MARKETING AGREEMENT

Exhibit 10(v)

 

MARKETING AGREEMENT

 

This Marketing Agreement is made and entered into and effective as of October 10, 2005, by and between the parties as follows:

 

Conseco Marketing L.L.C., an Indiana Limited Liability Company (“CONSECO”), and Legacy Marketing Group, a California corporation (“LMG”), based on the following facts:

 

A.

LMG and Conseco Insurance Company and Conseco Services L.L.C. are entering into an Administrative Services Agreement pursuant to which certain insurance business is to be administered by LMG.

 

B.

CONSECO is, and from time to time will be, affiliated with a number of insurance and related service companies, hereinafter called the “Conseco Companies,” that offer and service annuity, life and health insurance products.

 

C.

The objective of this Agreement is to provide an arrangement to sell certain Proprietary Products offered by CONSECO through Legacy Marketing Group.  

 

D.

LMG is engaged in the business of marketing insurance products to Wholesalers and Producers nationally and has developed a significant marketing operation and independent distribution channel, identified as: “Producers,” duly licensed and appointed independent insurance agents; and “Wholesalers,” duly licensed and appointed independent insurance agents or agencies who are responsible for  recruiting, training and managing Producers.    

 

E.

CONSECO desires to have LMG utilize its marketing operation and sales force for the solicitation of the Proprietary Products.

 

Based on the foregoing facts, LMG and CONSECO (“the parties”) agree as follows:

 

1.

DESIGNATION OF LMG AND SCOPE OF LMG’S AUTHORITY

 

1.1.

CONSECO designates LMG to appoint Wholesalers and Producers on behalf of CONSECO for the solicitation of the Proprietary Products.  Such appointments will take place in accordance with the Administrative Services Agreement executed by the parties.

 

1.2.

LMG is designated by CONSECO to market the Proprietary Products to LMG’s Wholesalers and Producers who will solicit applications and to otherwise transact the business of this Agreement.  

 

1.3.

LMG will have a written Producer Agreement with each Wholesaler and Producer, to which CONSECO will not be a party and shall have no obligation or liability thereunder.   

 

 

*Confidential information omitted and filed separately with the SEC.

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1.4.

It is understood and agreed that LMG is an independent contractor, and nothing herein shall be construed to create the relationship of employer or employee between CONSECO and LMG or between CONSECO and any officer, employee, Wholesaler, Producer, or other associated person of LMG.  Neither LMG nor any Wholesaler or Producer has authority to incur any liability on behalf of, or to bind, CONSECO in any way or change its rights, duties, or obligations, except as may be set forth in the Administrative Services Agreement between CONSECO and LMG.  

 

1.5.

All Wholesalers and Producers who have been recruited by LMG and are appointed with CONSECO using criteria established by CONSECO to sell Proprietary Products  shall be identified by CONSECO as Wholesalers and Producers of LMG as to such  Proprietary Products.   Any and all contracts entered into by and between such Wholesalers or Producers with respect to such  Proprietary Products  shall be coded by LMG onto its system and deemed Wholesalers and Producers of LMG.    Upon CONSECO’s reasonable request,  LMG will terminate the appointment of any agent appointed with CONSECO.  In any event, CONSECO shall impose no more restrictive criteria for LMG’s Wholesalers and Producers than for  any other  similar distribution channel of CONSECO.

 

1.6

CONSECO and the Conseco Companies shall not directly or indirectly appoint Wholesalers and Producers of LMG for the purpose of selling non-Proprietary Products who are not contracted and/or appointed with CONSECO as of the date of this Agreement and during the term of this Agreement and for * (*) months following the termination of the Agreement.  LMG may be willing to discuss other arrangements if the circumstances warrant.  In any event, CONSECO shall offer to LMG no less than the highest contracting commission to LMG for any non-Proprietary Products of CONSECO.

 

2.

RIGHTS AND OBLIGATIONS OF CONSECO

 

2.1.

Subject to Section 2.2, CONSECO and LMG will work together to develop new products to be underwritten by CONSECO and made available to LMG Producers and Wholesalers as specified on “Work Orders.” The parties may, from time to time, agree in writing to append Work Orders to this Agreement. The products set forth on Work Orders, executed by both parties, shall be referred to as a “Proprietary Product” or “Proprietary Products” throughout this Agreement. Each new Proprietary Product Work Order will provide for the compensation payable to LMG from CONSECO pertaining to that new Proprietary Product.    The marketing allowance and commissions provided for in each Work Order may vary with the development of each new Proprietary Product.  Such marketing allowance will be specifically provided for in that Proprietary Product’s Work Order, or any subsequent amendments to the Work Order.  

 

2.2.

LMG will provide to CONSECO a Product Summary Overview for a proposed Proprietary Product, containing a general summary of the product design information and pricing.  Following receipt of the Product Summary Overview, CONSECO will use its best efforts to approve the product design within ten (10) days, but, in any event, no later than thirty (30) days (“Initial Approval”).  Upon receipt of CONSECO’s Initial Approval,

 

 

*Confidential information omitted and filed separately with the SEC.

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LMG will, within thirty (30) days, proceed with drafting detailed product descriptions, specifications and preliminary pricing models of the proposed Proprietary Product

 

(“Product Information”). LMG will also provide access to such other information, materials and personnel relating to such products as CONSECO reasonably requests, without charge to CONSECO. Following receipt of the Product Information, CONSECO will have thirty (30) days to determine, in its sole discretion, if the product is approved (“Final Approval”).  The parties may, by mutual agreement, extend any deadline during this process.  In addition, the parties may revise the product design or re-price the product as necessary during these periods, to ensure that the product meets the desired objectives. If CONSECO determines the product is acceptable and gives its Final Approval, it will notify LMG in writing and a Work Order will be executed with a mutually agreed Effective Date. The product will be deemed to be a Proprietary Product within the terms of this Agreement, if: (a) a Work Order is signed for the product; and (b) the product is placed by mutual agreement of LMG and CONSECO on a Proprietary Products list.   

 

2.3.

The commissions specified in a Work Order shall be modified whenever necessary to conform to the legal requirements of any state. CONSECO agrees not to withdraw, discontinue or significantly modify a Proprietary Product that has been launched into the marketplace pursuant to Section 2.2 without providing * (*) days prior written notice to LMG unless such withdrawal, discontinuance or modification is mandated by law, regulation, regulatory authority or court of law, or in response to a material regulatory, market conduct, rating issue or economic conditions, including tax issues, which was/were not anticipated when the Proprietary Product was launched which results in the Proprietary Product performing adversely to its original pricing. CONSECO retains sole discretion to determine if a regulatory or market conduct issue is material but will not be unreasonable in its assertion of same.  If CONSECO withdraws any Proprietary Product within  * (*) months of the Launch Date for reasons other than CONSECO’s determination that the withdrawal is mandated by law, regulation, regulatory authority or court of law, or in response to a material regulatory market conduct, rating issue or economic conditions, including tax issues which was/were not anticipated when the Proprietary Product was launched which results in the Proprietary Product performing adversely, CONSECO will reimburse LMG $*, plus the cost of any unused inventory of marketing materials. Notwithstanding, all such costs to be reimbursed will not exceed $* per Proprietary Product.  Furthermore, CONSECO may not be required to reimburse LMG if CONSECO and LMG agree in writing to withdraw such a Proprietary Product.   

 

2.4.

CONSECO shall have the sole responsibility for maintaining and filing, and the costs associated with the filing, advertising materials in those states that so require prior to approving their use by LMG. In addition, CONSECO shall ensure a timely response to LMG’s submission of marketing materials requiring approval by CONSECO. CONSECO agrees to the following objectives in terms of service standards for CONSECO in supporting the marketing activities of LMG:

 

 

*Confidential information omitted and filed separately with the SEC.

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2.5.

CONSECO shall provide LMG with written notice of any change of authority of persons authorized and enumerated in APPENDIX B to provide LMG with instructions or directions relating to services to be performed by LMG under this Agreement.  

 

2.6.

During the term of this Agreement and for a period of * (*) months immediately following the termination of this Agreement between the parties, CONSECO or Conseco Companies shall not, directly or indirectly, solicit or recruit to represent CONSECO or Conseco Companies any LMG Wholesaler, Producer, or employee, unless such Wholesaler or Producer was contracted and/or appointed with CONSECO as of the date of this Agreement.

 

2.7.

CONSECO shall pay all license or royalty fees for use of any intellectual property belonging to a Third Party that is used with any Proprietary Products except to the extent of any intellectual property used by LMG in connection with performing its services pursuant to the Administrative Services Agreement between the parties or this Agreement.  Notwithstanding the foregoing, if this Agreement or the Administrative Services Agreement terminates, and CONSECO desires to process or perform any services for which LMG had previously been responsible, CONSECO shall be required to obtain all licenses and pay any royalty fees on its own behalf to the extent CONSECO wishes to use such intellectual property.

 

2.8.

LMG will use commercially reasonable efforts, employing reasonable and standard industry practices, to collect outstanding debit balances (“Commercial Collection Process”) from Wholesalers and Producers.  If a debit balance is not collected within * (*) months of the date it arises and LMG has utilized its Commercial Collection Process, LMG shall be responsible for the uncollected portion of any such debit balance.  

 

2.8.1.

Notwithstanding the foregoing, if the debit balance results from the unilateral decision, action, omission, or error of CONSECO or any CONSECO agent, CONSECO shall be *% responsible for any such resulting uncollected debit balance.   The parties shall use their best efforts to discuss and agree what, if any, charge-backs shall be made and/or collection efforts LMG shall utilize in such instances.

 

 

*Confidential information omitted and filed separately with the SEC.

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2.8.2.

Except for debit balances subject to Section 2.8.1., the parties further agree that if the debit balance results from a rescission ordered by a governmental entity or otherwise imposed upon the parties, or considered by the parties in resolution of any such action, the parties shall use their best efforts to discuss and resolve the parties’ responsibility for any such resulting uncollected debit balance.   The parties shall use their best efforts to discuss and agree what, if any, charge-backs shall be made and/or collection efforts LMG shall utilize in such instances.

 

2.9.

CONSECO shall be responsible for the cost of filing the Proprietary Products Contract Forms with applicable regulatory authorities including the costs of obtaining “opinion letters” from counsel or any consulting fees on such Proprietary Products. However, if LMG requests a separate legal opinion letter or the use of a consultant for its exclusive benefit separate from the joint product development process, LMG will be solely responsible for all such costs or fees.  “Contract forms” shall include, but are not limited to, master contract forms, riders, endorsements, certificates, policies, notices, disclosures, applications, amendments or administrative forms. Further, CONSECO shall have the sole responsibility for drafting and the costs of any required group trusts and  LMG will assist in the drafting, completion and preparation of filing of such policy (contract) forms if requested by CONSECO.  If CONSECO authorizes LMG to contract with outside consultants to assist with the preparation of contract forms or to expedite the state Department of Insurance approval process, CONSECO shall reimburse LMG for such expenses.  

 

2.10

CONSECO shall be responsible for ensuring compliance with applicable laws regarding the Contracts underwritten by it and any required interpretation of such laws.

 

2.11

CONSECO shall dedicate the resources necessary to bring the Proprietary Products to the market.  In any event, CONSECO agrees to use its best efforts to underwrite at least one new Proprietary Product per contract year, or as otherwise mutually agreed by the parties.

 

3.

RIGHTS AND OBLIGATIONS OF LMG

 

3.1.

At all times during the term of this Agreement, LMG (or the licensed individual who is acting on behalf of LMG in the capacity of an Officer in such states that do not permit the licensing of corporations) and all Wholesalers and Producers shall be properly licensed with each state or other jurisdiction and properly appointed with CONSECO in each state or other jurisdiction within the Territory before engaging in any activity that under the laws of such state or other jurisdiction makes such licensing and appointment necessary. Without limiting the generality of the foregoing, LMG shall require all such Wholesalers and Producers to, at all times, bear the cost of maintaining all licenses required by any such state, it being understood that CONSECO is not responsible for licensing fees or other costs of licensing.

 

 

*Confidential information omitted and filed separately with the SEC.

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3.2

LMG will itself and will communicate to and cause each Wholesaler and Producer to use only forms, applications, advertising (as such term is generally defined by the regulation of the state or other jurisdiction in which the Proprietary Products are solicited), guides, and rules furnished, authorized, or promulgated by CONSECO and agreed to by both parties and in each state or other jurisdiction where any Wholesaler or Producer solicits Proprietary Products.  No written advertising or sales materials of any kind, including sales illustrations, or recruiting material referencing the Proprietary Products of CONSECO shall be authorized by LMG until after it has been approved in writing by CONSECO.  LMG will provide such materials with sufficient lead-time to allow appropriate review by CONSECO.  CONSECO will then provide a timely response, as indicated in section 2.4 of this Agreement. In responding to CONSECO, LMG agrees to abide by the same turn-around times for its responses as provided CONSECO in section 2.4 of this Agreement.      

 

3.3.

LMG agrees to maintain the following insurance coverage:

 

3.3.1.

LMG will possess a fidelity bond of at least $* per occurrence and $* of aggregate coverage for any losses caused by the dishonesty of LMG’s employees.  LMG will also maintain adequate surety bond(s) as required in the states in which it is compelled to do so.  LMG will file such bond, if so required, with the appropriate agency.  The bond shall be executed by a corporate insurer authorized to transact business in the state that mandates the maintenance of such bond.

 

3.3.2.

LMG will possess and maintain errors and omissions coverage of at least $* per occurrence and in the aggregate of coverage that will comply with the requirements of the states in which such insurance coverage is required.

 

3.3.3.

LMG will possess and maintain commercial, general and liability insurance of at least $* per occurrence and $* of aggregate coverage.     

 

3.3.4.

LMG will require, as part of the appointment process, Wholesalers and Producers to provide proof of errors and omissions coverage satisfactory to CONSECO.  If the Wholesaler or Producer does not maintain the requisite errors and omissions insurance coverage, LMG will purchase errors and omissions insurance coverage on a per policy basis on behalf of Wholesaler or Producer, with coverage of $* per Wholesaler and Producer, or per occurrence.  LMG will deduct all or a portion of Producer’s commissions to satisfy any indebtedness associated therewith.  

 

3.4.

In performance of its marketing obligations and duties, LMG will not, and will inform its Wholesalers or Producers appointed hereunder in the performance of their obligations and duties hereunder, of the restriction against any of the following (where applicable):

 

3.4.1.

Enter into any agreement or incur any obligation on behalf of CONSECO, except with CONSECO’s written permission, or commit CONSECO to:

(i)

Pay any money to any such Wholesaler, Producer, or employee.

(ii)

A date that a payment will be made.

 

 

*Confidential information omitted and filed separately with the SEC.

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3.4.2.

Assign this Agreement or any compensation, other than commissions payable to Wholesalers and Producers, payable under it without the prior written consent of CONSECO.

 

3.4.3.

Solicit applications for CONSECO in any manner prohibited by, or inconsistent with, the provisions of this Agreement or the rules and regulations mutually agreed by both parties, now or hereafter in force.

 

3.4.4.

With respect to any Proprietary Product Contract:

 (i)

Make any alterations, modifications, or endorsements or otherwise alter CONSECO’s obligations as stated in the Proprietary Product Contract.

 (ii)

Adjust or settle any claim; except as provided for in the Administrative Services Agreement, executed concurrently herewith.

 

3.4.5.

Initiate any civil or criminal action or proceeding, whether or not brought in the name of CONSECO, which may in any way involve or affect CONSECO, its affiliates, their business, operations, or any Proprietary Product issued by CONSECO.  The foregoing shall not be construed as a waiver of any other right or entitlement hereunder, at law or in equity, that LMG may have to enforce its rights arising out of this Agreement.

 

3.4.6.

Use or authorize the use of any written, oral, or visual communication, circular, advertisement, or other publication except as follows:

 

LMG agrees that it will not place into use, or distribute to any person, any advertising, sales material, or other document (including, without limitation, illustrations, telephone scripts, and training materials) referring directly or indirectly to CONSECO or its Proprietary Products or cause, authorize, or permit any person to do so, without CONSECO’s prior written consent.  LMG agrees that it will not use the name of CONSECO on any business card, letterhead, website, or marquee or in any directory listing, or in any other manner, or cause, authorize or permit any Producer or other person to do so, without CONSECO's prior written consent.

 

3.4.7.

Knowingly, intentionally, or willfully violate the insurance laws or regulations of any regulatory authority of any state or any other jurisdiction in which LMG represents CONSECO.

 

3.4.8.

Embezzle or knowingly, intentionally, or willfully misapply funds of CONSECO or any other person or entity.

 

3.4.9.

Perpetrate any fraud against CONSECO or any other person or entity.

 

3.5.

LMG will create, print, and distribute of all advertising materials used by LMG for Proprietary Products jointly developed.  Notwithstanding, CONSECO will be responsible for filing such advertising materials with each state as required.

 

 

 

*Confidential information omitted and filed separately with the SEC.

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3.6.

LMG will be solely responsible for any commissions to be paid to Wholesalers or Producers, which are earned as a result of selling CONSECO Proprietary Products through LMG, except as hereafter provided in Section 8 of this Agreement.

 

3.7.

LMG shall have no authority, nor shall it represent itself as having such authority, other than as specifically set forth in this Agreement.  Without limiting the generality of the foregoing sentence, LMG specifically agrees that it will not do any of the following without the prior written consent of CONSECO:

 

3.7.1.

Litigation and Regulatory Actions: Institute, prosecute, or defend any legal proceedings or regulatory examinations or investigations (which shall not include regulatory complaints) in connection with any matter pertaining to the offering and/or sale of the Proprietary Products.  Notwithstanding the foregoing, LMG may defend itself in any action which names LMG, provided that LMG and CONSECO shall confer with and cooperate with one another, including but not limited to entering into a joint defense agreement.

 

3.7.2.

Alterations: Waive, amend, modify, alter, terminate, or change any term, provision, or condition stated in any Proprietary Product, or discharge any contract in the name of CONSECO.  

 

3.7.3.

Advice to Wholesalers or Producers/prospective Wholesalers or Producers: Offer tax, legal, or investment advice to any Wholesaler or Producer or prospective Wholesaler or Producer of CONSECO under any circumstances, with respect to a contract.  Notwithstanding the foregoing, LMG shall not be prohibited from providing detailed information regarding the features of the Proprietary Products.

 

3.8

LMG shall provide CONSECO with written notice of any change of authority of persons authorized and enumerated in APPENDIX B to provide CONSECO with instructions or directions relating to services to be performed by CONSECO under this Agreement.  

 

3.9

LMG understands and agrees that it is performing services for policyholders on behalf of CONSECO and that the policyholder is the customer of CONSECO. To protect the policyholder’s nonpublic personal information, LMG agrees to abide by the provisions contained in APPENDIX C .   

 

3.10

If in the event that LMG sells any health or other products that require personal health information, LMG understands and agrees that it will receive, create and/or maintain CONSECO insured’s protected health information (PHI) in order to perform services for CONSECO insureds on behalf of CONSECO, in accordance with the parties’ mutually agreed-upon provisions.

 

 

*Confidential information omitted and filed separately with the SEC.

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4.

TERM, ASSIGNMENT, MODIFICATION, AND TERMINATION OF AGREEMENT

 

4.1

Subject to termination as provided in Section 4.4 of this Agreement, this Agreement shall remain in force and effect until the close of business on October 10, 2009, (the Term of this Agreement).  This Agreement shall be renewed automatically for successive terms of one (1) year unless terminated by either party by providing twelve (12) months prior written notice to the other.

 

4.2

Neither party may assign or delegate all or any part of its rights and/or duties under this Agreement without the written consent, as signed by one or more of the personnel shown on APPENDIX B , of the granting party.

 

4.3.

This Agreement may be modified or amended at any time by mutual agreement of the parties, provided the modification or amendment is in writing, signed by authorized personnel, as provided in APPENDIX B of this Agreement.

 

4.4.

The termination of this Agreement is governed by the following provisions:

 

4.4.1.

LMG or CONSECO may terminate this Agreement, at any time, without cause by providing twelve (12) months written n