NTF PROGRAM SERVICE AGREEMENT
This Agreement is made as of ________________, 19 __, by and between U.S.
Clearing, a division of Fleet Securities, Inc., a New York corporation and an
indirect subsidiary of Fleet Financial Group, Inc. ("USC"), each registered
investment company executing this Agreement listed on Exhibit C (each a "Program
Fund"), as amended from time to time, and each investment adviser,
administrator, principal underwriter or transfer agent of each Program Fund
executing this Agreement (collectively, "Program Fund Affiliate").
WHEREAS USC is willing to permit each Program Fund to participate in
USC's No-Transaction-Fee Program (the "USC NTF), subject to the terms and
conditions set forth herein;
WHEREAS USC functions as a clearing agent for introducing broker-dealers
that may participate in the USC NTF ("Participating Correspondents") and in such
capacity performs operational functions, including execution, clearance of
trades, custody of funds and securities recordkeeping, shareholder
communication, and other services;
WHEREAS USC is willing to perform certain recordkeeping, shareholder
communication, and other services for each Program Fund in connection with the
USC NTF;
WHEREAS, the Program Fund and the Program Fund Affiliate wishes to make
shares of the Program Fund available for purchase and redemption through the USC
NTF;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
set forth below, the parties agree to the following terms and conditions:
1. SERVICES
USC will open one or more omnibus accounts in connection with the USC NTF
(the "Accounts") with each Program Fund or a Program Fund Affiliate through
which it will provide the services set forth in Exhibit A hereto (the "Operating
Procedures") for the benefit of customers of Participating Correspondents
(hereinafter referred to as "NTF Customers").
2. COMPENSATION
a. For the services provided by USC hereunder, Program Fund or Program
Fund Affiliate shall pay to USC the fees set forth in Exhibit B hereto
("Calculation and Payment of Fees"). All fees shall be calculated and paid in
accordance with Exhibit B. Fees are for shareholder servicing and other
administrative services provided by USC and do not constitute payment in any
manner for distribution, investment advisory, trustee or custodial services.
b. In the event the parties agree to material changes to the scope of
services provided hereunder, the parties agree to negotiate in good faith as to
the appropriate amendment to the calculation and payment of fees set forth on
Exhibit B.
3. COMPLIANCE RESPONSIBILITIES
a. Program Fund and any person directly or indirectly controlling,
controlled by, or under common control with, such Program Fund; any officer,
director, partner, corporation, or employee of such Program Fund; and any
Program Fund Affiliate ("Responsible Affiliates") are responsible for ensuring
compliance with the conditions set forth in paragraphs (i) and (ii) of this
Section 3.a.
(i) Program Fund and Responsible Affiliates are
responsible for (i) the compliance of each prospectus, registration
statement, annual or other periodic report, proxy statement and
item of advertising or marketing material of or relating to each
Program Fund with all applicable laws, rules and regulations
(except for advertising or marketing materials prepared by USC that
are not published or provided to USC by or on behalf of a Program
Fund or any Responsible Affiliates or accurately derived from
information published or provided by or on behalf of a Program Fund
or any Responsible Affiliates), (ii) the distribution and
tabulation of proxies in accordance with all applicable laws, rules
and regulations (except for such proxy related services provided by
USC or its mailing agent), (iii) the registration or qualification
of the shares of each Program Fund under all applicable laws, rules
and regulations, and (iv) the compliance by Program Fund and each
Responsible Affiliate with all applicable laws, rules and
regulations (including the Investment Company Act of 1940, as
amended (the "1940 Act"), and the Investment Advisers Act of 1940,
as amended), and the rules and regulations of each self-regulatory
organization with jurisdiction over Program Fund or any Responsible
Affiliate, except to the extent that the failure to so comply by
Program Fund or any Responsible Affiliate is caused by USCs breach
of this Agreement.
(ii) In the event that an Account holds five percent (5%)
or more of the outstanding Program Fund shares, Program Fund or
Responsible Affiliates will be responsible for requesting USC to
confirm its status as shareholder of record and to confirm whether
any NTF Customer beneficially owns five percent (5%) or more of the
outstanding Program Fund shares through USC. For this purpose,
Program Fund or Responsible Affiliates shall indicate in its
inquiry the number of Program Fund shares that equal five percent
(5%) of outstanding Program Fund shares. USC shall promptly reply
to any such inquiries.
b. USC is responsible for USC's compliance with all applicable laws,
rules and regulations governing USC's performance under this Agreement, except
to the extent that USC's failure to comply with any law, rule or regulation is
caused by Program Fund's or Responsible Affiliates' breach of this Agreement.
c. Except as set forth in this Agreement or as otherwise agreed upon
in writing by the parties, any communication, instruction or notice made
pursuant to this Agreement shall be made orally, provided that such oral
communication is on a recorded telephone line or is promptly confirmed in
writing by facsimile transmission. USC is entitled to rely on any
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communications, instructions or notices which it reasonably believes were
provided to it by Program Fund or Responsible Affiliates or their agents
authorized to provide such communications, instructions or notices to USC, and
on communications, instructions or notices provided to USC by NTF Customers and
Participating Correspondents. Program Fund and Program Fund Affiliate is
entitled to rely on any communications, instructions or notices it reasonably
believes were provided to it by USC, or its agents authorized to provide such
communications, instructions or notices to Program Fund.
d. Except to the extent otherwise expressly provided in this
Agreement, neither party assumes any responsibility hereunder, or will be liable
to the other, for any damage, loss of data, delay or any other loss whatsoever
caused by events beyond its reasonable control.
4. REPRESENTATIONS AND WARRANTIES
a. Program Fund and Program Fund Affiliate represent and warrant to
USC that each Program Fund and Program Fund Affiliate has the requisite
authority to enter into this Agreement on its own behalf and on behalf of the
Program Fund.
b. Program Fund and Program Fund Affiliate represent and warrant that
the boards of trustees of each Program Fund have approved or will ratify, within
a reasonable time period, both initially and on a periodic basis, the terms of
this Agreement, including USC's authorization to receive purchase and redemption
orders on behalf of each Program Fund or the Program Affiliate for purposes of
pricing the shares of each Program Fund under the Investment Company Act of
1940.
c. Program Fund and Program Fund Affiliate represent and warrant that
the prospectus for each Program Fund will contain tile following disclosures:
(i) that the Program Fund has authorized one or more brokers to accept purchase
and redemption orders on its behalf; (ii) if applicable, that the brokers are
authorized to designate other intermediaries to accept purchase and redemption
orders on the Program Fund's behalf; (iii) that the brokers and their designees
reserve the right (A) not to accept customer orders that are incomplete or
otherwise not in "good form," and (B) to accept certain institutional customer
orders conditioned on the understanding that the orders may later be rejected in
the event they cannot be transmitted to the Program Fund or the Program Fund
Affiliate in a timely manner; (iv) the Program Fund will be deemed to have
received a purchase or redemption order when an authorized broker or, if
applicable, a broker's authorized designee, accepts the order; and (v) that
customer orders will be priced at the Program Fund's net asset value ("NAV")
next computed after such orders are unconditionally accepted by an authorized
broker or the broker's designee.
d. Program Fund and Program Fund Affiliate represent and warrant that
the payment to USC of any fees pursuant hereto: (i) has been duly authorized by
the Program Fund, the Board of Trustees of the Program Fund, or any other
persons to the extent such authorization is required to properly make such
payment; (ii) is properly disclosed in the relevant Program Fund prospectus to
the extent such disclosure may be required; and (iii) is in material conformity
with all federal, state and industry laws and regulations to which the Program
Fund or the Program Fund Affiliate is subject.
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e. Program Fund and Program Fund Affiliate represent and warrant to
USC that each Program Fund and Program Fund Affiliate is in compliance with the
conditions and qualifications set forth in the Rules of Conduct of the National
Association of Securities Dealers, Inc. ("NASD"), Rule 2830, as amended from
time to time ("Rule 2830"), which enable an NASD member to offer or sell shares
in the Program Fund. Program Fund and Program Fund Affiliate represent and
warrant that each Program Fund marked with an asterisk on Schedule I is a "no
load" or "no sales charge" Program Fund as defined in Rule 2830. If a Program
Fund or a Program Fund Affiliate, for any reason, fails to satisfy the terms and
conditions of Rule 2830, Program Fund or Program Fund Affiliate will immediately
notify USC of the Program Fund's disqualification and the reason therefor.
f. Program Fund and Program Fund Affiliate represent and warrant to
USC that each Program Fund listed on Exhibit C has registered or qualified its
shares for sale under applicable federal and state law in every state or
territory in the United States (including the District of Columbia and Puerto
Rico). Program Fund or Program Fund Affiliate shall advise USC immediately if
any such registration or qualification is terminated.
g. Program Fund and Program Fund Affiliate represent and warrant that
each Program Fund and Program Fund Affiliate will provide to USC such
information or documentation necessary for USC to fulfill its obligations
hereunder or such other information or documentation that USC may reasonably
request from time to time.
h. Program Fund and Program Fund Affiliate represent and warrant that
any recision offer that is made to shareholders who own shares directly with a
Program Fund will also be made to NTF Customers who would be entitled to such
recision offer if they owned shares directly with the Program Fund. Program Fund
will provide USC with a letter on Program Fund letterhead containing the terms
of any such recision offer, and USC may send this writing, or any derivation
thereof, to the affected NTF Customers. To assist Program Fund in effecting any
such recision offer, USC agrees to provide Program Fund or Program Fund
Affiliate with relevant information regarding any affected NTF Customer,
including the account number, the number of shares purchased and redeemed, if
any, the dates of the purchase(s) and redemption(s), if any, and the dollar
amount of such transactions.
i. USC represents and warrants that USC is a broker-dealer registered
with the Securities and Exchange Commission and is a member of the NASD. USC
further represents and warrants that USC is duly registered or qualified as a
broker-dealer in every state or territory of the United States (including the
District of Columbia and Puerto Rico) where such registration or qualification
is required to enter into this Agreement and to carry out the services
contemplated herein.
5. USE OF PARTIES' NAMES
a. Without USC's prior written consent, Program Fund and Program Fund
Affiliate will not cause or permit the use, description, or reference to USC,
or to the relationship contemplated by this Agreement in any advertisement or
promotional materials or activities.
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b. Program Fund and Program Fund Affiliate authorize USC to use the
names or other identifying marks of Program Fund and Program Fund Affiliate in
connection with the operation of the USC NTF. Program Fund or Program Fund
Affiliate may withdraw this authorization as to any particular use of any such
name or identifying marks at any time (i) upon their reasonable determination
that such use would have a material adverse effect on the reputation or
marketing efforts of Program Fund or Program Fund Affiliate, or (ii) if any of
the Program Funds cease to be available through the USC NTF; PROVIDED, HOWEVER,
that USC may, in its discretion, continue to use materials prepared or printed
prior to the withdrawal of such authorization or in the process of being
prepared or printed at the time of such withdrawal.
6. PROPRIETARY INFORMATION
Program Fund and Program Fund Affiliate acknowledge that the identities
of NTF Customers, information maintained by USC regarding NTF Customers, and all
computer programs and procedures developed by USC or its agents in connection
with USC's performance of its duties hereunder constitute the valuable property
of USC. Program Fund and Program Fund Affiliate agree that should it come into
possession of any list or compilation of the identities of or other information
about NTF Customers, or any other property of USC, pursuant to this Agreement or
any other agreement related to services under this Agreement, Program Fund and
Program Fund Affiliate shall hold such information or property in confidence and
refrain from using, disclosing, or distributing any of such information or other
property, except (i) with USC's prior written consent, or (ii) as required by
law or judicial process. Program Fund and Program Fund Affiliate acknowledge
that any breach of the foregoing provisions would result in immediate and
irreparable harm to USC for which there would be no adequate remedy at law and
agrees that in the event of such a breach USC will be entitled to equitable
relief by way of temporary and permanent injunctions, as well as such other
relief as any court of competent jurisdiction deems appropriate.
7. INDEMNIFICATION
Program Fund, any person directly or indirectly controlling,
controlled by, or under common control with, such Program Fund, any officer,
director, partner, corporation, or employee of such Program Fund, and any
Program Fund Affiliate shall indemnify and hold harmless USC and each
director, officer, employee and agent of USC from and against any and all
losses, claims, liabilities and expenses (including reasonable attorney's
fees) ("Losses") incurred by any of them arising out of (i) any untrue
statement of material fact or any omission of a material fact necessary in
order to make the statements made, in light of the circumstances under which
they were made, not misleadmg in any prospectus, registration statement,
annual or other periodic report or proxy statement of the Program Fund or in
any advertising or promotional material published or provided to USC by or on
behalf of Program Fund or Responsible Affiliates or accurately derived from
information published or provided by or on behalf of Program Fund or
Responsible Affiliates, (ii) any violation of any law, rule or regulation
relating to the registration or qualification of shares of the Program Fund,
(iii) any breach by Program Fund or Responsible Affiliates of any
representation, warranty or Agreement contained in this Agreement, or (iv)
any willful misconduct or negligence by Program Fund or Responsible
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Affiliates in the performance of, or failure to perform, its obligations
under this Agreement, except to the extent such Losses are caused by USC's
breach of this Agreement or its willful misconduct or negligence in the
performance, or failure to perform, its obligations under this Agreement.
This Section 7 shall survive termination of this Agreement.
8. ASSIGNABILITY
This Agreement is not assignable by either party without the other
party's prior written consent, and any attempted assignment in contravention
hereof shall be null and void; PROVIDED, HOWEVER, that USC may, without the
consent of Program Fund or Program Fund Affiliate, assign its rights and
obligations under this Agreement to any affiliate of USC.
9. EXHIBITS; ENTIRE AGREEMENT
All Exhibits to this Agreement, as they may be amended from time to time,
are by this reference incorporated into and made a part of this Agreement. This
Agreement (including the Exhibits hereto) constitutes the entire Agreement
between the parties as to the subject matter hereof and supersedes any and-all
agreements, representations and warranties, written or oral, regarding such
subject matter made prior to the time at which this Agreement has been executed
and delivered by USC and Program Fund or Program Fund Affiliate.
10. AMENDMENT
This Agreement may be amended only by a writing executed by each party
hereto that is to be bound by such amendment, except as provided in this Section
10. Exhibit A may be amended by USC on forty (40) days' written notice to
Program Fund or Program Fund Affiliate or such earlier time as shall be agreed
to by the parties. Exhibits B and C may be amended from time to time as shall be
agreed to by the parties.
11. GOVERNING LAW
This Agreement will be governed by and interpreted under the laws of the
State of New York, without regard to that state's choice of law provisions.
12. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
will be deemed an original, but all of which together shall constitute one and
the same instrument.
13. EFFECTIVENESS AND TERMINATION
a. Upon USC's acceptance of Schedule I, as amended from time to time,
the effective date of this Agreement as to any Program Fund shall be the later
of the date on which this Agreement is made or the date set forth opposite the
name of the Program Fund on Schedule I.
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b. This Agreement may be terminated as to any Program Fund by USC
immediately upon written notice to Program Fund or Program Fund Affiliate. This
Agreement may be terminated as to any Program Fund by Program Fund or Program
Fund Affiliate upon thirty (30) days' written notice to USC.
c. Upon the termination date for any Program Fund, USC will no longer
make the Program Fund shares available for purchase by NTF Customers through
USC NTF. USC reserves the right to transfer the Program Fund shares of NTF
Customers out of the Account. If USC continues to hold the Program Fund shares
on behalf of NTF Customers in the Account, the parties agree to be obligated
under, and act in accordance with, the terms and conditions of this Agreement
with respect to such shares.
14. MISCELLANEOUS
a. CUSTODY. Program Fund and Program Fund Affiliate acknowledge that
Program Fund shares maintained by the Program Fund or Program Fund Affiliate
hereunder are held in custody for the exclusive benefit of NTF Customers and
shall be held free of any right, charge, security interest, lien or claim
against USC in favor of the Program Fund or Program Fund Affiliate.
b. NONEXCLUSIVITY. Program Fund and Program Fund Affiliate acknowledge
that USC may perform services similar to those to be provided under this
Agreement to other investment companies, investment company sponsors, or service
providers to investment companies.
c. CERTAIN TRANSACTION CHARGES. Program Fund and Program Fund
Affiliate acknowledge and agree that USC reserves the right to collect such
transaction fees from certain NTF Customers, including "Active Traders," as
defined by USC, for certain special trading services and from other NTF
Customers upon such other customers' redemption of certain shares of a Program
Fund.
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IN WITNESS WHEREOF, this Agreement has been executed by a duly authorized
representative of the parties hereto.
------------------------------- ------------------------------------
U.S. Clearing, a division of Fleet [PROGRAM FUND or PROGRAM FUND
Securities, Inc. AFFILIATE]
on its own behalf and on behalf of
By: each of its Program Funds listed on
------------------------------- Exhibit C hereto, as amended from
Xxxxxxx X. Xxxxxxx time to time.
Vice President
U.S. Clearing By:
---------------------------------
Name:
-------------------------------
Date:
-----------------------------
Title:
------------------------------
Date:
-------------------------------
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EXHIBIT A
OPERATING PROCEDURES
1. THE ACCOUNT
a. USC will open the Accounts with each Program Fund or Program Fund
Affiliate. The Accounts will be set up for the reinvestment of capital gains and
dividend distributions. The Accounts shall be registered:
U.S. Clearing, a division of Fleet Securities, Inc.
Special Custody Account for the Exclusive Benefit of Customers
Attention: [NAME]
[ADDRESS]
b. The Program Fund or Program Fund Affiliate shall designate the
Accounts with account numbers. Account numbers will be the means of
identification when the parties are transacting in the Accounts.
c. The parties acknowledge that each Account is an omnibus account in
USC's name with shares held by any number of beneficial owners. USC represents
that the shares in each Account are customer securities and are segregated from
USC's own assets. Program Fund and Program Fund Affiliate represent that the
shares in each Account are carried free of any charge, lien or payment of any
kind in favor of the Program Fund or Program Fund Affiliate or any person
claiming through the Program Fund or Program Fund Affiliate.
d. The Accounts shall be kept open on the Program Fund or Program Fund
Affiliate's books regardless of a lack of activity or small position size,
except to the extent that USC takes specific action to close an Account, or to
the extent the Program Fund's prospectus reserves the right to close accounts
that are inactive. In the latter case, Program Fund or Program Fund Affiliate
will give prior notice to USC before closing any Account.
e. USC has the right to open additional Accounts from time to time to
accommodate other investment options and features, and to consolidate existing
Accounts if and when appropriate to meet the needs of the USC NTF. In the event
that it is necessary for USC to open an account with a Program Fund or Program
Fund Affiliate for the payment of distributions in cash, the term "Account"
shall mean both the account for the reinvestment of capital gains and dividend
distributions and the account for the payment of distributions in cash.
f. USC reserves the right to issue instructions to each Program Fund
or Program Fund Affiliate to move shares between the Account and any other
account USC may open.
2. PURCHASE AND REDEMPTION OPTIONS
USC will accept orders to purchase and redeem Program Fund shares from
NTF Customers no later than the time each business day (typically, 4:00 p.m.
Eastern Time) that the
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Program Fund calculates its NAV per share in accordance with the procedures
contained in the Program Fund's prospectus ("Pricing Deadline"). USC will
communicate orders to the Program Fund or Program Fund Affiliate prior to a
mutually agreed upon time. NTF Customer orders that are accepted by USC each
business day prior to the Pricing Deadline will be priced at the Program Fund's
NAV as of the Pricing Deadline.
3. SETTLEMENT OF TRANSACTIONS
a. Program Fund and Program Fund Affiliate represents that each
Program Fund listed on Exhibit C is eligible for processing, settlement and
communications through the National Securities Clearing Corporation's Fund/SERV,
Networking level-3, Commission Settlement Services, ACATS Fund/SERV, and Mutual
Fund Profile.
b. For each day on which any NTF Customer places with a Participating
Correspondent a purchase or redemption order for shares of a Program Fund, USC
shall aggregate all such purchase orders and/or aggregate redemption orders in
each Program Fund and submit for settlement through Fund/SERV an aggregate
purchase or aggregate redemption order.
c. Should a Program Fund or Program Fund Affiliate need to extend
settlement on a trade, Program Fund or Program Fund Affiliate must contact USC
on trade date to discuss the extension. For purposes of determining the length
of settlement, Program Fund or Program Fund Affiliate agrees to treat
shareholders that hold Program Fund shares through the Account the same as it
treats shareholders that hold Program Fund shares directly with the Program Fund
or Program Fund Affiliate.
d. In the event that a Program Fund or Program Fund Affiliate cannot
verify redemption proceeds, Program Fund or Program Fund Affiliate will settle
trades and forward redemption proceeds in accordance with this Agreement based
on the information provided by USC. USC will be responsible for the accuracy of
all trade information provided by it.
e. Program Fund and Program Fund Affiliate represents that each
Program Fund that has reserved the right to redeem in kind has filed
Form N-18F-1 with the Securities and Exchange Commission. For purposes of
complying with the Program Fund's election on Form N-18F-1, Program Fund agrees
that it will treat as a "shareholder" each shareholder that holds Program Fund
shares through the Account, provided that USC provides to Program Fund or
Program Fund Affiliate, upon request, the name or account number, number of
Program Fund shares and other relevant information for each such shareholder.
Program Fund or Program Fund Affiliate acknowledge that treatment of USC as the
sole shareholder of Program Fund shares held in the Account for purposes of
applying the limits in Rule 18f-1 under the 1940 Act would be inconsistent with
the intent of Rule 18f-1 of the Program Fund's election on Form N-18F-1 and
could unfairly prejudice shareholders that hold Program Fund shares through the
Account.
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4. ACCOUNT RECONCILIATION REQUIREMENTS
a. USC shall verify, on a next day basis, orders placed for the
Account with each Program Fund. All activity in the Account must be reflected.
Therefore, any "as of" activity must be shown with its corresponding "as of"
dates.
b. USC must receive statements on or before the eighth business day of
each month, even if there has been no activity in the Account during the period,
unless USC can verify transactions by direct or indirect systems access.
c. The parties agree to notify each other and correct any error in the
Account with any Program Fund upon discovery. If an error is not corrected by
the day following discovery, each party agrees to make best efforts to avoid
this from hindering any routine daily operational activity.
5. PRICING
Every business day on which there is a transaction in the Account and for
each month-end business day, Program Fund or Program Fund Affiliate will provide
to USC prior to 7:00 p.m., Eastern Time, each Program Fund's closing net asset
value and public offering price (if applicable) for that day and/or notification
of no price for that day. Program Fund or Program Fund Affiliate shall provide
such information on a best efforts basis taking into consideration any
extraordinary circumstances arising at the Program Fund or Program Fund
Affiliate (e.g. natural disasters, etc.).
6. DISTRIBUTIONS
a. Program Fund or Program Fund Affiliate shall provide distribution
information to USC in a timely manner to enable USC to pay distributions to NTF
Customers on or as close to payable dates as practicable. As to each Program
Fund, Program Fund or Program Fund Affiliate shall provide USC with: (i) the
record date, ex-dividend date, and payable date with respect to a Program Fund
as soon as practicable after it is announced, but no later than three (3)
business days prior to record date, (ii) the record date share balance in the
Account and the distribution rate per share on the first business day after
record date, and (iii) the reinvest price per share as soon as it is available.
Other distribution information required by USC from time to time for payment of
distributions to NTF Customers shall be provided by Program Fund or Program Fund
Affiliate on such dates as are agreed upon between USC and Program Fund or
Program Fund Affiliate, but no later than payable date.
b. For purposes of effecting cash distributions for NTF Customers who
have elected to receive their capital gains distributions and/or dividends in
cash, prior to 10:00 a.m., Eastern Time, on the next business day following
receipt of the reinvestment price per share as provided in paragraph 6(a)(iii)
above, USC shall notify Program Fund or Program Fund Affiliate of the aggregate
number of Program Fund shares with respect to which the purchase is required to
be voided. Program Fund or Program Fund Affiliate agrees that the purchase of
such aggregate number of Program Fund shares may be voided. Program Fund or
Program Fund Affiliate shall
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credit the Account on the same business day to reflect the proceeds of such
voided transaction. USC shall use such voided transaction proceeds to pay the
distribution in cash to NTF Customers who have elected to receive such
distributions in cash.
c. For each Program Fund that pays daily dividends, Program Fund or
Program Fund Affiliate shall provide on a daily basis, the following record date
information: daily rate, account share balance, account accrual dividend amount
(for that day), account accrual dividend amount (for period to date), and
account transfers and period-to-date accrual amounts.
d. In the event that USC maintains an Account with a Program Fund or
Program Fund Affiliate for the payment of distributions in cash, Program Fund or
Program Fund Affiliate shall credit the Account on payable date to reflect any
cash distribution to the Account.
e. Each Program Fund shall accrue dividends, commencing on the
settlement date for the purchase of Program Fund shares and terminating on the
trade date for the redemption of Program Fund shares.
f. For annual tax reporting purposes, Program Fund or Program Fund
Affiliate shall inform USC of the portion of each Program Fund's distributions
that include any of the following: foreign source income, tax exempt income by
state of origin or return of capital.
g. USC shall prepare and file with the appropriate governmental
agencies, such information, returns and reports as are required to be so filed
for reporting (i) dividends and other distributions made, (ii) amounts withheld
on dividends and other distributions and payments under applicable federal and
state laws, rules and regulations and (iii) gross proceeds of sales transactions
as required.
h. USC will, upon request, (i) furnish Program Fund or Program Fund
Affiliate with monthly written statements of the number of shares of each
Program Fund purchased on behalf of NTF Customers resident in one or more states
or other jurisdictions indicated by Program Fund or Program Fund Affiliate or
(H) on a daily basis, transmit to an electronic database provider, with whom USC
has established effective systems interfaces, information regarding the number
of shares of each Program Fund sold in each state for retrieval by Program Fund.
Program Fund or Program Fund Affiliate shall be responsible for all reasonable
fees and other reasonable charges of such database provider in connection with
USC's transmission of such information to and Program Fund's retrieval of such
information from such database provider.
i. Upon notice from Program Fund or Program Fund Affiliate, USC shall
effect mergers, splits and other reorganization activities of a Program Fund for
NTF Customers.
7. PRICE AND DISTRIBUTION RATE ERRORS
a. In the event adjustments are required to correct any error in the
computation of the net asset value or public offering price of a Program Fund's
shares or in the distribution rate for a Program Fund's shares, Program Fund or
Program Fund Affiliate shall notify USC as soon as
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possible after discovering the need for such adjustments. Notification can be
made orally, but must be confirmed in writing.
b. USC and Program Fund or Program Fund Affiliate shall agree promptly
and in good faith to a resolution of the error, and no adjustment for the error
shall be taken in the Account until such Agreement is reached. Following
resolution, upon request by USC, Program Fund or Program Fund Affiliate shall
provide USC with written notification of the resolution. The letter shall be
written on Program Fund or Program Fund Affiliate letterhead and must state for
each day on which an error occurred the incorrect price or rate, the correct
price or rate, and the reason for the price or rate change. Program Fund or
Program Fund Affiliate agrees that USC may send this writing, or derivation
thereof, to NTF Customers whose accounts are affected by the price or rate
change.
c. If an NTF Customer has received cash in excess of what it is
entitled, USC will, when requested by Program Fund or Program Fund Affiliate,
and to the extent practicable and permitted by law, debit the NTF Customer's
account in the amount of such excess, but only to the extent of any cash in the
account, and repay it to the Program Fund or Program Fund Affiliate. In no
event, however, shall USC be liable to Program Fund or Program Fund Affiliate
for any such amounts. Upon the request by Program Fund or Program Fund
Affiliate, USC shall provide Program Fund or Program Fund Affiliate with the
name of the NTF Customer and other relevant information concerning the NTF
Customer's account to assist Program Fund or Program Fund Affiliate in the
collection from the NTF Customer of any such excess amount not repaid to the
Program Fund or Program Fund Affiliate.
d. If adjustment is necessary to correct an error which has caused NTF
Customers to receive dollars or shares less than that to which they are
entitled, the Program Fund or Program Fund Affiliate shall, as appropriate and
as mutually agreed by the parties pursuant to 7(b) above, make all necessary
adjustments to the number of shares owned in the Account and/or distribute to
USC any and all amounts of the underpayment. USC will credit the appropriate
amount of such shares or payment to each NTF Customer.
e. For purposes of making adjustments, including the collection of
overpayments, Program Fund or Program Fund Affiliate agrees to treat
shareholders that hold Program Fund shares through the Account the same as it
treats shareholders that hold Program Fund shares directly with the Program Fund
or Program Fund Affiliate. When making adjustments for an error, a Program Fund
or Program Fund Affiliate shall not net same day transactions in the Account.
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8. RECORD MAINTENANCE
a. USC shall maintain records for each NTF Customer who holds Program
Fund shares through the Account which records shall include:
(i) Number of shares;
(ii) Date, price and amount of purchases and redemptions
(including dividend reinvestments) and date and amounts of
dividends paid for at least the current year to date;
(iii) Name and address of the NTF Customer, including zip codes
and social security numbers or taxpayer identification
numbers;
(iv) Records of distributions and dividend payments;
(v) Any transfers of shares; and
(vi) Overall control records.
b. USC will be responsible for accurately posting transactions in
Program Fund shares to NTF Customer accounts.
9. TRANSFER OF ACCOUNTS
a. Program Fund and Program Fund Affiliate agrees to transfer shares
from accounts in the name of an NTF Customer or the name of a broker-dealer for
the benefit of an NTF Customer which is maintained directly with a Program Fund
or Program Fund Affiliate to the Account. For the purpose of expediting such
direct transfers, Program Fund or Program Fund Affiliate will accept by
facsimile transmission a summary sheet of information indicating the NTF
Customer's name, account numbers, the Program Fund affected and the number of
shares to be re-registered. For record keeping purposes, actual copies of
transfer forms will be forwarded to a Program Fund or Program Fund Affiliate
upon its request for such forms.
b. USC represents and warrants that for each transfer indicated in the
summary sheet of information, it holds each underlying instruction for
re-registration signed by the NTF Customer, and that the NTF Customer's
signature on such instruction is signature guaranteed by USC pursuant to the New
York Stock Exchange's Medallion Signature Program.
c. USC agrees to indemnify and hold harmless Program Fund and Program
Fund Affiliate and each director, officer, employee and agent of Program Fund or
Program Fund Affiliate (each an "Indemnified Person") from and against any and
all Losses incurred by any Person arising out of the impropriety of any transfer
effected by the Program Fund or Program Fund Affiliate in reliance on the
summary sheet of information, except to the extent such Losses arise out of the
failure of any Indemnified Person to comply with the instructions on the summary
sheet of information.
d. Program Fund and Program Fund Affiliate agree to process all
transfer requests into the appropriate Account USC as custodian is qualified to
accept in the Accounts shares from XXX, Xxxxx or 401(k) accounts. At no time
shall any Program Fund or Program Fund Affiliate establish separate accounts
registered to USC for the benefit of individual shareholders. In the
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event any such account is mistakenly opened, USC reserves the right to instruct
such Program Fund or Program Fund Affiliate to move Program Fund shares to the
Account.
e. Program Fund and Program Fund Affiliate agree to confirm to USC the
completion of each transfer on the day it occurs. The confirming information
shall include: (i) the number of shares; (ii) the date ("as of" date if
unavoidable delay); (iii) the transaction date; (iv) the account number of the
transferring account of the NTF Customer; (v) the account number of the Account
to which the transfer was made; (vi) the registration; (vii) accrued dividends;
and (viii) the account type (i.e., MA, Xxxxx, 401(k), etc.).
f. Program Fund and Program Fund Affiliate agree that transfer
processing after record date but prior to payable date will include all accrued
dividends. Each Program Fund and Program Fund Affiliate is responsible for
monitoring all completed full transfers for "trailing" dividends. Should a
"trailing" dividend appear in an account, a Program Fund or Program Fund
Affiliate shall send such dividend to USC within five (5) business days, along
with a specific written notification thereof Notification shall include details
of the dividend and the NTF Customer, including the NTF Customer's social
security number or taxpayer identification number, and/or the account number for
the Account to which the transfer was made.
g. If NTF Customers submit share certificates for transfer into their
USC accounts, USC will send such certificates, properly endorsed to the
applicable Program Fund or Program Fund Affiliate, for transfer into the Account
with such Program Fund or Program Fund Affiliate. Upon USC's request, Program
Fund and Program Fund Affiliate agrees to provide the status of such transfers
and book share balances.
10. SHAREHOLDER COMMUNICATION
a. Program Fund and Program Fund Affiliate agree to arrange with USC,
or a mailing agent designated or approved by USC, the distribution of the
materials listed below to all of NTF Customers who hold Program Fund shares,
which distribution shall be so arranged by Program Fund and Program Fund
Affiliate as to occur immediately upon the effective date of the materials:
(i) All proxy or information statements prepared for
circulation to shareholders of record of such Program
Fund;
(ii) Annual reports;
(iii) Semi-annual reports;
(iv) Quarterly reports (if applicable); and
(v) All updated prospectuses, supplements and amendments
thereto.
Program Fund and Program Fund Affiliate shall be responsible for
providing the materials and for USC or the mailing agent's fees in connection
with this service as well as for timely distribution. Program Fund and Program
Fund Affiliate agrees to have USC or the mailing agent consolidate mailings of
material to shareholders of more than one Program Fund if the mailing is
identical for all Program Funds in the Program Fund family.
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b. In addition to the materials listed above, Program Fund and Program
Fund Affiliate agrees to provided directly to USC all prospectuses, statements
of additional information and supplements and amendments thereto, and annual and
other periodic reports for each Program Fund in amounts reasonably requested by
USC for distribution to NTF Customers. Program Fund and Program Fund Affiliate
are obligated to supply these materials to USC in a timely manner so as to allow
USC, at their own expense, to send current prospectuses and statements of
additional information and periodic reports, immediately upon their effective
dates, to NTF Customers and prospective customers requesting them through USC or
Participating Correspondents. USC will also send a current Program Fund
prospectus with purchase trade confirmations for the initial purchase of a
Program Fund. Program Fund and Program Fund Affiliate agree to notify USC
immediately of any change to a Program Fund's prospectus.
c. Program Fund and Program Fund Affiliate agree to ensure that the
foregoing materials shall be in compliance with all applicable provisions of the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the 1940 Act, as amended, all applicable rules and regulations under
each such statute, and any and all laws, rules and regulations that may be
adopted and become applicable in the future.
d. Program Fund and Program Fund Affiliate agree to ensure that the
prospectus of each Program Funds discloses: (i) that a broker may charge
transaction fees on the purchase and/or sale of Program Fund shares; (ii) that
the performance of the Program Fund may be compared in publications to the
performance of various indices and investments for which reliable performance
data is available; (iii) that the performance of the Program Fund may be
compared in publications to averages, performance rankings, or other information
prepared by recognized mutual Program Fund statistical services; and (iv) that
the annual report contains additional Performance information and will be made
available to investors upon request and without charge.
e. USC shall mail statements to NTF Customers on a monthly basis (or
as to accounts in which there has been no activity in a particular month, no
less frequently than quarterly) showing, among other things, the number of
shares of each Program Fund owned by such NTF Customer and the net asset value
of each such Program Fund as of a recent date.
11. NEW PROCESSING SYSTEMS
Program Fund and Program Fund Affiliate agree to cooperate to the extent
possible with USC as USC develops and seeks to implement new processing systems
for the USC NTF.
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EXHIBIT B
CALCULATION AND PAYMENT OF FEES
a. For the services provided by USC hereunder, Program Fund or Program
Fund Affiliate shall pay to USC a fee with respect to each Program Fund,
calculated daily and paid monthly in arrears, equal to:
(i) with respect to all Programs other than index funds held in
the Accounts, .25 percent per annum of the daily net asset
value of the shares (determined by multiplying the number of
such shares times the publicly-reported net asset value of
each share); and
(ii) with respect to index funds .15 percent per annum of the
daily net asset value of the shares.
The total number of shares of all Program Funds with respect to
which a fee will be due to USC hereunder shall be referred to in this Exhibit A
as "Participating Assets."
In all other aspects, the fee due USC shall be calculated and
payable in accordance with this Agreement and Exhibit B.
b. Subsequent to each month-end, USC shall send to Program Fund or
Program Fund Affiliate a statement of the market value of shares of the Program
Fund for which the fee is calculated for the preceding month, together with a
statement of the amount of such fee. In the calculation of such fee, USC records
shall govern unless Program Fund or Program Fund Affiliate can demonstrate that
the number of shares of Program Fund price(s) used in such calculation is
inaccurate.
c. Program Fund or Program Fund Affiliate shall pay USC such fee
within 30 days after receipt of such statement by Program Fund or Program Fund
Affiliate. Such payment shall be by wire transfer or other form acceptable to
USC and shall be separate from payments related to redemption proceeds and
distributions.
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EXHIBIT C
PROGRAM FUNDS
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Galaxy Funds, on its own behalf and on behalf of
each of its Program Funds listed above.
By:
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Name:
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Title:
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Date:
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Accepted by U.S. Clearing, a division of Fleet Securities, Inc.
By:
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Name:
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Title:
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Date:
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