement. In the event
General Agent and Broker-Dealer are the same entity, the term "General Agent" in
this Agreement shall refer to Broker-Dealer, which shall undertake all the
obligations and privileges of General Agent pursuant to this Agreement.
NOW, THEREFORE, in consideration of the mutual promises made herein, the
parties hereto agree as follows:
1. PURPOSE OF AGREEMENT. The principal purpose of this Agreement is to set
forth a selling and service arrangement whereby MLIC and CUNA Brokerage will
provide the Products and appoint and authorize, on a non-exclusive basis,
General Agent and Broker-Dealer, and through General Agent's and Broker-Dealer's
registered representatives ("Representatives") who are also licensed to sell
insurance in appropriate jurisdictions and who are appointed by MLIC to sell the
Products, accept such appointment and authorization and will solicit, sell and
service the Products hereunder. Further, General Agent and Broker-Dealer will
provide certain administrative services pursuant to this Agreement for the
purposes of soliciting, selling and servicing the Products.
2. ROLES AND RESPONSIBILITIES OF MLIC AND CUNA BROKERAGE.
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2.1 THE PRODUCTS. The Products issued by MLIC are described on the
Schedule. The attached Schedule may be amended from time-to-time by MLIC. Prior
versions of Products are included for servicing under this Agreement for prior
customers by Representatives who are now
appointed as agents of MLIC through General Agent under this Agreement. Any
customer records and files relating to prior versions of the Products shall be
retained by the appropriate Representatives or by General Agent or Broker-Dealer
and shall be subject to the confidentiality provisions of Section 5 and record
maintenance provisions of Subsection 3.15 of this Agreement. Upon issuance of
the Products pursuant to this Agreement, MLIC will transmit Products to General
Agent or Broker-Dealer for delivery to policyholders according to procedures set
up by MLIC, unless MLIC has provided otherwise. MLIC, in its sole discretion and
without notice to Broker-Dealer, may suspend sales of any of the Products or may
amend the Products if, in MLIC's opinion, such suspension or amendment is: (a)
necessary for compliance with federal, state, or local laws, regulations, or
administrative orders; or (b) necessary to prevent administrative or financial
hardship to MLIC. In all other situations, MLIC shall provide reasonable notice,
as practicable, to Broker-Dealer prior to suspending sales of any of the
Products or amending the Products.
2.2. APPOINTMENT OF GENERAL AGENT AND AUTHORIZATION OF BROKER-DEALER.
MLIC hereby appoints and CUNA Brokerage hereby authorizes General Agent and
Broker-Dealer to solicit, sell and service the Products through its
Representatives. General Agent and Broker-Dealer shall be responsible for any
appointment or renewal fees.
2.3 PROSPECTUSES. MLIC and CUNA Brokerage, at their own expense, will
provide Broker-Dealer with prospectuses and supplements thereto relating to the
Products, and such other materials as MLIC or CUNA Brokerage, in its sole
discretion, deems necessary or appropriate for use in connection with the
issuance and sale of the Products. Upon termination of this Agreement or upon
request by MLIC or CUNA Brokerage, Broker-Dealer shall promptly return all such
prospectuses, supplements and other materials to MLIC or CUNA Brokerage free
from any claim or retention rights by Broker-Dealer.
2.4 SALES AND PROMOTION MATERIAL. MLIC and CUNA Brokerage, at their
expense and as deemed necessary at their discretion, may provide sales and
promotion materials relating to the Products for use by General Agent and
Broker-Dealer. Upon termination of this Agreement, General Agent and
Broker-Dealer shall promptly return or destroy all such sales and promotion
materials and advertising relating to the Products to MLIC or CUNA Brokerage
pursuant to Subsection 7.3 hereof.
2.5 COMPENSATION.
(a) MLIC shall pay "Compensation," as more fully described in
the Schedule, semi-monthly to General Agent and/or Broker-Dealer based upon the
Products sold by General Agent and/or Broker-Dealer during the term of this
Agreement. MLIC reserves the right, upon at least thirty (30) days prior written
notice to General Agent and Broker-Dealer, to change the Compensation on the
Schedule. Any such change shall constitute an amendment to the Schedule and
shall apply to Compensation due on applications of the Products received by MLIC
after the effective date of such amendment. Notwithstanding the foregoing, in
the event General Agent or Broker-Dealer or any Representative of General Agent
or Broker-Dealer shall at any time induce or endeavor to induce any
policyholders to relinquish the Products, except under circumstances where there
is reasonable grounds for believing that a particular policy or contract is not
suitable for a customer, any and all Compensation due General Agent and
Broker-Dealer hereunder shall cease and terminate. Except as expressly set forth
herein and the Schedule, no compensation other than that shown on the Schedule
shall be paid or payable by MLIC or CUNA Brokerage to General Agent or
Broker-Dealer in connection with the offer and sale of the Products.
(b) General Agent and MLIC acknowledge and agree that certain
Representatives, acting as agents of General Agent under this Agreement, may
elect to be paid by MLIC directly for fixed annuity products described on the
Schedule attached hereto. Such agents will be acting as
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independent agents under a separate independent agent agreement executed between
MLIC and said agents.
2.6 LEGAL COMPLIANCE. MLIC and CUNA Brokerage will comply in all
material respects with all applicable insurance and securities laws and rules
and regulations thereunder, including the rules and regulations of federal and
state authorities and self-regulatory organizations that have jurisdiction over
their activities described in this Agreement.
3. ROLES AND RESPONSIBILITIES OF GENERAL AGENT AND BROKER-DEALER.
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3.1 INSURANCE LICENSING. At all times while performing obligations
under this Agreement and at its own expense, General Agent, and General Agent's
Representatives, shall be validly licensed, including fees related to license
issue, transfer and termination, as an insurance agency in the states and other
local jurisdictions that require such licensing or registration in connection
with General Agent's fixed and variable insurance sales activities, or shall
maintain a validly licensed insurance agency subsidiary in those states in which
General Agent cannot obtain a corporate agent's license.
3.2 SECURITIES REGISTRATION. At all times while Broker-Dealer is
performing its obligations under this Agreement, Broker-Dealer, at its own
expense, shall be responsible for all fees, including registration and
examination fees, necessary in order to be registered as a securities broker
with the SEC and FINRA and shall generally maintain all licenses, registrations
and such other qualifications as may be necessary or required by applicable
federal and state laws, regulations or requirements of any self-regulating
organization with respect to its activities hereunder.
3.3 REPRESENTATIVES. General Agent shall have sole responsibility for the
training, supervision and compliance with applicable insurance laws and
regulations relating to Representatives who are engaged directly or indirectly
in soliciting, selling and servicing of the Products. All such persons shall be
subject to the control of Broker-Dealer with respect to such persons' securities
regulated activities in connection with the Products, including, but not limited
to, training and compliance with applicable federal and state laws and
regulations and compliance with any supervisory responsibilities pursuant to
applicable FINRA rules. General Agent and Broker-Dealer shall be responsible for
the selection of Representatives with the requisite insurance licenses and
securities registration under applicable federal, state, and local laws, rules
or regulations in order to engage in soliciting, selling and servicing the
Products. General Agent and Broker-Dealer will cause such Representatives to be
trained in the selling of the Products to ensure Representatives have thorough
knowledge of the Products and the ability to make appropriate product
presentations and suitability determinations in compliance with applicable law.
Furthermore, General Agent and Broker-Dealer will ensure Representatives are
licensed and registered representatives of General Agent or Broker-Dealer, as
the case may be, and meet any other requirements or conditions of this Agreement
before such Representatives engage in the solicitation of applications for the
Products, and General Agent and Broker-Dealer will ensure that such
Representatives maintain such licenses and registrations in accordance with
applicable laws and regulations. General Agent and Broker Dealer will be
responsible for all insurance and licensing fees for Representatives. Further,
General Agent and Broker-Dealer will cause such Representatives to limit
solicitation of applications for the Products to jurisdictions where MLIC or
CUNA Brokerage has approved or authorized such solicitation. General Agent and
Broker-Dealer will cause such Representatives to comply with all applicable
administrative procedures of MLIC, including, without limitation, those that
specifically address selling practices. Representatives' qualifications shall be
certified to the satisfaction of MLIC and CUNA Brokerage, and General Agent or
Broker-Dealer, as the case may be, shall notify MLIC and CUNA Brokerage if any
Representative ceases to be a registered representative of Broker-
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Dealer or ceases to maintain the proper licensing required for selling the
Products and will act to terminate the sales activities of such Representative
relating to the Products.
3.4 APPOINTMENT OF REPRESENTATIVES. General Agent shall assist MLIC
in the appointment of Representatives under the applicable insurance laws to
sell the Products. General Agent agrees to fulfill all requirements set forth in
the General Letter of Recommendation, attached hereto as Exhibit A and fully
incorporated herein, in conjunction with the submission of licensing/appointment
papers for all applicants as insurance agents of MLIC. All such
licensing/appointment papers should be submitted to MLIC or its duly appointed
agent by General Agent. Notwithstanding such submission, MLIC shall have sole
discretion to appoint, refuse to appoint, discontinue, or terminate the
appointment of any Representative as an insurance agent of MLIC.
3.5 REPRESENTATIVES' INSURANCE COMPLIANCE. Prior to allowing
Representatives to solicit, sell or service the Products, General Agent shall
require Representatives to be validly insurance licensed, registered and
appointed by MLIC as an agent in accordance with the jurisdictional requirements
of the place where the solicitations, sales or service take place as well as the
solicited person's or entity's place of residence.
3.6 COMPLIANCE WITH FINRA RULES OF CONDUCT AND FEDERAL AND STATE
SECURITIES AND INSURANCE LAWS.
(a) Broker-Dealer shall fully comply and shall cause
Representatives to fully comply with the requirements of FINRA and of the 1934
Act and all other applicable securities and insurance federal, state or local
laws, rules and regulations. Further, General Agent and Broker-Dealer will
establish rules and procedures as may be necessary consistent with applicable
laws and regulations to provide diligent supervision of the securities and
insurance sales activities of Representatives. Upon request by MLIC or CUNA
Brokerage, General Agent and Broker-Dealer shall promptly furnish any records
deemed necessary to establish such diligent supervision.
(b) Broker-Dealer represents and warrants that during the
tern of this Agreement, it will maintain and implement: i) policies and
procedures designed to comply with all applicable rules of FINRA, including but
not limited to rules relating to suitability of registered annuity
recommendations; ii) a training program for Representatives designed to ensure
that Representatives gather information concerning a customer's financial
status, tax status, investment objective and other relevant information prior to
recommending the purchase or exchange of a registered annuity contract; and iii)
a reasonable system of sales supervision designed to achieve compliance with
FINRA rules. Upon request by MLIC, Broker-Dealer agrees to provide a report to
MLIC certifying that Broker-Dealer is in compliance with the said activities
listed above. Such reports shall be certified by a senior manager of
Broker-Dealer who has responsibility for such activities. Broker-Dealer
acknowledges and agrees that MLIC and/or CUNA Brokerage may conduct an
inspection and/or audit of Broker-Dealer on a periodic basis to ensure
compliance with the stated activities above, and Broker-Dealer agrees to make
reasonable accommodation to MLIC to enable MLIC to inspect documents and records
Broker-Dealer is responsible to maintain that are directly related to the sale
and suitability of any MLIC registered annuity products.
3.7 COMPLIANCE WITH ADMINISTRATIVE PROCEDURES. General Agent and
Broker-Dealer shall fully comply and shall cause Representatives to fully comply
with the administrative procedures of MLIC relating to the Products and the
policies and procedures adopted by MLIC relating to privacy, agent conduct and
similar matters to the extent such policies and procedures are applicable to the
soliciting, sale and servicing of the Products, as those administrative
procedures and other
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policies and procedures are now in effect or may be amended or established in
the future by MLIC in its sole discretion and communicated to General Agent and
Broker-Dealer, as appropriate.
3.8 COMPLIANCE WITH PROSPECTUSES. General Agent and Broker-Dealer
shall comply with the terms of any prospectus (and supplements thereto) for a
Product. Without limiting the generality of the foregoing, General Agent and
Broker-Dealer shall offer the Products only at the public offering price
disclosed in the prospectus. In this regard, General Agent and Broker-Dealer
agree that Broker-Dealer shall be responsible for determining if, and
calculating the amount of, any waiver or reduction in sales charges is
applicable to any prospective purchaser of a Product and indicating such
information on the application for the Product. In addition, without limiting
the generality of the foregoing, General Agent and Broker-Dealer understand and
acknowledge that the Products are not suitable for offer or sale in connection
with any so-called "market-timing" program, plan, arrangement or service of
General Agent or Broker-Dealer or any Representative. General Agent and
Broker-Dealer shall not knowingly solicit, offer, or sell Products for use in
connection with any so-called "market-timing" program, plan, arrangement or
service and shall provide reasonable assistance to MLIC and CUNA Brokerage in
preventing the Products from being used for "market-timing" activity.
3.9 DELIVERY OF PROSPECTUSES AND USE OF SALES MATERIALS. Broker-
Dealer agrees to deliver prospectuses, prospectus supplements, and other sales
and promotion materials for the Products to purchasers and prospective
purchasers of the Products in a timely manner and in accordance with all
applicable laws and regulations. General Agent and Broker-Dealer shall not use
any sales and promotion materials or any advertisements that they may create
relating to the Products, MLIC or CUNA Brokerage, unless MLIC or CUNA Brokerage
approve such materials and advertisements in writing prior to use. However, this
limitation shall not prevent General Agent and Broker-Dealer from advertising
insurance products in general, provided such advertising does not reference the
Products, MLIC, CUNA Brokerage, or any affiliated person of MLIC or CUNA
Brokerage.
3.10 NOTICE OF REPRESENTATIVE'S NONCOMPLIANCE. In the event a
Representative fails or refuses to submit to supervision of General Agent and
Broker-Dealer, ceases to be a registered representative of Broker-Dealer or
otherwise fails to meet the rules and standards imposed by General Agent and
Broker-Dealer on Representatives, General Agent and Broker-Dealer, as the case
may be, shall immediately advise MLIC and CUNA Brokerage of this fact and shall
immediately notify such Representative that s/he is no longer authorized to sell
the Products. General Agent or Broker-Dealer shall take whatever additional
action may be necessary to terminate the selling and service activities of such
Representative relating to the Products, which shall include, but not be limited
to, acquiring all the customer records and files of the Representative relating
to the Products. General Agent and Broker-Dealer agree to retain such customer
records as required by applicable federal or state laws and regulations and to
provide access to such records as MLIC or CUNA Brokerage may reasonably request.
3.11 COMPENSATION TO REPRESENTATIVES. MLIC shall pay Compensation to
General Agent and Broker-Dealer pursuant to the Schedule. General Agent and
Broker-Dealer will be solely responsible for any compensation payable to
Representatives or any other persons associated with General Agent and
Broker-Dealer relating to the Products hereunder in accordance with applicable
laws and regulations. Except as necessary to meet legal requirements or subject
to the provisions as set forth in Subsection 2.5(b) of this Agreement, MLIC or
CUNA Brokerage will not be responsible for any compensation payable to
Representatives or agents of General Agent and Broker-Dealer.
3.12 HANDLING OF APPLICATIONS. MLIC shall supply Product application
forms for General Agent's and Broker-Dealer's use. All payments collected by
General Agent or Broker-Dealer or
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Representatives of General Agent and Broker-Dealer will be promptly remitted in
full, along with such application forms and any other required documentation,
directly to MLIC at the address indicated on such application or to such other
address as MLIC designates in writing. General Agent and Broker-Dealer are
responsible for reviewing all such applications for completeness and
correctness, as well as compliance with suitability standards of all applicable
federal state laws, rules and regulations and SEC and FINRA requirements.
Payments for the Products shall be made by check, bank wire transfer or other
forms of payment deemed acceptable by MLIC and allowable under applicable laws
or regulations and shall be drawn to the order of "MLIC Insurance Society."
General Agent and Broker-Dealer do not have any authority to deposit or endorse
checks payable to MLIC without the prior written approval of MLIC. All
applications are subject to acceptance or rejection by MLIC in its sole
discretion. MLIC may require that any medical examination made in conjunction
with an application for a Product be made by a medical examiner approved by MLIC
and MLIC shall pay only those fees in connection with medical examinations that
have been expressly authorized by it. All records or information obtained
hereunder by General Agent or Broker-Dealer shall not be disclosed or used
except as expressly authorized herein and pursuant to Section 5 hereof, and
General Agent and Broker-Dealer will keep confidential such records and
information, which will only be disclosed as authorized or if expressly required
by federal or state regulatory authorities. General Agent and Broker-Dealer, in
submitting applications for the Products, will be deemed to have warranted to
MLIC and CUNA Brokerage that General Agent or Broker-Dealer, as the case may be,
has made a determination of suitability based on information concerning the
prospective purchaser's insurance and investment objectives, risk tolerance,
need for liquidity, and financial and insurance situation and needs, or on such
other factors that General Agent or Broker-Dealer deems to be appropriate under
the circumstances and in compliance with applicable laws and regulations.
General Agent and Broker-Dealer will not, directly or indirectly, expend or
contract for the expenditure of any funds of MLIC or CUNA Brokerage and MLIC and
CUNA Brokerage will not be obligated to pay any expense incurred by General
Agent or Broker-Dealer in the performance of this Agreement, unless otherwise
provided for in this Agreement or agreed to in advance in writing by MLIC or
CUNA Brokerage.
3.13 TRANSMISSION AND OWNERSHIP OF MONEY FOR PRODUCTS. All money
received by General Agent and Broker-Dealer or Representatives or agents of
General Agent and Broker-Dealer in connection with the Products, whether as
premium or otherwise, and whether paid by or on behalf of any policyholder,
contract owner or anyone else having an interest in the Products, is the
property of MLIC, shall be held in a separate account and shall be transmitted
promptly in accordance with the administrative procedures of MLIC without any
deduction or offset for any reason, including but not limited to, any deduction
or offset for Compensation claimed by General Agent or Broker-Dealer.
3.14 DELIVERY OF PRODUCTS. Upon issuance of the Products by MLIC
pursuant to this Agreement, MLIC will transmit Products to purchasers, as long
as the representative or agent of General Agent and/or Broker Dealer indicates
on each application that MLIC is requested to deliver said transmission to the
purchaser, all in accordance with procedures established by MLIC, unless MLIC
has provided otherwise. MLIC will transmit a copy of the spec page to
Representatives of General Agent or Broker-Dealer upon issuance of the Products.
3.15 BOOKS, ACCOUNTS AND RECORDS. General Agent and Broker-Dealer will
maintain all books, accounts, and records as required by applicable laws and
regulations. The books, accounts and records of General Agent and Broker-Dealer
shall be kept in good order and clearly and accurately disclose the nature and
details of transactions relating to the Products and General Agent's and
Broker-Dealer's activities related thereto. General Agent and Broker-Dealer
shall keep confidential all information obtained pursuant to this Agreement,
including, but not limited to, names of policyholders, and shall disclose such
information only if MLIC or CUNA Brokerage has authorized such disclosure in
writing, or if such disclosure is expressly required by applicable federal
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or state authorities. MLIC and CUNA Brokerage shall have prompt and full access
to all books, accounts and records of General Agent and Broker-Dealer pertaining
to the Products. General Agent and Broker-Dealer agrees to permit MLIC and CUNA
Brokerage representatives to enter into all areas of the General Agent's and
Broker-Dealer's business related hereto for the purpose of conducting
inspections and General Agent and Broker-Dealer shall fully cooperate with such
representatives during such inspections by rendering assistance as MLIC and CUNA
Brokerage may reasonably request. Upon notice from MLIC or CUNA Brokerage, and
without limiting other rights of MLIC and CUNA Brokerage under this Agreement,
General Agent and Broker-Dealer shall take certain steps as may be necessary to
correct any deficiencies detected during such inspections. Each party hereto
agrees to promptly furnish any reports and information which a party hereto may
request in order to meet its reporting and record keeping obligations under the
state insurance laws and the federal and state securities laws or rules of FINRA
and to provide such books and records to the regulatory and administrative
agencies which have jurisdiction over MLIC or CUNA Brokerage.
3.16 CUSTOMER FILE AND RECORD RETENTION. For a period of six (6) years
from the termination date of this Agreement, General Agent and Broker-Dealer
agree (a) to permit CUNA Brokerage or MLIC access to inspect and copy, during
normal business hours, books and records, including but not limited to customer
files relating to the Products under this Agreement that are specifically
required to be maintained by the rules and regulations promulgated by the SEC,
FINRA, or any other federal or state regulatory agency with jurisdiction over
CUNA Brokerage, MLIC, Broker-Dealer or General Agent in connection with an audit
or investigation, including any such files as may have been requested by such
regulatory agencies ("Required Files) and (b) to maintain such Required Files in
the form originally received. In addition, this information will be made
available to CUNA Brokerage or MLIC in the event an individual customer
complaint or class action is submitted relating to activity between customer and
CUNA Brokerage or MLIC so that CUNA Brokerage or MLIC, as the case may be, may
respond to such complaint. This information will be provided immediately to CUNA
Brokerage or MLIC for such inspections and proof of the regulatory request
and/or customer complaint. Within ninety (90) days following termination,
General Agent and Broker-Dealer shall deliver to CUNA Brokerage or MLIC the
following materials maintained by General Agent and Broker-Dealer or
Representatives: sales and promotion material, correspondence, customer
communications, including all communications relating to customer complaints,
and records relating to inspections conducted by any regulatory agency or by
personnel of CUNA Brokerage or MLIC. This Subsection 3.16 shall survive
termination of this Agreement.
3.17 NOTIFICATION OF DISCIPLINARY PROCEEDINGS AND CUSTOMER COMPLAINTS.
General Agent and Broker-Dealer shall promptly notify MLIC and CUNA Brokerage of
any disciplinary proceedings or customer complaints against General Agent or
Broker-Dealer, or any Representatives or agents of General Agent and
Broker-Dealer relating to the Products or any threatened or filed arbitration
action or civil litigation arising out of the solicitation, sale or service of
the Products. General Agent and Broker-Dealer shall fully and promptly cooperate
with MLIC and CUNA Brokerage in investigating and responding to any customer
complaint, attorney demand, or inquiry received from state insurance departments
or other regulatory agencies or legislative bodies, and in any settlement or
trial of any actions arising out of the conduct of business under this
Agreement. No response by General Agent or Broker-Dealer to an individual
customer complaint involving a Product will be sent until it has been approved
by MLIC or CUNA Brokerage. Any response by General Agent or Broker-Dealer to an
individual customer complaint will be sent to MLIC and CUNA Brokerage for
approval not less than five (5) business days prior to it being sent to the
customer, except if a more prompt response is required, the proposed response
may be communicated by telephone, electronically, via facsimile or in person.
3.18 FIDELITY BOND AND ERRORS AND OMISSIONS INSURANCE COVERAGES.
General Agent/Broker-Dealer agrees that all directors, officers, employees and
Representatives of General
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Agent/Broker-Dealer shall be covered by a blanket fidelity bond/crime insurance
policy issued by a reputable bonding company with a limit of not less than five
hundred thousand dollars ($500,000) each occurrence for loss of money,
securities or property sustained by MLIC or CUNA Brokerage resulting from theft
or forgery committed by General Agent/Broker-Dealer or Representatives. General
Agent/Broker-Dealer further agrees to obtain and maintain errors and omissions
insurance in an amount of at least two million dollars ($2,000,000) each claim
with a two million dollar ($2,000,000) annual aggregate during the term of this
Agreement for General Agent/Broker-Dealer and Representatives. All said
coverages above shall be maintained by General Agent/Broker-Dealer at General
Agent/Broker-Dealer's expense. MLIC may require evidence that all such coverages
above are in force and are satisfactory, and Broker Dealer shall give prompt
written notice to MLIC of any notice of cancellation or change of the coverages.
General Agent/Broker-Dealer shall be solely responsible for responding to
customers and filing claims as may be necessary under this Agreement and General
Agent/Broker-Dealer is responsible for any out-of-pocket expenses related to
such claims. General Agent/Broker-Dealer hereby assigns to MLIC or CUNA
Brokerage, as the case may be, any proceeds received from the insurance
companies to the extent MLIC's or CUNA Brokerage's loss is due to activities
covered by said policies. If there is any deficiency amount, whether due to a
deductible or otherwise, General Agent/Broker-Dealer shall promptly pay MLIC or
CUNA Brokerage such amount on demand, and General Agent/Broker-Dealer hereby
indemnifies and holds MLIC and CUNA Broker harmless from any such deficiency and
from the costs of collection thereof, including reasonable legal fees.
3.19 PROHIBITED ACTS. Nothing in this Agreement shall be construed as
giving General Agent and Broker-Dealer the right to incur any indebtedness or
make contracts on behalf of MLIC or CUNA Brokerage. General Agent and
Broker-Dealer are not authorized to: discharge, waive any forfeitures under or
extend the time for making payment for the Products; waive or modify any terms,
conditions, or limitations of any policy or contract; pay any premium or other
payment on behalf of an purchaser of the Products; or enter into any court or
regulatory proceeding in the name of or on behalf of MLIC or CUNA Brokerage.
General Agent and Broker-Dealer hereby authorize MLIC and CUNA Brokerage to set
off liabilities of General Agent or Broker-Dealer, as the case may be, to MLIC
and CUNA Brokerage against any and all amounts otherwise payable to General
Agent or Broker-Dealer by MLIC or CUNA Brokerage.
4. RIGHT OF REJECTION. General Agent, Broker-Dealer, CUNA Brokerage and/or
MLIC each in their sole discretion, may reject any applications or payments
remitted by Representatives through the General Agent or Broker-Dealer and may
refund an applicant's payments to the applicant. Likewise, MLIC and CUNA
Brokerage may, at any time for any reason, reject any order from Product owner
(whether transmitted by or through General Agent or Broker-Dealer or otherwise)
to transfer contract value from one investment option under a Product to
another. In the event such refunds are made and if General Agent or
Broker-Dealer has received Compensation based on an applicant's payment that is
refunded, General Agent or Broker-Dealer shall promptly repay such Compensation
to MLIC. If repayment is not promptly made, MLIC may, at its sole option, deduct
any amounts due to General Agent or Broker-Dealer from future Compensation
otherwise payable to General Agent or Broker-Dealer. This Section 4 shall
survive termination of this Agreement.
5. SHARING OF CUSTOMER INFORMATION. The parties acknowledge and agree that
it may be necessary for the parties to share nonpublic personal information and
other customer information ("Customer Information") with each other in order for
each party to meet their obligations under this Agreement. With respect to the
sharing, use and protection of Customer Information, the parties agree to the
following:
5.1 CONFIDENTIALITY AND RESTRICTIONS ON REDISCLOSURE OF CUSTOMER
INFORMATION. Each party agrees to hold in strict confidence Customer Information
obtained from another party during the
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term of this Agreement and any existing Customer Information received or
obtained prior to this Agreement. Each party agrees not to disclose Customer
Information, in any form or medium, to any affiliated or nonaffiliated person,
firm or corporation except as necessary to perform services under this Agreement
or as may be required by law. The parties hereto acknowledge and agree that
disclosing Customer Information to effectuate, service or administer a Customer
transaction shall not be considered a breach of the confidentiality obligations
created hereunder. To the extent that a party contracts with a third party that
obtains Customer Information in order to provide services under this Agreement,
that party agrees to obtain contractual confidentiality protections to require
the third party to hold Customer Information in strict confidence and not
disclose it to any person unless required by law. Upon termination of this
Agreement, General Agent and Broker-Dealer agree to maintain all Customer
Information relating to the Products pursuant to Subsection 3.14 hereof. Each
party agrees to comply with applicable privacy laws and regulations including,
but not limited to, the Gramm-Leach-Bliley Act, Public Law 106-102 (1999) as set
forth in 15 U.S.C.A. [SEC]6801, as amended and to comply with applicable changes
in such laws and regulations as these occur and become effective.
5.2 USE OF CUSTOMER INFORMATION. Each party agrees to use Customer
Information only to fulfill its obligations hereunder and not to use it for any
other purpose.
5.3 OBLIGATION TO MAINTAIN SECURITY OVER CUSTOMER INFORMATION. Each
party agrees to implement and maintain reasonable and customary security
measures to safeguard Customer Information. Such measures shall include, but not
be limited to, requiring employees who will have access to such information to
agree to the confidentiality requirements of this Subsection.
5.4 CONFIDENTIALITY OBLIGATIONS SURVIVE TERMINATION OF THE AGREEMENT.
The obligations of the parties set forth in this Section 5 shall survive the
termination of this Agreement.
6. LIMITATIONS. Only MLIC or CUNA Brokerage, and no other party, shall have
the authority on behalf of MLIC or CUNA Brokerage: (a) to make, alter, or
discharge any of the Policies issued by MLIC; (b) to waive any forfeiture; (c)
to grant, permit or extend the time for making any payments; (d) to guarantee
earnings or rates; (e) to alter the forms which MLIC or CUNA Brokerage may
prescribe or substitute other forms in place of those prescribed by MLIC or CUNA
Brokerage; or (f) to enter into any proceeding in a court of law or before a
regulatory agency in the name of or on behalf of MLIC or CUNA Brokerage.
7. TERM AND TERMINATION.
--------------------
7.1 TERM. This Agreement will commence on the Effective Date, and
unless terminated as provided herein, will continue in force indefinitely.
7.2 TERMINATION. Each party will have the right to terminate this
Agreement: (a) without cause, effective upon delivery of thirty (30) days'
written notice thereof to the other party; (b) effective immediately upon
delivery of written notice thereof to the other party, in the event that the
other party is in breach of any material obligation herein; (c) effective
immediately in the event that either CUNA Brokerage or Broker-Dealer shall cease
to be registered broker-dealers under the 1934 Act and members of the FINRA; (d)
effective immediately, if General Agent or Broker-Dealer or any Representative
of General Agent or Broker-Dealer shall rebate or offer to rebate all or any
part of a premium on any Products issued by MLIC in violation of applicable
federal, state or local securities and insurance laws, rules or regulations; and
(e) effective immediately if General Agent or Broker-Dealer or any
Representative of General Agent or Broker-Dealer shall withhold any premium on
any policy issued by MLIC.
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7.3 EFFECT OF TERMINATION. Upon termination of this Agreement, all
Compensation to the General Agent and Broker-Dealer hereunder shall cease;
however, General Agent and Broker-Dealer shall continue to be liable for any
chargebacks or for any other amounts advanced by or otherwise due MLIC or CUNA
Brokerage hereunder. General Agent and Broker-Dealer will immediately return or
destroy, as instructed by MLIC and CUNA Brokerage, all of MLIC's and CUNA
Brokerage's proprietary materials, and any copies thereof, including but not
limited to, information and data relating to the Products, procedures and
practices, sales and promotion materials, advertising, information and materials
relating to "Systems," as described hereinafter, and any sales and promotion
materials created by General Agent or Broker-Dealer related to the Products, and
any copies thereof; and General Agent and Broker-Dealer shall not use the same
thereafter. General Agent and Broker-Dealer agree to retain all customer files
and records pursuant to Subsection 3.15 hereof.
8. USE OF TECHNOLOGY.
8.1 GENERALLY. MLIC agrees to provide General Agent and Broker-Dealer
access to and the right to use those technology-based systems and materials
(collectively, the "Systems") that MLIC determines to be reasonably required for
General Agent's or Broker-Dealer's performance of its obligations under this
Agreement. Said access may be provided through software provided by MLIC
directly to General Agent or Broker-Dealer and/or via the Internet. Upon
delivery of any such software, MLIC shall be deemed to grant to General Agent
and Broker-Dealer a non-transferable, non-exclusive, license to use the software
within the scope of their responsibilities under this Agreement and for no other
purpose. The access and use rights to the Systems granted hereunder shall apply
only to the version of the Systems MLIC makes available to General Agent or
Broker-Dealer from time to time. General Agent and Broker-Dealer shall not
reproduce, display, modify or distribute the Systems or any part thereof, or use
said Systems for any purpose outside the scope of General Agent's and
Broker-Dealer's responsibilities under this Agreement. General Agent and
Broker-Dealer shall not provide access to the Systems, nor to any software
provided to General Agent and Broker-Dealer by MLIC, in whole or in part, to any
third party including any consultant or contractor, without the express written
permission of MLIC, obtained in each instance in advance. General Agent and
Broker-Dealer shall hold in strict confidence, use only within the scope of
their responsibilities under this Agreement, not provide access to any third
parties, any passwords or other authentication or security procedures or devices
provided to General Agent or Broker-Dealer to access and/or use the Systems.
Upon termination of this Agreement, General Agent and Broker-Dealer shall
return all copies of the software or other indicia of the Systems in its
possession and retain nothing. Furthermore, General Agent and Broker-Dealer will
ensure that Representatives under this Agreement will abide by the provisions of
this Section 8.
8.2 DISCLAIMER. MLIC PROVIDES THE SYSTEMS, SOFTWARE AND ANY
INFORMATION STORED OR PROCESSED ON SAID SYSTEMS AND SOFTWARE "AS IS," AND
EXPRESSLY DISCLAIMS ALL WARRANTIES EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. General Agent
and Broker-Dealer understand and agree that the Systems and software contain
trade secrets and proprietary data of MLIC and that the Systems and software are
and shall at all times remain the sole and exclusive property of MLIC. This
provision shall survive termination of this Agreement.
8.3 LIMITED LIABILITY. In no event to the maximum extent permitted by
law shall MLIC be liable for any special, indirect, incidental, or consequential
damage (including, without limitation, damages for loss of business, profits or
income) arising out access, lack of access, use or lack of use of the Systems or
software, even if MLIC has been advised of the possibility of such damages.
Further, in no event to the maximum extent permitted by law shall MLIC be liable
to General Agent
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or Broker-Dealer for damages of any kind or nature arising from the access, lack
of access, use, or lack of use of the Systems or software to the extent said
damages exceed the Compensation that MLIC has paid to General Agent and
Broker-Dealer under this Agreement during the three (3) month period immediately
preceding the occurrence of the claim.
9. CONFIDENTIALITY AND TRADE SECRETS. All information or materials relating
to or prepared by a party to this Agreement which are obtained or reviewed in
any inspection or through the course of business during the term of this
Agreement, including but not limited to, MLIC's insurance policy information,
coverage plan and rates and MLIC's or CUNA Brokerage's policies and procedures,
practices, billing information, claims information, business relationship
information, statistical data, and any other know-how and information, shall be
held in strict confidence by the parties hereto. No party shall permit any third
party to copy, review or use the other party's confidential or proprietary
materials at any time. MLIC and CUNA Brokerage shall have sole and exclusive
ownership of all right, title and interest in "Trade Secrets" and Broker-Dealer
shall obtain no such rights hereunder. "Trade Secrets" shall be defined as a
whole or any portion thereof of any business, sales or legal information,
process, procedure, know-how that provides a party with a significant
competitive advantage in the development, construction, conduct, operation,
control, marketing, sale, management, administration, maintenance or servicing
of insurance, or financial products. This provision shall survive the
termination of this Agreement.
10. REPRESENTATIONS AND WARRANTIES
10.1 GENERAL REPRESENTATIONS AND WARRANTIES. Each party represents and
warrants to the others that:
(a) It is duly organized, validly existing and in good standing
under the laws of the state of its organization and has all the requisite power,
corporate or otherwise, to carry on its business as now being conducted and to
perform its obligations as contemplated by this Agreement;
(b) It has all licenses, approvals, permits and authorizations
of, and registrations with, all authorities and agencies, including
non-government self-regulatory bodies, required under federal, state and local
laws and regulations to enabled it to perform its obligations under this
Agreement; and
(c) The execution, delivery and performance of this Agreement
have been duly and validly authorized by all necessary "corporate" action, and
this Agreement constitutes the legal, valid and binding agreement of such party,
enforceable against it according to its terms, except as the same may be limited
by bankruptcy, insolvency, reorganization, moratorium, or other similar laws
relating to creditors' rights generally and general principles of equity.
10.2 BROKER-DEALER REPRESENTATIONS AND WARRANTIES. CUNA Brokerage and
Broker-Dealer each represent and warrant to the other that it is registered as a
broker-dealer with SEC under the 1934 Act and is a member in good standing of
FINRA.
11. MUTUAL INDEMNIFICATION.
----------------------
11.1 GENERAL AGENT AND BROKER-DEALER INDEMNIFICATION. General Agent
and Broker-Dealer, jointly and severally, will indemnify, defend and hold
harmless MLIC and CUNA Brokerage and their respective affiliates, officers,
directors, employees and agents from and against any claim, loss, damage,
expense or liability, judgment, settlements or regulatory actions, including
defense costs, reasonable attorneys' fees, penalties and fines, arising from, or
in any manner relating to: (a) any breach of any covenant or obligation pursuant
to this Agreement, including, but not limited to, any applicable law or
regulation, or any applicable rule of any self-regulatory organization by
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General Agent and Broker-Dealer or their Representatives and agents; (b) any
criminal, fraudulent or intentionally wrongful act or omission committed by
General Agent or Broker-Dealer or their Representatives and agents in connection
with the performance of General Agent's or Broker-Dealer's obligations
hereunder; or (c) the infringement, violation or misappropriation by General
Agent or Broker-Dealer or their Representatives and agents of any party's rights
with respect to any Trade Secrets, copyright, trademark, service mark, tradename
or similar proprietary rights conferred by common law, state law or by any law
of the United States arising out of or resulting from the performance of General
Agent's or Broker-Dealer's obligations under this Agreement.
11.2 MLIC AND CUNA BROKERAGE INDEMNIFICATION. MLIC and CUNA Brokerage,
jointly and severally, will indemnify, defend and hold harmless General Agent
and Broker-Dealer and their respective affiliates, officers, directors,
employees and agents from and against any claim, loss, damage, expense or
liability, judgment, settlements or regulatory actions, including defense costs,
reasonable attorneys' fees, penalties and fines, arising from, or in any manner
relating to: (a) any breach of any covenant or obligation pursuant to this
Agreement, including, but not limited to, any applicable law or regulation, or
any applicable rule of any self-regulatory organization by MLIC or CUNA
Brokerage; or (b) any criminal, fraudulent or intentionally wrongful act or
omission committed by MLIC or CUNA Brokerage in connection with the performance
of MLIC's or CUNA Brokerage's obligations hereunder.
11.3 SURVIVAL. This Section 11 shall survive termination of this
Agreement.
12. GENERAL COMPLIANCE. The parties hereto agree to comply with the existing
laws and rules or regulations of applicable local, state or federal regulatory
authorities, including, but not limited to, FINRA, SEC, Financial Crimes
Enforcement Network and the New York Stock Exchange, and with those which may be
enacted or adopted during the term of this Agreement regulating the business
conducted under this Agreement and in any jurisdiction in which the business
described herein is to be transacted, and to provide information or reports
relating to the respective duties and obligations hereunder pursuant to requests
by any regulatory authority having jurisdiction with respect thereto.
13. ANTI-MONEY LAUNDERING COMPLIANCE PROGRAM. The parties hereto acknowledge
and agree that insurance agencies and securities broker-dealers are subject to
certain regulations set forth under the Bank Secrecy Act (the "BSA") and
[SEC]352 of the USA PATRIOT Act (the "PATRIOT Act") related to adopting and
implementing an anti-money laundering compliance program ("AML Program"). Each
party hereto represents and warrants that it has effectively implemented a
written AML Program, which includes at a minimum: a) incorporating policies,
procedures and internal controls reasonably designed to assure compliance with
BSA and the PATRIOT Act; b) designating a compliance officer responsible for
day-to-day compliance with the BSA and the AML Program; c) providing education
and/or training of Representatives and other appropriate personnel concerning
their responsibilities under the AML Program, including training in the
detection of suspicious transactions; and d) providing for independent review to
monitor and maintain an adequate AML Program. The parties agree that MLIC and
CUNA Brokerage have the right, upon reasonable request, to examine the
description of the training provided to Representatives to ensure that the AML
Program of General Agent and/or Broker-Dealer provides adequate training for
Representatives. In the event General Agent and/or Broker-Dealer or
Representatives become aware of circumstances related to a customer that may be
suspicious, General Agent, Broker-Dealer or Representative, as the case may be,
agrees to promptly notify the Anti-Money Laundering Officer at MLIC regarding
such suspicious activity. Furthermore, the parties represent and warrant that
each has adopted and will continue to execute a customer identification program
(the "CIP") meeting the requirements under the PATRIOT Act. The parties agree
that MLIC and CUNA Brokerage have the right, upon reasonable request, to examine
the description of the CIP that General Agent and/or Broker-Dealer has adopted
and implemented.
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14. NOTICES. All notices, requests, demands and other communications required
or permitted under this Agreement shall be given in writing and shall be deemed
to be given upon receipt of any of the following delivery methods: (a)
personally delivered; or (b) sent by telecopier, facsimile transmission or other
electronic transmission; or (c) sent by United States certified or registered
mail, postage prepaid, return receipt requested; or (d) sent by private
overnight courier service. The respective addresses to be used for all notices,
requests, demands or communications are as follows:
MEMBERS Life Insurance Company
Attn: Licensing & Contracting Department
2000 Heritage Way
Waverly, IA 50677
CUNA Brokerage Services, Inc.
Attn: Licensing & Contracting Department
2000 Heritage Way
Waverly, IA 50677
Broker-Dealer:
General Agent:
15. INDEPENDENT CONTRACTORS. The relationship between the parties hereto is
an independent relationship and each party has sole responsibility and authority
for the conduct of its own business. General Agent and Broker-Dealer and their
Representatives and their agents are independent contractors with respect to
MLIC and CUNA Brokerage. No party hereto has the right to bind the other party
in any way.
16. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Wisconsin.
17. WAIVER. A waiver by any party of any terms and conditions of this
Agreement in any one instance shall not be deemed or construed to be a waiver of
any such term or condition for the future, or of any subsequent breach thereof,
nor shall it be deemed a waiver of performance of any obligation hereunder.
18. SEVERABILITY. If any portion or provision of this Agreement is held to be
invalid or unenforceable, the remainder of this Agreement shall continue in full
force and effect.
19. ASSIGNMENT. This Agreement shall be binding on and shall inure to the
benefit of the parties hereto and their respective successors and assigns; and
no party may assign rights or obligations under this Agreement without the prior
written consent of the other party.
20. HEADINGS. The headings in this Agreement are solely for convenience of
reference and shall not be given any effect in the construction or
interpretation of this Agreement.
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21. AMENDMENT. MLIC and CUNA Brokerage reserve the right to amend this
Agreement at any time, and the submission of an application by General Agent or
Broker-Dealer after notice of any such amendment has been sent to General Agent
and Broker-Dealer shall constitute that General Agent and Broker-Dealer are in
agreement to any such amendment.
22. ENTIRE AGREEMENT. This Agreement and any attachments hereto constitute
the entire understanding of the parties hereto relating to the subject matter
hereof and supersedes in its entirety all prior agreements between MLIC and CUNA
Brokerage and General Agent or Broker-Dealer, if any, all prior and collateral
agreements, understandings, statements and negotiations of the parties relating
to such subject matter.
23. COUNTERPARTS. This Agreement may be executed in counterparts and all
documents so executed shall constitute one agreement binding on the parties
hereto.
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Signatures appear on the following page.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.
MEMBERS LIFE INSURANCE COMPANY
Name:
Title:
By: __________________________________
CUNA BROKERAGE SERVICES, INC.
Name:
Title:
By: __________________________________
BROKER-DEALER
Name:
Title:
By: __________________________________
GENERAL AGENT
Name:
Title:
By: __________________________________
NOTE: Please return two signed copies of this Agreement to:
MEMBERS Life Insurance Company
Attn:
2000 Heritage Way
Waverly, IA 50677
Upon acceptance, one countersigned copy will be returned to General Agent/
Broker-Dealer for its files.
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EXHIBIT A
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SELLING AND SERVICES AGREEMENT
FOR
REGISTERED ANNUITY PRODUCTS
GENERAL LETTER OF RECOMMENDATION
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General Agent and Broker-Dealer hereby certify to MLIC that all the following
requirements will be fulfilled in conjunction with the submission by General
Agent or Broker-Dealer of licensing/appointment papers for all applicants as
agents of MLIC. General Agent or Broker-Dealer will, upon request, forward proof
of compliance with same to MLIC in a timely manner.
1. We have made a thorough and diligent inquiry and investigation relative to
each applicant's identity, residence, business reputation, and experience and
declare that each applicant is personally known to us, has been examined by
us, is known to be of good moral character, has a good business reputation,
is reliable, is financially responsible and is worthy of a license and
appointment as an agent of MLIC. This inquiry and background investigation
has included a credit and criminal check on each applicant. Based upon our
investigation, we vouch and certify that each individual is trustworthy,
competent and qualified to act as an agent for MLIC to hold himself/herself
out in good faith to the general public.
2. We have on file appropriate state insurance department licensing forms or a
Form U-4 which was completed by each applicant. We have fulfilled all the
necessary investigative requirements for the registration of each applicant
as a registered representative through our FINRA member firm, and each
applicant is presently registered as a FINRA registered representative. The
above information in our files indicates no fact or condition which would
disqualify the applicant from receiving a license or appointment and all the
findings of all investigative information is favorable.
3. We certify that all educational requirements have been met for the specific
state each applicant is licensed in, and that all such persons have fulfilled
the appropriate examination, education and training requirements.
4. We certify that each applicant will receive close and adequate supervision,
and that we will make inspection when needed of any or all risks written by
these applicants, to the end that the insurance interest of the public will
be properly protected.
5. We will not permit any applicant to transact insurance as an agent until duly
licensed therefor and appointed by MLIC. No applicants have been given a
contract or furnished supplies, nor have any applicants been permitted to
write, solicit business, or act as an agent in any capacity, and they will
not be so permitted until the certificate of authority or license applied for
is received.
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SELLING AND SERVICES AGREEMENT
FOR
REGISTERED ANNUITY PRODUCTS
PRODUCTS AND COMPENSATION SCHEDULE
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This Products and Compensation Schedule (this "Schedule") is incorporated
into the Selling and Services Agreement (the "Agreement") as of the Effective
Date of the Agreement. MLIC agrees to compensate General Agent and
Broker-Dealer, as appropriate, under the Agreement as set forth below.
Notwithstanding any provisions in the Agreement to the contrary, MLIC
reserves the right to discontinue the availability of any of the Products or
modify the Compensation at any time, subject to thirty (30) days written
notice. Subject to the provisions of the Agreement, General Agent and
Broker-Dealer shall be entitled to receive the Compensation for the Products
listed in this Schedule. Capitalized terms in this Schedule and not otherwise
defined herein will have the meanings set forth in the Agreement.
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For each product sale or transaction the following rules apply:
SELLING AND SERVICES AGREEMENT
PRODUCTS AND COMPENSATION SCHEDULE
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COMMISSION RATE
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