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EXHIBIT 10.4
GENERAL AGENT'S AGREEMENT
NOTICE: This Agreement is Subject to Arbitration
Under the Texas Arbitration Act
This AGREEMENT, executed in duplicate, is by and between The MEGA Life
and Health Insurance Company, an Oklahoma corporation (hereinafter called the
"Company") and United Group Association, a Texas corporation (hereinafter
called "UGA" and/or "GA").
In consideration of the mutual pledges, covenants and agreements
herein stated as made and performed and to be made and performed, the parties
hereto have agreed as follows:
1. PURPOSE OF AGREEMENT
This Agreement is solely for the purpose of allowing GA and/or
its sub-agents to solicit individual and group applications for such life
insurance, health insurance, and such other insurance programs as identified or
authorized by separate written addendum to this Agreement, and as may from time
to time be offered by the Company in the various states where both Company, GA,
and its sub-agents are duly qualified and licensed.
2. APPOINTMENT
The Company hereby appoints UGA as its general agent and UGA
hereby accepts such appointment, upon the terms and conditions hereinafter set
forth. Until this Agreement is terminated, UGA will not market, and will use
its reasonable efforts to prevent its sub-agents from marketing, insurance
products of other insurance carriers that are competitive with the insurance
products of the subsidiaries of United Insurance Companies, Inc., unless such
subsidiaries have declined to market such products.
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3. TERRITORY
GA is authorized to act for the Company as enumerated herein
in any state or territory where GA and the Company are duly qualified and
licensed. The Company may withdraw from any territory and may, at its
discretion, discontinue or withdraw any forms or policies from GA without
prejudice to the right of the Company to continue said forms with other
agencies in the same territory.
4. SCOPE OF AUTHORITY
As a general agent of the company, GA is an independent
contractor and nothing hereinafter shall be interpreted to create an
employer-employee relationship. It is also acknowledged and expressly agreed
that:
A. GA has no authority, express or implied, to bind the
Company or its affiliates by any promise or agreement
and may not accept a promissory note, incur a debt,
or other obligation on behalf of the Company.
B. GA has no authority to waive any of the Company's
rights or requirements or any provisions of policies
or certificates issued by the Company, nor shall GA
change or alter any policy or certificate issued by
the Company or quote rates that vary in any way from
the rates furnished to GA by the Company, or waive
forfeitures, obligations or conditions.
C. GA shall be free to exercise its own judgment as to
the persons from whom applications will be solicited
and the time and place of solicitation, subject to
the provisions as contained herein.
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D. The Company may from time to time prescribe rules
respecting the requirements for eligibility of
applications for insurance, which rules shall be
observed and conformed to by GA and its sub-agents.
GA agrees that the general transactions of business
will be governed by Company rules which may be
changed, altered, or amended from time to time by the
Company.
E. GA shall not use the name, in whole or partially, of
the Company or any of its affiliates as part of any
trade or business name.
F. GA shall have the authority to enter into written
contracts with sub-agents for the purpose of
soliciting insurance as permitted by this Agreement.
GA agrees not to enter into contract with its
sub-agents that exceed the scope of authority granted
to GA by this Agreement. GA further agrees that any
contracts entered into with its sub-agents shall be
its sole responsibility and creates no obligation on
the part of the Company.
5. DUTIES AND RESPONSIBILITIES
The duties and responsibilities of GA are:
A. To solicit and to cause its sub-agents to solicit
individual and group applications for life insurance,
health insurance and other programs, as identified or
authorized by separate written addendum to this
Agreement, which may from time to time be offered by
the Company in the various states where both the
Company and GA and its sub-agents are duly qualified
and licensed;
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B. To collect the initial premiums and policy fees for
applications taken by its sub-agents and promptly
remit such applications and monies to the Company at
its regional office in Dallas, Texas. All
collections made by GA and its sub-agents under
authority of this Agreement shall be kept entirely
separate and distinct from other personal funds, and
GA shall immediately remit same in cash to the
Company. GA shall be liable to the Company for loss
by accident, theft, or otherwise of any money or
items of value belonging to the Company and coming
into its control or into the control of any
sub-agent;
C. To keep records required by the Company, which
records shall be the property of the Company;
D. To comply with all applicable state and federal
statutes and regulations, and to similarly comply
with all rules, regulations and procedures as
prescribed by the Company in the performance of GA's
duties;
E. To assist the Company in maintaining all policies and
certificates in force;
F. To be solely responsible for the contracting with or
hiring, training, supervision, compensation,
termination and all other matters relating to any
persons;
G. To inform the Company in writing immediately of all
terminations of its sub-agents and the reason
therefor;
H. To allow its sub-agents to solicit applications only
after being licensed, duly appointed by the Company
according to the licensing statutes and regulations
of the state or states within which these sub-agents
are soliciting. GA shall be obligated to terminate
the appointment of any sub-
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agent when requested by the Company; and
I. To indemnify the Company against any actions or
proceedings arising from the contracting with or
employment of any person by GA.
6. COMPENSATION
A. The full compensation of GA shall be commissions
payable to GA or its designee, whichever is a
licensed agent or agency in the various states, at
rates set forth in the COMMISSION SCHEDULE in effect
at the time the application is submitted to the
Company, which schedule and all amendments and
changes thereto and replacements thereof are hereby
made a part of this Agreement and attached hereto as
Exhibit A. Such compensation shall be subject to the
terms and conditions of this Agreement and of the
applicable Commission Schedule. The Company and GA
shall from time to time agree on amendment, change,
or replacement of the COMMISSION SCHEDULE for future
commissions on policies to be issued in the future.
The commission rate on any policy already issued to
an insured shall not be affected by any such
amendment, change or replacement. Paid but unearned
commissions shall be immediately debited to the
earned commission statement furnished to GA. The
Company assumes no responsibility for the collection
of the debit balances of GA's sub-agents, although
the Company may from time to time acquire notes of
indebtedness from the GA for debts owed to the GA by
its sub-agents. The parties agree that amounts
loaned shall accrue and include interest.
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B. Each month, the Company will furnish GA a statement
reflecting the earned commissions account of the GA.
The Company may furnish a statement reflecting the
earned commissions of each of GA's sub-agents
entitled to commissions. All amounts paid, net
credits, debit balance, and said earned commission
statement shall be considered correct and binding on
the parties hereto unless any error is reported in
writing to the other party within ninety (90) days of
the date the statement is mailed.
C. GA's sub-agents shall be compensated directly and
promptly by GA, who shall also provide appropriate
accounting to his sub-agents. GA is solely
responsible for payment of commission to its
sub-agents. The Company may, at its discretion, and
from time to time, make commission and other
payments, and/or furnish the aforesaid monthly
accounting directly to the sub-agents as set forth by
GA, and in a manner satisfactory to the Company.
Such payments shall be made pursuant to GA's contract
with its sub-agents, including the payments to
sub-agents as set forth in the Agent Payment Schedule
included herein. Payments when made shall reduce
amounts due to GA from the Company. The monthly
accounting is provided for the information of GA and
its sub-agents. It is the responsibility of GA to
report corrections on said accounting to the Company
for adjustment.
D. Payments of commissions shall be subject to the
following conditions:
(1) On policies of which one or more renewal
premiums are paid in advance, commissions
shall be earned only as such premiums
otherwise would have become due. Renewal
premiums and
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renewal commissions are defined as amounts
applicable to the 13th and subsequent months.
(2) Commissions shall not be owed or paid on
policies continued in force under any
nonforfeiture or waiver of premium provision
of any policy.
(3) If collected premiums are subsequently
refunded by the Company, the account of GA
will be debited.
(4) No commissions will be earned for policies or
certificates issued under a group policy
conversion privilege.
(5) Commissions shall accrue to GA as premiums
are received and earned by the Company.
E. Where a policy is issued, which in the judgment of
the Company is to replace a terminated policy of the
Company, the new policy shall be regarded as a
"changed policy" and commissions and/or renewal
commissions shall be determined by the Company. In
the event of the reissuance of a lapsed policy within
three months of date of lapse, the commission to be
paid shall be the same as on a renewal of such
policy, but such commission shall be based only on
the amount of premium actually paid to the Company.
In the event of the reissuance of a lapsed policy
after three months from date of lapse, no commission
thereon shall accrue unless such reissuance is
accomplished by the efforts of GA.
F. In contracting with its sub-agents, GA may not
provide for more liberal commission terms than those
contained in this Agreement.
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7. REFUNDS
The Company shall at all times have the right to reject
applications for insurance without specifying the reason. If any premiums
shall be refunded by the Company for any reason, all commissions credited or
paid will be charged to the appropriate account.
8. VESTING
Should this Agreement be terminated when commissions are
payable to GA thereunder, the Company will continue to pay 100% of such
commissions to GA on premiums paid to the Company, provided said commissions
total at least $100 per month.
9. TERMINATION
A. The GA or Company may terminate this Agreement with
or without cause upon 15 months' notice sent by
certified mail to the last known address of the other
party, except in the event of termination for cause
in which case termination will be immediate. (Cause
is defined as any misappropriation of funds, fraud,
knowingly subjecting the Company to regulatory fines,
penalties, suspensions or revocations of license,
violation of any criminal or insurance law, or the
material breach of the terms of this Agreement by
GA.) In the event the GA is terminated for cause,
the Company shall have the right, at its discretion,
to declare a complete forfeiture of any and all
compensation due or to become due under this
Agreement and any amounts owed to the Company shall
immediately become due and payable.
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B. After termination of this Agreement, all sums due to
the Company hereunder shall be immediately due and
payable, and GA shall immediately deliver to the
Company all rate books, policyholder lists, letters,
records and supplies connected with the business and
belonging to the Company. The amount payable for
vested commissions and other emoluments will be
reduced by any debt or other liability of GA to the
Company existing at termination of this Agreement or
accruing after such termination. Any such debt or
other liability of GA to the Company then existing or
accruing shall accrue interest at the rate of 12% per
annum payable monthly as it accrues or at the rate
provided in any Note and Agreement made by GA in
connection with this Agreement, whichever is higher.
C. Furthermore, GA agrees to pay any indebtedness
incurred by its sub-agents. To assure that the
indebtedness of any sub-agent will be repaid, the
Company shall have a first lien upon the following:
any commissions, salvage accounts, service and
advertising fees, and any other credits or property
rights of any kind which have accrued or may accrue
to GA from the Company or its affiliates. All of the
above will be security for the indebtedness.
D. GA and the Company agree that it is good and prudent
business practice to maintain the business in force
and GA agrees that it will not rewrite the business
during the term of this Agreement or after
termination and GA will use all reasonable efforts to
insure none of its sub-agents rewrite the business.
It will not be considered a violation of this
provision if
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relatively isolated rewrites occur on an individual
basis.
10. DISCLOSURE RELATIONSHIP
All agreements between GA and its sub-agents shall be strictly
between such parties and shall not be construed in any way to bind the Company.
All agreements concerning the Company between GA and its sub-agents shall
contain the following provisions or provisions with the same meaning:
"Services provided to you by any insurance company pursuant to
an agreement between GA and the insurance company are strictly
for servicing purposes and compliance with various statutory
and/or regulatory requirements. The services provided by
these insurance companies do not in any way bind the insurance
companies to this Agreement, including, without limitation,
with respect to the payment of commissions."
11. LITIGATION
If any claim is made against either party hereto, or both
parties jointly, by reason of any alleged act, fault, or failure of GA or its
sub-agents in connection with their activities hereunder, the Company may
defend such action or require GA to defend such action. GA hereby agrees to
indemnify the Company, and hold it harmless from any loss, cost or expense as a
result of any act or omission, not authorized by this Agreement, of GA or its
sub-agents in connection with services rendered which are related to this
Agreement. GA shall immediately send the Company by U.S. Mail, overnight
delivery, any correspondence, legal process, or official notice served on it or
its sub-agents on behalf of the Company. The Company retains
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the right to settle or compromise any claim, lawsuit or proceeding brought
against it as a result of any act or omission of the GA or its sub-agents.
Such action on the part of the Company will not waive any right of
indemnification against GA provided for hereunder.
12. ASSIGNMENTS
This Agreement is not transferable. No assignment of
commissions or renewal commissions hereunder shall be valid unless authorized
in advance, in writing, by the Company. Any assignment so authorized shall be
subject to any and all indebtedness of GA to the Company.
13. ADVERTISING
No circular, brochures, advertisements, lead-generating
material, or similar matter shall be published, printed, distributed (by U.S.
Postal Service or otherwise) or used in any way, directly or indirectly, by GA
or his sub-agents until the same shall first have been approved in writing by
the Company and a copy of the final printed form shall have been submitted to
the Company. If any advertisement, circular, brochure, lead-generating
material, or similar matter is published, printed, disseminated, or used in any
way, directly or indirectly, by GA or his sub-agents, which has not been
approved in writing by the Company, GA agrees to indemnify the Company for any
costs and legal expenses incurred as a result of penalties imposed by any
regulatory agency for the use of such materials.
GA agrees to keep a current advertising file which contains
the proper notations as to dissemination methods and numbers for the inspection
of the Company. Such advertising file shall be available for periodic review
by the Company.
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14. ADMINISTRATIVE FEES
In connection with the sale of policies for the Company in
accordance with this Agreement, an administrative fee will be collected by GA
or its sub-agents and submitted to the Company with the first modal premium.
If the policy is not accepted by the policyholder upon delivery, the Company
will refund the administrative fee with the first modal premium.
15. ARBITRATION
If any dispute shall arise between any of the parties to this
Agreement with reference to the interpretation of this Agreement, the dispute
shall be settled by arbitration. The terms of the arbitration are as follows:
A. Commencement. Any controversy or claim arising out of, or
relating to, this Agreement or a breach thereof shall be
settled by arbitration in Dallas, Texas, commenced by either
party by delivering a written notice (the "Arbitration
Notice") to the other party. The arbitration decision shall
be made by the arbitrators selected as set forth below and the
decision of a majority of the arbitrators shall be final,
conclusive and binding on, and nonappealable by, the parties
hereto. Judgment upon any award rendered pursuant to this
arbitration process may be entered in any court having
jurisdiction thereof.
B. Selection of Arbitrators. The parties shall jointly select
three arbitrators. If, within fifteen (15) days after the
Arbitration Notice, the parties agree on only two arbitrators,
the two arbitrators shall select the third. If the parties
agree on only one, then they shall each select one additional
arbitrator. If the parties cannot agree on any arbitrator
within fifteen (15) days after the Arbitration Notice, then
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they shall each select one arbitrator within five days
thereafter, and those two arbitrators shall promptly select
the third. If under any of these methods a third arbitrator
is not selected within ten (10) days of the selection of the
second arbitrator, then either party may apply to the Chief
Judge of the United States Court of Appeals for the Fifth
Circuit for selection of the third arbitrator.
C. Expenses of Arbitration; Interest. The fees and expenses of
the arbitrators, and all other costs and expenses incurred in
the arbitration, shall be borne as specified in the
arbitration award. Any award of the arbitrators shall include
interest at a rate considered just under the circumstances by
the arbitrators.
D. Rules and Procedures. The commercial rules of the American
Arbitration Association shall be applied in any arbitration
under this Agreement (to the extent such rules and procedures
are not inconsistent with the above paragraphs).
16. NON-DISCLOSURE OF THE COMPANY'S AFFAIRS
GA and the Company agree to keep confidential such proprietary
information as each may from time to time impart to the other regarding the
other party's business affairs and customers, and neither will in whole or in
part, now or anytime, disclose said information.
17. CONSENT TO BREACH
No term or provision hereof shall be deemed waived and no
breach excused, unless such waiver or consent shall be in writing and signed by
the party claimed to have waived or consented. Any consent by any party to, or
waiver of, a breach by the other, whether expressed or implied, shall not
constitute a consent to, waiver of, or excuse for any other different or
subsequent breach.
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18. SOLE AGREEMENT
This Agreement covers and includes all agreements between the
parties hereto. This Agreement cannot be modified or changed by any agreement
whatsoever, unless such modification or change is made in writing and signed by
the President or a Vice President of the Company or its parent company, United
Insurance Companies, Inc. It is agreed that the Company may offset any and all
existing or future indebtedness of GA to the Company, or to any other company
with which the Company is or may become affiliated, against any earned
commissions or any other sums payable to GA under this Agreement. So long as
another company principally owns, or is owned by, the Company, or is
principally owned by the same stockholders as principally own the Company, it
shall be deemed to be an affiliated company. Such right of offset, as
described herein, constitutes a paramount and prior lien on any and all earned
commissions or any other sums payable and shall secure payment and performance
of all of GA's indebtedness and other obligations, and the Company may, at any
time without notice, apply any such earned commissions and any other sums
payable directly to any indebtedness, first to the Company and then to any
affiliated company. Failure to offset against the GA's indebtedness any earned
commissions or any other sums payable to the GA shall not be deemed a waiver of
the aforesaid right of offset or of the Company's lien on any earned
commissions or any other sums payable to GA, nor impair the right to so apply
such earned commissions and other sums in the future.
19. AGREEMENT TERMS EXCLUSIVE
This Agreement constitutes the entire agreement between the
parties hereto and the parties acknowledge and agree that neither of them has
made any representation with respect to the subject matter of this Agreement or
any representations inducing the execution and
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delivery thereof except as specifically set forth herein. Each of the parties
hereto acknowledge that it has relied on its own judgment in entering in this
Agreement.
20. APPLICABLE LAW
This Agreement and any disputes relating thereto shall be
construed under the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the 1st day of April, 1996, which is the effective date of this
Agreement.
NITED GROUP ASSOCIATION THE MEGA LIFE AND HEALTH
INSURANCE COMPANY
By: /s/ Ronald L. Jensen By: /s/ Richard J. Estell
------------------------------ ------------------------------
Title: President Title: President
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EXHIBIT A
SCHEDULE OF COMMISSIONS
Commissions are paid hereunder as a percentage of the premium rate in
effect for the policy on the policy issue date or at the time of the applicable
premium payment, whichever is lower. Commissions are paid only on earned,
commissionable premium. Commissions are not paid on: (a) policies continued in
force under any nonforfeiture or waiver of premium provision; (b) except as
provided in the following paragraph, policies issued under a group policy
conversion provision; (c) rate increases; (d) premium for any optional or
additional benefit which, at the time of its issue, Our guidelines provide is
non-commissionable; or (e) any extra premium for a substandard policy.
If a class of policyholders written by GA's sub-agents is voluntarily
converted by the Company at our discretion to another plan or product, GA will
be entitled, subject to all other terms and conditions of this Agreement, to
receive ongoing commissions on the conversion product at the commission rate
applicable to the original product, unless by regulation or statue the Company
is required to have a higher loss ratio on such conversion product.
1ST YEAR 2ND YEAR 3+ YEARS
PLAN TYPE COMMISSION COMMISSION COMMISSION
- ---- ---- ---------- ---------- ----------
LIFE PROTECTOR OWNER 72% 20% 20%
1ST YEAR 2ND YEAR 3+ YEARS
COMMISSION COMMISSION COMMISSION
---------- ---------- ----------
OTHERS OWNER 41.5% 30% 15%
(Health Ins.,
Accident & EMPLOYEE 36% 28% 13%
Dental)
PROTECTOR PPO OWNER 29% 24% 14%
& PPOII
1ST YEAR 2ND YEAR 3+ YEARS
COMMISSION COMMISSION COMMISSION
---------- ---------- ----------
Base Bonus Total Base Bonus Total
PROTECTOR POS OWNER 30.10% 24.75% 2.65% 27.4% 7.85% 2.65 10.5%
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