BROKER-DEALER
MARKETING AND SERVICING AGREEMENT
FOR
VARIABLE ANNUITY CONTRACTS
AGREEMENT dated this _____ day of _____________, 2004, by and between Principal
Life Insurance Company, (hereinafter called "Issuer"), Princor Financial
Services Corporation (hereinafter called "Distributor") and ABC Broker-Dealer
(hereinafter called "Broker"). For the purposes of this Agreement, in those
states in which Broker cannot obtain an insurance license the term "Broker"
shall include such validly licensed insurance representatives designated by
Broker to effect the sale of variable annuity contracts issued by the Issuer
(hereinafter called "Annuity Contracts").
MARKETING
In consideration of the mutual agreements herein contained, the Parties hereto
agree as follows:
1. The Distributor appoints the Broker to sell Annuity Contracts. This
agreement is a selling and servicing agreement between broker-dealers. It
does not designate any party as the broker, agent, or employee of any other
Party. Words and phrases in this Agreement given special meaning in any
Annuity Contracts shall have that same special meaning in this Agreement
unless specifically defined otherwise herein.
2. The Broker agrees to direct its best efforts to find purchasers and provide
service for Annuity Contracts. The Broker does not undertake to sell or
service any specific number of Annuity Contracts issued by the Issuer.
3. The Distributor shall provide the Broker with a reasonable number of
current prospectuses, annual reports and such other material as the
Distributor determines to be desirable for use in connection with the sale
and servicing of Annuity Contracts or the solicitation of applications for
participation thereunder. The Distributor indemnifies and holds the Broker
harmless for misrepresentations or omissions with regard to prospectuses
and sales materials provided by the Distributor as well as
misrepresentations or omissions of employees of the Distributor or
Principal Life Insurance Company relied upon in connection with the sale
and servicing of Annuity Contracts.
4. The Broker warrants that it is a member in good standing of the National
Association of Securities Dealers, Inc. (NASD) and will promptly notify
Distributor of any change in Broker's status as a member of the NASD.
5. The Broker represents that it is currently a member of SIPC and, while this
agreement is in effect, will continue to be a member of SIPC. The Broker
agrees to notify the Distributor if the Broker's SIPC membership status
changes.
6. The Broker warrants that the Broker, and any person associated with or
acting for the Broker in the solicitation of applications for Annuity
Contracts shall be qualified pursuant to the requirements of the NASD and
appropriate federal and state agencies regulating securities, insurance,
any other aspect of the Annuity Contracts or the sale and servicing of
them. The Broker shall be responsible for seeing to such qualifications,
and indemnifies and holds the Distributor and the Issuer harmless for any
failure to have all persons engaged in solicitation or servicing on its
behalf properly licensed, registered, and appointed for securities and
insurance sales.
7. The Broker is responsible for supervising and controlling the conduct and
activities of its Registered Representatives with regard to the sale and
distribution of Annuity Contracts. The Broker agrees to indemnify and hold
the Distributor and the Issuer harmless for claims and actions of any sort
which arise from the conduct and activities of the persons associated with
it who are involved in the sale, servicing and distribution of the Annuity
Contracts. The Distributor indemnifies and holds the Broker harmless for
claims which arise from alleged untrue statements contained in the
registration statement, prospectus or approved sales material for the
Annuity Contracts. The Broker shall use only sales materials or advertising
for the Annuity Contracts that have been approved in writing by the
Distributor.
8. The Broker acts only in its own behalf in making agreements with Registered
Representatives or other persons in connection with the solicitation or
sales of Annuity Contracts.
9. The Broker agrees to maintain all books and records relating to the
servicing and sale of Annuity Contracts or interests therein required to be
maintained by the Broker pursuant to the Securities Exchange Act of 1934,
in conformity with the requirements of Rules 17, 17a-3 and 17a-4 under such
Act, and to the applicable securities or insurance laws of any state.
10. The Broker shall transmit promptly and directly to the Distributor all
contributions collected by or paid to the Broker. All Annuity Contracts are
to be delivered promptly, and any undelivered Annuity Contracts are to be
returned within the time allowed or on demand.
COMPENSATION
1. While this Agreement is in force, compensation for the sale and servicing
of each Annuity Contract shall be paid pursuant to a corresponding schedule
attached hereto and made a part hereof. (Each Annuity Contract will have a
corresponding Compensation Schedule)
2. Compensation shall only be paid to the Broker of record on premiums paid to
and retained by Issuer while this Agreement is in force. Issuer expressly
reserves the right to change the broker-dealer of record or Registered
Representative in the event an Annuity Contract owner so requests.
Determination of the Annuity Contracts applicable to this Agreement shall
be by the Issuer.
3. In those states where Broker cannot obtain an insurance license, Broker
represents and warrants that: it will effect the sale of any contract
through a validly licensed insurance Representative (Compensation
Representative) who has entered into an agreement with Broker for this
purpose; it authorizes Distributor to pay any compensation due it from
sales of a contract to such Compensation Representative; it remains fully
responsible for recordkeeping and supervision of the solicitation and/or
sale of Annuity Contracts; all monies received by Compensation
Representative in accordance with this section will be distributed by
Compensation Representative only to duly licensed Registered
Representatives who have been appointed by the Issuer to solicit for
applications for Annuity Contracts.
4. The Distributor may, at any time, upon written notice to the Broker, change
any and all of the rates of Compensation set out herein. Broker will be
deemed to have accepted a new Compensation Schedule if an application is
submitted for an Annuity Contract affected after said Compensation Schedule
has been mailed to the broker.
5. Any indebtedness of any kind due to the Distributor or Issuer from the
Broker may be offset against any amount due the Broker.
Confidentiality
Each party acknowledges that, in the course of performing its duties under this
Agreement or otherwise, it may receive or learn information about individuals
who have applied for or purchased financial products or financial services from
the other party, including, but not limited to, personal, financial and/or
health information ("Confidential Information"). Each party agrees that it will
not use or disclose to any affiliate or third party, either orally or in
writing, any Confidential Information of the other party for any purpose other
than the purpose for which the Confidential Information was provided to that
party. Without limiting any of the foregoing, each party agrees to take all
precautions that are reasonably necessary to protect the security of the other
party's Confidential Information. Each party agrees to restrict access to the
other party's Confidential Information to those employees who need to know that
information to perform their duties under this Agreement. Each party further
agrees that, upon request of the other party, it will return to the party making
such request all tangible items containing any Confidential Information of the
other party, including all copies, abstractions and compilations thereof,
without retaining any copies of the items required to be returned. The
obligations of this paragraph extend to the employees, agents, affiliates and
contractors of each party, and each party shall inform such persons of their
obligations hereunder.
Notification obligation. Each party shall, upon learning of any unauthorized
disclosure or use of any of the other party's Confidential Information, notify
the other party promptly and cooperate fully with such party to protect such
Confidential Information.
Disclosure required by law. If Broker-Dealer believes it is required by law or
by a subpoena or court order to disclose any Confidential Information,
Broker-Dealer, prior to any disclosure, shall promptly notify Issuer in writing
attaching a copy of the subpoena, court order or other demand and shall make all
reasonable efforts to allow Issuer an opportunity to seek a protective order or
other judicial relief.
Non-restricted information. Except as stated in the final sentence of this
paragraph, nothing in this Agreement shall be construed to restrict disclosure
or use of information that: (a) was in the possession of or rightfully known by
the recipient, without an obligation to maintain its confidentiality, prior to
receipt from the other party; (b) is or becomes generally known to the public
without violation of this Agreement; (c) is obtained by the recipient in good
faith from a third party having the right to disclose it without an obligation
of confidentiality; (d) is independently developed by the receiving party
without the participation of individuals who have had access to the other
party's confidential or proprietary information. The parties acknowledge that
certain laws governing Confidential Information about individuals are more
restrictive than the foregoing statements and they agree to comply in all
respects with such laws.
Compliance with law. Each party agrees, In connection with its performance under
this Agreement, to comply with all applicable laws, including but not limited to
laws protecting the privacy of non-public personal information about
individuals.
Survival. The provisions of this Agreement relating to confidentiality shall
survive termination or expiration of this Agreement.
GENERAL
1. The Broker has no authority to: incur any liability or debt against the
Distributor or the Issuer; accept risks or contracts of any kind; make,
alter, authorize or discharge any contract; extend the time of payment of
any contributions; waive payments, fail to transmit promptly any
contributions collected to the Distributor; bind the Distributor or the
Issuer in any way.
2. Any modifications of this Agreement must be in writing and signed by an
authorized officer of the Distributor and of the Issuer.
3. This Agreement may be terminated by either the Distributor, the Broker or
the Issuer upon written notice to the last known address of the other
parties.
4. This Agreement supersedes and replaces any and all prior agreements of the
Distributor or the Issuer with the Broker on the subject of Annuity
Contracts or the sale and service of them.
5. Anti-Money Laundering and Know Your Customer Compliance: Broker-Dealer
represents, covenants and agrees that Broker-Dealer is, and at all times
during the term of this Agreement shall be, in compliance with NASD Rule
3011 and the anti-money laundering and know-your-customer requirements
thereof.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
in triplicate on the date first above written.
ABC Broker-Dealer, Broker-Dealer
By
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Please type or print name
Princor Financial Services Corporation
By
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Xxxxxx Xxxxxx - Vice President
Principal Life Insurance Company
By
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Xxxxxxx Xxxxxxx - Operations Officer
DEALER COMPENSATION SCHEDULE
FREEDOMsm VARIABLE ANNUITY CONTRACT
Contract Year Commission*
------------- ----------
1 - 4 years 0.35% (.000875% per quarter)
5 + 0.25% (.000625% per quarter)
* Annual Trail Commission paid quarterly starting at the end of the first
quarter as a percentage of account value.
NOTE: Commissions will not be paid, nor will they accrue, until the
Broker-Dealer Marketing and Servicing Agreement has been fully
executed.
DEALER COMPENSATION SCHEDULE
FLEXIBLE VARIABLE ANNUITY ("FVA") CONTRACT
The Broker will be paid Dealer Compensation in accordance with the Compensation
Options elected herein and which the Broker's sales representative shall elect,
using the election procedures established by the Insurer, upon submission of the
product application to the Insurer and for which good payment has been received.
Compensation paid will be based on Option A unless;
1) the Broker has elected the other Options (making them available to
representatives), and
2) the sales representative selects another (Broker elected) Compensation
Option upon submission of the product application.
Irrespective of the Broker's election of Options, if the Broker becomes entitled
to commission as a result of a change of broker on such Annuity Contract, the
Broker will receive commissions on such Annuity Contract in accordance with the
compensation option in effect for such Annuity Contract prior to the transfer.
A. Compensation
Oldest of Owner's
or Annuitant's Age Commission (as a % of purchase payment)*
when purchase payment paid Option A Option B Option C Option D
-------------------------- -------- -------- -------- --------
Purchase payment less than $2 million
0-75 6.000% 5.500% 4.500% 0.500%
Trail commission** 0.000% 0.100% 0.300% 1.000%
Purchase payment over $2 million
0-75 4.500% 4.000% 3.000% 0.375%
Trail commission** 0.000% 0.100% 0.300% 1.000%
All purchase payment amounts
76-85 4.500% 4.000% 3.000% N/A
Trail commission** 0.000% 0.100% 0.300% N/A
Check any or all options available to your representatives.
Broker elects the following compensation option(s)
X Option A - Full front end compensation with no trail
---
___ Option B - Slightly lower front-end commission with a .10% annual
trail commission paid quarterly starting at the end of the fifth
quarter
___ Option C - Lower front-end commission with a .30% annual trail
commission paid quarterly starting at the end of the fifth quarter
___ Option D - No front-end commission with a 1.0% annual trail commission
paid quarterly starting at the end of the fifth quarter
* In the State of New Jersey, additional purchase payments on or after the
later of policy anniversary age 64 or 4 years after issue are payable at
1.0% for Option A, 0.50% for Option B, and 0.0% for Option C and D. In the
State of Washington, additional purchase payments on or after the later of
policy anniversary age 70 or 10 years after issue are payable at 1.0% for
Option A, 0.50% for Option B, and 0.0% for Options C and D. Trail
commissions are not affected.
** Calculated as a percentage of account value.
