EXHIBIT 1.A.3(B)(I)
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NEW ENGLAND LIFE INSURANCE COMPANY
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MANAGING
PARTNER
CONTRACT
SECTION PAGE
1 Definitions 2
2 Duties 2
3 Responsibilities 2
4 Legal Relationship 2
5 Scope of Authority 2
6 Limitation of Authority 3
7 Books of the Firm 3
8 Office Supplies 3
9 Right to Audit 3
10 Commissions, Fees, Expense Allowances 3
11 Payment of Allowances 4
12 Commissions after Termination of the Firm 4
13 Special Rules for Compensation 4
14 Personal Business 4
15 Payment of Fees 4
16 Chargebacks 5
17 Forfeiture of Contract 5
18 Termination of Firm 5
19 Right of Offset 5
20 Assignment 5
21 Attribution of Acts of Partners 6
22 Service Xxxx License 6
23 Complete Agreement 6
[LOGO OF THE NEW ENGLAND APPEARS HERE](R)
The Managing Partner Contract is made and entered into by and among the NEW
ENGLAND LIFE INSURANCE COMPANY of Boston, MA, referred to as "Company," and
_____________________________________________
referred to as "Managing Partner."
The provisions set forth herein, the Schedule of Managing Partner Compensation
and all Amendments attached hereto are hereby made part of the Managing Partner
Contract, referred to as "the Contract."
The Contract shall supersede all previous agreements between the Company and
the Managing Partner with respect to policies or coverages, credited to the
Firm, whose Home Office Receipt Dates are on or after the Effective Date of the
Contract.
The parties to the Contract agree that the law of the Commonwealth of
Massachusetts shall control the interpretation of the Contract.
The Contract shall take effect on the __________ day of ______________,
19____ referred to as "the Effective Date."
New England Life Insurance Company
by: ____________________________________________________________________________
Authorized Officer (date signed)
Managing Partner
by: ____________________________________________________________________________
Managing Partner (date signed)
by: ____________________________________________________________________________
Managing Partner (date signed)
by: ____________________________________________________________________________
Managing Partner (date signed)
The Company hereby appoints the Managing Partner as general agent to market
Insurance Products in the following territory assigned to the Firm:
(See Territorial Attachment)
The Company may at any time change the territory, open said territory to other
agents, appoint other agents or Managing Partners to operate in said territory
on a national or regional basis, or discontinue doing business in all or any
part of said territory.
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SECTION 1
DEFINITIONS
The following definitions are adopted for use in the Contract:
(A) "Firm" shall mean the entire operation conducted by the Managing Partner
while continuing to perform the duties of a Managing Partner under the
Contract.
(B) "Insurance Product(s)" shall mean individual life insurance products
(including universal life and variable life), annuity contracts, disability
insurance products, group pension products, group life and health products
and such other financial products as may be designated from time to time by
the Company.
(C) "NES" shall refer to New England Securities Inc., a broker dealer affiliated
with the Company.
SECTION 2
DUTIES
The Managing Partner agrees that he will devote his full-time during normal
business times to honestly and faithfully perform for the Company the regular
duties of a Managing Partner, and will conform to the Contract and the rules and
instructions of the Company concerning its Firms. He further agrees that as a
Managing Partner he has a fiduciary relationship to the Company.
His duties shall also include the recruitment, appointment and training of
agents and brokers so that the Company will be adequately represented throughout
his territory, the maintenance of a financially sound Firm, the provision of
service to policyholders of the Company, and the collection of premiums for the
Company.
Further, the Managing Partner agrees to exclusively market the Insurance
Products of the Company and not to market, whether directly or indirectly,
without the express written permission of the Company, products of other
companies which in the judgment of the Company compete with Insurance Products
of the Company or to accept compensation relating to the sale of such other
products. The Managing Partner agrees to terminate within 180 days any contract
or agreement he may have on the Effective Date with any company or organization
for which he markets products which in the judgment of the Company compete with
the Insurance Products of the Company.
The Managing Partner shall not affiliate with any registered investment advisor
or become a registered representative of a broker/dealer other than NES without
the prior consent of the Company.
The Managing Partner also agrees that for a period of 90 days after termination
of the Contract he will not recruit or contract with any of the agents he has
contracted with in his capacity as a Managing Partner of the Company to solicit
on behalf of any other insurance company or financial services organization in
the territory assigned to the Firm. If the 90 day period shall be deemed
unenforceable at law, then such period shall be reduced to such period as shall
be legally enforceable.
SECTION 3
RESPONSIBILITIES
The Managing Partner shall be responsible for all Company-related moneys,
checks, receipts, applications and policies of the Company collected by the
Managing Partner or any person employed or under contract with him.
The Managing Partner hereby agrees to indemnify the Company and hold it harmless
from all claims in connection with the Firm of agents, employees or other
persons.
The Managing Partner shall furnish to the Company a bond satisfactory to the
Company for the faithful performance of all duties and responsibilities as set
forth by the Contract, the rules and regulations of the Company pertaining to
the Firm, its agents, employees and former agents and employees. The Managing
Partner shall be responsible for his share of the cost of employee benefits as
established by the Company for agents, employees and former agents and employees
of the Firm, predecessor firms or firms merged with the Firm.
SECTION 4
LEGAL RELATIONSHIP
It is agreed that the Managing Partner is an independent contractor with respect
to the Company and that nothing herein shall create the relationship of employer
and employee between the parties or between the Company and any employee or
agent of the Managing Partner. As an independent contractor the Managing Partner
shall be credited compensation and expense allowances as indicated in the
Contract and shall at all times be responsible to the Company for any amounts
advanced by the Company and any debts owed to the Company by him.
SECTION 5
SCOPE OF AUTHORITY
The Managing Partner is hereby authorized, subject to the rules and regulations
of the Company, to appoint, change the status of and contract with agents and
brokers, to procure, personally and through such agents and brokers,
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applications for all products of the Company and to forward them to the Home
Office of the Company for consideration. The Managing Partner is also authorized
to deliver policies and premium receipts of the Company upon receipt of the
payment of the amounts specified therein and upon compliance with the terms and
conditions governing such delivery.
SECTION 6
LIMITATION OF AUTHORITY
The Managing Partner is forbidden to make, alter or discharge any policies,
contracts or agreements on behalf of, or in the name of, the Company or to waive
any forfeitures. Except as otherwise agreed to in writing by a duly authorized
officer of the Company, the Managing Partner is also forbidden to incur any
obligations or liability for which the Company shall be responsible.
SECTION 7
BOOKS, RECORDS AND BANK DEPOSITS OF THE FIRM
The Managing Partner shall keep complete and accurate records of all
transactions involving the Company, shall maintain expense vouchers satisfactory
to the Company, shall promptly enter all receipts and disbursements in the
cashbook provided by the Company. The Managing Partner shall keep all funds
collected and received for or on account of the Company on variable policies and
contracts separate and distinct from personal or other funds and shall deposit
both sets of funds in such bank or trust company as shall be designated by the
Company in an account entitled "New England Life Insurance Company," (Name of
Managing Partner), Managing Partner for New England Life Insurance Company
funds. The Managing Partner shall hold the same in trust for the Company in
accordance with its rules and instructions and shall not use such funds for any
unauthorized purpose. Alternatively, provided that separate and distinct books,
records and subaccounts are kept, the Managing Partner may deposit all funds
collected and received including those for variable policies in one account
entitled "New England Life Insurance Company (Name of Managing Partner),
Managing Partner."
The books and records of the Firm which document financial transactions of the
Firm or which contain policyholder information whether or not physically located
in the Firm shall be the property of the Company. The Managing Partner agrees to
furnish during regular business hours to the Company's authorized representative
such books and records of the Firm as the Company may request.
SECTION 8
OFFICE SUPPLIES, FURNITURE, EQUIPMENT AND FIXTURES
Any office supplies, furniture, equipment, personal computers, hardware and
software and fixtures furnished by the Company shall at all times be the
property of the Company, subject to the use and control of its authorized
representatives and subject to the particular terms and conditions as have been
or shall be agreed upon between the Managing Partner and the Company. The
Company will make available such prospecting and advertising material,
stationery, books, records and blank forms as it may deem necessary for the
proper conduct of the business of the Firm. In the event of termination of the
Firm for any reason whatsoever, all of the above property shall be turned over
to the Company or its authorized representative on demand.
SECTION 9
RIGHT TO AUDIT
The Company shall have the right at any time to audit and inspect any books and
records of the Managing Partner or books and records to which the Managing
Partner has access which relate to the operation of the Firm or which relate to
any entity marketing or providing financial advice, products or services. This
right shall survive the termination of the Contract for a period of three years.
All information obtained by such audit shall be treated as confidential by the
Company and its representatives and shall not be disclosed to third parties
except as required by law or judicial or regulatory rule.
SECTION 10
COMMISSIONS, SERVICE FEES AND EXPENSE ALLOWANCES PAYABLE DURING OPERATION OF THE
FIRM
During the operation of the Firm, the Company shall pay to the Managing Partner:
(A) First year and renewal commissions, service fees and other forms of
compensation payable to agents and brokers by the Managing Partner under
contracts provided by the Company for use by the Managing Partner with any
agent or broker, including the Managing Partner's personal business;
(B) The overriding commissions set forth in the effective Schedule of Overriding
Commissions;
(C) The service fees set forth in the effective Schedule of Service Fees; and
(D) The expense allowances set forth in the effective Schedule of Expense
Allowances.
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SECTION 11
THE PAYMENT OF EXPENSE AND TRAINING ALLOWANCES
The Firm will be paid expense and training allowances as specified by the
Contract only as reimbursement for the expenses of maintaining the Firm and
training agents. Such reimbursement shall be limited to the allowances
stipulated in the Contract, shall be paid by the Managing Partner to the person
(if any) designated in the Contract, and the expense allowances shall not in any
event exceed the total amount of allowable expenses actually incurred by the
Managing Partner. No other expenses of any kind or nature shall be charged to,
or will be paid or allowed by the Company, except as approved in writing by a
duly authorized officer of the Company. Expense and training allowances will be
paid only to the extent permitted by law
The Managing Partner shall furnish the Company with satisfactory proof for any
expense and training allowances so reimbursed, and any such allowances paid by
the Company which have not been paid by the Managing Partner to the person (if
any) designated in said rules or Contract or for which the Managing Partner has
not furnished proof satisfactory to the Company shall be refunded by the
Managing Partner.
"Satisfactory proof" supporting the expense allowances reimbursed by the Company
shall mean such proof as shall enable the verification of expenses which clearly
support the expense limits required by law for the Company.
No expense allowances will be paid on amounts collected for temporary term
insurance.
SECTION 12
COMMISSIONS AFTER TERMINATION OF FIRM
After termination of the Managing Partner, except as otherwise provided herein,
the Company will pay to the Managing Partner, or his assigns, on policies or
coverages placed under the Contract, the overriding commissions set forth in
Section 10 above, except that no such overriding commissions will be payable
after the death of the Managing Partner or if the Managing Partner qualifies for
payments under the Managing Partner Retirement Plan ("MPRP"). Any such payments
by the Company will be made only if all conditions required by the Contract
shall have been fulfilled by the Managing Partner. After termination of the
Managing Partner, the Company may at its option, pay to any person employed by
or under contract with the Managing Partner any commission or other item payable
or owing from the Managing Partner to such person and offset such payments
against any amount due the Managing Partner, his executor, administrator or
assigns. Payments provided by this Section shall be made within a reasonable
time after termination of the Managing Partner.
SECTION 13
SPECIAL RULES FOR COMPENSATION
Under the following circumstances, the payment of compensation shall be
determined, not by the Schedule of Managing Partner Compensation and Allowances,
but by such rules and practices as may be established by the Company:
(A) When any policy or contract is converted or changed; or
(B) When any new policy, contract or coverage is issued as the result of a
conversion or change; or
(C) When in the judgment of the Company any new policy, contract, or
coverage replaces previous insurance in the Company; or
(D) When any special class policy or contract is issued; or
(E) When any policy, contract or coverage for which an agent of the Managing
Partner is agent of record and which is credited to another Firm of the Company.
No compensation will be paid on amounts collected for temporary term insurance.
SECTION 14
PERSONAL BUSINESS OF THE MANAGING PARTNER
It is agreed that with respect to business for which the Managing Partner is an
agent of record ("personal business"), placed during the tenure of the Managing
Partner, the Managing Partner will be compensated in accordance with the
compensation schedule of the Incentive Career Contract ("ICC") in effect at the
time the business is placed. The Managing Partner acknowledges that he is not a
party to the ICC and shall receive no benefits whatsoever under the ICC. All
compensation to the Managing Partner on personal business shall be paid pursuant
to this Contract.
SECTION 15
PAYMENT OF FEES
The Company will pay the fees of medical examiners and will also pay license
fees in accordance with local laws or ordinances, within such limits as the
Company may prescribe.
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SECTION 16
CHARGEBACKS
Compensation and expense allowances shall be charged back to the Managing
Partner in the following cases:
(A) On policies or contracts on which premiums or purchase payments are refunded
for any reason by the Company except when only the portion of the premium
attributable to a period after death is refunded as a result of a death claim;
or
(B) On policies or contracts on which first year commissions, whether earned or
advanced, of agents or brokers are charged back by the Company; or
(C) As is otherwise specifically provided herein.
SECTION 17
FORFEITURE OF CONTRACT
It is expressly agreed between the parties hereto that if the Managing Partner
shall withhold or convert to his own use, or for the benefit of others, any
moneys, securities, or other property of the Company or its subsidiaries; or if
he shall knowingly act in a fraudulent or unlawful manner as such Managing
Partner; or if he shall knowingly materially misrepresent information on his
application for appointment as Managing Partner, the Contract shall at once
terminate without notice, and thereafter the Managing Partner's claims for
compensation or any other benefit under the Contract or any contract with any of
the Company's subsidiaries shall be forfeited and void.
The Managing Partner, his executor or administrator, shall remain liable after
said termination to the Company and its subsidiaries for all losses which may
result from any of the above-described actions and misrepresentations, and any
other debts he may owe the Company or its subsidiaries or which the Company may
have guaranteed on his behalf. Such debts shall become due and payable
immediately upon termination.
SECTION 18
TERMINATION OF THE CONTRACT
The Contract shall terminate on the death of the Managing Partner. Except as
provided in Section 17, each of the parties hereto reserves the right to
terminate the Contract at will and without cause at any prior time upon giving
sixty (60) days' notice in writing. Notice of termination of the Contract shall
also be notice of termination of the Managing Partner's contracts with the
subsidiaries of the Company unless specifically stated to the contrary in such
contracts.
Any debt including advances not earned which are owed the Company by the
Managing Partner at the time of termination shall become due and payable 60 days
after termination. Any final expense allowance shall be paid to the Managing
Partner within 60 days after termination.
In cases in which the total of the amounts advanced by the Company to the
Managing Partner and debts owed to the Company by the Managing Partner ("Total
Indebtedness") on his termination exceeds the present value (as determined by
the Company's rules then in effect) of the future amounts payable on certain
products pursuant to the Contract, the Company, at its discretion, may deduct
such present value from such Total Indebtedness in lieu of paying such future
amounts to the Managing Partner.
SECTION 19
RIGHT OF OFFSET
It is understood and agreed that the Company may at any time offset against any
commissions or other items payable or owing from the Company or its subsidiaries
to the Managing Partner, his executor, administrator, beneficiaries or assigns,
any indebtedness due from the Managing Partner to the Company or its
subsidiaries, whether such indebtedness is based on debts accrued under the
Contract or any other agreement, implied or written, with the Company or its
subsidiaries.
By executing the Contract, the Managing Partner specifically recognizes that he
will make a collateral assignment contemporaneously herewith to the Company of
life insurance on his life issued by the Company to the extent that there is any
debt owing to the Company or its subsidiaries at the time of his death.
SECTION 20
ASSIGNMENT
No assignment or attempted assignment of the Contract, or any of the rights
accruing hereunder, by the Managing Partner, his executor or administrator,
shall be effective against the Company unless the assignment (a) is set forth on
Company-approved forms; (b) is agreed to in writing by an authorized officer of
the Company; (c) clearly designates the assignee; (d) recites the Company's
first and prior lien on commissions and other payments under the Contract; and
(e) is filed with the Company at its Home Office.
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SECTION 21
ATTRIBUTION OF ACTS OF PARTNERS
If the Managing Partner is a partnership, all acts of any of the partners,
whether or not authorized by the other partner(s), shall be considered to be
acts of the partnership and be attributed thereto.
SECTION 22
SERVICE XXXX LICENSE
(A) Grant of License
The Company hereby grants to the Managing Partner ("Licensee") a
nonexclusive, personal and nontransferable right and license to use the
service marks "The New England", the logo and corporate signature of The New
England and the trade name "New England Life Insurance Company" (hereinafter
referred to as "Marks") in the territory of the Managing Partner described
on the first page of the Contract in connection with the products and
services of the Company and its subsidiaries upon the terms and conditions
contained herein.
(B) Term
This License shall be in effect as long as the Licensee is a Managing
Partner of the Company.
(C) Use and Ownership of Service Marks
The Managing Partner shall use the Marks only with the products and services
of the Company and its subsidiaries and in accordance with the manuals and
instructions distributed to the Managing Partner. The Managing Partner
acknowledges the Company's exclusive right, title and interest in and to the
Marks and will not at any time do or cause to be done any act or thing
contesting or in any way impairing any part of such right, title and
interest.
(D) Termination
This License shall terminate:
1. when the Contract terminates, or
2. if the Managing Partner makes any assignment of assets or business for
the benefit of creditors or if a trustee or receiver is appointed to
administer or conduct the Managing Partner's business or affairs or if
the Managing Partner is adjudged in any legal proceeding to be either a
voluntary or involuntary bankrupt, or
3. if the Managing Partner fails to comply with any provision of this
License, after written notice thereof to the Managing Partner by the
Company.
Upon termination of this License the Managing Partner shall immediately cease
and desist from all use of the Marks in any way, including any use as a trade
name, and will deliver up to the Company all material, papers and other media
upon which the Marks appear. The Managing Partner shall at no time adopt or use
any word or xxxx which is likely to be similar to or confused with the Marks,
without the Company' prior written consent, and such consent shall terminate
upon termination of this License.
SECTION 23
COMPLETE AGREEMENT
The parties understand and agree that the right of either party to terminate
this Contract at will and without cause at any time upon giving sixty (60) days'
notice in writing, as provided in Section 18, is an integral part of this
Contract. Therefore, no change, waiver, or modification of this right to
terminate, whether in writing, verbally, or through course of conduct, shall be
valid, unless memorialized in writing, signed by the Managing Partner and a
Senior Officer of the Company, and specifically designated as an Amendment to
Section 18 of the Managing Partner Contract.
The parties further agree that the Managing Partner Contract constitutes the
entire agreement between the parties with respect to the relationship of the
parties and with respect to the right of either party to terminate this Contract
at will and without cause, superseding all other prior or contemporaneous
understandings or agreements between the parties pertaining to the subject
matter of this Contract. The parties agree that there are no representations,
understandings or agreements relative thereto which are not fully expressed by
the Managing Partner Contract.
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NEW ENGLAND LIFE INSURANCE COMPANY
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MANAGING
PARTNER
CONTRACT
SCHEDULE OF MANAGING PARTNER
COMPENSATION AND ALLOWANCES
The Schedule of Managing Partner Compensation and Allowances shall consist of
the following Parts and any amendment or revision thereto ("the Schedule"):
PART I:
Definitions and General Provisions
PART II:
Schedule of Overriding Commissions
PART III:
Schedule of Service Fees
PART IV:
Schedule of Expense Allowances
1. Cash Monthly Allowance
2. New Business Allowance
3. Productivity Allowance
4. Recruiting Allowance
5. Growth Allowance
6. Lives Allowance
7. DI Incentive Driven Compensation
8. Firm Employees Retirement Plan
9. Social Security
10. Experienced Agent Allowances
11. Supervisory Allowances
12. Transitional Allowances
PART V:
Incentive Training Allowances
The provisions of the Schedule shall apply to Individual Life, Disability
Insurance and Annuities and shall be subject to all the terms and conditions
of the Contract.
The right is reserved by the Company to amend, revise, or terminate the
Schedule, any Part thereof or any amendment to the Schedule. Any amendment to
or revision of Part II shall apply only to policies, coverages or changes
credited to the Firm on or after the effective date of the amendment or
revision. Any amendment to or revision of Part III shall apply to renewal
premiums and purchase payments credited to the Firm on or after the effective
date of the amendment or revision.
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PART I: DEFINITIONS AND GENERAL PROVISIONS
This Part I is effective on or after January 1, 1998.
A. DEFINITIONS
1. Home Office Receipt Date ("XXXX")
The date on which the policy or coverage application is received at the
Company Home Office.
2. Full Time Agent
An agent who the Company has determined as having met the requirements for a
full-time contract and for entitlement to fringe benefits.
3. First Year Commissions ("FYC")
Those first year commissions set forth in the agent's and broker's contracts
for individual life, DI, and annuity products, except as otherwise
specifically noted. Any reference to "FYC all products" shall mean all
Insurance Products and all products of NES
4. NBA Unit
A unit of one or more agents under Full Time Agent contracts or sub-agents
under corporate agent contracts whose FYC credited in the previous twelve
months exceeded NBA Threshold I. Units of two or more must be approved by
the Company.
5. NBA Threshold
For a one-member NBA Unit, the amount shown below of FYC issued by the
Company, credited to the Unit through any Firm of the Company:
1997 THRESHOLDS FOR
NBA THRESHOLDS ONE-MEMBER UNIT*
I $139,800
II 167,800
III 223,600
IV 279,450
For a two member Unit, add $27,950 to the Thresholds for a one-member Unit.
For larger Units, add another $55,850 for each additional person in the
Unit.
6. Qualified Business
Individual life insurance, excluding Paid-Up Additions Riders, VL
unscheduled payments, single premium annuities, Single Premium Whole Life,
and excess premiums on UL, VUL, VULC, FTD, and VSL
7. Override Unit
A unit of one or more agents under Full Time Agent contracts or sub-agents
under corporate agent contracts whose annualized FYC exceeds Override
Threshold I. Units of two or more must be approved by the Company. Any
changes to the composition of a Unit shall not be effective until approved
in writing by the Company.
8. Override Threshold
For a one-member Override Unit, the amount shown below of annualized first
year commissions on all individual products issued by the Company in a given
calendar year, credited to the Unit through any Firm of the Company:
NBA OVERRIDE 1997 THRESHOLDS FOR
THRESHOLDS ONE-MEMBER UNIT*
I $150,000
II 223,600
For a two member Unit, add $27,950 to the Thresholds for a one-member Unit.
For larger Units, add another $55,850 for each additional person in the
Unit.
If annualized FYC credited to a Unit on disability insurance policies
exceeds $33,550* before Override Threshold I is reached, then the excess
will not be counted toward any of the Override Thresholds.
B. GENERAL PROVISIONS
1. Special Rules for Compensation and Allowances for Universal Life policies
Notwithstanding any other provision of the Contract, payment of
compensation and expense allowances shall be determined by such rules and
practices as may be established by the Company whenever any change is made
which affects the Target Premiums/+/ for Universal Life policies.
2. Riders
Compensation on all riders attached at issue of the basic policy, unless
specified elsewhere in this Schedule, is payable at the rate for the basic
policy. Dividends (and additional premiums paid to provide coverage where
the dividends are insufficient) applied to provide coverage under any
policy provision are not subject to compensation.
3. Limitation on Payment
Compensation and expense allowances will be paid only to the extent
permitted by law. No payment will be used by the Managing Partner to effect
compensation in excess of the limits prescribed by the New York Insurance
Law.
*Future year thresholds and multi member increments will be as published by
the Company.
+As used in the Contract, Target Premiums shall be as published by the
Company.
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4. Modified Cash Surrenders
If a Modified Cash Surrender Value is paid on surrender of a policy, then
the difference in commissions between what has been paid on the policy and
what would have been paid on a yearly renewable term policy for the same
amount and issue age will be charged back.
5. Securities Commissions
Overriding commissions will not be paid if the Managing Partner is barred
from receiving such under National Association of Securities Dealers
regulations. In the event a Flexible Payment Retirement Annuity or Variable
Annuity is surrendered under the provisions of section 27(f) of the
Investment Company Act of 1940, or comparable legislation or regulation,
overriding commissions will be charged back.
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PART II: SCHEDULE OF OVERRIDING COMMISSIONS
This Part II is effective for policies or coverages, credited for the purposes
of this Part II to the Firm, whose XXXX falls on or after January 1, 1998.
A. STANDARD OVERRIDING COMMISSION SCALES.
When first and renewal premiums/purchase payments (not in excess of Target
Premiums on UL or scheduled premiums on VL) are received and credited by the
Company, overriding commissions equal to the following percentages of such
premiums or purchase payments, except for adjustments pursuant to subsections B,
C & D below, shall be paid:
PERCENTAGE OF PREMIUMS OR PURCHASE PAYMENTS
POLICY YEARS 1 2 3 4 5 6 7 8 9 10 11+
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1. LIFE INSURANCE - EXCEPT UL & VL
PERMANENT INSURANCE
Whole Life - Band 1 (OL1)
Limited Pay Life (10 or more premiums) (LPL)
Graded Premium Life (issue ages 60+)* (GPL)
Full Time Agents - Contract years 1-4 5 7 5 3 2 2 0 0 0 0 0
All Other Agents & Brokers 0 7 5 3 2 2 2 2 2 0 0
Whole Life - Band 2 (OL2)
Modified Premium Life - Band 2 (MPL2)
Survivorship Life (SWL)
Modified Premium Survivorship Life (MPSL) 0 7 5 2 1.5 1.5 1.5 1.5 1.5 1.5 0
Modified Premium Life - Band 1 (MPL1)
Pension Whole Life (POL) 0 8 6 3 1.5 1.5 1.5 1.5 1.5 1.5 0
Limited Pay Life (less than 10 premiums) (LPL) 0 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 0 0
Graded Premium Life (issue ages below 60)*(GPL) 0 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 0
Endowment @95 Paid-Up at 65 (EP65) 0 4 3 1.5 1.5 1.5 1.5 1.5 1.5 1.5 0
*Rates shown are paid on the renewal portion of the premium only.
TERM INSURANCE
YRT 95 (YRT 70 in NY) 0 3 3 3 3 3 3 3 3 3 0
YRT 4 0 0 0 0 0 0 0 0 0 0 0
10, 15, 20 Year Term (10T, 15T, 20T) 0 3.5 3 2.5 2 1 1 1 1 1 0
2. UNIVERSAL LIFE
UL-CCL 2 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 0
UL-91 - Bands 1-3 4 4 4 3 1.5 1.5 1.5 1.5 1.5 1.5 0
- Band 4 2 2 2 1.5 1 1 1 1 1 1 0
First to Die (FTD) 4 4 4 4 2 1.5 1.5 1.5 1.5 1.5 0
3. VARIABLE LIFE INSURANCE
Whole Life - Band 1 (VOL1)
Full Time Agents - Contract Years 1-4 5 5 3.5 3 3 3 0 0 0 0 0
All Other Agents & Brokers 0 5 3.5 3 3 3 2 2 2 0 0
Whole Life - Band 2 (VOL2) 0 7 5 2 1.5 1.5 1.5 1.5 1.5 1.5 0
Life Paid-Up at 65 (VL65) 0 4 3 1.5 1.5 1.5 1.5 1.5 1.5 1.5 0
Variable Universal 97 - Band 1 (VUL1) 4 3 3 3 3 2 2 1 0 0 0
- Band 2 (VUL2) 4 3 3 2 2 2 2 1 1 0 0
Variable Universal Survivorship (VSL) 4 4 4 4 2 1.5 1.5 1.5 1.5 1.5 0
Variable Universal COLI (VULC) 1 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 0
4. DISABILITY INSURANCE (DI) 0 5.5 5 4.5 1.5 1.5 1 1 1 1 0
(Excluding premium refund benefit riders)
5. ANNUITIES
Zenith Accumulator (ZAVA)** 0 .75 .75 .75 .75 .75 .75 .75 .75 .75 0
American Growth Series (AGS)** - Normal Option 0 .75 .75 .75 .75 .75 .75 .75 .75 .75 0
American Growth Series (AGS)** - Trail Option 0 .10 .10 .10 .10 .10 .10 .15 .15 .15 0
**Notes - Trail option rates are percentages of assets.
AGS - rates on renewal deposits are not guaranteed; renewal rates may
change in the future for prior issues.
AGS - normal option rate is reduced by 5% for each year that attained
age is over 75.
ZAVA - rates on renewal deposits are reduced for maturities of less
than 10 years.
10
SINGLE PREMIUM/PURCHASE PAYMENT
POLICIES
When single premiums/purchase payments, or premiums in excess of target on UL or
scheduled on VL, are received and credited by the Company, overriding
commissions equal to the following percentages of such premiums or purchase
payments shall be paid:
Percentage of Premiums or
POLICY Purchase Payments
1. Universal Life - Excess over Target:
UL CCL & 91 Band 4 0.5
UL 91 Bands 1-3, FTD and VSL 1.0
2. Paid Up Additions Rider 0.5
3. Variable Life Unscheduled Payment 0.5
4. Variable Universal 97-Excess over Target
- Band 1 0.5
- Band 2 0.4
5. Variable Universal COLI-
Excess over Target: 0.5***
6. Single Premium Deferred Annuity 0.5
7. Single Premium Immediate Annuity 0.5
8. Single Premium Variable Life - Band 1 0.65*
- Band 2 0.30**
*0.50 over age 75 for single life policies 0.35 for additional premium.
** 0.25 over age 75 for single life policies
*** 0.3 in years 11+
B. TOP PRODUCER ADJUSTMENT
On Qualified Business credited to an Override Unit in any calendar year after
Override Threshold I is reached by the Unit in such year, the overriding
commissions payable shall be the following percentages of the overriding
commissions in Subsection A above:
Percentage of Overriding
Commissions in Subsection A
after Override Threshold I is
reached but before Override
Threshold II is reached 60%
after Override Threshold II
is reached 25%
C. PERSONAL PRODUCING MANAGING PARTNER
If in any calendar year the personal volume credited by the Company to the
Managing Partner for individual life insurance and annuities exceeds one half of
the total volume credited under the Contract for such insurance and annuities to
the Firm, the overriding commissions for the Managing Partner will be reduced by
factors established by the Company.
D. OVERRIDES PAYABLE
Anything in the Contract to the contrary notwithstanding, no overriding
commissions will be paid after the death of the Managing Partner, either before
or after termination of the Firm. Nor will overriding commissions be paid after
the termination of the Firm if the Managing Partner qualifies for payment under
the Managing Partner Retirement Plan (MPRP). In the event of the death of a
Managing Partner in a partnership Firm, the overriding commissions attributable
to the deceased Managing Partner's share of the partnership shall terminate.
PART III: SCHEDULE OF SERVICE
FEES
This Part III is effective for renewal premiums or purchase payments credited
for the purposes of this Part III to the Firm on and after January 1, 1998.
While this Part III is in effect, when renewal premiums or purchase payments are
credited to the Firm before termination of the Firm, the following amounts shall
be paid by the Company as Service Fees:
Percentage of
Premiums or
POLICY Purchase Payments
1. Life Insurance - except UL & VL
All except EP 65 & YRT 4 1.0#
EP 65 0.5
YRT 4 0.0
2. Universal Life
Up to Target Premium
Years 2-10 0.5
Years 11+ 1.0
Excess over Target Premium
UL-CCL 0.0
UL 91 Bands 1-3
and First to Die 1.0
UL 91 Band 4 0.67
3. Variable Life Insurance
Whole Life 1.0
Life paid-up at 65 0.5
Variable Universal 97
Up to Target Years 2-10 0.5
Years 11+ 1.0
Excess over Target Band I 1.0
Band II 0.67
Variable Universal
Survivorship
Up to and over Target 1.0
Variable Universal COLI
Up to Target 1.0
Excess over Target 1.17*
4. Disability Insurance
All policies 0.5
(excluding premium refund
benefit rider)
5. Annuities**
ZAVA and AGS- Normal
Option
Years 2-10 1.15
Years 11+ 1.90
AGS - Trail Option
Years 2-7 1.15
years 8+ 1.10
#For YRT 4, paid on renewal portion of the premium only.
*0.67 in years 11+; for brokers, 1.4 except 0.8 in years 11+.
** Notes -- AGS rates as % of purchase payments are reduced by 5% for
each year that attained age is over 75.
-- For AGS-Trail Option, an additional service fee of .15% of
assets is payable in policy years 11+.
-- Service Fees will not be paid on Variable Annuities if the
Corporate Developmental Managing Partner is barred from
receiving such under the National Association of
Securities Dealers regulations.
-- For AGS-rates on renewal deposits are not guaranteed;
renewal rates may change in the future for prior issues.
11
PART IV: SCHEDULE OF EXPENSE ALLOWANCE
The Managing Partner will be reimbursed for the expenses of maintaining the
Firm. Such reimbursement shall be limited to the allowances set forth in the
Contract and shall not in any event exceed the total amount of allowable
expenses actually incurred by the Managing Partner in fulfilling the Managing
Partner's obligations under the Contract. No other expenses of any kind or
nature shall be charged to, or will be paid or allowed by, the Company, except
as approved in writing by a duly authorized officer of the Company.
The Expense Allowances in any month are payable only while this Part IV is in
effect, shall be payable only if the Firm was active during the entire preceding
month and shall consist of the sum of the following items:
1. CASH MONTHLY ALLOWANCE (CMA)
A level monthly payment, determined as of January 1 of a given year, and paid in
equal monthly installments throughout that year, equal to 5% of the prior three
year average of the Firm's life and disability insurance FYC on recurring
premium plans (up to target on flexible premium plans) from Full Time Agents,
excluding FYC from brokers, associate agents and the Managing Partner.
2. NEW BUSINESS ALLOWANCE (NBA)
An amount payable in a given month equal to a percentage of FYC earned* by
agents and brokers in the preceding month, as follows:
SCHEDULE A: RECURRING PREMIUMS/PURCHASE PAYMENTS
Status of Agent/Broker
On the XXXX
PERCENTAGES OF FYC
-------------------------
Life Annuities DI
---- --------- --
A. Full Time Agents
First Contract Year 45 50 45
Second Contract Year 45 50 40
Third Contract Year 45 50 35
Fourth Contract Year 45 50 30
Fifth Contract Year 45 50 25
Sixth/+/ Contract Year 45 50 20
B. Brokers 85 75 35
C. Managing Partner 53 53 25
D. Agents other than Full-
time Agents 35 35 20
For 10, 15, 20-year term policies, deduct 5% from the above life rates. For
Brokers, 75% on VUL, UL-91, UL-CCL, VULC.
*"Paid to" instead of "earned by" for those FYC paid pursuant to the Modified
Surrender Commission Amendment to a Full Time Agent, corporate agent, or broker
contract.
SCHEDULE B: SINGLE PREMIUMS/PURCHASE PAYMENTS
An amount equal to the following percentages of the FYC earned by agents or
brokers in the preceding month:
Percentage
Policy or Coverage of FYC
All except Brokers
Brokers
1. Universal Life-Excess over Target 33 1/3 50
(including single life, first-to die and
survivorship plans)
2. Pension Universal Excess Premiums 50 50
3. Variable Universal Excess Premiums 33 1/3 33 1/3
4. Variable Universal COLI: 33 1/3 40
5. Paid up Additions Rider 25 33 1/3
6. Variable Life Unscheduled Payments 25 33 1/3
7. Single Premium Deferred Annuities 25 33 1/3
8. Single Premium Immediate Annuities 25 33 1/3
9. Single Premium Variable Life 25 33 1/3
Except on Pension Universal Excess Premiums, the above rates do not apply to
commissions paid in renewal years.
3. PRODUCTIVITY ALLOWANCE (FACTOR P)
An amount payable in a given month equal to a percentage of Schedule A Life and
Annuity FYC earned in the preceding month by Full Time Agents in their 6/th/ or
later contract year, providing the agent had FYC in the prior 12-month period
equal to the following:
FYC IN PRIOR 12 MONTHS* FACTOR P%
Band
1. $0 - 22,999 0%
2. $23,000 - 49,999 2.5%
3. $50,000 - 80,999 5.0%
4. $81,000 - 139,799 7.5%
5. $139,800 - 223,599* 10.0%
6. $223,600 - 279,449* 15.0%
7. $279,450* 20.0%
*Qualification for these bands will be by units of one or more approved agents.
For a two-member unit, add $27,950 to these band requirements. For larger
units, add another $55,850 for each additional person in the unit. Should a
multi-member unit not qualify for Band 5 or higher, each unit member will be
treated as an individual for calculation of Factor P.
4. RECRUITING ALLOWANCE (FACTOR R)
An amount payable in a given month equal to a percentage of Schedule A Life and
Annuity FYC earned in the preceding month by Full Time Agents in their first
through fifth contract years, where the percentage is determined for each agent
and is the sum of up to six components, as follows:
For contract years 1 - 4:
a) 18%; plus
b) 5%, if the agent is full-time and is eligible for a financing plan at
time of contracting; plus
c) 5%, if the agent is full-time and is assigned to a supervisor's unit and
the supervisor is receiving a Company-determined minimum level of
compensation on the agent; plus
d) 2%, if the Firm recruited at least 10* new agents in the prior calendar
year; plus
e) 2%, if the Company met its recruiting objective for the prior calendar
year; plus
* For 1998; then as published by the Company.
12
f) up to 12%, depending on the Firm's ranking (versus other firms) as of the
end of the prior calendar year in annualized FYC from new agents hired in
that year and in the prior three years, as follows:
RANKING FACTOR R%*
1 - 3 12%
4 - 6 10
7 - 9 9
10 - 12 8
13 - 15 7
16 - 18 6
19 - 21 5
22 - 24 4
25 - 27 3
28 - 30 2
31 - 38 1
*For 1998; future years as published by the Company.
Note: For a Firm to receive 4.f, it must recruit in the prior calendar year the
greater of 5 agents or a number of agents equal to 15% of total Full Time Agents
as of the beginning of that year; or be in the top 20 of the above ranking and
have net manpower growth, as determined by Company.
Note: If any Firm should merge with another Firm after January 1 of a given
calendar year, the ranking in 4.f. shall be determined based upon procedures
established by the Company as if the merger did not occur until the end of that
calendar year.
For contract year 5:
a) 8%, plus
b) 2%, if the agent is full-time and is eligible for financing plan; plus
c) 5%, if the agent is full-time and is assigned to a supervisor's unit and
the supervisor is receiving a Company-determined minimum level of
compensation on the agent.
5. GROWTH ALLOWANCE (FACTOR G)
An amount payable as a lump sum in the first quarter of the year (first payable
in 1999) equal to up to 2.5% of Schedule A Life and Annuity FYC earned in the
preceding year by Full Time Agents in the Firm, based on the average annual
growth in the number of Full Time Agents and the average percentage growth in
Full Time Agent annualized FYC, as follows (these bands are illustrative; for
the 1999 payments, the specific bands will be announced in early 1998):
NOTE: The average annual growth in the number of Full Time Agents is a number
arrived at by subtracting from the number of Full Time Agents as of the
end of the preceding calendar year, the number of Full Time Agents as of
the end of the fourth preceding calendar year and dividing the result by
three. Thus, to determine the 1999 payment, subtract from the number of
Full Time Agents as of year end 1998, the number of Full Time Agents as
of year end 1994, and divide by three.
The average percentage growth in Full Time Agent annualized FYC is
arrived at by dividing A by B, where A is the growth in Full Time Agent
annualized FYC from the fourth preceding calendar year to the preceding
calendar year, and where B is the sum of the Full Time Agent annualized
FYC in the three preceding calendar years.
Average Annual Growth
in Number of Full-time Average Percentage Growth in Full Time Agent Annualized FYC
Agents -3 to-0.1% 0 to +2.9% 3 to +5.9% 6 to +8.9% 9 to +11.9% Over 12%
-1 to -0.1 0 0.25 0.50 0.75 1.00 1.25
0 to 0.9 0.25 0.50 0.75 1.00 1.25 1.50
1 to 1.9 0.50 0.75 1.00 1.25 1.50 1.75
2 to 2.9 0.75 1.00 1.25 1.50 1.75 2.00
3 to 3.9 1.00 1.25 1.50 1.75 2.00 2.25
4 & over 1.25 1.50 1.75 2.00 2.25 2.50
13
6. LIVES ALLOWANCE
An amount payable as a lump sum in the first quarter of the year equal to
between $1,000 and $7,000 for each Full Time Agent in the Firm who sells a
minimum of 50 individual life, annuity and disability policies (excluding policy
changes, term conversions, and rewrites) during the prior year, as follows:
Number of Policies Allowance
50 - 59 $1,000
60 - 69 1,250
70 - 79 1,500
80 - 89 1,750
90 - 99 2,000
100 - 124 2,500
125 - 149 3,250
150 - 174 4,250
175 - 199 5,500
200+ 7,000
This allowance must be passed through to the agent.
7. DI INCENTIVE DRIVEN COMPENSATION
In a given calendar year if an individual producer has in excess of $15,000* of
FYP (first year premiums) credited on DI, the following percentages of DI FYP
earned in the calendar year will be paid.
DI FYP* PERCENTAGE OF DI FYP*
$0 to 15,000 0
$15,000 to 60,000 20
in excess of $60,000 25
*Effective for 1997, future years as published by the Company.
8. FIRM EMPLOYEES RETIREMENT PLAN
One-third of the Firm's share of the Normal Cost for the plan. The Firm's share
is determined based on its proportion of the total covered payroll for Firm
employees. The Normal Cost is determined under the Entry Age Actuarial Cost
Method without regard to performance indexing and adjusted to reflect the
current actuarial cost method.
9. SOCIAL SECURITY
An amount equal to the sum of (a) and (b):
(a) The amount paid by the Managing Partner for F.I.C.A. taxes on each Full
Time Agent, and
(b) The amount paid by an entity under a Corporate Agent's Contract ("Corporate
Agent") for FICA taxes for each employee under a subagent's contract,
subject to the following conditions:
(1) the employee, but for being an employee of the Corporate Agent, would have
met the requirements for a Full Time Agent;
(2) the sum of the amount payable under this subsection (b) and the amount
payable under subsection (a) for the same employee does not exceed the
F.I.C.A. limit for that employee. If such sum exceeds the F.I.C.A. limit
for that employee, then the amount payable under this subsection (b) shall
be reduced by such excess.
The amount paid under this subsection (b) must be paid to the Corporate Agent
by the Managing Partner upon receipt.
10. EXPERIENCED AGENT ALLOWANCE PLAN (EAAP)
Under this allowance, the percentage of FYC set forth in NBA Schedule A will
increase by 30 percentage points for eligible agents in their first contract
year with the Company. This additional percentage will be paid on the first
$100,000 of FYC paid in the agent's first contract year (maximum payment
$30,000). No payments will be made beyond the first contract year, even on
policies written during that year.
An eligible agent is an active Full Time Agent who meets the following
requirements:
a) the agent met MDRT (Million Dollar Round Table) -level requirements in the
full calendar year prior to becoming an agent of the Company; and
b) the agent had at least five years of experience as an insurance agent (life,
annuities, disability) prior to becoming an agent of the Company; and
c) the agent is approved for the program by both the Managing Partner and the
Company.
If the agent fails to produce at least $26,000 of FYC in his first contract year
with the Company, or $28,000 in his second year, or terminates from full-time
status within 24 months of his full-time contract date, then the full amount of
EAAP allowance paid to the Managing Partner will be charged back to the Managing
Partner.
The Managing Partner shall pay to each eligible agent the entire EAAP allowance
which the Managing Partner receives on account of that agent, provided that the
total amount of all allowances payable to or incurred for the agent on Schedule
A products shall not exceed 65% of the FYC paid on such products. If the total
amount would exceed the 65% limit, a portion of the EAAP allowance will be
charged back until the total allowances are within the limit, and such portion
shall be returned to the Company.
The EAAP allowance shall be paid to the eligible agent in addition to and not in
lieu of any other allowances the Managing Partner would have paid to the agent
if not for the EAAP allowance.
14
11. SUPERVISORY ALLOWANCES
A. SUPERVISOR INCENTIVE PLAN (SIP) AND BROKERAGE INCENTIVE PLAN (BIP)
The SIP and BIP Allowances shown below reimburse the Managing Partner for part
of the cost of developing a sales manager (SM) or a brokerage manager (BM). A
Company-approved SM/BM receives a monthly salary that decreases every few months
for 36 months, as long as the SM/BM's unit is producing a minimum amount of FYC
(referred to as validating), as follows (per $1,000 of initial salary):
Month Under Monthly Allowance To Validation For Unit
Contract Salary Managing Partner (for the period)
1 - 4 $1,000 $833 $ 1,250
5 - 8 850 683 3,000
9 - 12 650 483 4,500
13 - 18 600 433 8,750
19 - 24 500 333 15,000
25 - 30 400 233 16,000
31 - 36 200 33 20,000
If the SM/BM fails to validate, the Managing Partner must immediately pay back a
percentage of the total SIP/BIP Allowance equal to the percentage of the
validation requirement by which the SM/BM failed.
The Managing Partner may elect to provide a salary increase to an SM/BM who
exceeds his validation requirement for a given period. His salary would increase
for that period, and at the Managing Partner's discretion, for subsequent
periods by the same percentage by which he exceeded the validation requirement,
provided that he reaches one of four levels of excess validation requirements.
Those levels vary depending on the initial monthly salary as follows:
Excess Production as a Percent of
Validation Requirement
Initial Monthly
Salary Xxxxx 0 Xxxxx 0 Xxxxx 0 Xxxxx 0
$500 100% 200% 300% 400%
1,000 50% 100% 150% 200%
1,500 33% 67% 100% 133%
2,000 25% 50% 75% 100%
2,500 20% 40% 60% 80%
3,000 17% 33% 50% 67%
4,000 13% 25% 38% 50%
5,000 10% 20% 30% 40%
Any salary adjustment is shared between the Managing Partner and the Company in
the same proportion as is the pre-adjusted salary.
B. SALES MANAGER INCENTIVES
1. A monthly allowance will be paid to the Managing Partner, to be passed
through to the SM, for those SM's who qualified for an Agency Builders
Conference in the current year (plus qualified for a prior Agency Builders
Conference, if the SM has been an SM for less than four calendar years).
The amount will be either $200 or $300 per Qualifying Agent* in the SM's
unit, as follows:
FYC (all products)
In Prior Calendar Year
Status as of 1/1 - Current Yr. For $200/month For $300/month
Agents in 1st contract year $22,000 $29,500
Agents in 2nd contract year 25,000 33,500
Agents in 3rd contract year 31,000 43,000
Agents in 4th contract year 37,500 54.000
Agents in 5th+ contract year 38,500 54,000
*Agent with FYC from all products as indicated in above table with at least 50%
from individual life, DI, and annuities (minimum of $10K FYC in annuities), or
50% from individual life and DI. Regarding new recruits in current year, for
SM to receive $200 in a given month, recruit must average $1800 FYC YTD per
month; for SM to receive $300 in a given month, recruit must have produced
$29,500 YTD.
2. A monthly allowance will be paid to the Managing Partner, to be passed
through to the SM, for those SM's who qualified for the Agency Builders
Conference in the current year and have been an SM for at least 24 months.
The amount shall be paid for Qualified Recruits, who are agents recruited
by the SM during the current calendar year who are either financed or, if
not financed, are averaging at least $1,200 per month YTD in FYC for all
products, with at least 50% from life, DI, and annuities (minimum of 10K
FYC in annuities), or 50% from individual life and DI. The amount of this
allowance shall be $150 per month per Qualified Recruit plus 10% of the FYC
of the Qualified Recruit in the prior month.
3. SM Management Trainee Allowance - A monthly allowance of $500 per sales
-------------------------------
management trainee, for up to one year, will be paid to the Managing
Partner, to be passed through to the trainee, for company-approved SM
candidates. These trainees must be following Company-approved development
plans to continue receiving the allowance, and will be eligible for SIP at
the completion of the Management Trainee Program.
C. BROKERAGE MANAGER INCENTIVES
1. A monthly allowance will be paid to the Managing Partner, to be passed
through to the BM, for those BM's who are not in the BIP program and who
have qualified for the Agency Builders Conference in the current year. The
payment is $100 per month for each year, up to four years, for which they
have qualified for the Agency Builders Conference. When the BM's qualify a
fifth year, they become Master Brokerage Managers as provided below.
15
2. A monthly allowance will be paid to the Managing Partner, to be passed
through to the BM, for those BM's who are not in the BIP program and who
have qualified for the Agency Builders Conference in the current year. The
amount will be 6% of the FYC paid to the BM's unit in the previous calendar
year and will be paid monthly in 12 equal installments.
D. MASTER BUILDERS ALLOWANCE
A Master Sales Manager (MSM) or Master Brokerage Manager (MBM) is an SM or BM
who has qualified for the Agency Builders Conference (an "Agency Builder"), in
at least five of the last seven years including the current year.
A monthly allowance will be payable to the Managing Partner, to be passed
through to the MSM or MBM who subsequently qualifies as an Agency Builder, as
follows:
MONTHLY ALLOWANCE
First eligible as MSM or MBM $ 500
Master plus one year as Agency Builder 600
Master plus two years as Agency Builder 700
Master plus three years as Agency Builder 800
Master plus four years as Agency Builder 900
Master plus five years (or more) as Agency Builder 1,000
If the MSM/MBM fails to qualify an Agency Builder for a given year, the monthly
allowance for such year will be reduced.
E. DISTRICT AGENCY DEVELOPMENT ALLOWANCE
For a newly organized and Company-approved district office, a Managing Partner
may elect to receive the following allowances for expenses associated with
establishing and operating the district office:
1. Start-Up Allowance - An up-front payment of $5,000 for rent, salaries and
------------------
equipment;
2. Development Allowance - During the first three years of the district, a
---------------------
monthly allowance equal to a percentage of FYC earned in the prior month by
Full Time Agents in the district (excluding the SM) on policies covered by
Schedule A of the NBA, as follows:
1st district year: 25%
2nd district year: 10%
3rd district year: 3%
3. Penetration Allowance - During the first ten agent contract years for each
---------------------
agent in the district, a monthly allowance equal to 7% of FYC earned by the
agent in the preceding month on policies covered by Schedule A of the NBA.
The Managing Partner may elect to receive all three allowances, or may choose to
receive only (3). The combined payout under (1) and (2) may not exceed $100,000
over the life of the district. Continued payment of the Development and
Penetration Allowances is contingent on both of the following validation
requirements being met:
FYC Earned by
Validation Period FYC Earned by Agents in Their
District Agency the District First Contract Year
Months During the Period During the Period
1 - 4 $ 4,000
5 - 8 6,000
9 - 12 10,000 $ 20,000
-------------------------------------------------------------------------
13 - 18 29,000
19 - 24 35,000 $ 20,000
-------------------------------------------------------------------------
25 - 30 45,000
31 - 36 45,000 $ 20,000
-------------------------------------------------------------------------
37 - 48 100,000 $ 20,000
-------------------------------------------------------------------------
Each 12 months thereafter 105,000
If the District Agency terminates or fails to validate during its first three
years, the Managing Partner must pay back to the Company a portion of the Start-
Up and Development Allowances as follows:
0xx Xxxxxxxx Year: 90%
2nd District Year: 75%
0xx Xxxxxxxx Year: 35%
0xx Xxxxxxxx Year: 25%
F. MARKETING DIRECTOR ALLOWANCE
This allowance provides a sharing with the Managing Partner of the cost of a
Marketing Director during the first three years after hiring of the Marketing
Director, as follows:
1st year: Company pays 75% of base compensation, up to a maximum payment of
$25,000.
2nd year: Company pays 50% of base compensation, up to a maximum payment of
$15,000.
3rd year: Company pays 25% of base compensation, up to a maximum payment of
$5,000.
The Marketing Director provides marketing support to the agents in the Firm
pursuant to a Company- approved performance plan. Such a plan will include such
quantitative measures as (1) increasing market penetration by 10%, and (2)
increasing average agent productivity by 15%. Review and validation of the
Marketing Director's performance will occur every six months.
16
12. TRANSITIONAL ALLOWANCES
A. SUPPLEMENTAL CASH MONTHLY ALLOWANCE (CMA)
1. In 1998, a level monthly payment beginning January 1 will be paid in
equal monthly installments throughout that year, equal to 1/12 of 2% of
the greater of the prior 3-year and 5-year averages of the Firm's
individual life and disability FYC on annual premium plans (up to
target on flexible premium plans) from Full Time Agents.
2. In 1999 and thereafter (until the Supplemental NBA below is phased
out), a similar payment will be made, except that the greater of the
prior 3-year and 5-year averages will be replaced by the prior 3-year
average.
B. SUPPLEMENTAL NEW BUSINESS ALLOWANCE (NBA)
An additional NBA will be paid on Schedule A premium beginning on 1/1/98. The
initial supplement will be as follows, as a percent of FYC:
Full Time Agents contract years 1-4......9.00%
contract years 5-6......6.00%
contract years 7+.......3.75%
Brokers, Associate Agents...................6.00%
Managing Partner............................2.25%
Reductions occur every six months, beginning 7/1/98 and will be by one-third of
the above supplement if the Company's FYC on individual life and disability
insurance for all Firms combined in the prior 12 months has increased by 10% or
more over the previous 12 months; otherwise the reduction will be by one-sixth
of the above supplement.
C. SUPPLEMENTAL RECRUITING ALLOWANCE
1. For 1998: for contract years 1-4, the minimum total payment for components
(a),(b),(c) & (f) under the Recruiting Allowance will be 30%;
for contract year 5, the base will be 15% instead of 3% and
component (b) is deleted;
for contract year 6, the base will be 10% and component (c) from
contract year 5 is added.
2. For 1999: for contract years 1-4, the minimum total payment for components
(a),(b),(c) & (f) will be 29% if the agent is full time and is
eligible for a financing plan at the time of contracting;
otherwise, the minimum will be 26.5%;
for contract year 5, the base will be 10% instead of 3% and
component (b) is deleted;
for contract year 6, the base will be 2.5% and component (c) from
contract year 5 is added.
D. SUPPLEMENTAL SUPERVISORY ALLOWANCE
In 1998, an additional allowance of $500 will be paid to the Managing Partner
for each Full Time Agent hired in 1994 and 1995 who is validating his contract
as of 12/31/97. This amount must be passed through to the SM in whose unit the
agent resides.
17
PART V: INCENTIVE TRAINING
ALLOWANCE PROGRAM (ITAP)
A. DEFINITIONS
1. ITAP Agent
A Full Time Agent of the Company who has signed an ITAP Agreement and has
been approved as a participant in the ITAP by the Company.
2. ITAP Agreement
The Incentive Training Allowance Program Agreement entered into between any
ITAP Agent and the Managing Partner.
3. Subsidy
The Subsidy is equal to:
(i) The total of all payments made to the ITAP Agent under his ITAP
Agreement, less
(ii) The total of all Eligible Commissions credited to the Agent under his
ITAP Agreement.
4. Eligible Commissions
Eligible Commissions for the purposes of this ITAP agreement only shall
mean all first year and renewal commissions on products for which a
commission would have been payable if the ITAP Agreement were not in
effect:
(a) Under the ITAP Agent's agent contract with the Company except large
group products and products for which the Agent is the insured; and
(b) Under the ITAP Agent's Registered Representative Agreement with New
England Securities Corporation; provided that Cash Management Trust
Service Fees, Agent Bonuses, Discount Brokerage compensation and
12(b)(1) fees shall not be considered Eligible Commissions.
5. Net ITAP Loss
The Net ITAP Loss shall be calculated as of the date of termination of the
ITAP Agreement unless otherwise required by this Amendment and be equal to
the Subsidy (a) less 90% of any deferred first year commissions and (b)
less the present value of the vested renewal commissions, utilizing
discounts determined by the Company, to be earned on all products of the
Company except annuities and group products, having a Home Office Receipt
Date occurring during the term of the ITAP Agreement.
B. ITAP ALLOWANCE
The Company shall pay to the Managing Partner an allowance ("ITAP) Allowance")
each week equal to the amount which has been approved by the Company and is
payable to an ITAP Agent under his ITAP Agreement upon the ITAP Agent meeting
all of the payment requirements set forth in his ITAP Agreement.
The Company shall not pay either directly or through loss sharing any ITAP
Allowance to the Managing Partner:
1. For any ITAP Agent whose ITAP Agreement has been amended without written
consent of the Company, or
2. For any amounts paid or to be paid to an ITAP Agent which are not approved
by the Company.
Payments made by the Company without knowledge of the foregoing shall be charged
back to the Managing Partner.
C. ITAP AGENT COMPENSATION
The Managing Partner shall pay to each ITAP Agent all of the ITAP Allowance
received from the Company for such ITAP Agent. Such amount shall be paid to each
ITAP Agent in his next scheduled paycheck following receipt by the Managing
Partner of the ITAP Allowance.
The Managing Partner shall not increase or decrease an ITAP Agent's amount
payable or make any lump sum payment without obtaining prior approval from the
Company.
The Managing Partner shall notify the Company within ten days of the termination
of an ITAP Agent from the ITAP.
If an ITAP Agent terminates without formal notice, the Managing Partner shall
determine the effective date of termination subject to approval of the Company.
D. CHARGEBACKS
If the Managing Partner does not pay to an ITAP Agent the ITAP Allowance
received from the Company for such ITAP Agent, the Company shall charge back to
the Managing Partner such unpaid amounts. The Managing Partner may not under any
circumstances convert such unpaid amounts to his own use.
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E. RECOVERY OF ITAP ALLOWANCE
1. Upon termination of an ITAP Agent from the ITAP, the Managing Partner shall
reimburse to the Company a percentage as provided below of any Net ITAP
Loss; provided, however, that if:
(a) the ITAP Agreement terminates upon (i) the Subsidy equaling $40,000 or
(ii) the 156th week of the ITAP; and
(b) the ITAP Agent's agent contract is then in effect; then the Managing
Partner shall not reimburse to the Company any percentage of any Net
ITAP Loss unless the ITAP Agent terminates from Full Time Agent status
within 365 days of the ITAP Agreement termination. If the ITAP Agent
does terminate from fulltime agent status within 365 days of the ITAP
Agreement termination, the Managing Partner shall reimburse to the
Company a percentage as provided below of any NET ITAP Loss; however,
for purposes of calculating the Managing Partner's share of the Net
ITAP Loss, the week during which termination shall be considered to
have occurred shall be equal to 156 plus the number of weeks between
termination of the ITAP Agreement and termination from fulltime agent
status.
2. The Managing Partner shall reimburse to the Company a percentage of the Net
ITAP Loss as set forth in the table below:
Following Weeks
Beginning With The First Managing Partner Percentage
Week of the ITAP Share of NET ITAP Loss
weeks 1-18 40
weeks 19-52 60
weeks 53-130 50
weeks 131-143 40
weeks 144-156 25
weeks 157-169 20
weeks 170-182 14
weeks 183-195 8
weeks 196-208 2
The Managing Partner shall reimburse the Company for each Net ITAP Loss in a
lump sum upon notification by the Company of the amount of the Net ITAP Loss.
3. If calculation of the Net ITAP Loss results in a gain, the Managing Partner
shall share in the gain to the same extent as he would have shared in the
Net ITAP Loss.
4. The Managing Partner shall be liable for any Net ITAP Loss for ITAP Agents
enrolled in the ITAP prior to the Effective Date except as provided in
sections F and G or unless otherwise agreed to in writing by the Managing
Partner and the Company.
F. ITAP AGENT TRANSFER
1. If an ITAP Agent shall transfer to another Firm and if his ITAP Agreement
terminates on or before 90 days after the date of transfer, the Firm prior
to the transfer shall be liable for the Firm percentage share (determined
as of the date of termination) of the Net ITAP Loss (determined as of the
date of transfer).
The Firm after the ITAP Agent transfer shall be liable for the Firm's
percentage share determined as of the date of termination of any excess of
the Net ITAP Loss (determined as of the date of termination) over the Net
ITAP Loss (determined as of the date of transfer).
2. If an ITAP Agent shall transfer to another Firm and if his ITAP Agreement
terminates more than 90 days after the date of transfer, the Firm prior to
the transfer owes nothing and the Firm after the ITAP Agent transfer shall
be liable for the Firm's percentage share of the Net ITAP Loss (both
determined as of the date of termination).
G. FIRM TERMINATION AND LOSS SHARING
If a Firm shall terminate from the Company (the "prior Firm"), and, within a
reasonable time to be determined by the Company and the prior Firm, such time to
be no less than 30 days from the date of the prior Firm's termination, any ITAP
Agent (i) shall be terminated from the ITAP for not fulfilling his validation
requirement on a prorate basis as of the date of the ITAP Agent's termination or
(ii) shall voluntarily terminate from the ITAP, the prior Firm shall pay the
Firm's percentage share of the Net ITAP Loss. Termination of the ITAP Agent
shall include failure to reinstate. For any other ITAP Agent, the Firm that
succeeds the prior Firm shall be liable for the entire Firm's share of the Net
ITAP Loss should any such ITAP Agent later terminate from the ITAP.
Except that, if any ITAP Agent shall terminate his fulltime status within 90
days of the prior Firm's termination and contracts with the prior Firm to
solicit on behalf of any other insurance company or financial services
organization, the prior Firm shall pay the Firm's percentage share of the Net
ITAP Loss.
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