Exhibit 3(E)
SELLING AND SERVICES AGREEMENT
(VARIABLE ANNUITY PRODUCTS)
THIS SELLING AND SERVICES AGREEMENT (this "Agreement") is entered into as of
____________________, 20___ (the "Effective Date") by and between CUNA Mutual
Insurance Society, an Iowa insurance company ("CUNA Mutual"), CUNA Brokerage
Services, Inc., a Wisconsin corporation ("CUNA Brokerage") and
[___________________], [a/an ______________________], the undersigned
broker-dealer ("Broker-Dealer"), with an address of
[______________________________________].
WHEREAS, CUNA Mutual has the requisite authority to provide certain variable
annuity contracts, which are securities under the Securities Act of 1933, as
amended;
WHEREAS, CUNA Mutual 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 variable annuity contracts;
WHEREAS, Broker-Dealer has the requisite authority to solicit, sell and service
variable 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, CUNA Mutual and CUNA Brokerage desire to appoint and authorize, on a
non-exclusive basis, Broker-Dealer to solicit, sell and service certain variable
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 fully incorporated herein, and to have
Broker-Dealer provide certain administrative services as described in this
Agreement for purposes of soliciting, selling and servicing the Products; and
Broker-Dealer desire to accept such appointment and authorization 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 CUNA Mutual and CUNA Brokerage
will provide the Products and appoint and authorize, on a non-exclusive basis,
Broker-Dealer, and through Broker-Dealer's registered representatives
("Representatives") who are also licensed to sell insurance in appropriate
jurisdictions and who are appointed by CUNA Mutual to sell the Products, accept
such appointment and authorization and will solicit, sell and service the
Products hereunder. Further, 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 CUNA MUTUAL AND CUNA BROKERAGE.
2.1 THE PRODUCTS. The Products issued by CUNA Mutual are described on the
Schedule. The attached Schedule may be amended from time-to-time by CUNA
Mutual. Prior versions of Products are included for servicing under this
Agreement for prior customers by Representatives who are now appointed as agents
of CUNA Mutual under this Agreement. Any customer records and files relating to
prior versions of the Products shall be retained by the appropriate
Representatives or by 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, CUNA Mutual will transmit Products to
Broker-Dealer for delivery to policyholders according to procedures set up by
CUNA Mutual, unless CUNA Mutual has provided otherwise. CUNA Mutual, 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 CUNA Mutual'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 CUNA Mutual. In all other situations,
CUNA Mutual 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 AND AUTHORIZATION OF BROKER-DEALER. CUNA Mutual hereby
appoints and CUNA Brokerage hereby authorizes Broker-Dealer to solicit, sell and
service the Products through its Representatives. Broker-Dealer shall be
responsible for any appointment or renewal fees.
2.3 PROSPECTUSES. CUNA Mutual 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 CUNA Mutual 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 CUNA Mutual or CUNA Brokerage, Broker-Dealer shall promptly return
all such prospectuses, supplements and other materials to CUNA Mutual or CUNA
Brokerage free from any claim or retention rights by Broker-Dealer.
2.4 SALES AND PROMOTION MATERIAL. CUNA Mutual 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 Broker-Dealer. Upon
termination of this Agreement, Broker-Dealer shall promptly return or destroy
all such sales and promotion materials and advertising relating to the Products
to CUNA Mutual or CUNA Brokerage pursuant to Subsection 7.3 hereof.
2.5 COMPENSATION. CUNA Mutual shall pay "Compensation," as more fully
described in the Schedule, semi-monthly to Broker-Dealer based upon the Products
sold by Broker-Dealer during the term of this Agreement. CUNA Mutual reserves
the right, upon at least thirty (30) days prior written notice to Broker-Dealer,
to change 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 CUNA Mutual after the effective date of such amendment.
Notwithstanding the foregoing, in the event Broker-Dealer or any Representative
of 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 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 CUNA Mutual or CUNA Brokerage to Broker-Dealer in connection with the
offer and sale of the Products.
2.6 LEGAL COMPLIANCE. CUNA Mutual 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.
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3. ROLES AND RESPONSIBILITIES OF BROKER-DEALER.
3.1 INSURANCE LICENSING. At all times while performing obligations under
this Agreement and at its own expense, Broker-Dealer, and Broker-Dealer'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 Broker-Dealer's variable annuity sales activities.
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. Broker-Dealer 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. 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. 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,
Broker-Dealer will ensure Representatives are licensed and registered
representatives of Broker-Dealer and meet any other requirements or conditions
of this Agreement before such Representatives engage in the solicitation of
applications for the Products, and Broker-Dealer will ensure that such
Representatives maintain such licenses and registrations in accordance with
applicable laws and regulations. Broker Dealer will be responsible for all
insurance and licensing fees for Representatives. Further, Broker-Dealer will
cause such Representatives to limit solicitation of applications for the
Products to jurisdictions where CUNA Mutual or CUNA Brokerage has approved or
authorized such solicitation. Broker-Dealer will cause such Representatives to
comply with all applicable administrative procedures of CUNA Mutual, including,
without limitation, those that specifically address selling practices.
Representatives' qualifications shall be certified to the satisfaction of CUNA
Mutual and CUNA Brokerage, and Broker-Dealer shall notify CUNA Mutual and CUNA
Brokerage if any Representative ceases to be a registered representative of
Broker-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. Broker-Dealer shall assist CUNA Mutual
in the appointment of Representatives under the applicable insurance laws to
sell the Products. Broker-Dealer 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 CUNA Mutual. All such
licensing/appointment papers should be submitted to CUNA Mutual or its duly
appointed agent by Broker-Dealer. Notwithstanding such submission, CUNA Mutual
shall have sole discretion to appoint, refuse to appoint, discontinue, or
terminate the appointment of any Representative as an insurance agent of CUNA
Mutual.
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3.5 REPRESENTATIVES' INSURANCE COMPLIANCE. Prior to allowing
Representatives to solicit, sell or service the Products, Broker-Dealer shall
require Representatives to be validly insurance licensed, registered and
appointed by CUNA Mutual 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, 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 CUNA Mutual or CUNA Brokerage, 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 variable 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 variable annuity contract; and iii) a reasonable system of sales
supervision designed to achieve compliance with FINRA rules. Upon request by
CUNA Mutual, Broker-Dealer agrees to provide a report to CUNA Mutual 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
CUNA Mutual 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
CUNA Mutual to enable CUNA Mutual to inspect documents and records Broker-Dealer
is responsible to maintain that are directly related to the sale and suitability
of any CUNA Mutual variable annuity products.
3.7 COMPLIANCE WITH ADMINISTRATIVE PROCEDURES. Broker-Dealer shall fully
comply and shall cause Representatives to fully comply with the administrative
procedures of CUNA Mutual relating to the Products and the policies and
procedures adopted by CUNA Mutual 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 policies and procedures are now in effect or may be amended
or established in the future by CUNA Mutual in its sole discretion and
communicated to Broker-Dealer, as appropriate.
3.8 COMPLIANCE WITH PROSPECTUSES. Broker-Dealer shall comply with the
terms of any prospectus (and supplements thereto) for a Product. Without
limiting the generality of the foregoing, Broker-Dealer shall offer the Products
only at the public offering price disclosed in the prospectus. In this regard,
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, 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 Broker-Dealer or any Representative.
Broker-Dealer shall not knowingly
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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 CUNA Mutual 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. Broker-Dealer shall not use any sales and promotion materials or
any advertisements that they may create relating to the Products, CUNA Mutual or
CUNA Brokerage, unless CUNA Mutual or CUNA Brokerage approve such materials and
advertisements in writing prior to use. However, this limitation shall not
prevent Broker-Dealer from advertising insurance products in general, provided
such advertising does not reference the Products, CUNA Mutual, CUNA Brokerage,
or any affiliated person of CUNA Mutual or CUNA Brokerage.
3.10 NOTICE OF REPRESENTATIVE'S NONCOMPLIANCE. In the event a
Representative fails or refuses to submit to supervision of Broker-Dealer,
ceases to be a registered representative of Broker-Dealer or otherwise fails to
meet the rules and standards imposed by Broker-Dealer on Representatives,
Broker-Dealer shall immediately advise CUNA Mutual and CUNA Brokerage of this
fact and shall immediately notify such Representative that s/he is no longer
authorized to sell the Products. 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. 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 CUNA Mutual or CUNA Brokerage may reasonably request.
3.11 COMPENSATION. CUNA Mutual shall pay Compensation to Broker-Dealer
pursuant to the Schedule. Broker-Dealer agrees to refund Compensation within
seven (7) business days to CUNA Mutual in the event a variable annuity contract
is returned by the customer to Broker-Dealer in accordance with FINRA rules.
Broker-Dealer will be solely responsible for any compensation payable to
Representatives or any other persons associated with 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, CUNA Mutual or CUNA Brokerage
will not be responsible for any compensation payable to Representatives of
Broker-Dealer.
3.12 HANDLING OF APPLICATIONS. CUNA Mutual shall supply Product application
forms for Broker-Dealer's use. All payments collected by Broker-Dealer or
Representatives of Broker-Dealer will be promptly remitted in full, along with
such application forms and any other required documentation, directly to CUNA
Mutual at the address indicated on such application or to such other address as
CUNA Mutual designates in writing. 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
CUNA Mutual and allowable under applicable laws or regulations and shall be
drawn to the order of "CUNA Mutual Insurance Society." Broker-Dealer do not
have any authority to deposit or endorse checks payable to CUNA Mutual without
the prior written approval of CUNA Mutual. All applications are subject to
acceptance or rejection by CUNA Mutual in its sole discretion. All records or
information obtained hereunder by Broker-Dealer shall not be disclosed or used
except as expressly authorized herein and pursuant to Section 5 hereof, and
Broker-Dealer will keep confidential such records and information, which will
only be disclosed as
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authorized or if expressly required by federal or state regulatory authorities.
Broker-Dealer, in submitting applications for the Products, will be deemed to
have warranted to CUNA Mutual and CUNA Brokerage that Broker-Dealer 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 Broker-Dealer deems to be appropriate under the circumstances and
in compliance with applicable laws and regulations. Broker-Dealer will not,
directly or indirectly, expend or contract for the expenditure of any funds of
CUNA Mutual or CUNA Brokerage and CUNA Mutual and CUNA Brokerage will not be
obligated to pay any expense incurred by Broker-Dealer in the performance of
this Agreement, unless otherwise provided for in this Agreement or agreed to in
advance in writing by CUNA Mutual or CUNA Brokerage.
3.13 TRANSMISSION AND OWNERSHIP OF MONEY FOR PRODUCTS. All money received
by Broker-Dealer or Representatives of Broker-Dealer in connection with the
Products, whether paid by or on behalf of any policyholder, contract owner or
anyone else having an interest in the Products, is the property of CUNA Mutual,
shall be held in a separate account and shall be transmitted promptly in
accordance with the administrative procedures of CUNA Mutual without any
deduction or offset for any reason, including but not limited to, any deduction
or offset for Compensation claimed by Broker-Dealer.
3.14 DELIVERY OF PRODUCTS. Upon issuance of the Products by CUNA Mutual
pursuant to this Agreement, CUNA Mutual will transmit Products to Broker-Dealer
for delivery to purchasers according to procedures set up by CUNA Mutual, unless
CUNA Mutual has provided otherwise. Broker-Dealer hereby agree to deliver all
Products to purchasers within five (5) business days after receipt by
Broker-Dealer. Broker-Dealer agree to indemnify and hold harmless CUNA Mutual
and CUNA Brokerage for any and all losses (including consequential damages and
regulatory penalties or fines) caused by Broker-Dealer's failure or any
Representative's failure to perform the undertakings pursuant to this Agreement.
Broker-Dealer hereby authorize CUNA Mutual to set off any amount it owes CUNA
Mutual or CUNA Brokerage under this Subsection against any and all amounts
otherwise payable to Broker-Dealer by CUNA Mutual.
3.15 FIDELITY BOND AND ERRORS AND OMISSIONS INSURANCE COVERAGES.
Broker-Dealer agrees that all directors, officers, employees and Representatives
of 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 CUNA Mutual or CUNA Brokerage resulting from
theft or forgery committed by Broker-Dealer or Representatives. 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 Broker-Dealer and Representatives. All said coverages above shall be
maintained by Broker-Dealer at Broker-Dealer's expense. CUNA Mutual may require
evidence that all such coverages above are in force and are satisfactory, and
Broker Dealer shall give prompt written notice to CUNA Mutual of any notice of
cancellation or change of the coverages. Broker-Dealer shall be solely
responsible for responding to customers and filing claims as may be necessary
under this Agreement, and Broker-Dealer is responsible for any out-of-pocket
expenses related to such claims. Broker-Dealer hereby assigns to CUNA Mutual or
CUNA Brokerage, as the case may be, any proceeds received from the insurance
companies to the extent CUNA Mutual'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, Broker-Dealer shall promptly pay CUNA Mutual
or CUNA Brokerage such amount on demand, and Broker-Dealer hereby indemnifies
and holds CUNA Mutual and CUNA
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Broker harmless from any such deficiency and from the costs of collection
thereof, including reasonable legal fees.
3.16 BOOKS, ACCOUNTS AND RECORDS. Broker-Dealer will maintain all books,
accounts, and records as required by applicable laws and regulations. The
books, accounts and records of Broker-Dealer shall be kept in good order and
clearly and accurately disclose the nature and details of transactions relating
to the Products and Broker-Dealer's activities related thereto. 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 CUNA Mutual or CUNA Brokerage has authorized such disclosure
in writing, or if such disclosure is expressly required by applicable federal or
state authorities. CUNA Mutual and CUNA Brokerage shall have prompt and full
access to all books, accounts and records of Broker-Dealer pertaining to the
Products. Broker-Dealer agrees to permit CUNA Mutual and CUNA Brokerage
representatives to enter into all areas of Broker-Dealer's business related
hereto for the purpose of conducting inspections and Broker-Dealer shall fully
cooperate with such representatives during such inspections by rendering
assistance as CUNA Mutual and CUNA Brokerage may reasonably request. Upon
notice from CUNA Mutual or CUNA Brokerage, and without limiting other rights of
CUNA Mutual and CUNA Brokerage under this Agreement, 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 CUNA
Mutual or CUNA Brokerage.
3.17 CUSTOMER FILE AND RECORD RETENTION. For a period of six (6) years from
the termination date of this Agreement, Broker-Dealer agrees to: (a) permit CUNA
Brokerage or CUNA Mutual 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,
CUNA Mutual or Broker-Dealer in connection with an audit or investigation,
including any such files as may have been requested by such regulatory agencies
("Required Files); and (b) maintain such Required Files in the form originally
received. In addition, this information will be made available to CUNA
Brokerage or CUNA Mutual in the event an individual customer complaint or class
action is submitted relating to activity between customer and CUNA Brokerage or
CUNA Mutual so that CUNA Brokerage or CUNA Mutual, as the case may be, may
respond to such complaint. This information will be provided immediately to
CUNA Brokerage or CUNA Mutual for such inspections and proof of the regulatory
request and/or customer complaint. Within ninety (90) days following
termination, Broker-Dealer shall deliver to CUNA Brokerage or CUNA Mutual the
following materials maintained by 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 CUNA Mutual. This Subsection 3.16 shall survive termination of this
Agreement.
3.18 NOTIFICATION OF DISCIPLINARY PROCEEDINGS AND CUSTOMER COMPLAINTS.
Broker-Dealer shall promptly notify CUNA Mutual and CUNA Brokerage of any
disciplinary proceedings or customer complaints against Broker-Dealer, or any
Representatives of 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. Broker-Dealer shall fully and promptly
cooperate with CUNA Mutual 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
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legislative bodies, and in any settlement or trial of any actions arising out of
the conduct of business under this Agreement. No response by Broker-Dealer to
an individual customer complaint involving a Product will be sent until it has
been approved by CUNA Mutual or CUNA Brokerage. Any response by Broker-Dealer
to an individual customer complaint will be sent to CUNA Mutual 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.
3.19 PROHIBITED ACTS. Nothing in this Agreement shall be construed as
giving Broker-Dealer the right to incur any indebtedness or make contracts on
behalf of CUNA Mutual or CUNA Brokerage. 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; make any 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
CUNA Mutual or CUNA Brokerage. Broker-Dealer hereby authorize CUNA Mutual and
CUNA Brokerage to set off liabilities of Broker-Dealer to CUNA Mutual and CUNA
Brokerage against any and all amounts otherwise payable to Broker-Dealer by CUNA
Mutual or CUNA Brokerage.
4. RIGHT OF REJECTION. Broker-Dealer, CUNA Brokerage and/or CUNA Mutual each
in their sole discretion, may reject any applications or payments remitted by
Representatives through Broker-Dealer and may refund an applicant's payments to
the applicant. Likewise, CUNA Mutual and CUNA Brokerage may, at any time for
any reason, reject any order from Product owner (whether transmitted by or
through 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 Broker-Dealer has received Compensation based on an applicant's
payment that is refunded, Broker-Dealer shall promptly repay such Compensation
to CUNA Mutual. If repayment is not promptly made, CUNA Mutual may, at its sole
option, deduct any amounts due to Broker-Dealer from future Compensation
otherwise payable to 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 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, Broker-Dealer
agrees 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 Xxxxx-Xxxxx-Xxxxxx 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.
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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 CUNA Mutual or CUNA Brokerage, and no other party, shall
have the authority on behalf of CUNA Mutual or CUNA Brokerage: (a) to make,
alter, or discharge any of the Products issued by CUNA Mutual; (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 CUNA Mutual or CUNA
Brokerage may prescribe or substitute other forms in place of those prescribed
by CUNA Mutual 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 CUNA Mutual
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 Broker-Dealer or any Representative of Broker-Dealer
shall rebate or offer to rebate all or any part of a customer payment on any
Products issued by CUNA Mutual in violation of applicable federal, state or
local securities and insurance laws, rules or regulations; and (e) effective
immediately if Broker-Dealer or any Representative of Broker-Dealer shall
withhold any customer payment on any policy or contract issued by CUNA Mutual.
7.3 EFFECT OF TERMINATION. Upon termination of this Agreement, all
Compensation to Broker-Dealer hereunder shall cease; however, Broker-Dealer
shall continue to be liable for any chargebacks or for any other amounts
advanced by or otherwise due CUNA Mutual or CUNA Brokerage hereunder.
Broker-Dealer will immediately return or destroy, as instructed by CUNA Mutual
and CUNA Brokerage, all of CUNA Mutual'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
Broker-Dealer related to the Products, and any copies thereof; and Broker-Dealer
shall not use the same thereafter. Broker-Dealer agree to retain all customer
files and records pursuant to Subsection 3.15 hereof.
- 9 -
8. USE OF TECHNOLOGY.
8.1 GENERALLY. CUNA Mutual agrees to provide Broker-Dealer access to and
the right to use those technology-based systems and materials (collectively, the
"Systems") that CUNA Mutual determines to be reasonably required for
Broker-Dealer's performance of its obligations under this Agreement. Said
access may be provided through software provided by CUNA Mutual directly to
Broker-Dealer and/or via the Internet. Upon delivery of any such software, CUNA
Mutual shall be deemed to grant to 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 CUNA Mutual makes available to Broker-Dealer from time to time.
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
Broker-Dealer's responsibilities under this Agreement. Broker-Dealer shall not
provide access to the Systems, nor to any software provided to Broker-Dealer by
CUNA Mutual, in whole or in part, to any third party including any consultant or
contractor, without the express written permission of CUNA Mutual, obtained in
each instance in advance. 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 Broker-Dealer to access and/or use
the Systems. Upon termination of this Agreement, Broker-Dealer shall return all
copies of the software or other indicia of the Systems in its possession and
retain nothing. Furthermore, Broker-Dealer will ensure that Representatives
under this Agreement will abide by the provisions of this Section 8.
8.2 DISCLAIMER. CUNA MUTUAL 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.
Broker-Dealer understand and agree that the Systems and software contain trade
secrets and proprietary data of CUNA Mutual and that the Systems and software
are and shall at all times remain the sole and exclusive property of CUNA
Mutual. This provision shall survive termination of this Agreement.
8.3 LIMITED LIABILITY. In no event to the maximum extent permitted by law
shall CUNA Mutual 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 CUNA Mutual has been advised of the
possibility of such damages. Further, in no event to the maximum extent
permitted by law shall CUNA Mutual be liable to 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 Compensation that CUNA
Mutual has paid to 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, CUNA Mutual's insurance policy information,
coverage plan and rates and CUNA Mutual'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. CUNA Mutual 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
- 10 -
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 BROKER-DEALER INDEMNIFICATION. Broker-Dealer will indemnify, defend
and hold harmless CUNA Mutual 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 Broker-Dealer or its Representatives; (b) any
criminal, fraudulent or intentionally wrongful act or omission committed by
Broker-Dealer or its Representatives in connection with the performance of
Broker-Dealer's obligations hereunder; or (c) the infringement, violation or
misappropriation by Broker-Dealer or its Representatives of any party's rights
with respect to any Trade Secrets, copyright, trademark, service xxxx, 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
Broker-Dealer's obligations under this Agreement.
11.2 CUNA MUTUAL AND CUNA BROKERAGE INDEMNIFICATION. CUNA Mutual and CUNA
Brokerage, jointly and severally, will indemnify, defend and hold harmless
Broker-Dealer and its 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 CUNA Mutual or CUNA
Brokerage; or (b) any criminal, fraudulent or intentionally wrongful act or
omission
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committed by CUNA Mutual or CUNA Brokerage in connection with the performance of
CUNA Mutual'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 CUNA
Mutual 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 Broker-Dealer provides adequate training for Representatives. In
the event Broker-Dealer or Representatives become aware of circumstances related
to a customer that may be suspicious, Broker-Dealer or Representative, as the
case may be, agrees to promptly notify the Anti-Money Laundering Officer at CUNA
Mutual 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 CUNA Mutual and CUNA Brokerage have the right, upon
reasonable request, to examine the description of the CIP that Broker-Dealer has
adopted and implemented.
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:
CUNA Mutual Insurance Society
Attn: Sales Compensation
0000 Xxxxxxxx Xxx
Xxxxxxx, XX 00000
Broker-Dealer:
[Broker-Dealer's Name]
[Broker-Dealer's Full Address]
- 12 -
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. Broker-Dealer and Representatives are
independent contractors with respect to CUNA Mutual 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.
21. AMENDMENT. CUNA Mutual and CUNA Brokerage reserve the right to amend this
Agreement at any time, and the submission of an application by Broker-Dealer
after notice of any such amendment has been sent to Broker-Dealer shall
constitute that 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 CUNA Mutual and CUNA
Brokerage and 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.
[The remainder of this page is intentionally left blank.
Signatures appear on the following page.]
- 13 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first set forth above.
CUNA MUTUAL INSURANCE SOCIETY
By: ___________________________________________
CUNA BROKERAGE SERVICES, INC.
By: ___________________________________________
BROKER-DEALER
Name:
Title:
By: __________________________________
NOTE: Please return two signed copies of this Agreement to:
CUNA Mutual Insurance Society
Attn: Xxxxx Xxxxxx, DTB FICP
0000 Xxxxxxxx Xxx
Xxxxxxx, XX 00000
Upon acceptance, one countersigned copy will be returned to Broker-Dealer for
its files.
- 14 -
EXHIBIT A
---------
SELLING AND SERVICES AGREEMENT
FOR
INSURANCE AND ANNUITY (VARIABLE ANNUITY PRODUCTS)
GENERAL LETTER OF RECOMMENDATION
--------------------------------
Broker-Dealer hereby certify to CUNA Mutual that all the following requirements
will be fulfilled in conjunction with the submission by Broker-Dealer of
licensing/appointment papers for all applicants as agents of CUNA Mutual.
Broker-Dealer will, upon request, forward proof of compliance with same to CUNA
Mutual 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 CUNA Mutual. 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
CUNA Mutual 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 CUNA Mutual. 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.
- 15 -
SELLING AND SERVICES AGREEMENT
(VARIABLE ANNUITY PRODUCTS)
PRODUCTS AND COMPENSATION SCHEDULE
----------------------------------
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. CUNA Mutual agrees to compensate Broker-Dealer, as appropriate,
under the Agreement as set forth below. Notwithstanding any provisions in the
Agreement to the contrary, CUNA Mutual reserves the right to discontinue the
availability of any of the Products or modify Compensation at any time, subject
to thirty (30) days written notice. Subject to the provisions of the Agreement,
Broker-Dealer shall be entitled to receive 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.
================================================================================
For each product sale or transaction the following rules apply:
o For PROPRIETARY ANNUITY PRODUCTS, First Year and Renewal Commission are
expressed as a percentage of purchase payments by year. First Year
Commission is calculated as a percentage of earned purchase payments, and
Renewal Commission is calculated as a percentage of trailers. A trailer is
defined as the annuity contract account value at the end of the annuity
contract anniversary.
o INCOME OPTION TRAILERS are expressed as a percent of the reserve held by
CUNA Mutual on the contract and are paid once per year in January to the
representative assigned for service as of the prior year-end calculation
date on contracts in force for all fixed period income options.
o In addition, several special Compensation rules apply to the Products sold
as part of this Agreement:
1. CUNA Mutual has the right to define and determine Compensation on
transfers, exchanges, or replacements.
2. CUNA Mutual reserves the right to refund purchase payments paid or
principal invested on a policy if such refund is justified by reason
of rescission or cancellation for justifiable reason. In this
situation, Compensation will be adjusted for any refunded purchase
payment or investment.
3. Increases to purchase payment levels and specified amount may result
in Compensation being credited to another representative. In
addition, changes in service assignments or in a sales and service
agreement may result in Compensation being credited to another
representative.
4. The minimum disbursed commissions check amount will be $50. Any
payable amounts below the minimum in a given period will be held over
and disbursed in a subsequent period.
5. With respect to annuity products, CUNA Mutual reserves the right to
reverse Compensation upon the death of the owner or annuitant within
the first year after issuance of the policy.
[The remainder of this page is intentionally left blank.
Signatures appear on the following page.]
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SELLING AND SERVICES AGREEMENT
PRODUCTS AND COMPENSATION SCHEDULE
---------------------------------------------------------------------------------------------------------------------
COMMISSION RATE
---------------------------------------------------------------------------------------------------------------------
PRODUCT YEAR FIRST YEAR RENEWAL
---------------------------------------------------------------------------------------------------------------------
VARIABLE ANNUITY
---------------------------------------------------------------------------------------------------------------------
MEMBERS(R) VARIABLE ANNUITY III:
---------------------------------------------------------------------------------------------------------------------
Option 1 - Up Front and Trailer (default option)
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 0-75 all years 6.50%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 76-80 all years 5.40%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 81-85 all years 3.75%
---------------------------------------------------------------------------------------------------------------------
Trailer; paid on policy anniversary 0.25%
---------------------------------------------------------------------------------------------------------------------
Option 2 - Semi-Levelized
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 0-75 all years 4.70%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 76-80 all years 3.85%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 81-85 all years 2.60%
---------------------------------------------------------------------------------------------------------------------
Trailer; paid on policy anniversary 0.50%
---------------------------------------------------------------------------------------------------------------------
Option 3 - Semi-Levelized 2
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 0-75 all years 3.50%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 76-80 all years 2.90%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 81-85 all years 2.00%
---------------------------------------------------------------------------------------------------------------------
Trailer; paid on policy anniversary 0.75%
---------------------------------------------------------------------------------------------------------------------
Option 4 - All Up Front
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 0-75 all years 7.25%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 76-80 all years 6.00%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 81-85 all years 4.20%
---------------------------------------------------------------------------------------------------------------------
Trailer; paid on policy anniversary 0.00%
---------------------------------------------------------------------------------------------------------------------
Option 5 - 1% Trailer
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 0-75 all years 2.00%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 76-80 all years 1.65%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 81-85 all years 1.15%
---------------------------------------------------------------------------------------------------------------------
Trailer; paid qtrly, starts at the end of the 5th qtr 0.25%
---------------------------------------------------------------------------------------------------------------------
MEMBERS(R) VARIABLE ANNUITY III - EXTRACREDIT:
---------------------------------------------------------------------------------------------------------------------
Option 1 - Up Front and Trailer (default option)
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 0-75 all years 5.00%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 76-80 all years 4.15%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 81-85 all years 2.90%
---------------------------------------------------------------------------------------------------------------------
Trailer; paid qtrly, starts at the end of the 5th qtr 0.063%
---------------------------------------------------------------------------------------------------------------------
Option 2 - Semi-Levelized
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 0-75 all years 3.20%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 76-80 all years 2.65%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 81-85 all years 1.85%
---------------------------------------------------------------------------------------------------------------------
Trailer; paid qtrly, starts at the end of the 5th qtr 0.125%
---------------------------------------------------------------------------------------------------------------------
Option 3 - Semi-Levelized 2
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 0-75 all years 2.00%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 76-80 all years 1.65%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 81-85 all years 1.15%
---------------------------------------------------------------------------------------------------------------------
Trailer; paid qtrly, starts at the end of the 5th qtr 0.188%
---------------------------------------------------------------------------------------------------------------------
Option 4 - All Up Front
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 0-75 all years N/A
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 76-80 all years N/A
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 81-85 all years N/A
---------------------------------------------------------------------------------------------------------------------
Trailer; paid qtrly, starts at the end of the 5th qtr N/A
---------------------------------------------------------------------------------------------------------------------
Option 5 - 1% Trailer
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 0-75 all years 1.00%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 76-80 all years 0.85%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 81-85 all years 0.60%
---------------------------------------------------------------------------------------------------------------------
Trailer; paid qtrly, starts at the end of the 5th qtr 0.250%
---------------------------------------------------------------------------------------------------------------------
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SELLING AND SERVICES AGREEMENT
PRODUCTS AND COMPENSATION SCHEDULE
---------------------------------------------------------------------------------------------------------------------
COMMISSION RATE
---------------------------------------------------------------------------------------------------------------------
PRODUCT YEAR FIRST YEAR RENEWAL
---------------------------------------------------------------------------------------------------------------------
MEMBERS(R) CHOICE VARIABLE ANNUITY
% of purchase payment all years 1.125%
---------------------------------------------------------------------------------------------------------------------
Trailer; paid on policy anniversary 1.00%
---------------------------------------------------------------------------------------------------------------------
MEMBERS(R) VARIABLE ANNUITY III - L-SHARE:
---------------------------------------------------------------------------------------------------------------------
Option 1 - Up Front and Trailer (default option)
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 0-75 1 4.00%
---------------------------------------------------------------------------------------------------------------------
2 3.25%
---------------------------------------------------------------------------------------------------------------------
3 2.50%
---------------------------------------------------------------------------------------------------------------------
4 1.75%
---------------------------------------------------------------------------------------------------------------------
5+ 1.00%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 76-80 1 3.30%
---------------------------------------------------------------------------------------------------------------------
2 3.25%
---------------------------------------------------------------------------------------------------------------------
3 2.50%
---------------------------------------------------------------------------------------------------------------------
4 1.75%
---------------------------------------------------------------------------------------------------------------------
5+ 1.00%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 81-85 1 2.30%
---------------------------------------------------------------------------------------------------------------------
2 2.30%
---------------------------------------------------------------------------------------------------------------------
3 2.30%
---------------------------------------------------------------------------------------------------------------------
4 1.75%
---------------------------------------------------------------------------------------------------------------------
5+ 1.00%
---------------------------------------------------------------------------------------------------------------------
Trailer; paid qtrly, starts at the end of the 5th qtr 0.25%
---------------------------------------------------------------------------------------------------------------------
Option 2 - Semi-Levelized
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 0-75 1 4.50%
---------------------------------------------------------------------------------------------------------------------
2 3.25%
---------------------------------------------------------------------------------------------------------------------
3 2.50%
---------------------------------------------------------------------------------------------------------------------
4 1.75%
---------------------------------------------------------------------------------------------------------------------
5+ 1.00%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 76-80 1 3.75%
---------------------------------------------------------------------------------------------------------------------
2 3.25%
---------------------------------------------------------------------------------------------------------------------
3 2.50%
---------------------------------------------------------------------------------------------------------------------
4 1.75%
---------------------------------------------------------------------------------------------------------------------
5+ 1.00%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 81-85 1 2.60%
---------------------------------------------------------------------------------------------------------------------
2 2.60%
---------------------------------------------------------------------------------------------------------------------
3 2.50%
---------------------------------------------------------------------------------------------------------------------
4 1.75%
---------------------------------------------------------------------------------------------------------------------
5+ 1.00%
---------------------------------------------------------------------------------------------------------------------
Trailer; paid qtrly, starts at the end of the 5th qtr 0.188%
---------------------------------------------------------------------------------------------------------------------
Option 3 - Semi-Levelized 2
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 0-75 1 5.00%
---------------------------------------------------------------------------------------------------------------------
2 3.25%
---------------------------------------------------------------------------------------------------------------------
3 2.50%
---------------------------------------------------------------------------------------------------------------------
4 1.75%
---------------------------------------------------------------------------------------------------------------------
5+ 1.00%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 76-80 1 4.15%
---------------------------------------------------------------------------------------------------------------------
2 3.25%
---------------------------------------------------------------------------------------------------------------------
3 2.50%
---------------------------------------------------------------------------------------------------------------------
4 1.75%
---------------------------------------------------------------------------------------------------------------------
5+ 1.00%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 81-85 1 2.90%
---------------------------------------------------------------------------------------------------------------------
2 2.90%
---------------------------------------------------------------------------------------------------------------------
3 2.50%
---------------------------------------------------------------------------------------------------------------------
4 1.75%
---------------------------------------------------------------------------------------------------------------------
5+ 1.00%
---------------------------------------------------------------------------------------------------------------------
Trailer; paid qtrly, starts at the end of the 5th qtr 0.125%
---------------------------------------------------------------------------------------------------------------------
- 18 -
SELLING AND SERVICES AGREEMENT
PRODUCTS AND COMPENSATION SCHEDULE
---------------------------------------------------------------------------------------------------------------------
COMMISSION RATE
---------------------------------------------------------------------------------------------------------------------
PRODUCT YEAR FIRST YEAR RENEWAL
---------------------------------------------------------------------------------------------------------------------
MEMBERS(R) VARIABLE ANNUITY III - L-SHARE (CON'T):
---------------------------------------------------------------------------------------------------------------------
Option 4 - All Up Front
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 0-75 1 5.50%
---------------------------------------------------------------------------------------------------------------------
2 3.25%
---------------------------------------------------------------------------------------------------------------------
3 2.50%
---------------------------------------------------------------------------------------------------------------------
4 1.75%
---------------------------------------------------------------------------------------------------------------------
5+ 1.00%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 76-80 1 4.55%
---------------------------------------------------------------------------------------------------------------------
2 3.25%
---------------------------------------------------------------------------------------------------------------------
3 2.50%
---------------------------------------------------------------------------------------------------------------------
4 1.75%
---------------------------------------------------------------------------------------------------------------------
5+ 1.00%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment; issue ages 81-85 1 3.15%
---------------------------------------------------------------------------------------------------------------------
2 3.15%
---------------------------------------------------------------------------------------------------------------------
3 2.50%
---------------------------------------------------------------------------------------------------------------------
4 1.75%
---------------------------------------------------------------------------------------------------------------------
5+ 1.00%
---------------------------------------------------------------------------------------------------------------------
Trailer; paid qtrly, starts at the end of the 5th qtr 0.00%
---------------------------------------------------------------------------------------------------------------------
Trailer; paid qtrly, starts at the end of the 17th qtr 0.25%
---------------------------------------------------------------------------------------------------------------------
INCOME OPTIONS
---------------------------------------------------------------------------------------------------------------------
LIFETIME PAYOUTS:
---------------------------------------------------------------------------------------------------------------------
% of purchase payment 1 0.00%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment 2 0.00%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment 3 1.50%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment 4 3.00%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment 5 4.00%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment 6 5.00%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment 7 6.00%
---------------------------------------------------------------------------------------------------------------------
% of purchase payment 8+ 6.50%
---------------------------------------------------------------------------------------------------------------------
INSTALLMENT PAYMENTS
---------------------------------------------------------------------------------------------------------------------
FIXED PERIOD INCOME OPTIONS:
---------------------------------------------------------------------------------------------------------------------
Trailer; paid on a calendar year basis, based on the year-end 0.225%
value.
---------------------------------------------------------------------------------------------------------------------
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