BROKER-DEALER
MARKETING AND SERVICING AGREEMENT
FOR
VARIABLE ANNUITY CONTRACTS
AGREEMENT dated this day of , , by and between Principal Life Insurance Company,
(hereinafter called "Issuer"), Princor Financial Services Corporation
(hereinafter called "Distributor") and ABC Company (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.
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.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
in triplicate on the date first above written.
ABC Company
Broker______________________________
By__________________________________
____________________________________
Please type or print name
PRINCOR FINANCIAL SERVICES CORPORATION
By__________________________________
PRINCIPAL LIFE INSURANCE COMPANY
By__________________________________
Xxxxx X. Xxxxxxxx - Asst. Director
SMB Sales Support
DEALER COMPENSATION SCHEDULE
FREEDOMsm VARIABLE ANNUITY CONTRACT
Contract Year Commission*
------------- -----------
1 - 4 years 0.35% (.0875% per quarter)
5 + 0.25% (.0625% 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 5.500% 5.000% 4.000% 0.000%
Trail commission** 0.000% 0.100% 0.300% 1.000%
Purchase payment over $2 million
--------------------------------
0-75 4.125% 3.625% 2.625% 0.000%
Trail commission** 0.000% 0.100% 0.300% 1.000%
All purchase payment amounts
----------------------------
76-85 4.125% 3.625% 2.625% N/A
Trail commission** 0.000% 0.100% 0.300% N/A
B. Reimbursement if Surrendered
----------------------------
In the event of a full or partial surrender of an Annuity Contract for any
reason within the first twelve (12) months after a purchase payment is
made, any compensation previously paid or payable with respect to such
purchase payment will be reimbursed to the Distributor by the Broker
promptly and on demand. The amount of the reimbursement will be determined
as follows:
Reimbursement Schedule
----------------------
=============================================================================================================
Percentage of Commission Percentage of Commission
Month of to be Reimbursed Month of to be Reimbursed
Surrender Surrender
=============================================================================================================
1 100% 7 60%
------------------------- ---------------------------- -------------------------- ---------------------------
2 100% 8 50%
------------------------- ---------------------------- -------------------------- ---------------------------
3 100% 9 40%
------------------------- ---------------------------- -------------------------- ---------------------------
4 90% 10 30%
------------------------- ---------------------------- -------------------------- ---------------------------
5 80% 11 20%
------------------------- ---------------------------- -------------------------- ---------------------------
6 70% 12 10%
=============================================================================================================
The Distributor also reserves the right to require reimbursement of any
compensation paid (less any applicable surrender charge) in the three years
prior to the surrender date on any purchase payments in excess of the
contractual purchase payment limitations.
C. Reimbursement if annuitized
If the Annuity Contract is annuitized within the first contract year, the
Broker will reimburse the Distributor for compensation paid in an amount
determined based upon the dollar amount applied and the type of
annuitization option selected.
PERCENTAGE OF COMPENSATION TO BE REIMBURSED
-------------------------------------------
I. 5-9 Year Fixed Amount or 5-9 Year Fixed Period
----------------------------------------------
Purchase Payments/Age Commission Option
--------------------- -----------------
Option A Option B
-------- --------
All purchase payments, all ages 75.00% 70.00%
Option C Option D
-------- --------
65.00% 0.00%
II. All Other Annuitization Options
-------------------------------
Commission
Option A Option B Option C Option D
-------- -------- -------- --------
Purchase payment less than $2 million
-------------------------------------
0-75 45.00% 40.00% 25.00% 0.00%
76-85 30.00% 20.00% 0.00% 0.00%
Purchase payment $2 million to $5 million
-----------------------------------------
0-75 30.00% 20.00% 0.00% 0.00%
76-85 30.00% 20.00% 0.00% 0.00%
Purchase payment greater than $5 million
----------------------------------------
0-75 75.00% 70.00% 65.00% 0.00%
76-85 75.00% 70.00% 65.00% 0.00%
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.
