SELECTED DEALER AGREEMENT
XXXXXX XXXXXXX DISTRIBUTORS INC.
AND
XXXXXX XXXXXXX XX INC.
Xxxxxx Xxxxxxx Distributors Inc. ("Distributor") serves as the
principal underwriter for the Xxxxxx Xxxxxxx group of open-end management
investment companies, including any series or classes thereof (each, a "Fund,"
and, collectively, the "Funds"), registered under the Investment Company Act of
1940, as amended (the "1940 Act"), pursuant to a distribution agreement with the
Funds. Distributor and Xxxxxx Xxxxxxx XX Inc. ("Dealer") hereby agree that
Dealer will participate in the distribution of shares ("Shares") of certain
Funds, subject to the terms of this Agreement ("Agreement"). This Agreement,
dated as of April 1, 2005, shall replace, in their entirety, all prior Selected
Dealers Agreements previously entered into between Distributor and Dealer.
SECTION 1. LICENSING
a. Dealer represents and warrants that: (i) it is a broker-dealer
registered with the Securities and Exchange Commission ("SEC"); (ii) it is a
member in good standing of the National Association of Securities Dealers, Inc.
("NASD"); and (iii) it is responsible for the supervision of its registered
representatives and associated persons.
b. Dealer agrees to notify Distributor if its membership in the NASD is
terminated or suspended. Termination or suspension of either party's membership
with the NASD shall immediately cause the termination of this Agreement. Dealer
and Distributor each agree to notify the other promptly in writing of any such
action or event.
c. Dealer understands that it is subject to the Conduct Rules of the
NASD and Dealer acknowledges that it is responsible for suitability
determinations with respect to offers and sales of Shares of the Funds to
Dealer's customers and that Distributor has no responsibility for the manner of
Dealer's performance of, or for Dealer's acts or omissions in connection with,
the duties and activities Dealer performs under this Agreement. Dealer further
understands that it is responsible for its compliance with the securities laws
in each jurisdiction with respect to its rights to sell the Shares of the Funds
in such jurisdiction.
d. Dealer agrees to comply with applicable federal and state laws
affecting the sale or distribution of mutual fund shares or classes of such
shares, including anti-money laundering laws and regulations and applicable
guidance issued by the Department of the Treasury, the SEC and the NASD.
SECTION 2. ORDERS
a. Dealer agrees that it may offer and sell Shares of the Funds
(including classes thereof) only at the regular public offering price applicable
to such Shares and in effect at the time of each transaction. The procedures
relating to all orders and the handling of each order (including the manner of
computing the net asset value of Shares and the effective time of orders
received from Dealer) are subject to: (i) the terms of the then-current
prospectus and Statement of Additional Information (including any supplements,
stickers or amendments thereto) relating to each Fund (or, as appropriate, class
thereof), as filed with the SEC (collectively, the "Prospectus"); (ii) the new
account application for each Fund (or, as appropriate, class thereof), as
supplemented or amended from time to time; and (iii) Distributor's written
instructions and multiple class pricing procedures and guidelines, if any, as
provided to Dealer from time to time. To the extent that the Prospectus contains
provisions that are inconsistent with this Agreement or any other document, the
terms of the Prospectus shall be controlling.
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b. In all offers and sales of the Shares to the public, Dealer is not
authorized to act as broker or agent for, or employee of, Distributor or any
Fund, and Dealer shall not represent to any third party that Dealer has such
authority or is acting in such capacity.
c. All orders are subject to acceptance by Distributor, in its sole
discretion, and become effective only upon confirmation by Distributor.
Distributor reserves the right not to accept any specific order for the
purchase, redemption and/or exchange of Shares. Notwithstanding the foregoing,
Distributor will not arbitrarily or without reasonable cause refuse to accept or
confirm orders.
d. Distributor agrees that it will accept from Dealer orders placed
through the customized processing system in place between the parties.
e. Distributor reserves the right at any time, and without notice to
Dealer, to suspend the sale of Shares or to withdraw or limit the offering of
Shares. Distributor shall forthwith notify Dealer, in writing, if it or the
Funds suspend, withdraw or limit the offering of the Shares.
SECTION 3. DUTIES OF DEALER
a. Dealer agrees to purchase Shares only from Distributor or from
Dealer's customers.
b. Dealer agrees to enter orders for the purchase of Shares only from
Distributor and only for the purpose of covering purchase orders Dealer has
already received from its customers or for Dealer's own bona fide investment.
c. Dealer agrees to date and time stamp all orders for the purchase,
redemption and/or exchange of Shares received by Dealer, and to promptly forward
such orders to Distributor in time for processing at the public offering price
next determined after receipt of such orders by Dealer, in each case as
described in the applicable Prospectus. Dealer represents that orders received
by Dealer are handled in a manner consistent with Rule 22c-1 under the 1940 and
any SEC staff positions or interpretations issued thereunder.
d. Dealer agrees not to withhold placing orders for Shares with
Distributor so as to profit itself as a result of such inaction.
e. Dealer agrees to maintain records of all purchases, redemptions and
exchanges of Shares made through Dealer and to furnish Distributor or regulatory
authorities with copies of such records upon request. In that regard, Dealer
agrees that, unless Dealer holds Shares as nominee for its customers, it will
provide Distributor with all necessary information to comply properly with all
applicable federal, state and local reporting and record-keeping requirements.
Dealer represents and agrees that all Taxpayer Identification Numbers ("TINs")
provided are certified, and that no account that requires a certified TIN will
be established without such certified TIN. With respect to all other accounts,
including Shares held by Dealer in omnibus accounts, Dealer agrees to perform
all federal, state and local tax reporting with respect to such accounts,
including, without limitation, redemptions and exchanges.
f. Dealer agrees to distribute or cause to be delivered to its
customers Prospectuses, proxy solicitation materials and proxy cards,
semi-annual and annual shareholder reports in compliance with applicable legal
requirements, except to the extent that Distributor expressly undertakes in
writing to do so on Dealer's behalf. Distributor shall timely provide such
materials to Dealer in sufficient quantities.
g. Dealer agrees that payment for Shares ordered from Distributor shall
be in Fed Funds, New York clearinghouse or other immediately available funds and
that such funds shall be received by Distributor by the earlier of: (A) the end
of the third (3rd) business day following Dealer's receipt of the
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customer's order to purchase such Shares; or (B) the settlement date established
in accordance with Rule 15c6-1 under the Securities Exchange Act of 1934, as
amended (the "1934 Act"). If such payment is not received by Distributor by such
date, Dealer shall forfeit its right to any compensation with respect to such
order, and Distributor reserves the right, without notice, to cancel the sale,
or, at its option (in the case of Funds), to sell the Shares ordered back to the
Fund, in which case Distributor may hold Dealer responsible for any loss,
including loss of profit, suffered by Distributor resulting from Dealer's
failure to make payment. If a purchase is made by check, the purchase is deemed
made upon conversion of the purchase instrument into Fed Funds, New York
clearinghouse or other immediately available funds.
h. Dealer agrees that it shall assume responsibility for any loss to
the Fund caused by a correction to any order placed by Dealer that is made
subsequent to the trade date for the order to the extent such order correction
was not based on any lack of good faith, negligence or willful misconduct on
Distributor's part.
i. Dealer agrees that, in connection with orders for the purchase of
Shares on behalf of any IRAs, 401(k) plans or other retirement plan accounts, by
mail, telephone, or wire (the "Retirement Accounts"), Dealer will not, as a
result of the terms of this Agreement, act as a fiduciary, custodian, trustee or
other responsible party for any such Retirement Account, but shall, pursuant to
the terms of such orders, act solely as a limited-purpose, non-discretionary
agent for the custodian, trustee or other responsible party on behalf of such
Retirement Accounts, and will be responsible only for recording the time of
receipt of (a) the completed Retirement Account application and (b) any
payments, prior to promptly transmitting such documents and payments to the
Distributor. Responsibility for the appropriate bonding of any payments made by
the Retirement Accounts during transmission by the Dealer is that of the
custodian, trustee or other responsible party acting on behalf of such
Retirement Accounts. Dealer shall not place such an order with Distributor until
it has received payment from such Retirement Account for such purchase and, if
such purchase represents the first contribution on behalf of such Retirement
Account, until it has received the completed documents necessary to establish
the Retirement Account.
j. Dealer agrees that it will not make any conditional orders for the
purchase, redemption or exchange of Shares and acknowledges that Distributor
will not accept conditional orders for Shares.
k. Dealer agrees that all out-of-pocket expenses incurred by it in
connection with its activities under this Agreement will be borne by Dealer.
l. Dealer agrees that it will maintain the required net capital as
specified by the rules and regulations of the SEC, NASD and other regulatory
authorities.
m. Dealer agrees that it will maintain, during the term of this
Agreement, a Financial Institution Blanket Bond covering dishonest acts, as such
term is defined in the Dealer's bond (hereinafter referred to as "Dishonest
Acts"), of Dealer's directors, trustees, officers, partners, employees, and
agents, with coverage limits in amounts standard in the industry, and adequate
to reasonably indemnify Dealer for losses it pays as a result of the Dishonest
Acts of Dealer's directors, trustees, officers, partners, employees, and agents.
Dealer's failure to maintain insurance shall not relieve it of liability under
this Agreement.
SECTION 4. NOTIFICATION TO DEALER
Distributor shall advise Dealer immediately: (i) in the event of the
issuance by the SEC of any stop order suspending the effectiveness of a Fund's
Prospectus or the initiation of any proceedings for that purpose; (ii) of the
happening of any material event which makes untrue any statement made in a
Fund's then current Prospectus or which requires the making of a change in such
Prospectus in order to
3
make the statements therein not misleading; and/or (iii) of any regulatory or
legal action involving the Fund or the Fund's adviser that would limit or
restrict Dealer's ability to market or sell the Fund.
SECTION 5. DEALER COMPENSATION
a. Sales Charges/Dealer Concessions. On each purchase of Shares by
Dealer from Distributor, the total sales charges and dealer concessions or
commissions, if any, payable to Dealer shall be as set forth in each Fund's
Prospectus. Dealer acknowledges that no sales charge or concession or commission
will be paid to Dealer on the reinvestment of dividends or capital gains
reinvestment or on Shares acquired in exchange for Shares of another Fund, or
class thereof, having the same sales charge structure as the Fund, or class
thereof, from which the exchange was made, in accordance with the Prospectus.
b. Rule 12b-1 Plan Payments.
With respect to any Fund that offers Shares for which
distribution plans have been adopted under Rule 12b-1 under the Investment
Company Act of 1940, as amended ("Rule 12b-1 Plans"), Distributor also is
authorized to pay the Dealer continuing distribution and/or service fees, as
specified in the relevant Fund Prospectus, with respect to Shares of any such
Fund, to the extent that Dealer provides distribution, marketing, administrative
and other services and activities regarding the promotion of such Shares and the
maintenance of related shareholder accounts. Each Rule 12b-1 Plan in effect on
the date of this Agreement is described in the relevant Fund's Prospectus.
In connection with the receipt of distribution fees and/or
service fees under Rule 12b-1 Plans applicable to Shares purchased by Dealer's
customers, Distributor directs Dealer to provide enhanced shareholder services
such as (i) processing purchase, redemption and exchange transactions; (ii)
establishing shareholder accounts; and (iii) providing certain information and
assistance with respect to the Funds. Provided, however, that Distributor will
not arbitrarily or without reasonable cause exclude any sales.
All Rule 12b-1 Plan distribution and/or servicing fees shall
be based on the value of Shares attributable to Dealer's customers and eligible
for such payment, and shall be calculated at the rates set forth in the
compensation schedule then in effect. Without prior approval by a majority of
the outstanding shares of a Fund, the aggregate annual fees paid to Dealer
pursuant to any Rule 12b-1 Plan shall not exceed the amounts stated as the
"annual maximums" in each Fund's Prospectus, which amount shall be a specified
percent of the value of the Fund's net assets held in Dealer's customers'
accounts that are eligible for payment pursuant to the Rule 12b-1 Plans
(determined in the same manner as each Fund uses to compute its net assets as
set forth in its then current Prospectus). To the extent Distributor waives any
payments payable to Distributor under such Rule 12b-1 Plan, the amounts payable
to Dealer will be reduced accordingly.
In determining the amount payable to Dealer hereunder,
Distributor reserves the right to exclude any sales that it reasonably
determines are not in accordance with the terms of the Prospectus and provisions
of this Agreement.
Dealer hereby acknowledges that all payments under Rule 12b-1
Plans are subject to limitations contained in such Rule 12b-1 Plans and may be
varied or discontinued at any time. After the date of termination as to any
Fund, Distributor will not be obligated to pay a distribution and/or servicing
fee with respect to any shares of that Fund that are first purchased by Clients
after the date of termination. However, after the termination, for so long as
any share of a Fund that was considered in the calculation of the fee as of the
date of the termination is held by a Client (a "Pre-Termination Share"),
provided that the payment of such fee complies with applicable law, Distributor
will remain obligated to
4
pay Dealer the fee as to each Pre-Termination Share. For so long as Distributor
or some other person or entity continues to pay the fee, Dealer will continue to
perform its duties and obligations hereunder with respect to each such
Pre-Termination Share and the covenants and agreements between the parties set
forth in this Agreement will remain in full force and effect, to the extent
applicable, as to such Pre-Termination Shares.
c. Qualifying Sales. In accordance with the Funds' Prospectuses,
Distributor or any affiliate may, but is not obligated to, make payments to
dealers from Distributor's own resources as compensation for certain sales that
are made at net asset value ("Qualifying Sales"). If Dealer notifies Distributor
of a Qualifying Sale, Distributor may make a contingent advance payment up to
the maximum amount available for payment on the sale. If any of the Shares
purchased in a Qualifying Sale are redeemed within twelve (12) months of the end
of the month of purchase, Distributor shall be entitled to recover any advance
payment attributable to the redeemed Shares by reducing any account payable or
other monetary obligation Distributor may owe to Dealer or by making demand upon
Dealer for repayment in cash. Distributor reserves the right to withhold
advances to Dealer, if for any reason Distributor believes that it may not be
able to recover unearned advances from Dealer. Dealer shall be entitled to
disclose such payment to Clients in a manner it deems reasonable.
d. Reduced Sales Charge. Any sales charges and dealer concessions or
commissions are subject to reduction under a variety of circumstances as
described in each Fund's then current Prospectus. For an investor to obtain any
reduction, Distributor must be notified at the time of the sale that the sale
qualifies for the reduced sales charge. If Dealer fails to notify Distributor of
the applicability of a reduction in the sales charge at the time the trade is
placed, neither Distributor nor any Fund will be liable for amounts necessary to
reimburse any investor for the reduction that should have been affected.
e. No Obligation to Pay. Distributor shall have no obligation to pay
any compensation to Dealer for the sale of Shares of a Fund until Distributor
receives the related compensation from the Fund, and Distributor's liability to
Dealer for such payments is limited solely to the related compensation that
Distributor receives from such Fund.
f. Suspension/Elimination of Compensation. Dealer acknowledges and
agrees that each Fund may, without prior notice, suspend or eliminate the
payment of any compensation, including Rule 12b-1 Plan payments or other dealer
compensation, by amendment, sticker or supplement to the then current Prospectus
for such Fund.
SECTION 6. MULTIPLE CLASSES OF SHARES; REDUCED SALES CHARGES
a. Distributor may, from time to time, provide Dealer with written
guidelines or standards relating to the sale, distribution or servicing of Funds
offering multiple classes of Shares, including classes offering different sales
charges, Rule 12b-1 Plan fees or other operating expenses.
b. If applicable to a particular Fund, Distributor will not accept a
purchase order from Dealer for Class A shares of the Fund that qualifies for
investment in Class D shares of such Fund.
c. In accordance with the terms of each applicable Prospectus, Dealer
acknowledges that a reduced sales charge or no sales charge (collectively,
"discounts") may be available to purchasers of Shares. Dealer represents that it
has, and will maintain during the term of this Agreement, adequate written
supervisory procedures to ensure that Dealer's customers receive all available
discounts, and Dealer agrees: (i) to inform its customers of applicable discount
opportunities and to inquire about other qualifying holdings that might entitle
customers to receive discounts; (ii) to advise Distributor, contemporaneously
with each purchase order it forwards to Distributor as agent for its customers,
of the availability of any discounts; and (iii) that in the event that Dealer
fails to provide Distributor with
5
information concerning the availability of discounts as provided in (ii) above,
Dealer, and not Distributor or the Funds, shall be responsible for reimbursing
its customer any applicable discount amount.
SECTION 7. REDEMPTIONS, REPURCHASES AND EXCHANGES OF FUNDS
a. The Prospectus for each Fund describes the provisions whereby the
Fund, under all ordinary circumstances, will redeem Shares held by shareholders
on demand. Dealer agrees that it will not make any representations to
shareholders relating to the redemption of their Shares other than the
statements contained in the applicable Prospectus and the underlying
organizational documents of the Fund to which it refers, and that Dealer will
pay as redemption proceeds to shareholders the net asset value, minus any
applicable redemption fee, determined after receipt of the order as discussed in
the Prospectus.
b. Dealer agrees not to repurchase any Shares from its customers at a
price below that next quoted by a Fund for redemption or repurchase, i.e., at
the net asset value of such Shares, less any applicable redemption fee, in
accordance with the Fund's Prospectus. Dealer shall, however, be permitted to
sell Shares for the account of the customer or record owner to a Fund at the
repurchase price then currently in effect for such Shares and may charge the
customer or record owner a fair service fee or commission for handling the
transaction, provided Dealer discloses the fee or commission to the customer or
record owner. Nevertheless, Dealer agrees that it shall not maintain a secondary
market in such repurchased Shares.
c. Dealer agrees that, with respect to a redemption order it has made,
if instructions in proper form, including any outstanding certificates, are not
received by Distributor within the time customary or required by law, the
redemption may be canceled without any responsibility or liability on
Distributor's part or on the part of any Fund, or Distributor, at its option,
may buy the shares redeemed on behalf of the Fund, in which latter case
Distributor may hold Dealer responsible for any loss, including loss of profit,
suffered by Distributor resulting from Distributor's failure to settle the
redemption unless such failure was caused by a Force Majeure event.
d. Dealer agrees that if any Share is repurchased by any Fund or is
tendered for redemption within seven (7) business days after confirmation by
Distributor of the original purchase order from Dealer unless such redemption is
the result of an error by the Distributor or the Fund or such shorter holding
period was agreed by the Distributor or the Fund, Dealer shall forfeit its right
to any compensation with respect to such Share and shall forthwith refund to
Distributor the full compensation, if any, paid to Dealer on the original sale.
Distributor agrees to notify Dealer of such repurchase or redemption within a
reasonable time after settlement. Termination or cancellation of this Agreement
shall not relieve Dealer from its obligation under this provision.
e. Dealer agrees that it will comply with any restrictions and
limitations on exchanges described in each Fund's Prospectus, including any
restrictions or prohibitions relating to frequent purchases, redemptions and
exchanges (i.e., market timing).
SECTION 8. FUND INFORMATION
a. Dealer agrees that Distributor is responsible and liable only for
the information or representations concerning Shares of any Fund contained in
the Fund's Prospectus or in materials provided or approved by Distributor.
b. Distributor, at no cost to Dealer, will supply to Dealer reasonable
quantities of Prospectuses, sales literature, sales bulletins, and additional
sales information as approved by Distributor and the Funds. Dealer agrees to use
only advertising or sales material relating to the Funds that: (i) is
6
supplied by Distributor, or (ii) conforms to the requirements of all applicable
laws or regulations of any government or authorized agency having jurisdiction
over the offering or sale of Shares of the Funds.
SECTION 9. REGISTRATION OF SHARES
a. Distributor acts solely as agent for the Funds.
b. Upon execution of this Agreement, and upon future requests from
Dealer, Distributor shall timely furnish in writing to Dealer information
identifying the states or jurisdictions in which it is believed that all
necessary notice, registration or exemptive filings for Shares have been made
under applicable securities laws such that offers and sales of Shares may be
made in such states or jurisdictions (the "Blue Sky Matrix"). Distributor shall
have no obligation to make such notice, registration or exemptive filings with
respect to Shares in any state or jurisdiction. Distributor shall promptly
notify Dealer if there are any changes in information previously provided to
Dealer under this Section 9.b.
c. Dealer agrees not to transact orders for Shares in states or
jurisdictions in which it has been informed that Shares may not be sold or in
which it and its personnel are not authorized to sell Shares.
d. Distributor shall have no responsibility, under the laws regulating
the sale of securities in the United States or any foreign jurisdiction, with
respect to the qualification or status of Dealer or Dealer's personnel selling
Fund Shares.
e. Distributor acknowledges that, as between Distributor and Dealer,
Distributor shall be responsible for the accuracy and timely delivery of the
Blue Sky Matrix. Dealer acknowledges that, as between Dealer and Distributor,
Dealer shall be responsible for any offers or sales of Shares in any
jurisdictions made by Dealer not in accordance with the Blue Sky Matrix, except
if otherwise approved in advance by Distributor .
SECTION 10. REPRESENTATIONS AND WARRANTIES
a. In addition to the representations and warranties found elsewhere in
this Agreement, Distributor represents and warrants that:
(i) It is a corporation duly organized and existing and
in good standing under the laws of the state of
Delaware and is duly registered or exempt from
registration as a broker-dealer in all states and
jurisdictions in which it provides services as a
non-exclusive distributor for the Funds.
(ii) It is a member in good standing of the NASD.
(iii) It is empowered under applicable laws and by
Distributor's organizational documents to enter into
this Agreement and perform all activities and
services of Distributor provided for herein and that
there are no impediments, prior or existing,
regulatory, self-regulatory, administrative, civil or
criminal matters affecting Distributor's ability to
perform under this Agreement.
(iv) All requisite actions have been taken to authorize
Distributor to enter into and perform this Agreement.
(v) Each Fund is registered as an open-end management
investment company with the SEC under the 1940 Act.
7
(vi) All shares, when issued, shall be validly issued,
fully paid and non-assessable.
(vii) Each Fund's prospectus is currently effective and
will remain effective with respect to all shares
being offered for sale.
(viii) The payment to Dealer of any compensation pursuant
hereto (1) has been duly authorized by the Funds',
the Board of Directors/Trustees of the Funds, or any
other person to the extent such authorization is
required to make such payment; (ii) is properly
disclosed in the relevant Fund prospectus to the
extent such disclosure may be required; and (iii) is
in conformity with all federal, state and industry
laws or regulations to which the Funds or its agents
are subject.
b. In addition to the representations and warranties found elsewhere in
this Agreement, Dealer represents and warrants that:
(i) It is a corporation duly organized and existing and
in good standing under the laws of the state of
Delaware and will not offer Shares of any Fund for
sale in any state or jurisdiction where such Shares
may not be legally sold, as indicated in the
information supplied to Dealer pursuant to Section
9.b. hereof, or where Dealer is not qualified to act
as a broker-dealer.
(ii) It is empowered under applicable laws and by Dealer's
organizational documents to enter into this Agreement
and perform all activities and services of the Dealer
provided for herein and that there are no
impediments, prior or existing, regulatory,
self-regulatory, administrative, civil or criminal
matters affecting Dealer's ability to perform under
this Agreement.
(iii) All requisite actions have been taken to authorize
Dealer to enter into and perform this Agreement.
(iv) It is a "financial institution" as defined in 31
U.S.C. 5312(a)(2) or (c)(1) and is regulated by a
"Federal functional regulator" as defined in 31 CFR
ss.103.120(a)(2).
SECTION 11. INDEMNIFICATION
a. Dealer agrees to indemnify, defend and hold harmless Distributor and
the Funds and their directors, trustees, officers, employees, shareholders and
agents from and against any direct losses, claims, liabilities, costs, and
expenses, including attorney fees (collectively, "Losses"), that may be assessed
against or suffered or incurred by any of them which relate in any way to: (i)
Dealer's lack of good faith, negligence, or willful misconduct in carrying out
its duties and responsibilities under this Agreement; (ii) the failure of Dealer
to comply with any applicable law, rule or regulation (including, without
limitation, the securities laws and regulations of the United States or any
state or jurisdiction, including jurisdictions outside of the U.S.) in
connection with the offer or sale by Dealer of Shares of the Funds pursuant to
this Agreement, or the discharge of any of its other duties and responsibilities
under this Agreement, except to the extent that Dealer relied upon the Blue Sky
Matrix; (iii) any tort or breach of contract by Dealer related to the offer or
sale by Dealer of Shares of the Funds pursuant to this Agreement (except to the
extent that Distributor's negligence or failure to follow correct instructions
received from Dealer is the cause of such Loss); (iv) any redemption or exchange
pursuant to instructions received from Dealer or its directors, trustees,
officers, partners, employees or agents; (v) incorrect investment instructions
received by Distributor from Dealer; or (vi) the breach by Dealer of any of its
representations and warranties specified herein or the Dealer's failure to
comply with the terms and
8
conditions of this Agreement, if such action, failure, error, omission,
misconduct or breach is committed by Dealer or its directors, officers,
employees or agents.
b. Distributor agrees to indemnify, defend and hold harmless Dealer and
its directors, trustees, officers, partners, employees and agents from and
against any direct Losses that may be assessed against or suffered or incurred
by any of them which relate in any way to (i) Distributor's lack of good faith,
negligence, or willful misconduct in carrying out its duties and
responsibilities under this Agreement; (ii) the failure of Distributor to comply
with any applicable law, rule or regulation in connection with the discharge of
its duties and responsibilities under this Agreement; (iii) any untrue statement
of a material fact, or any omission to state a material fact, contained in a
Prospectus or in any written sales literature or other marketing materials
provided or approved by Distributor to the Dealer, or (iv) the breach by
Distributor of any of its representations and warranties specified herein or
Distributor's failure to comply with the terms and conditions of this Agreement,
if such action, failure, error, omission, misconduct or breach is committed by
Distributor or its directors, officers, employees or agents.
c. Neither party to this Agreement shall be liable to any other party
for consequential, incidental, special or indirect damages under any provision
of this Agreement. This Section 11 shall survive any termination of the
Agreement.
SECTION 12. ANTI-MONEY LAUNDERING RESPONSIBILITY
a. Dealer represents and warrants that it is in compliance and will
continue to be in compliance with all applicable anti-money laundering laws and
regulations, including the Bank Secrecy Act, as amended by the USA PATRIOT Act,
and implementing regulations of the Bank Secrecy Act ("BSA Regulations") and
applicable guidance issued by the SEC and the guidance and rules of the
applicable Exchanges, SROs and the NASD (collectively, "Guidance").
b. In connection with Distributor's reliance on Dealer to perform
Customer Identification Program ("CIP") procedures on its behalf, Dealer
represents and warrants that (1) Dealer is subject to a rule implementing 31
U.S.C. 5318(h) and maintains an anti-money laundering program consistent with
the USA PATRIOT Act and the rules thereunder; (2) Dealer is regulated by a
Federal functional regulator as that term is defined under 31.C.F.R.
ss.103.120(a)(2); (3) Dealer has implemented a CIP compliant with Section 326
that enables Dealer to form a reasonable belief that it knows the true identity
of its customers, including procedures to obtain information from and verify the
identity of customers, maintain records of the information used to verify
identity, determine whether the customer appears on any government list of known
or suspected terrorists or terrorist organizations, and provide customers with
adequate notice that the institution is requesting information to verify their
identities; and (4) upon request, Dealer will certify annually that it has
implemented its anti-money laundering program and that it or its agent will
perform all aspects of its CIP procedures with respect to customers referred to
the Fund by the Dealer.
c. Dealer represents and warrants that to the extent that any of its
customers who maintain Fund accounts is a current or former Senior Foreign
Political Figure ("SFPF"), an immediate family member of a SFPF, a person who is
widely known (or is actually known by the Dealer) to maintain a close personal
relationship with any such individual, or a corporation, business or other
entity that has been formed by or for the benefit of such individual, it has
conducted appropriate due diligence of such customer consistent with Section 312
of the USA PATRIOT Act and any applicable BSA Regulations and Guidance.
d. Dealer represents and warrants that to the extent its customers who
maintain Fund accounts are foreign banks, it has taken reasonable measures and
has obtained certifications and will
9
obtain re-certifications that indicate that the customers are not foreign shell
banks, as defined in the BSA Regulations.
e. Dealer will take all reasonable and practicable steps to ensure that
it does not accept or maintain investments in any Fund, directly or indirectly,
from:
(i) A person or entity (A) who is or becomes subject to
sanctions administered by the U.S. Office of Foreign
Assets Control ("OFAC"), is included in any executive
order or is on the list of Specially Designated
Nationals and Blocked Persons maintained by OFAC, or
(B) whose name appears on such other lists of
prohibited persons and entities as may be mandated by
applicable U.S. law or regulation.
(ii) A foreign shell bank (i.e., a bank with no physical
presence in any country).
f. Dealer agrees that if the Funds or Distributor is required to supply
information, documentation or guidance to a securities regulatory organization
("SRO") or government department or agency about the CIP of the Funds or
Distributor or the measures taken to obtain information and to verify the
identity of specific clients of the Funds, Dealer shall allow such SRO or
government department or agency to examine its files.
SECTION 13. LATE TRADING COVENANT
Dealer will transmit orders for the purchase, redemption and/or
exchange of Shares on any business day that are based only on those transactions
that Dealer received and accepted as being in good order no later than the Close
of Trading for that business day.
SECTION 14. MARKET TIMING/FREQUENT TRADING COVENANT
Dealer shall cooperate with Distributor to identify and discourage
market timers and frequent traders. If any market timer buying or redeeming
Shares comes to the attention of Dealer, it will, as soon as practicable, notify
Distributor. Dealer acknowledges that Distributor may refuse a request to
purchase Shares if Distributor believes such purchase request includes a request
by a market timer or frequent trader. Dealer will assist the Funds in enforcing
policies adopted by the Funds with respect to market timing and frequent
trading, and shall impose on shareholders, and remit to the applicable Fund, any
applicable redemption or short-term trading fees imposed by a Fund and collected
by Dealer. Distributor shall immediately notify Dealer of any changes to the
policies adopted by the Funds with respect to market timing and frequent
trading.
SECTION 15. PRIVACY
Each of Distributor and Dealer represents that it is in compliance with
SEC Regulation S-P, adopted pursuant to the Xxxxx-Xxxxx Xxxxxx Act of 1999.
SECTION 16. CONFIDENTIALITY
All books, records, information and data pertaining to the business of
the other party ("Confidential Information") that are exchanged or received in
connection with this Agreement shall be kept confidential and shall not be
voluntarily disclosed to any other person, except (i) if such information is
already publicly available; (ii) if such information is, at the time of
disclosure, as shown by the receiving party's records, already in the receiving
party's possession on a lawful basis;
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(iii) if such information is lawfully acquired by the receiving party after the
time of the disclosure through a third party under no obligation of
confidentiality to the disclosing party; (iv) as may be required solely for the
purpose of carrying out a party's duties and responsibilities under this
Agreement; (v) if such information is independently developed by the receiving
party; (vi) as required by order or demand of a court or other governmental or
regulatory body or as otherwise required by law; (vii) as may be required to be
disclosed to a party's attorneys, accountants, regulatory examiners or insurers
for legitimate business purposes; or (viii) with the express prior written
permission of the other party.
SECTION 17. TERMINATION; AMENDMENT; FORCE MAJEURE
a. In addition to the automatic termination of this Agreement specified
in Section 1.b. of this Agreement, either party to this Agreement may
unilaterally cancel its participation in this Agreement by giving thirty (30)
days prior written notice to the other party. In addition, either party to this
Agreement may, in the event of a material breach of this Agreement by the other
party, terminate this Agreement immediately by giving written notice to the
other party, which notice sets forth in reasonable detail the nature of the
breach. Such notice shall be deemed to have been given and to be effective on
the date on which it was either delivered personally to the other party or any
officer or member thereof, or was sent in accordance with Section 23.
b. This Agreement shall terminate immediately upon the appointment of a
trustee under the Securities Investor Protection Act or any other act of
insolvency by Dealer or Distributor.
c. The termination of this Agreement by any of the foregoing means
shall have no effect upon transactions entered into prior to the effective date
of termination and shall not relieve either party of its obligations, duties and
indemnities specified in this Agreement. A trade placed by Dealer subsequent to
its voluntary termination of this Agreement will not serve to reinstate the
Agreement. Reinstatement, except in the case of a temporary suspension of
Dealer, will only be effective upon written notification by Distributor.
d. This Agreement is not assignable or transferable and will terminate
automatically in the event of its "assignment," as defined in the 1940 Act, and
the rules, regulations and interpretations thereunder. Either party may,
however, transfer any of its duties under this Agreement to any entity that
controls or is under common control with such party.
e. This Agreement may be amended by Distributor at any time, upon 60
days' prior written notice to, and the prior written consent of, Dealer, which
consent will not be unreasonably withheld. Distributor may, however, amend this
Agreement at any time to comply with the requirements of any applicable law,
rule or regulation without Dealer's consent, but with 60 days' prior written
notice to Dealer, and Dealer's placing of an order or accepting payment of any
kind after the effective date contained in such notice of such amendment shall
constitute Dealer's acceptance of such amendment.
f. If either party is unable to carry out any of its obligations under
this Agreement because of conditions beyond its reasonable control, including,
but not limited to, acts of God; strikes; acts of terrorism or war; riots;
delays associated with computer hardware malfunction or failure, electrical
failures and similar occurrences reasonably beyond its control ("Force
Majeure"), this Agreement will remain in effect and the non-performing party
shall not be liable for damages resulting from such failure to perform from such
causes.
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SECTION 18. SETOFF; DISPUTE RESOLUTION; GOVERNING LAW
a. Should any of Dealer's compensation accounts with Distributor have a
debit balance, or should Dealer otherwise owe any amounts to Distributor,
Distributor shall be permitted to offset and recover the amount owed from any
account Dealer has with Distributor, without notice or demand to Dealer.
b. In the event of a dispute concerning any provision of this
Agreement, either party may require the dispute to be submitted to binding
arbitration under the commercial arbitration rules and procedures of the NASD.
The parties agree that, to the extent permitted under such arbitration rules and
procedures, the arbitrators selected shall be from the securities industry.
Judgment upon any arbitration award may be entered by any state or federal court
having jurisdiction.
c. This Agreement shall be governed by, and construed in accordance
with, the laws of the state of New York, without reference to the choice-of-law
principles thereof.
SECTION 19. INVESTIGATIONS AND PROCEEDINGS
The parties to this Agreement agree to cooperate, to the full extent
permitted by applicable laws and regulations, in any securities regulatory
investigation or proceeding or judicial proceeding with respect to each party's
activities under this Agreement and promptly to notify the other party of any
such investigation or proceeding.
SECTION 20. CAPTIONS
All captions used in this Agreement are for convenience only, are not a
party hereof, and are not to be used in construing or interpreting any aspect
hereof.
SECTION 21. SEVERABILITY
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law.
If, however, any provision of this Agreement is held under applicable law to be
invalid, illegal, or unenforceable in any respect, such provision shall be
ineffective only to the extent of such invalidity, and the validity, legality
and enforceability of the remaining provisions of this Agreement shall not be
affected or impaired in any way.
SECTION 22. SURVIVAL
The obligation contained in Section 5.b. to pay a distribution and/or
shareholder servicing fee on any Pre-Termination Shares, the representations and
warranties contained in Section 10 hereof and the indemnification agreements
contained in Section 11 hereof shall survive any termination of this Agreement.
SECTION 23. NOTICES
Every notice required by this Agreement will be in writing and deemed
given (i) the next business day if sent by a nationally recognized overnight
courier service that provides evidence of receipt, (ii) the same business day if
sent by 3:00 p.m. (receiving party's time) by facsimile transmission and
confirmed by a telephone call, (iii) the same business day if sent by personal
delivery, or (iv) on the third business day if sent by certified mail, return
receipt requested. Unless otherwise notified in writing, all notices required to
be given under this Agreement shall be given or sent to a party at the address
listed on Exhibit A attached hereto.
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SECTION 24. NON-EXCLUSIVITY
Each of the parties acknowledges and agrees that this Agreement and the
arrangements described herein are intended to be non-exclusive and that each of
the parties is free to enter into similar agreements and arrangements with other
entities.
SECTION 25. ENTIRE AGREEMENT
This Agreement contains the entire understanding of the parties hereto
with respect to the subject matter contained herein and supersedes all previous
agreements and/or understandings of the parties. This Agreement shall be binding
upon the parties hereto when signed by Dealer and accepted by Distributor.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year set forth below.
XXXXXX XXXXXXX DISTRIBUTORS INC.
By: /s/Xxxx Xxxx
------------------------------------------------------
Name: Xxxx Xxxx
-------------------------------------------------
Title: President and Chief Executive Officer
--------------------
Date: 05/11/05
--------------------------------------------------
XXXXXX XXXXXXX XX INC.
By: /s/Xxxxxxx XxXxxxx
-------------------------------------------------
Name: Xxxxxxx XxXxxxx
---------------------------------------------
Title: Executive Director
-----------------------------------------
Address: 0000 Xxxxxxxxxxx Xxx.
------------------------------------
Xxxxxxxx, XX 00000
------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
Telephone: 000-000-0000
-------------------------------------------
Fax: 000-000-0000
-------------------------------------------------
NASD CRD #
-------------------------------------------------------
TAX ID #
---------------------------------------------------------
Dealer #
---------------------------------------------------------
(Internal Use Only)
Date: April 1, 2005
-----------------------------------------------
14
EXHIBIT A
NOTICES
Notices required by the Agreement should be sent as follows:
If to the Dealer: Xxxxxx Xxxxxxx XX Inc.
0000 Xxxxxxxxxxx Xxx.
Xxxxxxxx, XX 00000
Attn.: Xxxxxxx XxXxxxx, Xxxxxx Xxxxxxx
Mutual Funds Department
Phone: (000) 000-0000
Fax: (000) 000-0000
If to the Fund: [Insert Fund Name]
Attn.: President
c/o General Counsel
Xxxxxx Xxxxxxx Investment Management Inc.
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
If to the Distributor: Xxxxxx Xxxxxxx Distributors Inc.
Attn.: General Counsel
Xxxxxx Xxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
If to the Transfer Agent: Xxxxxx Xxxxxxx Trust
Harborside Financial Xxxxxx
Xxxxx Xxx, 0xx Xxxxx
Xxxxxx Xxxx, XX 00000
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