<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 1, 1996
--------------------------------
UNITED INSURANCE COMPANIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-14320 75-2044750
- ---------------------------- ---------------- ---------------------
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
4001 McEwen Drive, Suite 200, Dallas, Texas 75244
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 960-8497
-----------------------------
Not Applicable
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<PAGE> 2
Item 5.OTHER EVENTS
Since United Insurance Companies, Inc.'s (the "Company") inception, a
substantial portion of the health insurance policies sold by United Group
Association, Inc. ("UGA") agents has been issued by AEGON USA, Inc. (together
with its subsidiaries, "AEGON") and coinsured by the Company. Effective April
1, 1996, substantially all new health insurance policies sold by UGA will be
directly issued by the Company, following a transition period, pursuant to
agreements between the Company and AEGON (the "AEGON Transaction"). The
Company will retain 100% of the premiums and pay all of the costs of such new
policies. During the transition period, UGA agents will continue to sell
health insurance policies issued by AEGON and coinsured by the Company in each
state where UGA sells insurance until regulatory approvals for the Company to
directly issue its policies in such state are received. The Company believes
that substantially all regulatory approvals will be obtained by December 31,
1996. The Company and AEGON will maintain the coinsurance agreement for
policies issued by AEGON prior to April 1, 1996 and during the transition
period. The Company's coinsurance percentage will be 57.5% in 1996 and 60%
thereafter until December 31, 2000, at which time the Company will acquire all
remaining policies from AEGON at a formula price described in the agreement.
As part of the AEGON Transaction, the Company acquired AEGON's
underwriting, claims management and administrative capabilities related to the
products coinsured by the Company, through the purchase of AEGON's insurance
center for approximately $10 million. The Company also hired substantially all
of the 700 employees located at the center. The Company believes that this
will ensure a continuation of the quality, cost effective underwriting, claims
processing and customer service expertise that has contributed to the
profitability of the business sold by UGA.
Under general agency agreements effective April 1, 1996, UGA will sell
insurance directly issued by the Company. The agreements are terminable by
either party at any time on 15 months' written notice or immediately for cause
(as defined). Commissions will be agreed upon by the parties from time to time
under the agreements. UGA has agreed that until such agreements are
terminated, UGA will not market, and will use its reasonable efforts to prevent
UGA agents from marketing, insurance products of other insurance carriers that
are competitive with the Company's insurance products, unless the Company has
declined to market such products.
2
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Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL AND EXHIBITS
<TABLE>
<CAPTION>
Exhibit Page
Number Description of Exhibit Number
------ ---------------------- ------
<S> <C> <C>
10.1 Reinsurance Agreement between AEGON USA Companies and UICI
Companies effective January 1, 1995, as amended through April 1,
1996.
10.2 Asset Purchase Agreement between UICI Companies and PFL Life
Insurance Company, Bankers United Life Assurance Company, Life
Investors Insurance Company of America and Monumental Life
Insurance Company and Money Services, Inc. effective April 1,
1996.
10.3 General Agent's Agreement between Mid-West National Life
Insurance Company of Tennessee and United Group Association,
Inc. effective April 1, 1996.
10.4 General Agent's Agreement between The MEGA Life and Health
Insurance Company and United Group Association, Inc. effective
April 1, 1996.
10.5 Agreement between United Group Association, Inc. and Cornerstone
Marketing of America effective April 1, 1996.
</TABLE>
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<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNITED INSURANCE COMPANIES, INC.
(Registrant)
Date April 1, 1996 By /s/ W. Brian Harrigan
-------------------- -----------------------------------
W. Brian Harrigan
President and Director
Date April 1, 1996 By /s/ Vernon R. Woelke
-------------------- -----------------------------------
Vernon R. Woelke
Vice President, Treasurer and
Director
4
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------ ----------------------
<S> <C>
10.1 Reinsurance Agreement between AEGON USA Companies and UICI
Companies effective January 1, 1995, as amended through April 1,
1996.
10.2 Asset Purchase Agreement between UICI Companies and PFL Life
Insurance Company, Bankers United Life Assurance Company, Life
Investors Insurance Company of America and Monumental Life
Insurance Company and Money Services, Inc. effective April 1,
1996.
10.3 General Agent's Agreement between Mid-West National Life
Insurance Company of Tennessee and United Group Association,
Inc. effective April 1, 1996.
10.4 General Agent's Agreement between The MEGA Life and Health
Insurance Company and United Group Association, Inc. effective
April 1, 1996.
10.5 Agreement between United Group Association, Inc. and Cornerstone
Marketing of America effective April 1, 1996.
</TABLE>
<PAGE> 1
EXHIBIT 10.1
AMENDMENT No 3 TO REINSURANCE AGREEMENT
BETWEEN
AEGON USA COMPANIES AND UICI COMPANIES
EFFECTIVE DATE APRIL 1, 1996
Reference is hereby made to that certain Reinsurance Agreement
(effective January 1, 1995) (the "UGA Reinsurance Agreement"), among National
Manager's Life Insurance Company, United Group Reinsurance Inc., U.S. Managers
Life Insurance Company, Financial Services Reinsurance Company, and MEGA Life
and Health Insurance Company (hereinafter collectively referred to as "UICI
Companies") and PFL Life Insurance Company, Life Investors Insurance Company of
America, Bankers United Life Assurance Company, and Monumental Life Insurance
Company (hereinafter referred to as "AEGON Companies").
WHEREAS, the AEGON Companies entered into that certain Asset Purchase
Agreement dated as of April 1, 1996 with United Insurance Company, Inc.
("UICI") (the "Purchase Agreement") whereby UICI purchased certain insurance
operations owned by the AEGON Companies and located at the Insurance Center,
North Richland Hills, Texas (the "Insurance Center"), the business of which was
primarily produced by United Group Association ("UGA"), an independent
insurance agency and such business was reinsured by the UICI Companies pursuant
to the UGA Reinsurance Agreement and administered by employees of the AEGON
Companies at the Insurance Center (the "UGA Business");
WHEREAS, pursuant to the Purchase Agreement, Mega Life and Health
Insurance Company ("Mega") and the AEGON Companies have entered into the Mega
Service Agreement pursuant to which Mega is authorized to service the UGA
Business until such time as the AEGON Companies' liabilities and obligations
with respect to the UGA Business have expired, been satisfied or been
transferred;
WHEREAS, pursuant to the Purchase Agreement, the UICI Companies and
the AEGON Companies have agreed to certain modifications of this UGA
Reinsurance Agreement;
NOW THEREFORE, for good and valuable consideration and the mutual
promises herein, the parties agree as follows:
1. The last paragraph of Paragraph 1 of the UGA Reinsurance
Agreement is modified to read as follows:
"1. Where applicable in states which have limits on
reinsurance ceded rates for what they term as "Small Group Health
Insurance" the applicable Reinsurance Ceded Percentage as defined in
"Exhibit A" shall not exceed the maximum ceded rate in applicable
states for health insurance policies referred to as "Small Employer
Health Insurance." AEGON Companies will increase the ceded percentage
rate on other health insurance policies and certificates included in
the reinsurance pool "Exhibit A" to achieve an overall Reinsurance
Ceded Percentage defined in "Exhibit A". In the event state laws or
regulations are amended to render impossible the reinsurance
arrangements contemplated herein, the parties shall enter into a
financially equivalent settlement to the extent legally permissible."
<PAGE> 2
2. Paragraph 3 of the UGA Reinsurance Agreement is hereby
modified to read as follows:
"3. "Exhibit B" Annual Settlements. As referenced above
in Section 1. and "Exhibit A", the Reinsurance Percentage increases in
each calendar year from 1995 through 1997. During the first quarter
of each accounting period subsequent to a Reinsurance Percentage
change, the settlement sheet shown as "Exhibit B" will be completed by
each AEGON Company. In completing the settlement sheet, "Net Assets
Transferred" means with respect to each AEGON Company, the amount of
additional assets to be transferred from the AEGON Company to the UICI
Companies to reflect this increase in the Reinsurance Ceded
Percentage. Each AEGON Company will transfer assets equal to the "Net
Assets Transferred" multiplied by the "Quota Share Percentage" defined
in "Exhibit C" to each UICI Company."
3. The first sentence of Paragraph 4 of the UGA Reinsurance
Agreement is hereby modified to read as follows:
"4. Reinsurance Cash Flow Payable. The UICI Companies on
a monthly basis will prepare a worksheet showing the monthly cash
activity within each AEGON Company bank account in regard to the
Reinsurance Pool."
4. Paragraph 6 of the UGA Reinsurance Agreement dated January 1,
1995, is hereby modified to read as follows:
"6. Claims. Pursuant to the Mega Service Agreement, the
AEGON Companies have delegated to Mega certain authorization to
adjust, settle and pay claims on Policies reinsured hereunder. Each
AEGON Company will accept the decision of Mega on payment of a claim
under policies reinsured hereunder.
The balance of paragraph 6 is deleted in its entirety.
4. Paragraph 7 of the UGA Reinsurance Agreement shall be modified
to read as follows:
"7. Inspection. UICI Companies' Designated
Representative or the AEGON Companies' Designated Representative shall
have the right at any time to inspect all records concerning any
policy reinsured hereunder or concerning any claim made against a
policy reinsured hereunder. Upon request made by the UICI Companies'
Designated Representative or the AEGON Companies' Designated
Representative, the Insurance Center employees shall make all such
records available to the requesting party during normal business hours
at the administrative offices in North Richland Hills, Texas. Upon
request made by UICI Companies' Designated Representative or the AEGON
Companies' Designated Representative, the Insurance Center employees
shall deliver to the appropriate Designated Representative, copies of
all papers connected with claims made on any policy reinsured
hereunder."
5. The first paragraph of Paragraph 9 of the UGA Reinsurance
Agreement is hereby modified to read as follows:
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<PAGE> 3
"9. Term and Cancellation. This Agreement shall continue
in effect until all of the AEGON Companies' liabilities and obligations
relating to the Policies reinsured hereunder have expired, been satisfied or
been assumed through novation by UICI."
6. Paragraph 13 of the UGA Reinsurance Agreement is hereby
modified to read as follows:
"13. Administration. The inforce hereunder shall be
administered by Mega Life and Health Insurance Company ("Mega")
pursuant to a service agreement dated April 1, 1996 among the parties
hereto (the "Mega Service Agreement") Administration shall include all
functions necessary to service and administer all insurance policies,
including but not limited to premium billing and the payment of policy
benefits. The services to be provided hereunder shall more fully be
set forth in the Mega Service Agreement entered into on April 1, 1996
between the parties hereto. Such Mega Service Agreement sets forth
the basis of the administration fees to be paid by the AEGON Companies
to Mega for its services hereunder."
7. Exhibit A of the UGA Reinsurance Agreement is hereby modified
to add that business commonly referred to by the parties as Division 10 and 12
business and is further modified to include Divisions 7,8,9 and 14 (the
"Unreinsured Business) as of January 1, 2001. Exhibit A is further modified to
reflect the following Reinsurance Ceded Percentage:
<TABLE>
<CAPTION>
Calendar Year PFL or Affiliates Share UICI Companies Share
-------------- ----------------------- --------------------
<S> <C> <C>
01/01/96 to 12/31/96 42.5% 57.5%
01/01/97 to 12/31/97 40.0% 60.0%
01/01/98 to 12/31/98 40.0% 60.0%
01/01/99 to 12/31/99 40.0% 60.0%
01/01/00 to 12/31/00 40.0% 60.0%
01/01/01 and thereafter 0.0% 100.0%
</TABLE>
Mega agrees to automatically become the 100% reinsurer of the policies
reinsured under this Agreement if the policies reinsured hereunder are not
replaced or novated by policies issued by duly licensed UICI insurance
subsidiaries by January 1, 2001.
8. Exhibit D, dated July 1, 1995, of the UGA Reinsurance
Agreement is hereby modified to read as set forth in Schedule 1 of the Mega
Service Agreement.
All terms and conditions of the UGA Reinsurance Agreement not
otherwise amended herein shall remain in full force and effect.
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<PAGE> 4
IN WITNESS HEREOF, the parties have caused this amendment to the UGA
Reinsurance Agreement to be executed by their respective officers this 1st day
of April, 1996.
AEGON COMPANIES UICI COMPANIES
PFL Life Insurance Company National Managers Life
Insurance Company
/s/ Rex B. Eno /s/ Richard J. Estell
- ----------------------------------- -----------------------------------
Executive Vice President President
- ----------------------------------- -----------------------------------
Life Investors Insurance United Group Reinsurance Inc.
Company of America
/s/ Rex B. Eno /s/ Robert B. Vlach
- ----------------------------------- -----------------------------------
Executive Vice President Secretary
- ----------------------------------- -----------------------------------
Bankers United Life Assurance Company U.S. Managers Life Insurance Company
/s/ Rex B. Eno /s/ Richard J. Estell
- ----------------------------------- -----------------------------------
Executive Vice President Director
- ----------------------------------- -----------------------------------
Monumental Life Insurance Company Financial Services Reinsurance Company
/s/ Rex B. Eno /s/ Richard J. Estell
- ----------------------------------- -----------------------------------
Executive Vice President Director
- ----------------------------------- -----------------------------------
MEGA Life Insurance Company
/s/ Richard J. Estell
-----------------------------------
President
-----------------------------------
4
<PAGE> 1
EXHIBIT 10.2
ASSET PURCHASE AGREEMENT
This Agreement is dated the 1st day of April, 1996 by and among United
Insurance Companies, Inc. and its insurance subsidiaries ("UICI") and PFL Life
Insurance Company Bankers United Life Assurance Company, Life Investors
Insurance Company of America and Monumental Life Insurance Company (hereinafter
collectively referred to as the "Company") and Money Services, Inc.
Whereas the Company and UICI have enjoyed a longstanding relationship
pursuant to which certain of the Company's affiliates write insurance
policies sold primarily by United Group Association ("UGA") and reinsured by
UICI subsidiary insurance companies pursuant to a Reinsurance Agreement (the
"UGA Reinsurance Agreement"), effective January 1, 1995 between the UICI
Companies and certain of the Company's affiliates (the "UGA Business"); and
Whereas the UGA Business is serviced and administered by employees of
PFL Life Insurance Company ("PFL") located at the Insurance Center in North
Richland Hills and Hurst, Texas (the "Insurance Center"); and
Whereas the Company wishes to cease the writing of new business sold
by UGA; and
Whereas PFL wishes to divest itself of the Insurance Center; and
Whereas UICI wishes to (1) ultimately acquire the UGA Business, (2)
assume the responsibility for administering the UGA Business and the
Unreinsured Business as defined in the UGA Reinsurance Agreement, except for
policies issued for delivery in New York state, (3) purchase the land,
buildings, furniture and equipment of the Insurance Center, (4) employ the
individuals working for the Insurance Center on the Closing Date (except for
employees working in the "New York Unit") and (5) issue UICI insurance
subsidiaries' policies to new customers; then
In consideration of the above recitals and the mutual covenants and
agreements hereinafter set forth and other good and valuable consideration and
subject to the satisfaction or waiver of any conditions set forth in this
Agreement to the closing of the transactions contemplated by this Agreement
(the "Closing"), which includes the execution and delivery of any related
agreements to be executed at closing, UICI and the Company hereto agree as
follows:
At the Closing:
(a) PFL will sell and UICI will purchase the Insurance Center
office building and accompanying 19.159 acres at 9151 Grapevine Highway, North
Richland Hills, Texas and the assets referred to in section (b) below for
$9,948,144. The terms and conditions of such purchase, other than the purchase
price, will be subject to a separate contract of
<PAGE> 2
sale executed by the parties within fifteen (15) business days of the execution
of this Agreement;
(b) Except as specifically excluded in Exhibit A, the Company and
Money Services Inc. will sell, transfer and convey and UICI will purchase all
of the Company's and MSI's right, title and interest in and to the assets
currently used by the Insurance Center , including those listed on Exhibit A.
(c) The Company will assign and UICI will assume any lease
obligations for equipment leased by the Company located in the above buildings
including those shown on Exhibit B; and the lease obligation for the property
located at 815 Trailwood, Hurst, Texas, the two storage facilities at the
hangers on Cardinal, and the storage facility at Gravel Road.
(d) To the extent permitted by contract, the Company will assign and
UICI will assume all right, title and interest in and to any contracts and
software licenses including those listed on Exhibit C which are associated with
insurance processing by the Insurance Center provided that UICI pays any
applicable fees and taxes in connection with the assignment;
(e) The Company and Mega Life and Health Insurance Company ("Mega")
shall enter into the Mega Service Agreement attached as Exhibit D, the
Individual Division Service Agreement attached as Exhibit E, Amendment No. 3
to the UGA Reinsurance Agreement attached as Exhibit F, the New York Business
Service Agreement attached as Exhibit G, the Long Term Care Division Service
Agreement attached as Exhibit H and MSI and UICI shall have entered into the
Amended and Restated Revolving Credit Agreement attached as Exhibit I
(collectively, the "Related Agreements"); and
(f) Mega, a wholly owned subsidiary of UICI, shall offer to employ
all employees of the Insurance Center (except for employees of the separate
"New York Unit" who shall remain employees of an affiliate of PFL), effective
at 12:01 a.m. Dallas time on the date of the Closing ("Closing Date"), at the
initial base compensation level (or higher) at which they were employed by PFL
on the day prior to Closing. Mega shall provide welfare benefits as outlined
in Exhibit J through December 31, 1996 on the same basis, terms and conditions
as such benefits are provided by PFL on the day prior to Closing and
thereafter on the same basis, terms and conditions as such benefits are
provided to Mega's other employees. Mega shall give such employees credit for
service with the Company for purpose of eligibility and vesting with respect to
any benefit plan that requires service for eligibility or vesting (including
the UICI ESOP plan) and for purposes of determining any pre-existing medical
condition limitation or exclusion for any employee electing to be covered under
the UICI indemnity plan.
UICI agrees to include management employees located at the Insurance
Center in the planning process relating to benefits to be offered to UICI
employees beginning in 1997. The Company agrees to cause to amend the 401(K)
profit sharing plan and its pension plan currently provided to make every
eligible Insurance Center employee 100% vested in the plan benefits. The
Company and UICI agree to use their best efforts to cooperate in resolving
employee and benefit transition issues.
2
<PAGE> 3
In the event any New York employees are transferred to Mega after
April 1, 1996 and before December 31, 1996, such employees will be provided
welfare benefits on the same basis, terms and conditions as provided those
employees of the Insurance Center employed by Mega on April 1, 1996.
Regardless of the date of transfer, Mega shall give such employees credit for
service with the Company for purpose of eligibility and vesting with respect to
any benefit plan that requires service for eligibility and vesting (including
the UICI ESOP plan) and for purposes of determining any pre-existing medical
condition limitation or exclusion for any employee electing to be covered under
the UICI indemnity plan. At the time of transfer to Mega, the Company will
make eligible New York employees 100% vested in the Company's 401(K) profit
sharing plan and its pension plan.
(g) The Company will transfer funds to Mega equal to the March 31,
1996 Insurance Center accounts payable balance and shall transfer $575,000 in
reserves established to fund self-insured welfare benefit plans. On and after
the Closing Date, Mega agrees to pay all expense disbursements and obligations
under such welfare benefit plans which were previously the obligation of the
Company. The accounts payable balance will not include the following items:
claims cost containment, outside legal fees and the April 5, 1996 Insurance
Center payroll which shall be paid directly by the Company.
The obligation of each party to close the transaction contemplated by
this Agreement shall be subject to the following conditions: (a) This
Agreement and the Related Agreements will be valid and binding on the parties
thereto; (b) there shall have been no event, occurrence or contractual
arrangement which would materially and adversely affect the ability of a party
to this Agreement or the Related Agreements to enter such agreements or perform
their obligations thereunder; (c) No order or injunction has been entered which
would prohibit or materially adversely affect the ability of the parties to
perform their obligations under this Agreement or the Related Agreements; (d)
No action, suit or other proceeding has been instituted by a third party
challenging this Agreement or the transactions contemplated hereby; (e) The
parties have all licenses, permits and approvals necessary to consummate the
transactions contemplated hereby and perform their obligations under this
Agreement and the Related Agreements.
All of the UGA Business will be reinsured by UICI insurance
subsidiaries pursuant to the UGA Reinsurance Agreement, which will be amended
to reflect the following schedule:
3
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<TABLE>
<CAPTION>
================================================================================
Calendar Year PFL or Affiliates Share UICI Share
- --------------------------------------------------------------------------------
<S> <C> <C>
01/01/96 to 12/31/96 42.5% 57.5%
- --------------------------------------------------------------------------------
01/01/97 to 12/31/97 40.0% 60.0%
- --------------------------------------------------------------------------------
01/01/98 to 12/31/98 40.0% 60.0%
- --------------------------------------------------------------------------------
01/01/99 to 12/31/99 40.0% 60.0%
- --------------------------------------------------------------------------------
01/01/00 to 12/31/00 40.0% 60.0%
- --------------------------------------------------------------------------------
01/01/01 and thereafter 0.0% 100.0%
================================================================================
</TABLE>
The UGA Reinsurance Agreement will apply to all UGA Business in force
as of the Closing date, all business written subsequent to the Closing date by
UGA on policies issued by PFL or its affiliates and all renewals thereof
(collectively "PFL Policies") UICI and PFL agree that all UGA Business written
on PFL Policies will be renewed on PFL Policies until January 1, 2001. On
January 1, 2001, UICI agrees that it shall use its best efforts, to the extent
legally permissible, to cause the PFL Policies to be replaced with policies
issued by a UICI insurance subsidiary on renewal, or UICI will use its best
efforts to cause one of its insurance subsidiaries to novate so as to
substitute a UICI insurance subsidiary as the insurer on the PFL Policies
through assumption reinsurance ("Novate or Novation"). UICI agrees that such
replacements or Novations will comply with all applicable laws, rules and
regulations. In the event a state does not allow for such novation, the UGA
Reinsurance Agreement shall remain in effect with UICI 100% reinsuring the
policies. If, despite UICI's best efforts, it is unable to cause such Novation
or replacement of the PFL Policies by January 1, 2001, UICI agrees to amend the
UGA Reinsurance Agreement so as to substitute a UICI company licensed in those
states where policies have not been novated or replaced. Notwithstanding the
above, the parties agree if such replacement or Novation would adversely affect
the authority of the Company or UICI insurance subsidiaries, then the Company
shall have the authority to cancel such business. On or after January 1, 2001
in regard to the business sold in New York on policies issued by a PFL
affiliate (the "New York Business"), PFL and it affiliates shall in their
discretion, have the option to cancel such Policies to the extent legally
permissible.
In the event UICI does not cause such replacement or Novation in
regard to the PFL Policies and state or federal laws or regulations are
modified to such an extent to cause the Company significant problems in any
particular jurisdiction, the Company after consultation with UICI, shall, in
its discretion, have the option to cancel such Policies to the extent legally
permissible. The Company and UICI will mutually agree to a financial
resolution for UICI prior to such cancellation.
As soon as possible, but no later than March 31, 2001, ("Payment
Date") UICI will make a lump sum payment to the Company which will compensate
them for the reduction from 40.0% to 0.0% of the UGA Business then in force.
The amount of the lump sum payment shall be the present value of future profits
but not less than zero for the next seven years (January 1, 2001 through
December 31, 2007) on the 40.0% share of the UGA Business which does not
include the New York Business (not including the business identified in the UGA
Reinsurance Agreement as Divisions 7,8,9, and 14)
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attributable to the Company and its affiliates plus interest at the interest
rate set forth in the formula below from January 1, 2001 until the date of such
payment. The present value will be based on the following formula:
12/31/2000 or Change of Control Formula
# of months
through
12/31/2007
SUM (1/1.2)t/12 x { [EP x (1-MLR)t x (1-COMM - PT - GFA - LR - 6% )] + [I
x V x (1-MLR)t]}
t = 1
EP = Monthly Earned Premium for December, 2000 (or Monthly Earned
Premium for month preceeding change of control, if earlier ) x
40%
MLR = Monthly Lapse Rate
COMM = Commission Rate Percentage
PT = Premium Tax Percentage
GFA = Guaranty Fund Assessment Percentage
LR = Incurred Claim Loss Ratio Percentage
V = Appropriate Reserves transferred at December 31, 2000
(or the change of control date) x 40%
I = (3 year Treasury Bill + 110 basis points) at December 31, 2000
(or the change in control date)
For purposes of the above formula, commission, premium tax, guaranty
fund assessment, claim cost containment expense percentage, monthly lapse rate
and incurred claim loss ratio percentages are averages for the prior 12 month
period preceeding 12/31/2000 (or the change of control date) after adjusting
reserves to Appropriate Reserves, as hereinafter defined. Incurred claim loss
ratio will include legal settlements and associated legal fees. The above
formula may be adjusted for the changes in state or federal laws or
regulations, if mutually agreed upon by the parties.
It is agreed that the lump sum payment contemplated by this Agreement
will not relieve PFL or its affiliates of their proportional share of liability
for judgments, settlements and all expenses with respect to lawsuits pending on
the UGA Reinsured Business as of January 1, 2001 or lawsuits filed after
December 31, 2000 (or change of control date) provided notification in writing
is sent to the insured of a denial of the claim in question before January 1,
2001 (the "Pending Claims"). The proportional share of the
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<PAGE> 6
Company's liability shall be (1 - the applicable Reinsurance Ceded Percentage)
as of December 31, 2000 (or change of control date) with respect to the lawsuit
giving rise to such judgment or settlement.
On the Payment Date (or 60 days after the change of control as
hereinafter set forth), the Company shall transfer cash in an amount equal to
the Appropriate Reserve (as hereinafter defined) liability to the UICI
companies with respect to the UGA Business plus interest at the interest rate
set forth in the above formula from January 1, 2001 to the date of such
transfer. Reserves to be transferred shall be best estimates of: claim
liabilities, active life reserves, unearned premium reserves and any other
reserves for policy assets or liabilities, regardless of how classified, each
determined with no provisions for the following: adverse deviation, claims
processing expenses, or amounts held in the aggregate for lawsuits pending as
of January 1, 2001 (or on the change of control as hereinafter set forth), (the
"Appropriate Reserves"). Exhibit K sets forth an example of the calculation to
be used in making such determination. Except for judgments and settlements
with respect to lawsuits pending on January 1, 2001 and Pending Claims (or on
the change of control as hereinafter set forth), effective January 1, 2001 (or
on the change of control as hereinafter set forth), the UICI companies shall be
liable for all claims, losses and litigation with respect to the Policies
acquired regardless of the date incurred.
At the end of a two year period following the transfer of the
Appropriate Reserves, the portion of Appropriate Reserves related to claim
liabilities transferred, will be compared to claims incurred (i.e. actual cash
payments made to policyholders during such two years plus a then current
reserve determined on the same basis as the Appropriate Reserve) prior to
January 1, 2001 (or change of control as hereinafter set forth). Any shortfall
from the amount transferred on the Payment Date will be paid by the Company to
UICI, any excess amount will be reimbursed to the Company by UICI. Current
practices used by the Insurance Center for establishing incurred dates will be
maintained.
UICI will refile on to forms of duly licensed UICI subsidiaries those
insurance products sold by UGA and written as of the Closing date on PFL
Policies in a prompt and reasonable manner. As state policy form and rate
filings are approved for UICI insurance subsidiaries, the Insurance Center will
discontinue issuing PFL Policies to new customers (i.e., customers not then
insured under a PFL Policy sold by UGA) and will begin to issue policies of
UICI insurance subsidiaries which have been approved for use in the applicable
state. Once UICI insurance subsidiaries' forms and rates have been approved in
all states except New York, UICI will issue 100% of the business written for
new customers on its insurance subsidiaries' policies. Every reasonable effort
will be made by UICI to secure policy approvals and to begin the writing of all
business for new customers on UICI insurance subsidiaries' policies prior to
December 31, 1996. No policies of the Company will be issued to new UGA
Business customers after April 1, 1997, except with written permission from the
Company. No PFL Policies, other than those policy types being sold and
serviced at the Insurance Center as of the Closing Date, will be sold by UGA to
new UGA Business customers after April 1, 1996 except for those written
pursuant to agreements with other Divisions of the Company. This restriction
shall not prohibit UICI from adding, in the ordinary course of business, new
certificateholders or enrollees to existing PFL Policies until January 1, 2001
unless the Company provides specific written permission after that date.
6
<PAGE> 7
UICI agrees to defend, indemnify and hold harmless the Company, its
affiliates, officers, directors and employees with respect to any and all
losses, damages, claims or expenses, including reasonable attorney fees which
the Company, its affiliates, officers, directors and employees may incur
arising from any and all lawsuits by agents of UGA or New United Agency and
their predecessors and successors filed after January 1, 2001 against the
Company, its affiliates, officers, directors or employees based on actions or
failure to act of UGA or NUA or their affiliates, officers, directors or
employees. UICI shall be responsible for all costs and expenses associated
with the transfer or failure to transfer to UICI of any software licenses
listed in Exhibit C.
During the period in which the Company remains liable under any
policies sold by UGA or administered by UICI or its affiliates, UICI will
comply and will cause its affiliates to comply with all applicable laws and
regulations. Any fines, judgments, legal fees or other costs arising from the
defense or settlement of actions relating to this business (including lawsuits
pending January 1, 2001 and lawsuits resulting from Pending Claims) shall be
charged to each company's share of profits. The amount charged the Company for
any given year will be limited to its share of the current year's profits, and
any deficit may be carried forward to be deducted from future years' profits,
including amounts paid or payable by UICI to Company on the Payment Date.
During the period from April 1, 1996 to January 1, 2001, UICI will
continue to calculate profits on a basis consistent with practices prior to the
date of Closing except as modified above, with the business written on policies
issued by the Company to be segregated and tracked separately. The
administration fee to be charged against this business will be the proportional
share of actual expenses based on earned premiums net of returns and net of
student health premiums for the period from April 1, 1996 to December 31, 1996
and will be 6.0% of earned premiums from January 1, 1997 to December 31, 2000,
as more fully set forth in the Mega Service Agreement. The 6.0% administration
fee may be adjusted during those years by mutual consent if future laws,
regulations or unforeseen events cause actual expenses to materially increase
or decrease.
UICI agrees that its insurance subsidiaries will use best efforts
consistent with past practices not to cause any policy issued by the Company to
be cancelled or rewritten onto policies issued by UICI insurance subsidiaries
or others before January 1, 2001, provided however, in the event that future
laws, regulations or unforeseen events require significant revisions in the
policy design, then Mega shall issue replacement policies to the extent allowed
by law or state regulation. If the Company notifies UICI of such cancellation
or replacement practices, UICI agrees to take corrective action within sixty
days of such notice. In the event the Company would be required to issue state
mandated basic or standard plan on or after April 1, 1997, Mega would also
offer such plan to the prospective customer to the extent allowed by state law
or regulation.
UICI will maintain its share of the claim reserves and active life
reserves in a custodial account on behalf of the Company for the business
written on their policies in a manner consistent with past practice.
In the event that any entity other than Ronald Jensen (or his
immediate family) or management and employees of UICI shall gain ownership of
50% or more of the UICI voting stock, then the Company shall have the right to
accelerate the January 1, 2001 lump sum payment to a then current date and
value using the formula set forth above for
7
<PAGE> 8
calculation of the payment amount, which shall be equal to the then present
value of future profits through December 31, 2007. Additionally, any other
requirements to be met at termination shall be accelerated to the date of the
change of control.
The group commonly known as the Insurance Center Management Board
shall continue to meet on a quarterly basis until January 1, 2001 unless the
parties otherwise mutually agree. The board membership will continue to
consist of the same representatives as on the date of Closing and UICI shall
appoint an additional representative to the board. The parties may replace
their own representatives as they deem necessary.
This Agreement is subject to the approval of the UICI board of
directors and the approval of the PFL board of directors and any regulatory
agency having jurisdiction over this transaction.
In the event of a dispute between the parties, the arbitration
provisions contained in the UGA Reinsurance Agreement shall be applicable
hereto.
The validity, interpretation, construction, performance and
enforcement of this Agreement shall be governed by the laws of the State of
Iowa without giving effect to Iowa's conflicts of law principles.
In witness whereof, the parties hereto by their duly authorized
representatives have caused this Agreement to be executed as of the date first
written above.
This Agreement is executed as of the date and year first above
written.
8
<PAGE> 9
UNITED INSURANCE COMPANIES, INC.
BY: /s/ Richard J. Estell
-----------------------------------
Name: Richard J. Estell
Title: Executive Vice President and COO
MEGA LIFE AND HEALTH INSURANCE COMPANY
BY: /s/ Richard J. Estell
-----------------------------------
Name: Richard J. Estell
Title: President
PFL LIFE INSURANCE COMPANY
BY: /s/ Rex B. Eno
-----------------------------------
Name: Rex B. Eno
Title: Executive Vice President
LIFE INVESTORS INSURANCE COMPANY OF AMERICA
BY: /s/ Rex B. Eno
-----------------------------------
Name: Rex B. Eno
Title: Chairman of the Board and President
BANKERS UNITED LIFE ASSURANCE COMPANY
BY: /s/ Rex B. Eno
-----------------------------------
Name: Rex B. Eno
Title: Executive Vice President
MONUMENTAL LIFE INSURANCE COMPANY
BY: /s/ Rex B. Eno
-----------------------------------
Name: Rex B. Eno
Title: Executive Vice President
9
<PAGE> 10
MONEY SERVICES, INC.
BY: /s/ Rex B. Eno
-----------------------------------
Name: Rex B. Eno
Title: Executive Vice President
10
<PAGE> 1
EXHIBIT 10.3
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 Mid-West
National Life Insurance Company of Tennessee, a Tennessee 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.
1
<PAGE> 2
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.
2
<PAGE> 3
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;
3
<PAGE> 4
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-
4
<PAGE> 5
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.
5
<PAGE> 6
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
6
<PAGE> 7
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.
7
<PAGE> 8
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.
8
<PAGE> 9
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
9
<PAGE> 10
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
10
<PAGE> 11
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.
11
<PAGE> 12
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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<PAGE> 13
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.
13
<PAGE> 14
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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<PAGE> 15
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.
UNITED GROUP ASSOCIATION MID-WEST NATIONAL LIFE INSURANCE
COMPANY OF TENNESSEE
By: /s/ Ronald L. Jensen By: /s/ Richard J. Estell
------------------------------ ------------------------------
Title: President Title: Chairman of the Board
--------------------------- ---------------------------
15
<PAGE> 16
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.
<TABLE>
<CAPTION>
1ST YEAR 2ND YEAR 3+ YEARS
PLAN TYPE COMMISSION COMMISSION COMMISSION
- ---- ---- ---------- ---------- ----------
<S> <C> <C> <C> <C>
LIFE PROTECTOR OWNER 72% 20% 20%
<CAPTION>
1ST YEAR 2ND YEAR 3+ YEARS
COMMISSION COMMISSION COMMISSION
---------- ---------- ----------
<S> <C> <C> <C> <C>
OTHERS OWNER 41.5% 30% 15%
(Health Ins.,
Accident & EMPLOYEE 36% 28% 13%
Dental)
PROTECTOR PPO OWNER 29% 24% 14%
& PPOII
<CAPTION>
1ST YEAR 2ND YEAR 3+ YEARS
COMMISSION COMMISSION COMMISSION
---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Base Bonus Total Base Bonus Total
PROTECTOR POS OWNER 30.10% 24.75% 2.65% 27.4% 7.85% 2.65 10.5%
</TABLE>
16
<PAGE> 1
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.
1
<PAGE> 2
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.
2
<PAGE> 3
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;
3
<PAGE> 4
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-
4
<PAGE> 5
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.
5
<PAGE> 6
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
6
<PAGE> 7
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.
7
<PAGE> 8
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.
8
<PAGE> 9
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
9
<PAGE> 10
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
10
<PAGE> 11
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.
11
<PAGE> 12
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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<PAGE> 13
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.
13
<PAGE> 14
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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<PAGE> 15
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
--------------------------- ---------------------------
15
<PAGE> 16
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.
<TABLE>
<CAPTION>
1ST YEAR 2ND YEAR 3+ YEARS
PLAN TYPE COMMISSION COMMISSION COMMISSION
- ---- ---- ---------- ---------- ----------
<S> <C> <C> <C> <C>
LIFE PROTECTOR OWNER 72% 20% 20%
<CAPTION>
1ST YEAR 2ND YEAR 3+ YEARS
COMMISSION COMMISSION COMMISSION
---------- ---------- ----------
<S> <C> <C> <C> <C>
OTHERS OWNER 41.5% 30% 15%
(Health Ins.,
Accident & EMPLOYEE 36% 28% 13%
Dental)
PROTECTOR PPO OWNER 29% 24% 14%
& PPOII
<CAPTION>
1ST YEAR 2ND YEAR 3+ YEARS
COMMISSION COMMISSION COMMISSION
---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Base Bonus Total Base Bonus Total
PROTECTOR POS OWNER 30.10% 24.75% 2.65% 27.4% 7.85% 2.65 10.5%
</TABLE>
16
<PAGE> 1
EXHIBIT 10.5
AGREEMENT
THIS AGREEMENT is made by UNITED GROUP ASSOCIATION, INC. ("UGA") for
the benefit of CORNERSTONE MARKETING OF AMERICA ("CMA").
W I T N E S S E T H:
WHEREAS, UGA currently generates leads (individuals who are interested
in obtaining health insurance) for CMA agents; and
WHEREAS, there is no formal written agreement between UGA and CMA to
provide for the terms of the services provided by UGA to CMA; and
WHEREAS, UGA now wishes to reduce to writing its agreement as to
termination of such services to CMA,
NOW, THEREFORE, it is agreed as follows:
1. UGA will not cease providing leads to CMA without giving CMA
180 days' written notice of its intention to terminate such services.
2. This AGREEMENT shall be binding upon UGA, its successors and
assigns.
Dated this 1st day of April, 1996.
UNITED GROUP ASSOCIATION, INC.
By: /s/ Ronald L. Jensen
-----------------------------------
Its: President
--------------------------------
