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]
