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BONUS
RESTRICTED STOCK AGREEMENT
 
 
This Bonus Restricted Stock Agreement is dated as of the 17th day of February, 2011, between FBL Financial Group, Inc., an Iowa corporation (the “Company”), and James E. Hohmann (“Employee”).
 
1.    Award.
 
(a)    Shares.  Pursuant to the FBL Financial Group, Inc. 2006 Class A Common Stock Compensation Plan (the “Plan”), 65,359 shares (the “Restricted Shares”) of the Company's common stock, without par value (“Stock”), shall be issued as hereinafter provided in Employee's name subject to certain restrictions thereon.
 
(b)    Issuance of Restricted Shares.  The Restricted Shares shall be issued upon acceptance hereof by Employee, subject to satisfaction of the conditions of this Agreement. 
 
(c)    Plan Incorporated.  Employee acknowledges receipt of a copy of the Plan, and agrees that this award of Restricted Shares shall be subject to all of the terms and conditions set forth in the Plan (except as limited by provisions of this Agreement), including future amendments thereto, if any, pursuant to the terms thereof, which Plan is incorporated herein by reference as a part of this Agreement.
 
(d)    Policy Incorporated.  Employee acknowledges receipt of a copy of Exhibit A, the Impact of Restatement of Financial Statements Upon Awards Policy (“Clawback Policy”) adopted by the Management Development and Compensation Committee of the Board of Directors (the “Committee”) and agrees that this award of Restricted Shares shall be subject to all of the terms and conditions set forth in the Clawback Policy, including future amendments thereto, if any, which Clawback Policy is incorporated herein by reference as part of this Agreement.
 
(e)    Additional Definitions:
 
(i)  Good Reason.     “Good Reason” means one or more of the following conditions arising without the consent of the Employee:
 
(1)    A material diminution in the Employee's authority, duties, or responsibilities of the Employee;
 
(2)    A material diminution in the Employee's base compensation;
 
(3)    A material diminution in the authority, duties, or responsibilities of the corporate officer or employee to whom the Employee is required to report, including a requirement that the Employee report to a corporate officer or employee instead of reporting directly to the Board;  
 
(4)    A material diminution in the budget over which the Employee retains authority; 
 
(5)    A material change in the geographic location at which the Employee must perform the services Employee provides to the Company; or
 

 

 

(6)    Any other action or inaction that constitutes a material breach by the Company of any agreement under which the Employee provides services.
 
(ii) Cause.  “Cause” means:
 
(1)    the Employee's willful and continued failure to substantially perform the Employee's duties with the Company or its Affiliates (other than any such failure resulting from the Employee's incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Employee by the Company which specifically identifies the manner in which the Company believes that the Employee has not substantially performed his or her duties; 
 
(2)    the final conviction of the Employee of, or an entering of a guilty plea or a plea of no contest by the Employee to, a felony; or 
 
(3)    the willful engaging by the Employee in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company. 
 
For purposes of this definition, no act or failure to act on the part of the Employee shall be considered “willful” unless it is done, or omitted to be done, by the Employee in bad faith or without a reasonable belief that the action or omission was in the best interests of the Company or its Affiliates. Any act, or failure to act, based on authority given pursuant to a resolution duly adopted by the Board, the instructions of a more senior officer of the Company or the advice of counsel to the Company or its Affiliates will be conclusively presumed to be done, or omitted to be done, by the Employee in good faith and in the best interests of the Company and its Affiliates.
 
2.    Restricted Shares.  Employee hereby accepts the Restricted Shares when issued and agrees with respect thereto as follows:
 
(a)    Forfeiture Restrictions.  The Restricted Shares may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of to the extent then subject to the Forfeiture Restrictions (as hereinafter defined), and in the event of termination of Employee's employment with the Company or employing subsidiary for any reason other than those listed in paragraph 2(b)(vi), Employee shall, for no consideration, forfeit to the Company all Restricted Shares to the extent then subject to the Forfeiture Restrictions.  The prohibition against transfer and the obligation to forfeit and surrender Restricted Shares to the Company upon termination of employment are herein referred to as “Forfeiture Restrictions.”  The Forfeiture Restrictions shall be binding upon and enforceable against any transferee of Restricted Shares.
 
(b)    Lapse of Forfeiture Restrictions.  The Forfeiture Restrictions shall lapse as to the Restricted Shares on the Lapse Date in accordance with the following schedule:
 
(i)    Lapse Date:
 
The Forfeiture Restrictions shall lapse on the date the Committee  certifies the extent to which the performance goals after four  years performance have been attained, which certification shall be made no later than March 1, 2015 (hereinafter “Lapse Period”).
 

 

 

(ii)    Restricted Stock Agreement Book Value (RSABV)
 
RSABV means the percentage increase in book value per common share excluding accumulated other comprehensive income (loss) (“AOCI”) from January 1, 2010 to December 31, 2014. Dividends paid on common shares from January 1, 2010 will be added back to the December 31, 2014 book value to determine the percentage increase. 
 
(iii)    Performance Goals
 
Lapse of Forfeiture Restrictions on the Restricted Stock Award is governed entirely by the RSABV goals which follow:
 
Threshold RSABV goal:          60  % growth from January 1, 2010 to December 31, 2014
Maximum RSABV goal:        65  % growth from January 1, 2010 to December 31, 2014
  
(iv)    Percentage of Number of Restricted Shares Awarded Pursuant to RSABV Goals to Which Forfeiture Restrictions Lapse:
 
If RSABV equals or exceeds the maximum RSABV goal:         100%
If RSABV equals the threshold goal:                        50%
If RSABV is less than the threshold RSABV goal:                        0%
 
If the RSABV percentage for the five years ended December 31, 2014 is higher than the threshold RSABV goal of 60 % (“X”) but lower than the maximum RSABV goal of 65 % (“Y”), the percentage of the Restricted Shares to which the Forfeiture Restrictions lapse will be calculated according to the following formula:
 
(RSABV - X)/(Y - X)/2 + 50%
 
(v)    RSABV Computation:
 
The parties agree that based on the book value of the company at December 31, 2009, of $32.38, the 60% threshold growth and 65% maximum growth in book value per share over the measuring period would result in the following book value per share at the indicated dates:
 
	
			
	Date
	60% growth
	65% growth

	December 31, 2010
	$35.57
	$35.79

	December 31, 2011
	$39.08
	$39.56

	December 31, 2012
	$42.93
	$43.73

	December 31, 2013
	$47.16
	$48.34

	December 31, 2014
	$51.81
	$53.43

 
For purposes of determining book value of the company's Class A Common Shares during the Lapse Period, the following shall apply:
 
(a)    AOCI shall be excluded;
 
(b)    Any dividends paid during the calendar years on common shares from January 1, 2010 

 

 

shall be added to the actual book value.
 
(c)    Book value shall be calculated using generally accepted accounting principles (“GAAP”) materially consistent with those used to determine book value as of December 31, 2009.
 
(vi)    Effect of Termination of Employment:
 
Notwithstanding the foregoing: 
 
(A)  On the occurrence of both a Change in Control (as such term is defined in the Plan) and termination of Employee's employment before the Lapse Date by the Company other than for Cause or by the Employee for Good Reason, the Forfeiture Restriction shall immediately lapse as to a prorata portion of the Restricted Shares, where the prorata portion shall be measured as the total of 12 (twelve) months plus the number of months elapsed from the date of this Agreement to the date of the Change in Control and termination of Employee's employment other than for Cause or by the Employee for Good Reason, as compared to 60 (sixty)  months.  The prorata lapse provision of this subparagraph (A) shall only apply if the book value of the Company's Class A Common Shares had increased to an amount equal to the value noted in subparagraph 2(b)(v) for 60% growth on the December 31st immediately preceding the termination , or the transaction resulting in the Change in Control resulted in a valuation by merger, sale, or exchange, of the Company's Class A Common Shares in an amount equal or greater to the value noted in subparagraph 2(b)(v) for 60% growth at the time of the transaction.
 
(B)  If Employee's employment with the Company is terminated before the Lapse Date by reason of death, the Forfeiture Restrictions shall immediately lapse as to a prorata portion of the Restricted Shares, where the prorata portion shall be measured as the total of 12 (twelve) months plus the number of months elapsed from the date of this Agreement to the date of death, as compared to 60 months. The prorata lapse provisions of this subparagraph B shall only apply if the book value of the Company's Class A Common shares had increased to an amount equal to the value noted in subparagraph 2(b)(v) for 60% growth on the December 31st immediately preceding employee's death.
 
(C)  If Employee's employment with the Company is terminated before the Lapse Date by reason of disability (as determined by the Company), the Forfeiture Restrictions shall lapse on the Lapse Date as to a prorata portion of the Restricted Shares which would be available to Employee on the Lapse Date (according to the schedule above) had Employee not terminated employment. The prorata portion shall be measured as the total of 12 (twelve) months plus the number of  months elapsed from the date of this Agreement to termination of employment, as compared to 60 months. The prorata lapse provisions of this subparagraph C shall only apply if the book value of the Company's Class A Common shares had increased to an amount equal to the value noted in subparagraph 2(b)(v) for 60% growth on the December 31st immediately preceding employee's disability.
 
(D)  In the event Employee's employment is terminated for any other reason, the Committee or its delegate, as appropriate, may, in the Committee's or such delegate's sole discretion, approve the lapse of Forfeiture Restrictions as to any or all Restricted Shares still subject to such restrictions, such lapse to be effective on the Lapse Date.
 

 

 

(E)   If Employee is a “covered employee” as defined in Internal Revenue Code Section 162(m), the provisions of paragraph (D), above, shall not apply to this Agreement.
 
(c)    Dividend Restriction.  Payment of any dividends on the Restricted Shares is contingent upon meeting the performance and service requirements contained in this Agreement, and such dividends shall be retained by the Company and not paid to Employee until the Lapse Date, and then only in respect to shares which have not been forfeited.
 
(d)    Uncertificated.  The Company will maintain the shares in an uncertificated record at the offices of its stock transfer agent.  Upon the lapse of the Forfeiture Restrictions without forfeiture, the Company shall instruct its stock transfer agent of the lapse of the Forfeiture Restrictions without forfeiture, the number of shares for which the Forfeiture Restrictions lapsed without forfeiture, and to enter the number of such shares in the books of the stock transfer agent for the Employee's account.  At the election of Employee, the stock transfer agent will cause uncertificated shares to be transferred to an account for the benefit of Employee at such bank or brokerage firm as Employee directs.  
 
3.    Withholding of Tax.  To the extent that the receipt of the Restricted Shares, dividends paid upon the Restricted Shares or the lapse of any Forfeiture Restrictions results in compensation income to Employee for federal or state income tax purposes, Employee shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of money or shares of unrestricted Stock as the Company may require to meet its withholding obligation under applicable tax laws or regulations, and, if Employee fails to do so, the Company is authorized to withhold from any cash or Stock remuneration then or thereafter payable to Employee any tax required to be withheld by reason of such resulting compensation income.
 
4.    Status of Stock.  Employee agrees that the Restricted Shares will not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or state securities laws.  Employee also agrees (i) that the certificates representing the Restricted Shares may bear such legend or legends as the Company deems appropriate in order to assure compliance with applicable securities laws, (ii) that the Company may refuse to register the transfer of the Restricted Shares on the stock transfer records of the Company if such proposed transfer would be in the opinion of counsel satisfactory to the Company constitute a violation of any applicable securities law and (iii) that the Company may give related instructions to its transfer agent, if any, to stop registration of the transfer of the Restricted Shares.
 
5.    Employment Relationship.  For purposes of this Agreement, Employee shall be considered to be in the employment of the Company as long as Employee remains an employee of either the Company, any successor corporation or a parent or subsidiary corporation (as defined in section 424 of the Code) of the Company or any successor corporation.  Any question as to whether and when there has been a termination of such employment, and the cause of such termination, shall be determined by the Committee, or its delegate, as appropriate, and its determination shall be final.
 
6.    Committee's Powers.  No provision contained in this Agreement shall in any way terminate, modify or alter, or be construed or interpreted as terminating, modifying or altering any of the powers, rights or authority vested in the Committee or, to the extent delegated, in its delegate pursuant to the terms of the Plan or resolutions adopted in furtherance of the Plan, including, without limitation, the right to make certain determinations and elections with respect to the Restricted Shares.  By execution of this Agreement, Company affirms that the Committee has waived the provisions of Section 9(i) of the Plan which would otherwise require automatic forfeiture of all shares of Restricted Stock still subject to restrictions upon termination of Employee's  employment, and has substituted therefore the provisions stated in Paragraphs 2(a) and 2(b), above.

 

 

 
7.    Binding Effect.  This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under Employee.
 
8.    Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Iowa
 
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and Employee has executed this Agreement, with an effective date of February 17, 2011.
 
 
 
FBL FINANCIAL GROUP, INC.
 
 
/s/ Douglas Shelton
By:____________________________
 
Douglas Shelton, 
Vice President - Corporate Planning                                        
 
 
/s/ James E. Hohmann
_______________________________
James E. Hohmann, “Employee”
 
 
 
 
 
Please Initial Appropriate Item (One of the lines must be initialed):
 
JEH
         I do not desire the alternative tax treatment provided for in the Internal Revenue Code 
Section 83(b).
              I do desire the alternative tax treatment provided for in Internal Revenue Code Section 83(b) and desire that forms for such purpose be forwarded to me.
 
		
	•
	I acknowledge that the Company has suggested that before this line is initialed that I check with a tax consultant of my choice.

 

 

 

Exhibit A
 
Policy:  Impact of Restatement of Financial Statements Upon Awards.  (Adopted by Management Development and Compensation Committee December 2006.)
 
If any of the Company's financial statements are restated because of errors, omissions or fraud, the Committee may (in its sole discretion, but acting in good faith) direct that the Company recover all or a portion of awards of bonuses, and grants of options and restricted stock options (together, “awards”) with respect to any fiscal year of the Company the financial results of which are negatively affected by such restatement. Recoveries may be made from all officers in the Section 16 reporting group regardless of fault, and from any other persons whom the Committee believes were involved in misconduct causing the required restatement (together, “Participants”). Misconduct involves more than mere negligent job performance. The amount to be recovered from the Participant shall be the amount by which awards exceeded the amount that would have been payable to the Participant had the financial statements been initially filed as restated, or any greater or lesser amount (including, but not limited to, the entire award) that the Committee shall determine. The Committee shall determine whether the Company shall effect any such recovery (i) by seeking repayment from the Participant, (ii) by reducing (subject to applicable law and the terms and conditions of the applicable plan, program or arrangement) the amount that would otherwise be payable to the Participant under any compensatory plan, program or arrangement maintained by the Company or any of its affiliates, (iii) by withholding payment of future increases in compensation (including the payment of any discretionary bonus amount) or grants of compensatory awards that would otherwise have been made in accordance with the Company's otherwise applicable compensation practices, or (iv) by any combination of the foregoing. Provisions reflecting this policy shall be placed in all award grant instruments delivered to Participants.WebFilings | EDGAR view

 

 
FBL FINANCIAL GROUP, INC.
 
INCENTIVE STOCK OPTION AGREEMENT
 
 
OPTIONEE:            
DATE OF GRANT:            
DATE FIRST EXERCISABLE: One Year from Date of Grant
DATE OF EXPIRATION: Ten Years from Date of Grant
NUMBER OF SHARES COVERED BY THIS OPTION:  
OPTION PRICE:                    
 
 
THIS OPTION AGREEMENT  (the "Agreement"), effective as of Date of Grant set forth above, is between FBL Financial Group, Inc., an Iowa corporation (the "Company") and the Optionee set forth above, who is an employee of the Company or one of its Subsidiaries, pursuant to the FBL Financial Group, Inc. 2006 Class A Common Stock Compensation Plan adopted by the Board of Directors of the Company on November 16, 2005 and approved by the shareholders of the Company on May 17, 2006, as subsequently amended (the "Plan").  The Plan provides for the granting of Incentive Stock Options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") by the Board of Directors of the Company (the "Board") or by a committee appointed by the Board (the "Committee") to certain Eligible Employees, as defined in the Plan.  Capitalized terms used in this Agreement shall have the same meaning as defined in the Plan unless otherwise defined herein.  References to the Company used in this Agreement may mean, as the context requires, the Board of Directors or any Committee appointed by the Board of Directors of the Company to administer the Plan and to perform the functions set forth therein.  The parties hereto agree as follows:
 
1. Grant of Stock Option at Option price.  The Company hereby grants to Optionee the Option to purchase the number of shares of Class A Common Stock without par value of the Company ("Common Stock") set forth above at the Option Price per share set forth above; provided, however, that the Option Price per share shall not be less than 100% (110% in the case of  Optionee being a Ten-Percent Stockholder as defined in the Plan as of the Date of Grant) of the Fair Market Value (as defined in the Plan) of a share of the common Stock as of the Date of Grant, subject to the terms and conditions of this Agreement.  This Option is intended by the parties to be, and shall be treated as, an Incentive Stock Option within the meaning of Section 422 of the Code.  However, in no event shall the option be considered an Incentive Stock Option if more than $100,000 in aggregate fair market value of stock (determined as of the date of grant) becomes exercisable for the first time in any calendar year.  
 
2. Duration of the Stock Option.  The Option shall be exercisable in accordance with this Agreement and the Plan until the Date of Expiration set forth above; provided, however that this Option shall not be exercisable under any circumstances after the expiration of ten (10) years (five (5) years in the case of Optionee being a Ten-Percent Stockholder as of the Date of Grant) from the Date of Grant.  The Company may extend the Date of Expiration in accordance with the Plan by written notice to Optionee, but in no event shall the term of this Option as so extended exceed the maximum term provided for in the preceding sentence.
 
3.  Vesting of Stock Option.  
 
(a) Five Year Vesting.  This Option shall become exercisable as to 20% of the number of shares covered by this Option set forth above at any time on or after the first anniversary date of the Date of Grant 

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(the “Date First Exercisable”).  An additional 20% of the number of shares covered by this Option shall become purchasable at any time on or after each of the second through fifth anniversaries of the Date of Grant.  To the extent not exercised, installments shall accumulate and be exercisable, in whole or in part, at any time after becoming exercisable, but not later than the Date of Expiration.  
 
(b) Acceleration.  The Company may accelerate the exercisability of this Option, or any portion thereof, at any time, by written notice to Optionee.  Notwithstanding the above provisions of Section 3(a), this Option shall become immediately exercisable in full upon (i) the death, Disability or Retirement of the Optionee as described in Section 4, or (ii) the occurrence of a Change in Control as defined in the Plan followed by the first of the following to occur within the subsequent 24 months:  (A) the Company terminates the Optionee's employment for other than Cause, (B) the Optionee terminates employment for Good Reason.
 
(c)  Cause.  “Cause” means:
 
(i)  the Optionee's willful and continued failure to substantially perform the Optionee's duties with the Company or its Affiliates (other than any such failure resulting from the Optionee's incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Optionee by the Company which specifically identifies the manner in which the Company believes that the Optionee has not substantially performed his or her duties;
 
(ii)  the final conviction of the Optionee of, or an entering of a guilty plea or a plea of no contest by the Optionee to, a felony; or
 
(iii)  the willful engaging by the Optionee in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company.
 
For purposes of this definition, no act or failure to act on the part of the Optionee shall be considered “willful” unless it is done, or omitted to be done, by the Optionee in bad faith or without a reasonable belief that the action or omission was in the best interests of the Company or its Affiliates.  Any act, or failure to act, based on authority given pursuant to a resolution duly adopted by the Board, the instructions of a more senior officer of the Company or the advice of counsel to the Company or its Affiliates will be conclusively presumed to be done, or omitted to be done, by the Optionee in good faith and in the best interests of the Company and its Affiliates.
 
(d)  Good Reason.  “Good Reason” means one or more of the following conditions, arising without the consent of the Optionee:
 
(i)  A material diminution in the Optionee's authority, duties, or responsibilities;
 
(ii)  A material diminution in the Optionee's base compensation;
 
(iii)  A material diminution in the authority, duties, or responsibilities of the corporate officer or employee to whom the Optionee is required to report, including a requirement that the Optionee report to a corporate officer or employee instead of reporting directly to the Board.
 
(iv)  A material diminution in the budget over which the Optionee retains authority;
 
(v)  A material change in the geographic location at which the Optionee must perform the services Optionee provides to the Company; or
 
(vi)  Any other action or inaction that constitutes a material breach by the Company of any agreement 

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under which the Optionee provides services.
 
4.  Termination of Employment by Retirement, Death or Disability.  If, without having fully exercised this Option, Optionee shall die or Optionee's employment with the Company or any Subsidiary (as defined in the Plan) of the Company is terminated by reason of Retirement or Disability (each as defined in the Plan), and if at such time this Option is not yet exercisable, then Optionee's rights to purchase all of the Common Stock subject to this Option shall immediately vest, and Optionee or Optionee's legal representative or beneficiary (or such persons who have acquired Optionee's rights under the Option by will or by the laws of descent and distribution), as applicable, shall have the right to exercise this Option for a period ending on the earlier of (a) the Date of Expiration, or (b) the third anniversary date of such termination of employment, and the Option shall thereafter terminate. Notwithstanding the above provisions of this Section 4, the Company may extend the period for the exercise of this Option in accordance with the Plan by written notice to Optionee, but in no event shall the term of this Option as so extended exceed the maximum term provided for in Section 2.  Optionee acknowledges and understands that  (a) if Optionee exercises this Option more than one year after termination of employment with the Company or any Subsidiary by reason of Disability (three months if the Disability is not a disability within the meaning of Section 22(e)(3) of the Code), or (b) this option is exercised more than three months after termination of Optionee's employment for any other reason except death, the provisions of Section 421(a) of the Code, including the provision thereof that no income shall result at the time of the exercise of the Option, shall not apply.
 
5.  Termination of Employment for Other Reasons.  If, without having fully exercised this Option, Optionee's employment with the Company or any Subsidiary is terminated for reasons other than Optionee's death, Disability or Retirement (including Optionee's ceasing to be employed by the Company or a Subsidiary as a result of the sale of such Subsidiary or an interest in such Subsidiary), and if at such time this Option is not yet exercisable, then Optionee's rights under this Option shall immediately terminate.  However, if at the date of such termination of Optionee's employment, this Option or a portion of this Option is exercisable, then Optionee shall have the right to exercise this Option, to the extent exercisable at the time of Optionee's termination of employment, for a period ending on the earlier of (a) the Date of Expiration, or (b) thirty (30) days following such termination of employment, and the Option shall thereafter terminate.  Notwithstanding the above provisions of this Section 5, the Company may extend the period for the exercise of this Option in accordance with the Plan by written notice to Optionee, but in no event shall the term of this Option as so extended exceed the maximum term provided for in Section 2.
 
6. Procedure for Exercise of Option.  
 
(a)  Minimum Shares. This Option may be exercised in whole or in part, but not for less than one hundred (100) shares of Common Stock at any one time, unless fewer than one hundred (100) shares are then purchasable under the Option and the Option is then being exercised as to all such shares.  
 
(b)  Written Notice. This Option may be exercised by giving written notice in the form attached to the Company's designated representative at the Company's principal executive office.  This Option may be exercised during Optionee's lifetime only by Optionee or Optionee's legal representative or after Optionee's death only by Optionee's legal representative, beneficiary.  Such notice shall (i) be signed by the Optionee or Optionee's legal representative or beneficiary entitled to exercise the Option and, if being exercised by any person other than Optionee, be accompanied by proof, satisfactory to counsel for the Company, of the right of such person to exercise the Option; (ii) state the person(s) in whose name the shares of Common Stock are to be registered, and the street address and the tax identification or social security number of such person(s); (iii) specify the number of full shares of Common Stock then elected to be purchased with respect to the Option and the date of exercise thereof; (iv) contain such representations and agreements as may be satisfactory to counsel for the Company and, unless a Registration Statement under the Securities Act of 

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1933, as amended (the “Securities Act”) is in effect with respect to the shares to be purchased, contain a representation of Optionee or Optionee's legal representative or beneficiary, as applicable, that the shares of Common Stock are being acquired for investment, and that the shares will not be sold or otherwise transferred except in compliance with all applicable securities laws and regulations and all requirements of any stock exchange or market upon which such shares of Common Stock are then listed and/or traded; and (v) be accompanied by payment in full of the Option Price of the shares to be purchased. With concurrence of the Company, Optionee or holder may vary from the foregoing procedures and do a cashless exercise of the Option involving a same day sale of the shares by a Company designated broker, with payment to the Company being made by the broker.
 
Alternatively, the Optionee may exercise an Option on-line through Etrade, but the method of exercise is limited to same-day sales.
 
(c)  Payment of Option Price. The Option Price upon exercise of this Option shall be payable to the Company in full either (i) in cash or its equivalent (acceptable cash equivalents shall be determined at the sole discretion of the Company) or by check; (ii) at the sole discretion of the Company and upon such terms and conditions as the Company shall approve, by (a) transferring previously-acquired shares of Common Stock having an aggregate Fair Market Value (as defined in the Plan) on the day preceding the date of exercise equal to the total price of the shares for which the Option is being exercised; (iii) by a combination of (i) and (ii), or (iv), upon such terms and conditions as the Company shall require, by cashless exercise and same day sale, with the exercise price paid to the Company by the selling broker.
 
(d) Confirmation.  As promptly as practicable after receipt of such written notice, required representations, and payment, the Company shall cause to be delivered to the Optionee or Optionee's legal representative or beneficiary, as applicable, confirmation of the number of shares allocated to the recipient on the books of the Company maintained by its stock transfer agent.  
 
(e)  Records.  The Company shall maintain records of all information pertaining to Optionee's rights under this Agreement, including the number of shares for which this Option is exercisable, and the Company's books and records shall be conclusive and binding upon Optionee.
 
7. Restrictions on Transfer.  This Option may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution, or by a qualified domestic relations order.   Optionee, with the consent of the Board, may designate a person or persons to receive in the event of Optionee's death, this Option or any shares pursuant thereto, to which Optionee would then be entitled.  Such designation shall be made upon forms supplied by and delivered to the Company and may be revoked or changed in writing by Optionee.  In the event of the death of Optionee and in the absence of a beneficiary validly designated under the Plan who is living at the time of Optionee's death, the Company shall deliver this Option and/or amounts payable to the executor or administrator of Optionee's estate or, if no executor or administrator has been appointed to the knowledge of the Company, the Company, in its sole discretion, may deliver this Option and/or amounts payable to the spouse or to any one or more dependents or relatives of Optionee, or if no spouse, dependent or relative is known to the Company, then to such other person or persons as the Company may designate.  This Option shall not be subject to any levy, attachment, execution or similar process.  In the event of any transfer or levy of process upon the rights or interests hereby conferred, the Company may terminate this Option by written notice to Optionee and it shall thereupon become null and void.  This Agreement shall be binding upon the beneficiaries and legal representatives of Optionee.
 
8. Change in Capitalization.  In the event of a Change in Capitalization as defined in the Plan, the number and class of shares of Common Stock subject to this Option, as well as the Option Price, may be 

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adjusted by the Company, in its sole discretion, to prevent dilution or enlargement of rights.  The Company's determination of the adjustment, if any, shall be conclusive and binding upon Optionee.  Any such adjustments shall be made in such manner as not to constitute a modification as defined by Section 424(h)(3) of the Code, and only to the extent otherwise permitted by Sections 422 and 424 of the Code.
 
9. Rights as a Stockholder.  Neither Optionee nor Optionee's legal representative or beneficiary, as applicable, shall have any rights or privileges as a stockholder of the Company with respect to the shares of Common Stock subject to this Agreement unless and until (a) the Option shall have been exercised pursuant to the terms of the Plan and this Agreement; (b) the Company shall have delivered a confirmation pursuant to Section 6(d), above; and (c) the name of Optionee, Optionee's legal representative or beneficiary, as applicable, shall have been entered as a stockholder of record on the books of the Company.  Thereupon, Optionee, Optionee's legal representative or beneficiary, as applicable, shall have full voting, dividend and other ownership rights with respect to such shares.
 
10. Continuation of Employment.  This Agreement shall not confer upon Optionee any right to continuation of employment by the Company or any Subsidiary of the Company, nor shall this Agreement interfere in any way with the Company's right to terminate Optionee's employment at any time.
 
11. Additional Restrictions on Exercise.  This Option may not be exercised if the issuance of shares upon such exercise would constitute a violation of any applicable federal or state securities or other law or regulation, including, without limitation, the Code or regulations promulgated thereunder, or Section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  As a condition to the exercise of this Option, the Company may require the person exercising this Option to make any representation or warranty to the Company as may be required by applicable law or regulation or other restriction or agreement binding upon or otherwise affecting the shares of the Company.  To the extent that the aggregate Fair Market Value of Common Stock determined as of the Date of Grant with respect to which this Option is exercisable for the first time by Optionee during any calendar year exceeds $100,000, the shares issued in excess of $100,000 shall not be qualified as Incentive Stock Options and the Company shall identify such shares as non-qualifying in the Company's stock transfer records.
 
12. Miscellaneous.
 
(a)  This Agreement and the rights of Optionee hereunder are subject to the terms of the Plan and all rules and regulations as the Board, the Committee, or the Company may adopt for administration of the Plan, the terms of which are incorporated herein by this reference.  The Company shall have the right to impose such restrictions on any shares acquired pursuant to the exercise of this Option as the Company may deem advisable, including, without limitation, restrictions under applicable federal or state securities laws or regulations, the requirements of any stock exchange or market upon which such shares are listed and/or traded, and applicable provisions of the Code or regulations promulgated thereunder.  It is expressly understood that the Board, the Committee, or the Company is authorized to administer, construe and make all determinations necessary or appropriate to the administration of the Plan or this Agreement, all of which shall be conclusive and binding upon Optionee and any other person claiming an interest thereunder.
 
(b)  The Company may issue additional options, or terminate, amend, or modify its rules and regulations for administering the options; provided, however, that no such action may in any way adversely alter or impair Optionee's rights under this Agreement, except as provided in Sections 8 and 11 hereof.
 
(c)  The Company shall have the authority to deduct or withhold, or require Optionee to remit to the Company, an amount sufficient to satisfy federal, state and local taxes (including Optionee's FICA obligations) and other amounts required by law to be withheld with respect to any exercise of Optionee's 

5

 

rights under this Agreement.  Optionee may elect, subject to the approval of the Company, to satisfy withholding requirements, in whole or in part, by having the Company withhold shares of Common Stock having an aggregate Fair Market Value, on the date the tax is to be determined, equal to the amount required to be withheld.  All elections shall be irrevocable and in writing, and shall be signed by Optionee in advance of the day that the transaction becomes taxable.  If the Optionee makes a disposition, within the meaning of Section 424(c) of the Code and regulations promulgated thereunder, of any shares issued to the Optionee pursuant to Optionee's exercise of this Option, and such disposition occurs within the two-year period commencing on the date after the Date of Grant or within the one-year period commencing on the day after the date of transfer of such shares to Optionee pursuant to the exercise of this Option, such Optionee shall, within ten (10) days of such disposition, give written notice to the Company thereof and immediately thereafter deliver to the Company any amount of federal, state or local income taxes and other amounts that the Company informs Optionee the Company is required to withhold.
 
(d)  Optionee agrees to take all steps necessary to comply with all applicable provisions of federal and state securities law in exercising Optionee's rights under this Agreement.
 
(e)  This Agreement is not intended to qualify for treatment under the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").
 
(f)  This Agreement shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental entities or stock exchanges as may be required.
 
(g)  To the extent not preempted by federal law, this Agreement shall be governed by, and construed in accordance with, the laws of the State of Iowa.
 
(h)  Any written notice required or permitted under this Agreement shall be given by hand delivery or by United States mail, postage prepaid, to the address set forth herein for each party (or to such other address as may be given by such party by written notice and shall be effective upon delivery or upon mailing, as applicable.
 
13. Cancellation and Rescission of Options.
 
(a) The Committee may cancel, rescind, suspend, withhold or otherwise limit or restrict any unexpired, unpaid, or deferred options at any time if the Optionee is not in compliance with all applicable provisions of the option Agreement and the Plan, or if the Optionee engages in any "Detrimental Activity." For purposes of this Section 13, "Detrimental Activity" shall include: (i) the rendering of services for any organization or engaging directly or indirectly in any business which is or becomes competitive with the Company, or which organization or business, or the rendering of services to such organization or business, is or becomes otherwise prejudicial to or in conflict with the interests of the Company; (ii) the disclosure to anyone outside the Company, or the use in other than the Company's business, without prior written authorization from the Company, of any confidential information or material, as defined in the Company's Code of Conduct, relating to the business of the Company, acquired by the Optionee either during or after employment with the Company; (iii) activity that results in termination of the Optionee's employment for cause; (iv) a violation of any rules, policies, procedures or guidelines of the Company, including but not limited to the Company's Corporate Compliance Manual or Code of Ethics for Senior Financial Officers, if applicable; (v) any attempt directly or indirectly to induce any employee of the Company to be employed or perform services elsewhere or any attempt directly or indirectly to solicit the trade or business of any current or prospective customer, supplier or partner of the Company; (vi) the Optionee being convicted of, or entering a guilty plea with respect to, a crime, whether or not connected with the Company; or (viii) any other conduct or act determined to be injurious, detrimental or prejudicial to any 

6

 

interest of the Company.
 
(b) Exercise of an Option shall be deemed to constitute certification by the Optionee that he or she is in compliance with the terms and conditions of the Plan. In the event an Optionee fails to comply with the provisions of paragraphs (a)(i)-(viii) of this Section 13 prior to, or during the six months after, any exercise, payment or delivery pursuant to an Option, such exercise, payment or delivery may be rescinded within two years thereafter. In the event of any such rescission, the Optionee shall pay to the Company the amount of any gain realized or payment received as a result of the rescinded exercise, payment or delivery, in such manner and on such terms and conditions as may be required, and the Company shall be entitled to set-off against the amount of any such gain any amount owed to the Optionee by the Company.
 
14.  Clawback Policy.  This Agreement and the options awarded hereunder are subject to the Policy:  Impact of Restatement of Financial Statements Upon Awards adopted by Management Development and Compensation Committee December 2006 as it may be amended from time to time, which is attached hereto and incorporated herein by reference.
 
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date set forth below.
 
 
ATTEST:                        FBL FINANCIAL GROUP, INC. 
 
 
________________________    
David A. McNeill
Vice President, General Counsel  
and Secretary
 
 
 
Dated: ________________________            
________________________
By: Douglas V. Shelton
Vice President - Corporate Planning
 

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Optionee hereby acknowledges receipt of copies of this Agreement and the Plan attached hereto; represents that Optionee is familiar with the terms and provisions of the Plan; and hereby accepts this Option subject to all the terms and provisions of the Plan and this Agreement.  Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee or the Company with respect to all matters or issues arising under the Plan or this Agreement.
 
 
Dated:  ________________________        
_________________________________ 
Optionee (please sign)
 
_________________________________   
Name (please type or print)
 
 _________________________________   
Street Address
 
 _________________________________ 
City                    State             Zip Code
 
_________________________________ 
Social Security / Tax Identification Number
 
 
_________________________________                                                                         
Date of Birth
 
[Insert Exercise Notice form per 6(b)]
 
Policy:  Impact of Restatement of Financial Statements Upon Awards.  (Adopted by Management Development and Compensation Committee December 2006.)
 

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