UNDERWRITING AGREEMENT
This UNDERWRITING AGREEMENT (this "Agreement"), dated as of
the 5th day of October, 1999, is made and entered into by and between
Southern Farm Bureau Life Insurance Company ("Insurer"), a Mississippi
corporation, on its behalf and on behalf of Southern Farm Bureau Life Variable
Account (the "Separate Account"), and Southern Farm Bureau Fund Distributor,
Inc. ("Distributor"), a Mississippi corporation.
WITNESSETH
WHEREAS, Distributor is a broker-dealer that is willing to engage 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" means 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 insurance products
that may be added to Schedule 1 from time to time in accordance with Section
11.b of this Agreement, 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" means those Contracts issued by Insurer on the
same policy form or forms and covered by the same Registration Statement.
b. "Registration Statement" means, 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 that is
or at any time was a Registration Statement within the meaning of this Section
1.b.
c. "Prospectus" means, 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 1933 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 of this Agreement,
the term "any Prospectus" means any document that is or at any time was a
Prospectus within the meaning of this Section 1.c.
d. "Variable Accounts" means 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.
e. "1933 Act" means the Securities Act of 1933, as amended.
f. "1934 Act" means the Securities Exchange Act of 1934, as amended.
g. "1940 Act" means the Investment Company Act of 1940, as amended.
h. "SEC" means the Securities and Exchange Commission.
i. "NASD" means the National Association of Securities Dealers, Inc. and
any affiliates.
j. "Regulations" means 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.
k. "Agent Manual" means 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.
l. "Representative" means, when used with reference to Distributor, an
individual who is an associated person, as that term is defined in the 1934 Act,
thereof.
m. "Application" means an application for a Contract.
n. "Premium" means a payment made under a Contract by an applicant or
purchaser to purchase benefits under the Contract.
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. 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, 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. Distributor will solicit Applications from
the public through Distributor Representatives. All Distributor Representatives
shall be duly registered with the NASD as representatives of Distributor with
authority to sell variable products, and shall be duly licensed as insurance
agents with authority to sell variable products.
b. Insurer shall appoint Distributor and each of its Representatives;
provided that Insurer reserves the right to refuse to appoint any proposed
person or, once appointed, to terminate such appointment.
c. Distributor shall use its best efforts to cause its Representatives to
solicit Applications and to comply with applicable laws and regulations,
including the Insurer's rules and regulations as reflected in the Agent Manual
or otherwise communicated to its Representatives appointed by the Insurer.
Distributor and its Representatives shall not offer or attempt to offer the
Contracts, solicit Applications or Premiums, or deliver Contracts in any state
or jurisdiction in which the Contracts have not been approved for sale.
Distributor and its Representatives shall not solicit Applications or Premiums
without delivering the Prospectus and, where required by state insurance law,
the then-currently effective statement of additional information for the
Contracts, and the then-currently effective prospectus(es) for the registered
investment companies in which the Separate Account invests.
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,
Distributor
and its Representatives 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 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.
e. Insurer reserves the right, in its sole discretion, to reject any
Application or Premium and to return or refund to an applicant such applicant's
Premium.
4. 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, is duly registered under applicable state
securities laws, and is and shall remain during the term of the Agreement in
compliance with Section 9(a) of the 1940 Act.
5. Marketing Materials
a. Preparation and Filing. Insurer shall be 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 with the
NASD and any state securities regulatory authorities, to the extent required, at
Insurer's expense. Insurer shall be responsible for filing all promotional,
sales or advertising material, to the extent 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 its Representatives in their solicitation activities
with respect to the Contracts. Distributor and its Representatives shall not use
or implement any other promotional, sales or advertising material relating to
the Contracts or otherwise advertise the Contracts without the prior written
approval of Insurer.
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 Distributor's Representatives, on Distributor's behalf,
subject to the provisions of Section 7 of this Agreement. No compensation shall
be payable, and Distributor agrees to reimburse Insurer for any compensation
paid to Distributor or its Representatives, if Insurer:
(1) in its sole discretion, rejects an Application or Premium;
(2) refunds the Premiums upon the applicant's surrender or withdrawal
pursuant to any "free-look" privilege;
(3) refunds the Premiums as a result of a complaint by applicant; or
(4) determines that any person signing an Application who is required to
be licensed or registered or any other person receiving compensation
for soliciting the purchase of a Contract is not duly licensed or
registered to sell the Contract in the state or jurisdiction of such
sale.
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 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 foregoing,
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 by 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; or
(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; or
(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 Distributor
ceases
to be a registered broker-dealer or a member of the NASD or if this Agreement 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 sixty (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 compensation 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:
Southern Farm Bureau Life Insurance Company
0000 Xxxxxxxxxx Xxxx
Xxxxxxx, XX 00000
If to Distributor, to:
Southern Farm Bureau Fund Distributor, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxxx, XX 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
Mississippi 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.
[The remainder of this page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by such authorized officers as of the date set forth
above.
INSURER:
Southern Farm Bureau Life Insurance Company
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name Xxxxxx X. Xxxxxx
-------------------------------------
Title Vice President and General Counsel
------------------------------------
DISTRIBUTOR:
Southern Farm Bureau Fund Distributor, Inc.
By: /s/ Xxxxxxxx X. Xxxxxxx
--------------------------------------
Name Xxxxxxxx X. Xxxxxxx
-------------------------------------
Title Secretary/Treasurer
------------------------------------
SCHEDULE 1
To Underwriting Agreement
Contracts:
Flexible Premium Deferred Variable Annuity
Variable Accounts:
Southern Farm Bureau Life Variable Account
SCHEDULE 2
To Underwriting Agreement
Compensation for Flexible Premium Deferred Variable Annuity
Effective ___________________
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Issue Age 0-70
-------------------------------------------------------------------------------------------------------
Yr 1 Yr 2-7 Yr 8+
% PREM % FUND % PREM % FUND % PREM % FUND
(BP)* (BP) * (BP)*
-------------------------------------------------------------------------------------------------------
4.19% 0 3.75% 3.0 1.25% 13.0
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
Issue Age 71-75
-------------------------------------------------------------------------------------------------------
YR 1 YR 2-7 YR 8+
% PREM % FUND % PREM % FUND % PREM % FUND
(bp)* (bp) * (bp)*
-------------------------------------------------------------------------------------------------------
3.15% 0 2.81% 3.0 0.94% 13.0
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
Issue Age 76-80
-------------------------------------------------------------------------------------------------------
Yr 1 Yr 2-7 Yr 8+
% PREM % FUND % PREM % FUND % PREM % FUND
(BP)* (BP) * (BP)*
-------------------------------------------------------------------------------------------------------
2.10% 0 1.88% 3.0 0.63% 13.0
-------------------------------------------------------------------------------------------------------
* BP = BASIS POINT; 100 BASIS POINTS = 1.00%
