UNDERWRITING AGREEMENT
UNDERWRITING AGREEMENT made this 26th day of April, 2001, by and between
Farm Bureau Life Insurance Company ("Farm Bureau"), an Iowa corporation, on its
own behalf and on behalf of Farm Bureau Life Variable Account and Farm Bureau
Life Annuity Account ("Accounts"), and EquiTrust Marketing Services, LLC
("EquiTrust Marketing"), a Delaware limited liability company.
WITNESSETH
WHEREAS, Farm Bureau has established and maintains the Accounts,
segregated investment accounts, pursuant to the laws of the State of Iowa for
the purpose of selling flexible premium deferred variable universal life
policies and flexible premium last survivor variable universal life policies
(the "Policies") and individual flexible premium deferred variable annuity
contracts (the "Contracts"), to commence after the effectiveness of the
registration statement for the Policies and Contracts as filed with Securities
and Exchange Commission (the "SEC") on Form S-6 and Form N-4, respectively,
pursuant to the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Accounts are registered as unit investment trusts under the
Investment Company Act of 1940, as amended (the "1940 Act:"); and
WHEREAS, EquiTrust Marketing is registered as a broker-dealer with the
SEC under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and
is a member of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, the parties desire to have EquiTrust Marketing act as principal
underwriter for the Accounts and assume such supervisory responsibility as is
required by federal and state securities law and applicable requirements of the
NASD for the securities activities of any "person associated" (as that term is
defined in Section 3(a)(18) of the 0000 Xxx) with EquiTrust Marketing, including
Farm Bureau personnel, and engaged directly or indirectly in Farm Bureau's
variable life and annuity operations (the "associated persons"); and
WHEREAS, Farm Bureau and the Accounts desire to have the Policies and
Contracts sold and distributed through EquiTrust Marketing, and EquiTrust
Marketing is willing to sell and distribute such Policies and Contracts, under
the terms stated herein.
NOW THEREFORE, the parties hereto agree as follows:
1. DISTRIBUTOR AND PRINCIPAL UNDERWRITER
Farm Bureau grants to EquiTrust Marketing the right to be, and EquiTrust
Marketing agrees to serve as, distributor and principal underwriter of the
Policies and Contracts during the term
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of this Agreement. EquiTrust Marketing agrees to use its best efforts to solicit
applications for the Policies and Contracts, and to undertake to provide sales
services relative to the Policies and Contracts and otherwise to perform all
duties and functions which are necessary and proper for the distribution of the
Policies and Contracts.
2. PREMIUM PAYMENTS
All premium payments or other monies payable for the Policies and Contracts
shall be paid or remitted in full by or on behalf of Policy owners directly to
Farm Bureau or its designated servicing agent together with such applications,
forms and other documentation as may be required by Farm Bureau. Checks or money
orders in payment of premiums or other monies payable shall be drawn to the
order of "Farm Bureau Life Insurance Company." Farm Bureau will retain all such
payments except to the extent such payments are allocated to the Accounts.
3. SALES IN ACCORDANCE WITH CURRENT PROSPECTUS
EquiTrust Marketing agrees to offer the Policies and Contracts for sale in
accordance with the current prospectuses therefor. EquiTrust Marketing is not
authorized to give any information or to make any representations concerning the
Policies and Contracts other than those contained in the current prospectuses
therefor filed with the SEC or in such sales literature as may be developed and
authorized by Farm Bureau.
4. PROSPECTUSES AND PROMOTIONAL MATERIALS
On behalf of the Accounts, Farm Bureau shall furnish EquiTrust Marketing with
copies of all prospectuses, financial statements, and other documents which
EquiTrust Marketing reasonably requests for use in connection with the
distribution of the Policies and Contracts. Farm Bureau shall have
responsibility for preparing, filing and printing all required prospectuses
and/or registration statements in connection with the Policies and Contracts and
the payment of all related expenses. EquiTrust Marketing and Farm Bureau shall
cooperate fully in the design, draft, and review of sales promotion materials
and the preparation of individual sales proposals related to the sale of the
Policies and Contracts. EquiTrust Marketing shall not use any such materials not
provided or approved by Farm Bureau.
5. COMPLIANCE WITH APPLICABLE LAWS
EquiTrust Marketing represents that it is duly registered as a broker-dealer
under the 1934 Act and is a member in good standing of the NASD and, to the
extent necessary to offer the Policies and Contracts, shall be duly registered
or otherwise qualified under the securities laws of any state or other
jurisdiction. EquiTrust Marketing shall be responsible for carrying out its
sales and underwriting obligation hereunder in continued compliance with the
NASD Rules of Fair Practice and federal and state securities laws and
regulations. Without limiting the generality of the foregoing, EquiTrust
Marketing agrees that it shall be fully responsible for:
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(a) ensuring that no person shall offer or sell the Policies and Contracts on
its behalf until such person is duly registered as a representative of
EquiTrust Marketing, duly licensed and appointed by Farm Bureau under
applicable state insurance law, and appropriately licensed, registered or
otherwise qualified to offer and sell such Policies and Contracts under
the federal securities laws and any applicable securities laws of each
state or other jurisdiction in which such Policies and Contracts may be
lawfully sold, in which Farm Bureau is licensed to sell the Policies and
Contracts and in which such persons shall offer or sell the Policies and
Contracts; and
(b) training, supervision, and control of all such persons for purposes of
complying on a continuous basis with the NASD Conduct Rules and with
federal and state securities laws requirements applicable in connection
with the offering and sale of the Policies and Contracts. In this
connection EquiTrust Marketing shall:
(i) conduct such training (including the preparation and utilization
of training materials) as in the opinion of EquiTrust Marketing is
necessary to accomplish the purposes of this Agreement;
(ii) establish and implement reasonable written procedures for
supervision of sales practices of associated persons or brokers
selling the Policies and Contracts;
(iii) establish branch offices and offices of supervisory jurisdiction,
as necessary or appropriate; and
(iv) take reasonable steps to ensure that the various sales
representatives associated with it shall not make recommendations
to an applicant to purchase a Policy or Contract in the absence of
reasonable grounds to believe that the purchase of the Policy or
Contract is suitable for such applicant. While not limited to the
following, a determination of suitability shall be based on
information furnished to a sales representative after reasonable
inquiry of such applicant concerning the applicant's insurance and
investment objectives, financial situation and needs, and the
likelihood of whether the applicant will persist with the Policy
or Contract for such a period of time that Farm Bureau's
acquisition costs are amortized over a reasonable period of time.
6. SALES AGREEMENTS
EquiTrust Marketing is hereby authorized to enter into separate written
agreements, on such terms and conditions as EquiTrust Marketing may determine
not inconsistent with this Agreement, with broker-dealers which agree to
participate in the distribution of the Policies and Contracts and to use their
best efforts to solicit applications for the Policies and Contracts. All such
sales agreements shall provide that each independent broker-dealer will assume
full responsibility for continued compliance by itself and its representatives
with applicable federal and state securities laws. Such broker-dealers and their
agents or representatives soliciting applications for the Policies and Contracts
shall be duly and appropriately licensed, registered
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or otherwise qualified for the sale of such Policies and Contracts under the
federal securities laws, the state insurance laws and any applicable state
securities laws of each state or other jurisdiction in which such Policies and
Contracts may be lawfully sold and in which Farm Bureau is licensed to sell the
Policies and Contracts.
Each such organization shall be both registered as a broker-dealer under the
1934 Act and a member of the NASD.
Applications for the Policies and Contracts solicited by such organizations
through their representatives shall be forwarded to Farm Bureau. All payments
for the Policies and Contracts shall be made by check payable to "Farm Bureau
Life Insurance Company" and remitted promptly by such organizations to Farm
Bureau as agent for EquiTrust Marketing. All broker-dealers who agree to
participate in the distribution of the Policies and Contracts shall act as
independent contractors and nothing herein contained shall constitute such
broker-dealers or their agents or employees as employees of Farm Bureau in
connection with the sale of the Policies and Contracts.
7. INSURANCE LICENSES
Designated persons associated with EquiTrust Marketing, or with other
independent broker-dealers which have entered into agreements with EquiTrust
Marketing for the sale of the Policies and Contracts, who maintain the proper
insurance licenses in the appropriate states or jurisdictions shall be appointed
with Farm Bureau, provided that Farm Bureau reserves the right to refuse to
appoint any proposed registered representatives as an agent or broker, and to
terminate an agent or broker once appointed.
8. MAINTENANCE OF BOOKS, RECORDS AND ACCOUNTS
Farm Bureau and EquiTrust Marketing shall cause to be maintained and preserved,
for the periods prescribed, such accounts, books and other documents as are
required of them by the 1940 Act, the 1934 Act and any other applicable laws and
regulations. The books, accounts and records of Farm Bureau, the Accounts, and
EquiTrust Marketing as to all transactions hereunder shall be maintained so as
to disclose clearly and accurately the nature and details of the transactions.
As agent for and on behalf of EquiTrust Marketing, Farm Bureau shall maintain
such books and records of EquiTrust Marketing pertaining to the sale of the
Policies and Contracts and required by the 1934 Act as may be mutually agreed
upon from time to time by Farm Bureau and EquiTrust Marketing; provided that
such books and records shall be the property of EquiTrust Marketing and shall at
all times be subject to such reasonable periodic, special or other examination
by the SEC and all other regulatory bodies having jurisdiction. In addition,
Farm Bureau will maintain records of all sales commissions paid to associated
persons of EquiTrust Marketing in connection with the sale of the Policies and
Contracts. Farm Bureau,
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as agent for EquiTrust Marketing, shall be responsible for sending all required
confirmations on customer transactions in compliance with applicable
regulations, as modified by an exemption or other relief obtained by Farm Bureau
and EquiTrust Marketing.
EquiTrust Marketing shall have the responsibility for maintaining the records of
associated persons of EquiTrust Marketing who are licensed, registered, and
otherwise qualified to sell the Policies and Contracts, and for furnishing
periodic reports thereto to Farm Bureau. EquiTrust Marketing shall cause Farm
Bureau to be furnished with such other reports as Farm Bureau may reasonably
request for the purpose of meeting its reporting and recordkeeping requirements
under the insurance laws of the State of Iowa and any other applicable states or
jurisdictions.
9. COSTS AND EXPENSES BORNE BY EQUITRUST MARKETING
EquiTrust Marketing shall bear the costs and expenses of: (a) services,
materials, and supplies required to be supplied by EquiTrust Marketing pursuant
to the terms of this Agreement and (b) training and supervision of associated
persons.
10. COMPENSATION FOR EQUITRUST MARKETING'S SERVICES
As compensation for EquiTrust Marketing's assumption of the costs and expenses
set forth in Section 9 hereof, the sales services rendered by EquiTrust
Marketing and the associated persons of EquiTrust Marketing, and the continuing
obligations herein, Farm Bureau shall pay: (a) an annual fee, payable monthly,
at a rate equal to $200 multiplied by the number of associated persons of
EquiTrust Marketing; (b) all commissions or other fees or amounts which are due
or otherwise payable to associated persons of EquiTrust Marketing in accordance
with the compensation schedules attached to the associated persons agreements
for the sale of the Policies and Contracts as may be revised from time to time
by EquiTrust Marketing and in accordance with the election form of associated
persons, if applicable; and (c) such compensation as is due under dealer sales
agreements that EquiTrust Marketing and Farm Bureau enter into with other
broker-dealers pursuant to Section 6 hereof.
11. PAYMENT ARRANGEMENT
In accordance with the terms of the Letters of Instruction dated the same date
as this Agreement and attached hereto as Exhibits A and B, as they may be
amended from time to time hereafter, from EquiTrust Marketing to Farm Bureau,
Farm Bureau will forward commissions payable to designated associated persons of
EquiTrust Marketing as paying agent on behalf of EquiTrust Marketing and will
maintain the books and records reflecting such payments in accordance with the
requirements of the 1934 Act on behalf of EquiTrust Marketing. Farm Bureau
acknowledges and agrees that its services in this regard are purely ministerial
and clerical in nature and shall not interfere with the control and supervision
exercised by EquiTrust Marketing over its associated persons with regard to the
Policies and Contracts. Farm Bureau further acknowledges and
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agrees that EquiTrust Marketing shall not be liable to any party for commissions
payable hereunder. Farm Bureau may delegate its responsibility to pay
compensation or commissions pursuant to this Section 11 to any other insurer
affiliated with Farm Bureau, in its discretion, provided such insurer agrees to
comply with the provisions hereof applicable to the payment of such compensation
or commissions. Farm Bureau shall have no right to compensation for the
performance of any activities pursuant to this Section 11. Associated persons of
EquiTrust Marketing shall have no interest in this Agreement or right to any
compensation to be paid by or on behalf of EquiTrust Marketing hereunder prior
to their receipt thereof.
12. INDEMNIFICATION
Farm Bureau agrees to indemnify EquiTrust Marketing for any losses incurred as a
result of any action taken or omitted by Farm Bureau or any of its officers,
agents, or employees in performing their responsibilities under this Agreement
in good faith and without willful misfeasance, gross negligence, or reckless
disregard of such obligations.
13. INVESTIGATIONS AND PROCEEDINGS
EquiTrust Marketing and Farm Bureau agree to cooperate fully in any insurance
regulatory investigation or proceeding or judicial proceeding arising in
connection with the Policies and Contracts distributed under this Agreement.
EquiTrust Marketing and Farm Bureau further agree to cooperate fully in any
securities regulatory inspection, inquiry, investigation or proceeding or any
judicial proceeding with respect to Farm Bureau, EquiTrust Marketing, their
affiliates, or the associated persons to the extent that such inspection,
inquiry, investigation or proceeding is in connection with the Policies and
Contracts distributed under this Agreement. Without limiting the foregoing:
(a) EquiTrust Marketing will be notified promptly of any customer
complaint or notice of any regulatory inspection, inquiry,
investigation or proceeding or judicial proceeding received by
Farm Bureau with respect to EquiTrust Marketing or any associated
person or which may affect Farm Bureau's issuance of any Policy or
Contract marketed under this Agreement; and
(b) EquiTrust Marketing will promptly notify Farm Bureau of any
customer complaint or notice of any regulatory inspection,
inquiry, investigation or proceeding received by EquiTrust
Marketing or its affiliates with respect to EquiTrust Marketing or
any associated person in connection with any Policy or Contract
distributed under this Agreement or any activity in connection
with any such Policy or Contract. In the case of a customer
complaint, EquiTrust Marketing and Farm Bureau will cooperate in
investigating such complaint and arrive at a mutually satisfactory
response.
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14. TERMINATION
This Agreement may be terminated by either party hereto upon 60 days' written
notice to the other party without the payment of any penalty. This Agreement may
be terminated upon written notice of one party to the other party hereto in the
event of bankruptcy or insolvency of such party to which notice is given. This
Agreement may be terminated at any time upon the mutual written consent of the
parties hereto. This Agreement shall terminate automatically if it shall be
assigned.
Upon termination of this Agreement, all authorizations, rights and obligations
hereunder shall cease except (a) the obligation to settle accounts hereunder,
including commissions on premiums subsequently received for Policies and
Contracts in effect at the time of termination or issued pursuant to
applications received by Farm Bureau prior to termination, and (b) the
agreements contained in 12 hereof.
15. EXCLUSIVITY
The services of EquiTrust Marketing hereunder are not to be deemed exclusive and
EquiTrust Marketing shall be free to render similar services to others so long
as its services hereunder are not impaired or interfered with hereby.
16. REGULATION
This Agreement shall be subject to the provisions of the 1940 Act and the 1934
Act and the rules, regulations, and rulings thereunder and of the NASD, from
time to time in effect, including such exemptions from the 1940 Act as the SEC
may grant and the terms hereof shall be interpreted and construed in accordance
therewith.
EquiTrust Marketing shall submit to all regulatory and administrative bodies
having jurisdiction over the operations of Farm Bureau or the Accounts, present
or future, and will provide any information, reports or other material which any
such body by reason of this Agreement may request or require pursuant to
applicable laws or regulations. Without limiting the generality of the
foregoing, EquiTrust Marketing shall furnish the Iowa Department of Insurance
with any information or reports which the Department may request in order to
ascertain whether the variable life operations of Farm Bureau are being
conducted in a manner consistent with the Department's variable life insurance
regulations and any other applicable law or regulations.
17. SEVERABILITY
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement shall not
be affected thereby.
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18. APPLICABLE LAW
This Agreement shall be construed and enforced in accordance with and governed
by the laws of the State of Iowa.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their respective officers thereunto duly authorized as of the day and year
first above written.
Attest:
FARM BUREAU LIFE INSURANCE COMPANY
/s/ Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx,
Chief Executive Officer and Management Director
Attest:
EQUITRUST MARKETING SERVICES, LLC
/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx,
Vice President - Investment Administration
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EXHIBIT A
[EquiTrust Marketing Services, LLC Letterhead]
[Letter of Instruction from EquiTrust Marketing to Farm Bureau Life]
Farm Bureau Life Insurance Company
To Whom it May Concern:
With reference to the agreement (the "Agreement") between you and the
undersigned regarding the payment of commissions for securities transactions to
our associated persons ("Reps"), you are hereby directed to follow these
instructions:
- You shall pay commissions to Reps for the sale of securities
effected on behalf of EquiTrust Marketing in accordance with the
compensation schedules currently in effect. In addition, you shall
pay commissions on an annualized basis as directed by a Rep's
election form, if applicable. You shall be responsible for any
losses incurred as the result of commissions being paid in advance
on premiums which were not received and retained by Farm Bureau.
- You shall pay overwrite commissions to Agency Managers in the
life-only states for the sale of securities effected by Reps on
behalf of EquiTrust Marketing in accordance with the compensation
schedules currently in effect.
- You will be furnished information regarding compensation payable
to each Rep and Agency Manager for each processing period through
the company's internal life policy service system, which
information may include instructions with regard to the payment of
advances on commissions payable as well as instructions with
regard to annualized payment, if applicable.
- You will pay gross commissions to each Rep and Agency Manager and
these amounts will be recorded on EquiTrust Marketing's accounting
records via book entry.
- Payments made to Reps and Agency Managers may be aggregated with
other compensation payable for other products and services for
which you act as payor.
- You must furnish a statement to each Rep or Agency Manager
detailing the compensation paid on behalf of EquiTrust Marketing
and indicating that such portion is paid on behalf of EquiTrust
Marketing.
- You may make deductions from commissions that have been authorized
by EquiTrust Marketing or by the Rep or Agency Manager and are
authorized to make any deductions from compensation payable to a
Rep or Agency Manager, such as wage garnishments ordered by a
court of competent jurisdiction against such Rep or Agency
Manager.
- You will reimburse to EquiTrust Marketing any commissions
previously paid to a Rep or Agency Manager as an advance on
commissions payable if premiums are not received or if that Rep or
Agency Manager and terminates his contract with you and EquiTrust
Marketing.
- You will furnish us on a monthly basis with a report concerning
compensation paid by you during the month pursuant to the
Agreement.
[Signed: EquiTrust Marketing Services, LCC]
EXHIBIT B
[EquiTrust Marketing Services, LLC Letterhead]
[Letter of Instruction from EquiTrust Marketing to Farm Bureau Mutual]
Farm Bureau Mutual Insurance Company
To Whom it May Concern:
With reference to the agreement (the "Agreement") between you and the
undersigned regarding the payment of commissions for securities transactions to
our Agency Managers, you are hereby directed to follow these instructions:
- You shall pay overwrite commissions to Agency Managers in the
multi-line states for the sale of securities effected by
registered representatives on behalf of EquiTrust Marketing in
accordance with the compensation schedules currently in effect.
- You will be furnished information regarding compensation payable
to each Agency Manager for each processing period through the
company's internal policy service system.
- You will pay overwrite commissions to each Agency Manager and
these amounts will be recorded on EquiTrust Marketing's accounting
records via book entry.
- Payments made to Agency Managers may be aggregated with other
compensation payable for other products and services for which you
act as payor.
- You must furnish a statement to each Agency Manager detailing the
compensation paid on behalf of EquiTrust Marketing and indicating
that such portion is paid on behalf of EquiTrust Marketing.
- You may make deductions from commissions that have been authorized
by EquiTrust Marketing or by the Agency Manager and are authorized
to make any deductions from compensation payable to an Agency
Manager, such as wage garnishments ordered by a court of competent
jurisdiction against such Agency Manager.
- You will reimburse to EquiTrust Marketing any commissions
previously paid to a Agency Manager as an advance on commissions
payable if premiums are not received or if that Agency Manager
terminates his contract with you and EquiTrust Marketing.
- You will furnish us on a monthly basis with a report concerning
compensation paid by you during the month pursuant to the
Agreement.
[Signed: EquiTrust Marketing Services, LCC]
