Broker-Dealer Variable Contract
Supervisory and Service Agreement
Princor Financial Services Corporation ("Princor"), and Principal Mutual Life
Insurance Company (the "Insurer"), distributor and issuer for and of the
Policies hereunder described and the undersigned broker-dealer (the
"Broker-Dealer"), enter into this Agreement as of the date indicated, for the
purpose of appointing the Broker-Dealer to perform the services hereunder
described, subject to the following provisions:
1. Except as provided below, Princor hereby appoints the Broker-Dealer to
provide sales assistance with respect to, and to cause applications to be
solicited for the purchase of variable life policies issued by the Insurer.
Broker-Dealer accepts such appointment and agrees to use its best efforts
to provide sales assistance to registered representatives of the
Broker-Dealer and to cause applications for the purchase of Policies to be
solicited by such registered representatives. Broker-Dealer agrees to pay a
commission to such registered representatives.
2. The Broker-Dealer will promptly forward to the appropriate office of
Princor, or its authorized designee, all Policy applications along with
other documents, if any, and any payments received with such applications
and will have no rights of set off for any reason. Any Policy application
which is rejected, together with any payment made and other documents
submitted, shall be returned to the Broker-Dealer.
3. Insurer, on behalf of Princor, shall pay the Broker-Dealer pursuant to
Exhibits A and B. The Broker-Dealer agrees to return promptly all
compensation received for any Policy returned within the "free look" period
as specified in the Policy.
4. In those states where Broker-Dealer cannot obtain an insurance license,
Broker-Dealer represents and warrants that: it will effect the sale of the
Policy through a validly licensed insurance Representative (Compensation
Representative) who has entered into an agreement with Broker-Dealer for
this purpose; it authorizes Insurer to pay any compensation due it from
sales of the Policy to such Compensation Representative; it remains fully
responsible for recordkeeping and supervision of the solicitation and/or
sale of the Policy; d) all monies received by Compensation Representative
in accordance with this section will be distributed by Compensation
Representative only to duly licensed and registered representatives who
have been appointed by the Insurer to solicit for applications for the
Polices.
5. The Broker-Dealer represents that it is a registered broker-dealer under
the Securities Exchange Act of 1934, a member in good standing of the
National Association of Securities Dealers, Inc. ("NASD"), and is
registered as a broker-dealer under state law to the extent required in
order to provide the services described in this Agreement. Broker-Dealer
agrees to abide by all rules and regulations of the NASD Regulation, Inc.
("NASDR"), including its Conduct Rules, and to comply with all applicable
state and federal laws and the rules and regulations of authorized
regulatory agencies affecting the sale of the Policies, including the
prospectus delivery requirements under the Securities Act of 1933 for the
Policies and any underlying mutual fund. The Broker-Dealer agrees to notify
Princor promptly of any change, termination, or suspension of its status.
Broker-Dealer shall immediately notify Princor with respect to i) the
initiation and disposition of any form of disciplinary action by the NASDR
or any other agency or instrumentality having jurisdiction with respect to
the subject matter hereof against Broker-Dealer or any of its employees or
agents; ii) the issuance of any form of deficiency notice by the NASDR or
any such agency regarding Broker-Dealer's training, supervision or sales
practices; and/or iii) the effectuation of any consensual order with
respect thereto.
6. In connection with the solicitation of applications for the purchase of
Policies, Broker-Dealer agrees to indemnify and hold harmless Princor and
the Insurer from any damage or expense as a result of (a) the negligence,
misconduct or wrongful act of Broker-Dealer or any employee, representative
or agent of the Broker-Dealer and/or (b) any actual or alleged violation of
any securities or insurance laws, regulations or orders and/or (c) any
actual or alleged obligation of the Compensation Representative under terms
of the agreement between the Broker-Dealer and the Compensation
Representative, including claims by one or more of the Broker-Dealer's
representatives for compensation due or to become due on account of such
representatives' sales of the Policy and any claims or controversy between
Broker-Dealer and Compensation Representative as to rights to
compensation.. Any indebtedness or obligation of the Broker-Dealer to
Princor or the Insurer, whether arising hereunder or otherwise, and any
liabilities incurred or moneys paid by Princor or the Insurer to any person
as a result of any misrepresentation, wrongful or unauthorized act or
omission, negligence of or failure of Broker-Dealer or its employees,
producers, and registered representatives to comply with this Agreement,
shall be set off against any compensation payable under this Agreement.
Notwithstanding the foregoing, Broker-Dealer shall not indemnify and hold
harmless Princor and the Insurer from any damage or expense on account of
the negligence, misconduct or wrongful act of Broker-Dealer or any
employee, representative or producer of Broker-Dealer if such negligence,
misconduct or wrongful act arises out of or is based upon any untrue
statement or alleged untrue statement of material fact, or the omission or
alleged omission of a material fact in: (i) any registration statement,
including any prospectus or any post-effective amendment thereto; or (ii)
any material prepared and/or supplied by Princor or the Insurer for use in
conjunction with the offer or sale of Policies, or (iii) any state
registration or other document filed in any state or jurisdiction in order
to qualify any Policies under the securities laws of such state or
jurisdiction. The terms of this provision shall not be impaired by
termination of this Agreement.
In connection with the solicitation of applications for the purchase of
Policies, Princor and the Insurer agree to indemnify and hold harmless
Broker-Dealer from any damage or expense on account of the negligence,
misconduct or wrongful act of Princor or the Insurer or any employee,
representative or producer of Princor or the Insurer, including but not
limited to, any damage or expense which arises out of or is based upon any
untrue statement or alleged untrue statement of material fact, or the
omission or alleged omission of a material fact in: (i) any registration
statement, including any prospectus or any post-effective amendment
thereto; or (ii) any material prepared and/or supplied by Princor or the
Insurer for use in conjunction with the offer or sale of the Policies; or
(iii) any state registration or other document filed in any state or other
jurisdiction in order to qualify any Policy under the securities laws of
such state or jurisdiction. The terms of this provision shall not be
impaired by termination of this Agreement.
7. The Broker-Dealer will itself be, or will select persons associated with it
who are trained and qualified to solicit applications for purchase of
Policies in conformance with applicable state and federal laws. Any such
persons shall be registered representatives of the Broker-Dealer in
accordance with the rules of the NASDR, be licensed to offer the Policies
in accordance with the insurance laws of any jurisdiction in which such
person solicits applications and be licensed with and appointed by the
Insurer to solicit applications for the Policies. Broker-Dealer will
supervise its representatives to insure that purchase of a Policy is not
recommended to an applicant in the absence of reasonable grounds to believe
that the purchase of a Policy is suitable for that applicant. Broker-Dealer
shall pay the fees to regulatory authorities in connection with obtaining
necessary securities licenses and authorizations for registered
representatives to solicit applications for the purchase of Policies.
Broker-Dealer is not responsible for fees in connection with the
appointment of registered representatives as producers of the Insurer.
8. The activities of all producers referred to in Paragraph 6 will be under
the direct supervision and control of the Broker-Dealer. The right of such
producers to solicit applications for the purchase of Policies is subject
to their continued compliance with the rules and procedures which may be
established by the Broker-Dealer, or the Insurer, including, but not
limited to, those set forth in this Agreement.
9. The Broker-Dealer shall ensure that applications for the purchase of
Policies are solicited only in the states where the Policies are qualified
for sale, and only in accordance with the terms and conditions of the then
current prospectus applicable to the Policies and will make no
representations not included in the prospectus, Statement of Additional
Information, or in any authorized supplemental material supplied by
Princor. With regard to the Policies, the Broker-Dealer shall not use or
permit its producers to use any sales promotion materials or any form of
advertising other than that supplied or approved by Princor.
10. Broker-Dealer shall ensure that the prospectus delivery requirements under
the Securities Act of 1933 and all other applicable securities and
insurance laws, rules and regulations are met and that delivery of any
prospectus for the Policies will be accompanied by delivery of the
prospectus for the underlying mutual funds, and, where required by state
law, the Statement of Additional Information for the underlying mutual
funds.
11. The Broker-Dealer understands and agrees that in performing the services
covered by this Agreement, it is acting in the capacity of an independent
contractor and not as an agent or employee of Princor or the Insurer and
that it is not authorized to act for, or make any representation on behalf
of, Princor or the Insurer except as specified herein. Broker-Dealer
understands and agrees that the Insurer shall execute telephone
transactions only in accordance with the terms and conditions of the then
current prospectus applicable to the Policies and agrees that in
consideration for the Broker-Dealer's right to exercise the telephone
transaction services neither Princor nor the Insurer will be liable for any
loss, injury or damage incurred as a result of acting upon, nor will they
be held responsible for the authenticity of any telephone instructions
containing unauthorized, incorrect or incomplete information. Broker-Dealer
agrees to indemnify and hold harmless Princor and the Insurer against any
loss, injury or damage resulting from any telephone transactions
instruction containing unauthorized, incorrect or incomplete information
received from Broker-Dealer or any of its registered representatives.
(Telephone instructions are recorded on tape.)
12. This Agreement may not be assigned by the Broker-Dealer without the prior
written consent of Princor. Any party hereto may cancel this Agreement at
any time upon written notice. This Agreement shall automatically terminate
if the Broker-Dealer voluntarily or involuntarily ceases to be or is
suspended from being, a member in good standing of the NASD. Provided
further, Princor and the Insurer reserve the right to terminate this
Agreement in the event that any employee or agent of Broker-Dealer is
suspended, disciplined or found to be in violation of governing insurance
or securities laws, rules or regulations. Furthermore, Princor and the
Insurer reserve the right to revise the payments for services described in
this Agreement as set forth in Exhibits A and B at any time upon the
mailing of written notice to the Broker-Dealer. Failure of any party to
terminate this Agreement for any of the causes set forth in this Agreement
shall not constitute a waiver of the right to terminate this Agreement at a
later time for any such causes.
13. This Agreement on the part of the Broker-Dealer runs to Princor and the
Insurer and is for the benefit of and enforceable by each. This Agreement
shall be governed by and construed in accordance with the laws of the State
of Iowa.
AGREED TO BY:
BROKER-DEALER
By:
Title:
Date:
PRINCOR FINANCIAL SERVICES CORPORATION
By:
Title:
Date:
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By:
Title:
Date:
