UNDERWRITING AGREEMENT
UNDERWRITING AGREEMENT made this ___ day of ____________ ____, by and
between Farm Bureau Life Insurance Company ("Farm Bureau"), an Iowa
corporation, on its own behalf and on behalf of Farm Bureau Life Annuity
Account III ("Annuity Account") and EquiTrust Marketing Services, Inc.
("EquiTrust Marketing"), a Delaware corporation.
WITNESSETH:
WHEREAS, Farm Bureau has established and maintains the Annuity Account,
a segregated investment account, pursuant to the laws of the State of Iowa
for the purpose of selling flexible premium deferred variable annuity
contracts (the "Contracts"), to commence after the effectiveness of the
registration statement for the Contracts as filed with Securities and
Exchange Commission (the "SEC") on Form N-4 pursuant to the Securities Act of
1933, as amended (the "1933 Act"); and
WHEREAS, the Annuity Account is registeed as a unit investment trust
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 Account 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 annuity operations (the "associated
persons"); and
WHEREAS, Farm Bureau and the Annuity Account desire to have the
Contracts sold and distributed through EquiTrust Marketing, and EquiTrust
Marketing is willing to sell and distribute such 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
Contracts during the term of this Agreement. EquiTrust Marketing agrees to
use its best efforts to solicit applications for the Contracts, and to
undertake to provide sales services relative to the Contracts and otherwise
to perform all duties and functions which are necessary and proper for the
distribution of the Contracts.
2. PREMIUM PAYMENTS
All premium payments or other monies payable for the Contracts shall be
paid or remitted in full by or on behalf of contractowners 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
Annuity Account.
3. SALES IN ACCORDANCE WITH CURRENT PROSPECTUS
EquiTrust Marketing agrees to offer the Contracts for sale in accordance
with the current prospectus therefor. EquiTrust Marketing is not authorized
to give any information or to make any representations concerning the
Contracts other than those contained in the current prospectus 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 Annuity Account, 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 Contracts. Farm Bureau shall have
responsibility for preparing, filing and printing all required prospectuses
and/ or registration statements in connection with the 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
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 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:
(a) ensuring that no person shall offer or sell the 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 Contracts under the federal securities laws and any
applicable securities laws of each state or other jurisdiction in which such
Contracts may be
lawfully sold, in which Farm Bureau is licensed to sell the Contracts and
in which such persons shall offer or sell the Contracts; and
(b) training, supervision, and control of all such persons for purposes of
complying on a continuous basis with the NASD Rules of Fair Practice and
with federal and state securities laws requirements applicable in connection
with the offering and sale of the 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
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 Contract in the absence of reasonable grounds to believe
that the purchase of the 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
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 Contracts and to use their best
efforts to solicit applications for the 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 Contracts
shall be duly and appropriately licensed, registered or otherwise qualified
for the sale of such 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 Contracts may be lawfully sold and in which
Farm Bureau is licensed to sell the 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 Contracts solicited by such organizations through
their representatives shall be forwarded to Farm Bureau. All payments for
the 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 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
Contracts.
7. INSURANCE LICENSES
Farm Bureau shall apply for the proper insurance licenses in the
appropriate states or jurisdictions for the 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
Contracts, 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 Annuity Account, 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 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 Contract. Farm Bureau, 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 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
reasonable 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; (b) registration, licensing or other
qualification of associated persons of EquiTrust Marketing under federal and
state securities laws and with the NASD; and (c) training and supervision of
associated persons.
10. COMPENSATION
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 spelled out herein, Farm Bureau shall pay
EquiTrust Marketing an annual fee, payable monthly, at a rate equal to $100
multiplied by the number of associated persons of EquiTrust Marketing, and
shall, on behalf of and as agent for EquiTrust Marketing, pay associated
persons of EquiTrust Marketing all commissions or other fees which are due
for the sale of the Contracts. No associated person shall have an interest
in any fees payable to EquiTrust Marketing pursuant to this Agreement.
For Contracts sold under dealer sales agreements that EquiTrust
Marketing enters into with other broker-dealers pursuant to Section 6 hereof,
Farm Bureau shall pay to the parties specified in any such agreements such
compensation as is due under the terms of such sales agreements.
11. INDEMNIFICATION
Farm Bureau agrees to indemnify EquiTrust Marketing for any losses
incurred as a result of any action taken or omitted by EquiTrust Marketing 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.
12. 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 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 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 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 Contract distributed under this
Agreement or any activity in connection with any such 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.
13. 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 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.
1. 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.
15. 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 Annuity
Account, 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 Annuity operations of
Farm Bureau are being conducted in a manner consistent with the Department's
variable annuity insurance regulations and any other applicable law or
regulations.
16. 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.
17. 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
[signature]
Xxxxxx X. Xxxxxxxxxxx
President
Attest:
EQUITRUST MARKETING SERVICES, INC.
[signature]
Xxxx X. Xxxxxx
President
