UNDERWRITING AGREEMENT
AGREEMENT dated as of this _____________ day of June, 1998 by and between
EquiTrust Life Insurance Company, an Iowa corporation ("Insurer"), on its behalf
and on behalf of EquiTrust Life Variable Account II and EquiTrust Life Annuity
Account II (the "Separate Accounts"), and EquiTrust Marketing Services, Inc.
("Distributor"), a Delaware corporation.
WITNESSETH
WHEREAS, Distributor is a broker-dealer that engages in the distribution of
variable insurance products and other investment products; and
WHEREAS, Insurer desires to issue certain variable insurance products
described more fully below to the public through Distributor acting as principal
underwriter;
NOW THEREFORE, in consideration of their mutual promises, Insurer and
Distributor hereby agree as follows:
1. Additional Definitions
a. Contracts - The class or classes of variable insurance products set
forth on Schedule 1 to this Agreement as in effect at the time this Agreement is
executed, and such other classes of variable products that may be added to
Schedule 1 from time to time in accordance with Section 11.b of this Agreement,
and including any riders to such contracts and any other contracts offered in
connection therewith. For the purpose of this Agreement generally, a "class of
Contracts" shall mean those Contracts issued by Insurer on the same policy form
or forms and covered by the same registration statement.
b. Registration Statement - With respect to each class of contracts, the
most recent post-effective registration statement filed with the SEC or the most
recent effective post-effective amendment thereto, including financial
statements included therein and all exhibits thereto. For purposes of Section 9
of this Agreement, the term "Registration Statement" means any document which is
or at any time was a Registration Statement within the meaning of this Section
1.b.
c. Prospectus - With respect to each class of Contracts, the prospectus
for such class of Contracts included within the Registration Statement for such
class of Contracts; provided, however, that if the most recently filed
prospectus filed pursuant to Rule 497 under the 1993 Act subsequent to the date
on which the Registration Statement became effective differs from the prospectus
on file at the time the Registration Statement became effective, the term
"Prospectus" shall refer to the most recently filed prospectus filed under Rule
497 from and after the date on which it shall have been filed. For
purposes of Section 9 the term "any Prospectus" means any document which is or
at any time was a Prospectus within the meaning of this Section 1.c.
d. Fund - registered investment companies in which the Separate Accounts
invest.
e. Variable Accounts - separate accounts supporting a class or classes of
Contracts and specified in Schedule 1 as in effect at the time this Agreement is
executed, or as it may be amended from time to time in accordance with Section
11.b of this Agreement.
f. 1933 Act - The Securities Act of 1933, as amended.
g. 1934 Act - The Securities Exchange Act of 1934, as amended.
h. 1940 Act - The Investment Company Act of 1940, as amended.
i. SEC - The Securities and Exchange Commission.
j. NASD - The National Association of Securities Dealers, Inc. and any
affiliates.
k. Regulations - The rules and regulations promulgated by the SEC under
the 1933 Act, the 1934 Act and the 1940 Act as in effect at the time this
Agreement is executed or thereafter promulgated.
l. Selling Broker-Dealer - A person registered as a broker-dealer and
licensed as a life insurance agent or affiliated with a person so licensed, and
authorized to distribute the Contracts pursuant to a sales agreement as provided
for in Section 4 of this Agreement.
m. Agent Manual - Any manual and other written rules, regulations and
procedures provided by Insurer to insurance agents appointed to sell its
insurance contracts, as revised from time to time.
n. Representative - When used with reference to Distributor or a Selling
Broker-Dealer, an individual who is an associated person, as that term is
defined in the 1934 Act, thereof.
o. Application - An application for a Contract.
p. Premium - A payment made under a Contract by an applicant or purchaser
to purchase benefits under the Contract.
q. Home Office -- the home office identified in the Prospectus as the
location at which Premiums and Applications are accepted.
2. Authorization and Appointment
a. Scope and Authority. Insurer hereby authorizes Distributor on an
exclusive basis, and Distributor accepts such authority, subject to the
registration requirements of the 1933 Act and the 1940 Act and the provisions of
the 1934 Act and conditions herein, to be the distributor and principal
underwriter for the sale of the contracts to the public in each state and other
jurisdiction in which the Contracts may lawfully be sold during the term of this
Agreement. Insurer hereby authorizes Distributor to grant authority to Selling
Broker-Dealers to solicit Applications and Premiums to the extent the
Distributor deems appropriate and consistent with the marketing program for the
Contracts or a class of Contracts, subject to the conditions set forth in
Section 4 of this Agreement. The Contracts shall be offered for sale and
distribution at premium rates set from time to time by Insurer. Distributor
shall use its best efforts to market the Contracts actively through Selling
Broker-Dealers in accordance with Section 4 of this Agreement, subject to
compliance with applicable law, including rules of the NASD.
b. Limits on Authority. Distributor shall act as an independent
contractor and nothing herein contained shall constitute Distributor or its
agents, officers, or employees as agents, officers or employees of Insurer
solely by virtue of their activities in connection with the sale of the
Contracts hereunder. Distributor and its Representatives shall not have
authority, on behalf of Insurer to make, alter, or discharge any Contract or
other insurance policy or annuity entered into pursuant to a Contract; to waive
any Contract forfeiture provision; to extend the time of paying any Premium; or
to receive monies or Premiums (except for the sole purpose of forwarding monies
or Premiums to Insurer). Distributor shall not expend, nor contract for the
expenditure of, funds of the Insurer. Distributor shall not possess or exercise
any authority on behalf of Insurer other than that expressly conferred on
Distributor by this Agreement.
3. Solicitation Activities
a. Distributor Representatives. The Distributor will not solicit
applications from the public for the Contracts through Distributor
Representatives.
b. Representations and Warranties of Distributor. Distributor represents
and warrants to Insurer that Distributor is and shall remain registered during
the term of this Agreement as a broker-dealer under the 1934 Act, is a member of
the NASD, and is duly registered under applicable state securities laws, and
that Distributor is and shall remain during the term of the Agreement in
compliance with Section 9(a) of the 1940 Act.
4. Selling Broker-Dealers. Insurer and Distributor shall insure that sales of
the contracts by Selling Broker-Dealers comply with the following conditions,
and any additional conditions Insurer may specify from time to time.
a. Every Selling Broker-Dealer shall be both registered as a
broker-dealer with the SEC and a member of the NASD and licensed as an insurance
agent, if required, with authority to sell variable products or associated with
an insurance agent so licensed. Any individuals to be authorized to act on
behalf of Selling Broker-Dealer shall be duly registered with the NASD as
representatives of Selling Broker-Dealer with authority to sell variable
products, and shall be licensed as insurance agents with authority to sell
variable products. Insurer shall verify that Selling Broker-Dealer and its
Representatives are duly licensed under applicable state insurance law to sell
the Contracts or, if Broker-Dealer is not so licensed, that it is associated
with an entity so licensed.
b. Every Selling Broker-Dealer (or, if applicable, its associated
insurance agency) and each of its Representatives shall have been appointed by
Insurer, provided that Insurer reserves the right to refuse to appoint any
proposed person, or once appointed, to terminate such appointment.
c. Every Selling Broker-Dealer must enter into a written sales agreement
with Distributor which sales agreement, among other things, will require such
Selling Broker-Dealer to use its best efforts to solicit applications for the
Contracts and to comply with applicable laws and regulations, including the
Insurer's rules and regulations as reflected in the Agents Manual or otherwise
communicated to agents appointed by the Insurer, and will contain such other
provisions as the Distributor deems to be consistent herewith.
d. In view of the fact that Insurer and Distributor want to ensure that
Contracts will be sold to purchasers for whom the Contracts will be suitable,
the written Sales Agreement shall require that Selling Broker-Dealers and their
Representatives 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 the applicant. While not limited to the following, a
determination of suitability shall be based on information supplied by an
applicant after reasonable inquiry concerning the applicant's other security
holdings, insurance and investment objectives, financial situation and needs,
and the likelihood that the applicant will continue to make premium payments
contemplated by the Contract applied for and will keep the Contract in force for
a sufficient period of time so that Insurer's acquisition costs are amortized
over a reasonable period of time.
5. Marketing Materials
a. Preparation and Filing. Insurer shall be primarily responsible for
the design and preparation of all promotional, sales and advertising material
related to the
Contracts. Distributor shall be responsible for filing such material as
required, with the NASD and any state securities regulatory authorities at
Insurers expense. Insurer shall be responsible for filing all promotional,
sales or advertising material, as required, with any state insurance regulatory
authorities. Insurer shall be responsible for preparing the Contract Forms and
filing them with applicable state insurance regulatory authorities, and for
preparing the Prospectuses and Registration Statements and filing them with the
SEC and state regulatory authorities, to the extent required. The parties shall
notify each other expeditiously of any comments provided by the SEC, NASD or any
securities or insurance regulatory authority on such material, and will
cooperate expeditiously in resolving and implementing any comments, as
applicable.
b. Use in Solicitation Activities. Insurer shall be responsible for
furnishing Distributor with such Applications, Prospectuses and other materials
for use by Distributor and any Selling Broker-Dealers in their solicitation
activities with respect to the Contracts. Insurer shall notify Distributor of
those states or jurisdictions which require delivery of a statement of
additional information with a prospectus to a prospective purchaser.
6. Compensation and Expenses.
a. Insurer shall pay compensation for sales of the Contracts in
accordance with Schedule 2 hereto. Upon Distributor's request, Insurer shall
pay compensation payable to Selling-Broker-Dealers, on Distributor's behalf,
subject to the provisions of Section 7 of this Agreement.
b. Insurer shall pay all expenses in connection with:
(1) the preparation and filing of each registration statement (including
each pre-effective and post-effective amendment thereto) and the
preparation and filing of each Prospectus (including any preliminary and
each definitive Prospectus);
(2) the preparation, underwriting, issuance and administration of the
Contracts;
(3) any registration, qualification or approval or other filing of the
Contracts or Contract forms required under the securities or insurance laws
of the states in which the Contracts will be offered;
(4) all registration fees for the Contracts payable to the SEC;
(5) the printing of promotional materials, definitive Prospectuses for the
Contracts and any supplements thereto for distribution;
(6) any applicable postage costs; and
(7) any out-of-pocket expenses incurred by Distributor in carrying out its
obligations under this Agreement.
7. Compliance.
a. Maintaining Registration and Approvals. Insurer shall be responsible
for maintaining the registration of the Contracts with the SEC and any state
securities regulatory authority with which such registration is required, and
for gaining and maintaining the approval of the Contract forms where required
under the insurance laws and regulations of each state or other jurisdiction in
which the Contracts are to be offered.
b. Confirmations and the 1934 Act Compliance. Insurer, as agent for the
Distributor, shall confirm to each applicant for and purchaser of a Contract in
accordance with Rule 10b-10 under the 1934 Act acceptance of premiums and such
other transactions as are required by Rule 10b-10 or administrative
interpretations thereunder. Insurer shall maintain and preserve such books and
records with respect to such confirmations in conformity with the requirements
of Rules 17a-3 and 17a-4 under the 1934 Act to the extent such requirements
apply. Insurer shall maintain all such books and records and hold such books
and records on behalf of and as agent for Distributor whose property they are
and shall remain, and acknowledges that such books and records are at all times
subject to inspection by the SEC in accordance with Section 17(a) of the 1934
Act.
c. Issuance and Administration of Contracts. Insurer shall be
responsible for issuing the Contracts and administering the Contracts and the
Variable Account, provided, however, that Distributor shall have full
responsibility for the securities activities of all persons employed by the
Insurer, engaged directly or indirectly in the Contract operations, and for the
training, supervision and control of such persons to the extent of such
activities.
8. Investigations and Proceedings.
a. Cooperation. Distributor and Insurer shall cooperate fully in any
securities or insurance regulatory investigation or proceeding or judicial
proceeding arising in connection with the offering, sale or distribution of the
Contracts distributed under this Agreement. Without limiting the forgoing,
Insurer and Distributor shall notify each other promptly of any customer
complaint or notice of any regulatory investigation or proceeding or judicial
proceeding received by either party with respect to the Contracts.
b. Customer Complaints. In the case of any customer complaints,
Distributor and Insurer will cooperate in investigating such complaint and any
response by Distributor to such complaint or Insurer to such complaint will be
sent to the other party for review and approval not less than five business days
prior to its being sent to the
customer or regulatory authority, except that if a more prompt response is
required, the response shall be communicated by telephone or electronic mail.
9. Indemnification.
a. By Insurer. Insurer shall indemnify and hold harmless Distributor and
each person who controls or is associated with Distributor within the meaning of
such terms under the federal securities laws, and any officer, director,
employee or agent of the foregoing, against any and all losses, claims, damages
or liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
Distributor and/or any such person may become subject, under any statute or
regulation, any NASD rule or interpretation, at common law or otherwise, insofar
as such losses, claims, damages or liabilities:
(1) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in light of the circumstances in which
they were made, contained in any (i) Registration Statement or in any
Prospectus or (ii) blue sky application or other document executed by
Insurer specifically for the purpose of qualifying any or all of the
Contracts for sale under the securities laws of any jurisdiction; provided
that Insurer shall not be liable in any such case to the extent that such
loss, claim, damage or liability arises out of, or is based upon, an untrue
statement or alleged untrue statement or omission or alleged omission made
in reliance upon information furnished in writing to Insurer by Distributor
specifically for use in the preparation of any such Registration Statement
or any such blue sky application or any amendment thereof or supplement
thereto;
(2) result from any breach by Insurer of any provision of this Agreement.
This indemnification agreement shall be in addition to any liability that
Insurer may otherwise have; provided, however, that no person shall be
entitled to indemnification pursuant to this provision if such loss, claim,
damage or liability is due to the willful misfeasance, bad faith, gross
negligence or reckless disregard of duty by the person seeking
indemnification.
b. By Distributor. Distributor shall indemnify and hold harmless Insurer
and each person who controls or is associated with the Insurer within the
meaning of such terms under the federal securities laws, and any officer,
director, employee or agent of the foregoing, against any and all losses,
claims, damages or liabilities, joint or several (including any investigative,
legal and other expenses reasonably incurred in connection with, and any amounts
paid in settlement of, any action, suit or proceeding or any claim asserted), to
which Insurer and/or any such person may become subject under any statute
or regulation, any NASD rule or interpretation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities:
(1) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in light of the circumstances in which
they were made, contained in any (i) Registration Statement or in any
Prospectus or (ii) blue sky application or other document executed by
Insurer specifically for the purpose of qualifying any or all of the
Contracts for sale under the securities laws of any jurisdiction; in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in
reliance upon information furnished in writing by Distributor to Insurer
specifically for use in the preparation of any such Registration Statement
or any such blue sky application or any amendment thereof or supplement
thereto;
(2) result from any breach by Distributor of any provision of this
Agreement.
This indemnification shall be in addition to any liability that Distributor
may otherwise have; provided, however, that no person shall be entitled to
indemnification pursuant to this provision if such loss, claim, damage or
liability is due to the willful misfeasance, bad faith, gross negligence or
reckless disregard of duty by the person seeking indemnification.
c. General. Promptly after receipt by a party entitled to
indemnification ("Indemnified Person") under this Section 9 of notice of the
commencement of any action as to which a claim will be made against any person
obligated to provide indemnification under this Section 9 ("Indemnifying
Party"), such indemnified person shall notify the indemnifying party in writing
of the commencement thereof as soon as practicable thereafter, but failure to so
notify the indemnifying party shall not relieve the indemnifying party from any
liability which it may have to the indemnified person otherwise than on account
of this Section 9. The indemnifying party will be entitled to participate in
the defense of the indemnified person but such participation will not relieve
such indemnifying party of the obligation to reimburse the indemnified person
for reasonable legal and other expense incurred by such indemnified person in
defending himself or herself.
The indemnification provisions contained in this Section 9 shall remain
operative in full force and effect, regardless of any termination of this
Agreement. A successor by law of Distributor or Insurer, as the case may be,
shall be entitled to the benefits of the indemnification provisions contained in
this Section 9.
10. Termination. This Agreement shall terminate automatically if it is
assigned by a party without the prior written consent of the other party. (The
term "assigned" shall not include any transaction exempted from Section 15(b)(2)
of the 1940 Act.) This
Agreement may be terminated at any time for any reason by either party upon 60
days' written notice to the other party, without payment of any penalty. This
Agreement may be terminated at the option of either party to this Agreement upon
the other party's material breach of any provision of this Agreement or of any
representation or warranty made in this Agreement, unless such breach has been
cured within 10 days after receipt of notice of breach from the non-breaching
party. Upon termination of this Agreement all authorizations, rights and
obligations shall cease except 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
Insurer prior to termination.
11. Miscellaneous.
a. Binding Effect. This Agreement shall be binding on and shall inure to
the benefit of the respective successors and assigns of the parties hereto
provided that neither party shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other party.
b. Schedules. The parties to this Agreement may amend Schedule 1 to this
Agreement from time to time to reflect the addition of any class of Contracts
and Variable Accounts. The provisions of this Agreement shall be equally
applicable to each such class of Contracts and each Variable Account that may be
added to the Schedule, unless the context otherwise requires. Insurer may amend
Schedule 2 unilaterally, from time to time. Any other change in the terms or
provisions of this Agreement shall be by written agreement between Insurer and
Distributor.
c. Rights, Remedies, etc. are Cumulative. The rights, remedies and
obligations contained in this Agreement are cumulative and are in addition to
any and all rights, remedies and obligations, at law or in equity, which the
parties hereto are entitled to under state and federal laws. Failure of either
party to insist upon strict compliance with any conditions of this Agreement
shall not be construed as a waiver of any of the conditions, but the same shall
remain in full force and effect. No waiver of any of the provisions of this
Agreement shall be deemed, or shall constitute, a waiver of any other
provisions, whether or not similar, nor shall any waiver constitute a continuing
waiver.
d. Notices. All notices hereunder are to be made in writing and shall be
given:
If to Insurer, to:
EquiTrust Life Insurance Company
0000 Xxxxxxxxxx Xxxxxx
Xxxx Xxx Xxxxxx, Xxxx 00000
If to Distributor, to:
EquiTrust Marketing Services, Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxxx Xxx Xxxxxx, Xxxx 00000
or such address as such party may hereafter specify in writing. Each such
notice to a party shall be either hand delivered or transmitted by registered or
certified United States mail with return receipt requested, or by overnight mail
by a nationally recognized courier, and shall be effective upon delivery.
e. Interpretation; Jurisdiction. This Agreement constitutes the whole
Agreement between the parties hereto with respect to the subject matter hereof,
and supersedes all prior written or oral understandings, agreements or
negotiations between the parties with respect to such subject matter. No prior
writings by or between the parties with respect to the subject matter hereof
shall be used by either party in connection with the interpretation of any
provision of this Agreement. This Agreement shall be construed and its
provisions interpreted under and in accordance with the laws of the state of
Iowa without giving effect to principles of conflict of laws.
f. Severability. In the event that any provision of this Agreement would
require a party to take action prohibited by applicable federal or state law or
prohibit a party from taking action required by applicable federal or state law,
then it is the intention of the parties hereto that such provision shall be
enforced to the extent permitted under the law, and, in any event, that all
other provisions of this Agreement shall remain valid and duly enforceable as if
the provision at issue had never been a part hereof.
g. Section and Other Headings. The headings in this Agreement are
included for convenience of reference only and in no way define or delineate any
of the provisions hereof or otherwise affect their construction or effect.
h. Counterparts. This Agreement may be executed in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
i. Regulation. This Agreement shall be subject to the provisions of the
1933 Act, 1934 Act and the 1940 Act and the rules and regulations 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by such authorized officers on the date specified below.
INSURER:
By: Date
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Name
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Title
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DISTRIBUTOR:
By: Date
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Name
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Title
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SCHEDULE 1
Separate Accounts
Effective
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[put contract names in]
EquiTrust Life Variable Account
EquiTrust Life Annuity Account
SCHEDULE 2
Compensation
Effective
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