Exhibit (h)(xi) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
MUTUAL FUNDS
SALES AND SERVICE
AGREEMENT
This Agreement is entered into among the financial institution executing this
Agreement ("Financial Institution"), Edgewood Services, Inc. ("Distributor"),
acting as principal underwriter with respect to those series or portfolios
listed on each Exhibit hereto (referred to individually as the "Fund" and
collectively as the "Funds").
This Agreement contemplates that Distributor may make one or more of the
following payments to Financial Institutions: (a) payment for sales commissions
as described in Section II and listed in each Exhibit; (b) payment for
distribution services as described in Section III and listed in each Exhibit;
(c) payment for shareholder services as described in Section IV and listed in
each Exhibit; and/or (d) supplemental payments as described in Section V and
listed in each Exhibit.
SECTION I - FINANCIAL INSTITUTION.
1. Status of Financial Institution as "Bank" or Registered Broker-Dealer.
Financial Institution represents and warrants to Distributor:
(a)(i)that it is a broker or dealer as defined in Section 3(a)(4) or
3(a)(5) of the Securities Exchange Act of 1934 ("Exchange Act"); that
it is registered with the Securities and Exchange Commission ("SEC")
pursuant to Section 15 of the Exchange Act; that it is a member in
good standing of the National Association of Securities Dealers, Inc.
("NASD"); that its customers' accounts are insured by the Securities
Investors Protection Corporation ("SIPC"); and that, during the term
of this Agreement, it will abide by all of the rules and regulations
of the NASD including, without limitation, the NASD Rules of Conduct.
Financial Institution agrees to notify Distributor immediately in the
event of: (1) the termination of its coverage by the SIPC; (2) its
expulsion or suspension from the NASD; or (3) its being found to have
violated any applicable federal or state law, rule or regulation
arising out of its activities as a broker-dealer or in connection
with this Agreement, or which may otherwise affect in any material
way its ability to act in accordance with the terms of this
Agreement. Financial Institution's expulsion from the NASD will
automatically terminate this Agreement immediately without notice.
Suspension of Financial Institution from the NASD for violation of
any applicable federal or state law, rule or regulation will
terminate this Agreement effective immediately upon Distributor's
written notice of termination to Financial Institution; or
(a)(ii)that it is a "bank," as that term is defined in Section 3(a)(6) of
the Exchange Act and that, during the term of this Agreement, it will
abide by the rules and regulations of those state and federal banking
authorities with appropriate jurisdiction over the Financial
Institution, especially those regulations dealing with the activities
of the Institution as described under this Agreement. Financial
Institution agrees to notify Distributor immediately of any action by
or communication from state or federal banking authorities, state
securities authorities, the SEC, or any other party which may affect
its status as a bank, or which may otherwise affect in any material
way its ability to act in accordance with the terms of this
Agreement. Any action or decision of any of the foregoing regulatory
authorities or any court of appropriate jurisdiction which affects
Financial Institution's ability to act in accordance with the terms
of this agreement, including the loss of its exemption from
registration as a broker or dealer, will terminate this Agreement
effective upon Distributor's written notice of termination to
Financial Institution; and
(b) that Financial Institution is registered with the appropriate
securities authorities in all states in which its activities make
such registration necessary.
1 Revised 10/7/04
2. Financial Institution Acts as Agent for its Customers.
The parties agree that in each transaction in the shares of beneficial interest
or capital stock of any Fund ("Shares") and with regard to any services rendered
pursuant to this Agreement: (a) Financial Institution is acting as agent for the
customer; (b) each transaction is initiated solely upon the order of the
customer; (c) as between Financial Institution and its customer, the customer
will have full beneficial ownership of all Shares of the Funds; (d) each
transaction shall be for the account of the customer and not for Financial
Institution's account; and (e) each transaction shall be without recourse to
Financial Institution provided that Financial Institution acts in accordance
with the terms of this Agreement. Financial Institution shall not have any
authority in any transaction to act as Distributor's agent or as agent for the
Funds.
SECTION II - AGREEMENT FOR SALES OF FUND SHARES.
3. Execution of Orders for Purchase and Redemption of Shares.
(a) Distributor, as agent for the Funds, hereby offers to sell Shares of the
Funds listed on each Exhibit hereto to Financial Institution, for the
account of Financial Institution's customers, upon the following terms and
conditions:
(i)Unless otherwise agreed in writing by the parties, Financial
Institution agrees to comply with reasonable instructions provided by
Distributor or a Fund from time to time ("Instructions") with respect
to establishing accounts and processing purchase orders.
(ii)Distributor and each Fund reserves the right to reject, in its sole
discretion, any purchase order for a Fund's Shares. Unless otherwise
instructed by Financial Institution, Distributor agrees to confirm to
Financial Institution in writing (or by electronic or other reasonable
means) a Fund's acceptance of any purchase order.
(iii)Share purchase orders shall be executed at the public offering price
per share next calculated after the order is received subject to any
sales charges or other conditions disclosed in the applicable
prospectus.
(b) Financial Institution shall settle purchase order transactions in
accordance with the applicable prospectus.
(c) With respect to those Shares subject to an initial sales load, Financial
Institution shall be responsible for the determination of the applicable
initial sales load. Financial Institution shall provide Distributor with
information regarding applicable breakpoints, reductions, waivers or
variations of the initial sales load to each transaction and shall inform
Distributor whether settlement of a transaction will be net of the initial
sales load.
(d) Upon request, Financial Institution shall provide Distributor with a report
detailing the amount of any initial sales loads retained by Financial
Institution.
(e) If a purchase order is not settled in accordance with this Section,
Distributor may without notice cancel the sale and Financial Institution
shall be responsible for any resulting loss Distributor or the Funds
sustains. Neither the Fund nor Distributor shall have any responsibility
(but otherwise reserves the right) to correct Financial Institution's
assessment of an incorrect initial sales load.
(f) Financial Institution will deliver or cause to be delivered to each
customer, at or prior to the time of any purchase of Shares, a copy of the
prospectus for such Shares.
(g) Unless otherwise agreed by the parties, Financial Institution agrees to
comply with Instructions with respect to processing exchange and redemption
orders.
(h) Exchange and redemption orders shall be executed at the net asset value
next calculated after the order is received, subject to any contingent
deferred sales charge ("CDSC"), redemption fee or other conditions
disclosed in the applicable prospectus.
(i) Financial Institution agrees to collect all applicable redemption fees as
described in the prospectus on all accounts opened with the Fund on an
omnibus basis, and promptly remit such fees to Distributor. Distributor
shall collect all applicable redemption fees on accounts opened with the
Fund on a fully-disclosed basis, unless otherwise notified in writing by
Financial Institution that Financial Institution will assume such
obligation.
(j) Distributor and each Fund reserves the right to reject any exchange order
for Shares if permitted by the prospectus. Distributor agrees to confirm
to Financial Institution in writing (or by electronic or other reasonable
means) the Fund's acceptance of any exchange order.
(k) At the reasonable request of Distributor, Financial Institution agrees to
take such actions as may be appropriate to (i) give effect to any
conversion of Shares as required by the prospectus; (ii) give effect to any
election by a Fund to redeem Shares as permitted by the prospectus; or
(iii) collect and remit to the Fund any CDSC or redemption fee incorrectly
paid to Financial Institution or its customer.
4. Initial Sales Loads Payable to Financial Institution.
(a) On each order accepted by Distributor, in exchange for the performance of
sales services and/or distribution services, Financial Institution will be
entitled to receive the applicable dealer concession set forth in the then
current prospectus or statement of additional information ("SAI") of the
applicable Fund or applicable Fund Exhibit, whichever contains more recent
information, subject to any adjustment in the rate of such concession
referred to below, from the amount paid by Financial Institution's
customer. The initial sales loads for any Fund shall be those set forth in
its prospectus. The rate of the dealer concession payable to Financial
Institution may be changed at any time at Distributor's sole discretion
upon written notice to Financial Institution.
(b) Transactions may be settled by Financial Institution: (i) by payment of the
full purchase price less an amount equal to Financial Institution's
applicable percentage of the initial sales load, or (ii) by payment of the
full purchase price, in which case Financial Institution shall receive, not
less frequently than monthly, the aggregate fees due it on orders received
and settled. Upon request, Financial Institution shall provide Distributor
with a report detailing the amounts retained by Financial Institution under
subparagraph 4(b)(i).
(c) It shall be the obligation of the Financial Institution either: (i) to
provide Distributor with all necessary information regarding the
application of the appropriate initial sales load to each transaction, or
(ii) to assess the appropriate initial sales load for each transaction and
to forward the public offering price, net of the amount of the initial
sales load to be reallowed to the Financial Institution, to the appropriate
Fund. Neither the Fund nor Distributor shall have any responsibility to
correct the payment or assessment of an incorrect initial sales load due to
the failure of the Financial Institution to fulfill the foregoing
obligation.
5. Advance Commissions Payable to Financial Institution.
Upon the purchase of certain Shares, as described in the applicable prospectus,
the Financial Institution may be entitled to receive an advance commission from
the Distributor as set forth on each Exhibit (or the Fund's current prospectus,
if it contains more recent information). This amount is not to be considered an
initial sales load and should not be deducted from the public offering price of
the Shares which shall be forwarded to the Fund. Generally, a CDSC will be
assessed upon the redemption of Shares with regard to which an advance
commission is paid by Distributor. In the event that Financial Institution
notifies Distributor in writing that Financial Institution elects to waive such
advance commission, and if the Fund's prospectus or SAI permits such a waiver,
the CDSC will not be charged upon the redemption of the relevant Shares. To
receive advance commission from Distributor on Shares that are subject to a
CDSC, Financial Institution must open investor accounts with the Fund on a
fully-disclosed basis or be able to account for share ownership periods used in
calculating the CDSC. Furthermore, should the custody (or record ownership) of
the shares of the investor account(s) be transferred during the applicable CDSC
holding period (as described in the Fund prospectus or SAI) to a financial
institution which does not maintain investor accounts on a fully disclosed basis
and does not account for share ownership periods, the Financial Institution
agrees to reimburse Distributor prior to such transfer for advance commissions
paid to it by Distributor.
6. Delivery of Prospectuses to Customers.
Financial Institution will deliver or cause to be delivered to each customer, at
or prior to the time of any purchase of Shares, a copy of the current prospectus
of the applicable Fund and, upon request by a customer or shareholder, a copy of
the applicable Fund's current SAI and any annual or semi-annual report
("Financial Report(s)"). Financial Institution shall not make any
representations concerning any Shares other than those contained in the
prospectus, SAI or Financial Report of the Fund or in any promotional materials
or sales literature furnished to Financial Institution by Distributor or the
Fund.
7. Indemnification.
(a) In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties hereunder on the part of
Distributor or the Funds, and their respective officers, directors, or
employees (each a "Distributor Indemnified Party"), Financial Institution
agrees to indemnify each Distributor Indemnified Party against any and all
claims, demands, liabilities and reasonable expenses (including attorneys'
fees) which any Distributor Indemnified Party may incur arising from,
related to or otherwise connected with: (i) any breach by Financial
Institution of any provision of this Agreement; or (ii) any actions or
omissions of any Distributor Indemnified Party in reliance upon any oral,
written or electronically transmitted instructions believed to be genuine
and have been given to any of them by Financial Institution or its
representatives. In no event shall Financial Institution be liable for
special, indirect or consequential damages, or lost profits or loss of
business, arising under or in connection with any event described in (i)
and (ii) above.
(b) In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties hereunder on the part of
Financial Institution and its officers, directors, representatives or
employees (each a "Financial Institution Indemnified Party"), Distributor
agrees to indemnify each Financial Institution Indemnified Party against
any and all claims, demands, liabilities and reasonable expenses (including
attorneys' fees) which any Financial Institution Indemnified Party may
incur arising from, related to or otherwise connected with: (i) any breach
by Distributor of any provision of this Agreement; or (ii), any actions or
omissions of Financial Institution Indemnified Party and its subsidiaries,
affiliates, officers, directors, agents and employees in reliance upon any
oral, written or computer or electronically transmitted instructions
reasonably believed to be genuine and to have been given by or on behalf of
the Distributor. In no event shall Distributor be liable for special,
indirect or consequential damages, or loss profits or loss of business,
arising under or in connection with any event described in (i) and (ii)
above.
(c) The Distributor agrees to indemnify and hold harmless any Fund for which
Distributor is principal underwriter, each of its Directors, each of its
officers who have signed the Registration Statement and each other person,
if any, who controls such Fund within the meaning of Section 15 of the
Securities Act of 1933 (the "1933 Act"), as amended, but only with respect
to statements or omissions, if any, made in the Registration Statement, or
any prospectus, SAI, or any amendment or supplement thereof (collectively,
"Filing(s)") in reliance upon, and in conformity with, information
furnished to such Fund about Distributor by or on behalf of Distributor
expressly for the use in the Filing(s). In case any action shall be
brought against any Fund or any other person so indemnified based on the
Filing(s), and with respect to which indemnity may be sought against
Distributor, Distributor shall have the rights and duties given to such
Fund to the extent that Distributor is distributor to that Fund, and such
Fund and each other person so indemnified shall have the rights and duties
given to Distributor by the provisions of subsection (a) above.
(d) The agreement of the parties in this Paragraph to indemnify each
other is conditioned upon the party entitled to indemnification (each an
"Indemnified Party") giving notice to the party required to provide
indemnification (each an "Indemnifying Party") promptly after the summons
or other first legal process for any claim as to which indemnity may be
sought is served on the Indemnified Party. The Indemnified Party shall
permit the Indemnifying Party to assume the defense of any such claim or
any litigation resulting from it, provided that counsel for the
Indemnifying Party who shall conduct the defense of such claim or
litigation shall be approved by the Indemnified Party (which approval shall
not unreasonably be withheld), and that the Indemnified Party may
participate in such defense at its expense. The failure of the Indemnified
Party to give notice as provided in this subparagraph (d) shall not relieve
the Indemnifying Party from any liability other than its indemnity
obligation under this Paragraph. No Indemnifying Party, in the defense of
any such claim or litigation, shall, without the consent of the Indemnified
Party, consent to entry of any judgment or enter into any settlement that
does not include as an unconditional term the giving by the claimant or
plaintiff to the Indemnified Party of a release from all liability in
respect to such claim or litigation.
(e) The provisions of this Section shall survive the termination of this
Agreement.
SECTION III - AGREEMENT TO PROVIDE DISTRIBUTION-RELATED ACTIVITIES.
8. Agreement under Rule 12b-1.
Financial Institution acknowledges that this Section III, together with the
Introduction to this Agreement, constitute a form of "Related Agreement" under a
plan ("Plan") adopted by the Fund in accordance with Rule 12b-1 under the
Investment Company Act of 1940 ("1940 Act"). Financial Institution agrees to
furnish such information to Distributor as necessary to comply with the Plan and
Rule 12b-1.
9. Distribution-Related Activities.
Certain Funds pay distribution fees under a Plan or Plans adopted under Rule
12b-1 under the 1940 Act, as noted on Exhibits to this Agreement (or the Fund's
current prospectus if it contains more recent information). Distributor hereby
appoints Financial Institution to render or cause to be performed one or more of
the distribution-related activities and, to the extent covered under the Plans,
shareholder services referred to in Section IV, as outlined on such Exhibits, to
those Funds and their shareholders.
10. Distribution Fees Payable to Financial Institution.
During the term of this Section III, Distributor will pay Financial Institution
distribution fees for each class of shares ("Class") of a Fund as set forth in
any Exhibits to this Agreement (or the Fund's current prospectus if it contains
more recent information).
11. Term of Agreement.
This Related Agreement shall continue in effect for one year from the date of
its execution, and thereafter for successive periods of one year provided the
form of this Related Agreement is approved with respect to each Class or Fund
(as the case may be) at least annually by the Board of the Fund, including a
majority of the members of the Fund Board who are not interested persons of the
Fund and have no direct or indirect financial interest in the operation of any
Plan or in any related agreements to such Plan ("Independent Board Members"),
cast in person at a meeting called for that purpose.
SECTION IV - AGREEMENT TO PROVIDE SHAREHOLDER SERVICES.
12. Shareholder Services.
Certain Funds pay a Shareholder Services Fee as noted on Exhibit(s) to this
Agreement (or the Fund's current prospectus or SAI, if they contain more recent
information). Financial Institution agrees to render or cause to be rendered
one or more of the personal services to shareholders of the Funds and/or the
maintenance of accounts of shareholders of the Funds ("Shareholder Services") as
outlined on such Exhibit(s). Financial Institution further agrees to provide,
upon request, a written description of the Shareholder Services which Financial
Institution is providing hereunder.
13. Shareholder Service Fees Payable to Financial Institution.
During the term of this Agreement, Distributor will pay Financial Institution
Shareholder Service Fees as set forth in Exhibit(s) to this Agreement (or the
Fund's current prospectus or SAI, if they contain more recent information).
2 Revised 10/7/04
14. Acknowledgment by Financial Institution.
Financial Institution acknowledges that, to the extent a Fund's Plan covers
Shareholder Services and Shareholder Services Fees, such services and fees are
also subject to the terms of Section III of this Agreement.
SECTION V - SUPPLEMENTAL PAYMENTS.
15. Supplemental Payments to Financial Institution.
During the term of this Agreement, Distributor or their affiliates may make
Supplemental Payments to Financial Institution if and as set forth in Exhibit(s)
to this Agreement (or the Fund's current prospectus or SAI, if they contain more
recent information) as additional compensation for services described in
Sections II, III or IV. Such payments will be made from the assets, reasonable
profits and/or resources of Distributor, the adviser to the Fund, or the
affiliates of either, and not from assets of the Funds nor from fees payable
under applicable Plans.
SECTION VI - MISCELLANEOUS.
16. Proration of Payments.
For the payment period in which this Agreement becomes effective or terminates,
there shall be an appropriate proration of the payments referenced in Sections
III, IV and V, on the basis of the number of days that this Agreement is in
effect during the quarter.
17. ERISA Assets.
Deleted.
18. Security Against Unauthorized Use of Funds' Recordkeeping Systems and
Confidentiality.
Financial Institution agrees to provide such security as is necessary to prevent
any unauthorized use of the Funds' recordkeeping system, accessed via any
computer hardware or software provided to Financial Institution by Distributor.
Financial Institution represents and warrants that it has examined and tested
the internal systems that it has developed to support the services outlined
herein and, as of the date of this Agreement, has no knowledge of any situation
or circumstance that will inhibit the system's ability to perform the expected
functions or inhibit Financial Institution's ability to provide the expected
services.
19. Solicitation of Proxies.
Financial Institution agrees not to solicit or cause to be solicited directly,
or indirectly, at any time in the future, any proxies from the shareholders of
any or all of the Funds in opposition to proxies solicited by management of any
Fund, unless a court of competent jurisdiction shall have determined that the
conduct of a majority of the Board of the Fund constitutes willful misfeasance,
bad faith, gross negligence or reckless disregard of their duties. This
Paragraph will survive the term of this Agreement.
20. Taxpayer Identification Number
Financial Institution agrees to provide all necessary information to comply with
all federal, state and local reporting and backup withholding requirements for
its customer account including, without limitation, those requirements that
apply by treating Shares as readily tradable instruments. Financial Institution
represents and agrees that all Taxpayer Identification Numbers ("TINS") provided
are certified, and that no account which requires a certified TIN will be
established without such certified TIN.
3 Revised 10/7/04
21. Notices.
Except as otherwise specifically provided in this Agreement, all notices
required or permitted to be given pursuant to this Agreement shall be given in
writing and delivered by personal delivery or by postage prepaid, registered or
certified United States first class mail, return receipt requested, overnight
courier services, or by facsimile or similar electronic means of delivery (with
a confirming copy by mail as provided herein). Unless otherwise notified in
writing, all notices to Distributor shall be given or sent to it at Federated
Xxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000, Attention: Secretary,
Fax: 000-000-0000 (Phone: 000-000-0000). All notices to Financial Institution
shall be given or sent to it at its address, fax number or e-mail address shown
below.
22. Amendment and Termination
(a) Except as provided below, this Agreement may be amended only by a writing
signed by both parties.
(b) Any additional compensation paid by Distributor to Financial Institution
must be set forth in a written addendum expressly referring to this
Agreement and signed by Distributor.
(c) Distributor may amend the fee Exhibit from time to time by mailing a copy
of the fee Exhibit to the Financial Institution's address, as shown below.
Any such amendment shall be effective ten (10) days after posting
(d) This Agreement will become effective in this form as of the date executed
by Distributor. This Agreement shall continue in effect for a period of
more than one year from its effective date so long as such continuance of
the form of this Agreement is specifically approved by the Funds' Board at
least annually in a manner prescribed in Rule 12b-1 of the 1940 Act. If the
Agreement is not so approved, Distributor shall terminate the Agreement in
accordance with Paragraph (e)(i) of this Section.
(e) This Agreement may be terminated as follows:
(i) at any time, without the payment of any penalty, by Financial
Institution or by Distributor (on its own behalf or on behalf of any
Fund) upon written notice to the other party.
(ii)immediately upon (A) the assignment (as defined in the 0000 Xxx) of the
Agreement by either party; (B) Financial Institution's suspension or
expulsion from the NASD; or (C) Financial Institution's withdrawal or
deregistration as a broker/dealer under the 1934 Act.
(f) The termination of this Agreement with respect to any Class or Fund will
not cause the Agreement's termination with respect to any other Class or
Fund.
(g) Financial Institution agrees to notify Distributor immediately of any of
the events described in Paragraph (e)(ii) of this Section. Financial
Institution shall be obligated to return any payments made to it by
Distributor for the period following any such event.
23. Severability.
If any provision or portion of this Agreement is at any time determined to be
invalid or unenforceable for any reason, the remaining provisions and portions
of this Agreement will be unaffected thereby and will remain in full force and
effect to the fullest extent permitted by law.
24. Customer Confidentiality and Privacy.
(a) The parties acknowledge that:
(i) The SEC has adopted Regulation S-P at 17 CFR Part 248 to protect the
privacy of individuals who obtain a financial product or service for
personal, family or household use;
(ii)Regulation S-P permits financial institutions, such as the Distributor
and Financial Institution, to disclose "nonpublic personal information"
("NPI") of its "customers" and "consumers" (as those terms are therein
defined in Regulation S-P) to affiliated and nonaffiliated third
parties, without giving such customers and consumers the ability to opt
out of such disclosure, for the limited purposes of processing and
servicing transactions (17 CFR {section} 248.14) ("Section 248.14
NPI"); for specified law enforcement and miscellaneous purposes (17 CFR
{section} 248.15) ("Section 248.15 NPI"); and to service providers or
in connection with joint marketing arrangements (17 CFR {section}
248.13) ("Section 248.13 NPI");
(iii)Regulation S-P provides that the right of a customer and consumer to
opt out of having his or her NPI disclosed pursuant to 17 CFR {section}
248.7, and 17 CFR {section} 248.10 does not apply when the NPI is
disclosed to service providers or in connection with joint marketing
arrangements, provided the Financial Institution and third party enter
into a contractual arrangement that prohibits the third party from
disclosing or using the information other than to carry out the
purposes for which the Financial Institution disclosed the information
(17 CFR {section} 248.13);
(b) The Financial Institution may disclose shareholder NPI to the Distributor
as agent of the Fund and solely in furtherance of fulfilling the
Distributor's contractual obligations under the Agreement and to the Funds
in the ordinary course of business to support the Fund and its
shareholders;
(c) The Distributor hereby agrees to be bound to use and redisclose such NPI
only for the limited purpose of fulfilling its duties and obligations under
the Agreement and to the Funds, for law enforcement and miscellaneous
purposes as permitted in 17 CFR {section} 248.15, or in connection with
joint marketing arrangements that the Financial Institution may establish
with the Distributor or the Funds in accordance with the limited exception
set forth in 17 CFR {section} 248.13;
(d) Each party represents and warrants that, in accordance with 17 CFR
{section} 248.30, it has implemented and will continue to carry out for the
term of the Agreement policies and procedures reasonably designed to:
insure the security and confidentiality of records and NPI of customers,
protect against any anticipated threats or hazards to the security or
integrity of customer records and NPI, and protect against unauthorized
access to or use of such customer records or NPI that could result in
substantial harm or inconvenience to any customer.
(e) The Distributor may redisclose Section 248.13 NPI only to: (i) the Funds
and affiliated persons of the Funds ("Fund Affiliates"); (ii) affiliated
persons of the Distributor ("Distributor Affiliates") (which in turn may
disclose or use the information only to the extent permitted under the
original receipt); (iii) a third party not affiliated with the Distributor
or the Funds ("Nonaffiliated Third Party") under the service and processing
({section} 248.14) or miscellaneous ({section} 248.15) exceptions, but only
in the ordinary course of business to carry out the activity covered by the
exception under which the Distributor or the Funds received the information
in the first instance; and (iv) a Nonaffiliated Third Party under the
service provider exception ({section} 248.13), provided the Distributor or
the Funds enter into a written contract with the Nonaffiliated Third Party
that prohibits the Nonaffiliated Third Party from disclosing or using the
information other than to carry out the purposes for which the Financial
Institution disclosed the information in the first instance;
(f) The Distributor may redisclose Section 248.14 NPI and Section 248.15 NPI
to: (i) the Funds or Fund Affiliates; (ii) Distributor Affiliates (which
in turn may disclose the information to the same extent permitted under the
original receipt); and (iii) a Nonaffiliated Third Party to whom the Funds
might lawfully have disclosed NPI directly; and
(g) The Distributor is obligated to maintain beyond the termination date of the
Agreement the confidentiality of any NPI it receives from the Financial
Institution in connection with the Agreement and hereby agrees that this
shall survive such termination.
4 Revised 10/7/04
25. Anti-Money Laundering and Customer Identification.
(a) Distributor and Financial Institution each represent, warrant and certify
that they have established, and covenant that at all times during the
existence of the Agreement they will maintain, a written anti-money
laundering and customer identification program ("Program") in accordance
with the USA PATRIOT Act and the rules and regulations adopted thereunder
by the SEC and the U.S. Treasury Department ("Applicable Law").
(b) Financial Institution hereby covenants that it will perform all activities,
including the establishment and verification of customer identities as
required by Applicable Law or its Program, with respect to all customers on
whose behalf Financial Institution maintains an account with Distributor or
the Funds ("Financial Institution Customers").
(c) Distributor and Financial Institution hereby agree that: (i) accounts in
the Funds in the name of, or beneficially owned by, Financial Institution
Customers shall be accounts of the Financial Institution for purposes of
the Financial Institution's Program; and (ii) Financial Institution
Customers will be customers of Financial Institution for all purposes under
the Program of the Financial Institution.
26. Governing Law.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Pennsylvania, without regard to conflict of laws principles
thereof. Financial Institution agrees that it shall bring any action or
proceeding against Distributor arising out of or related in any way to this
Agreement solely in a court of competition jurisdiction sitting in Allegheny
County or the Western District of Pennsylvania, and otherwise consents to the
jurisdiction of either court.
SECTION VII. ADDITIONAL PROVISIONS
27. Representations
(a) Each party represents and warrants to the other party that:
(i) It has the power to execute this Agreement and any other documentation
relating to this Agreement to which it is a party, to deliver this
Agreement and any other documentation relating to this Agreement that
it is required by this Agreement to deliver and to perform its
obligations under this Agreement and has taken all necessary action to
authorize such execution, delivery and performance.
(ii)Such execution, delivery and performance do not violate or conflict
with any law applicable to it, any provision of its constitutional
documents, any order or judgment of any court or other agency of
government applicable to it or any contractual restriction binding on
or affecting it.
(iii)Its obligations under this Agreement constitute its legal, valid and
binding obligations, enforceable in accordance with their respective
terms (subject to applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditors' rights generally and
subject, as to enforceability, to equitable principles of general
application regardless of whether enforcement is sought in a proceeding
in equity or law).
(iv)It will comply with all applicable provisions of the 1940 Act, the 1933
Act, the Securities Exchange Act of 1934 (the "1934 Act"), the NASD's
Conduct Rules and all other federal and state laws, rules and
regulations governing the sale and ownership of Shares and will comply
with all applicable laws and orders to which it may be subject if
failure to do so would materially impair its ability to perform its
obligations under this Agreement.
(v) If it is a broker-dealer, it is: (A) registered with the SEC as a
broker/dealer in compliance with the 1934 Act, (B) a member in good
standing of the NASD, and (C) registered and licensed as a
broker/dealer in each state in which such registration or license is
necessary to conduct its business.
(b) Financial Institution further represents and warrants to Distributor that:
(i) Any representative of Financial Institution that offers or sells Shares
is duly registered and licensed with the NASD and with the appropriate
securities authorities in all states in which the representative's
activities make such registration and licensing necessary.
(ii)Each transaction with a Fund initiated by Financial Institution under
this Agreement has been authorized by Financial Institution's customer
prior to initiation and is solely for the account of such customer.
(iii)Financial Institution shall not directly or indirectly offer, adopt,
implement, conduct or participate in any program, plan, arrangement,
advice or strategy Distributor or the Funds reasonably deem to be
harmful to Shareholders or potentially disruptive to the management of
the Funds, as communicated to Financial Institution by Distributor in
writing from time to time, or which violates the policies and
procedures of the Funds as disclosed in each Fund's Prospectus;
including without limitation, any activity involving market timing,
programmed transfer, frequent transfer and similar investment programs.
Financial Institution, at all times during the term of this Agreement,
shall have active, formal policies and procedures aimed at deterring
"market timers." Such policies and procedures shall provide for
Financial Institution's ongoing review of its customers' account
activity and prescribe effective actions to deter or stop disruptive
activities. Financial Institution agrees to furnish a copy of its
market-timing policies and procedures to Distributor upon request.
(iv)Financial Institution will forward for processing on each day only
those purchase and redemption orders received by Financial Institution
prior to the daily cut-off times disclosed in each Fund's prospectus.
Financial Institution has, and will maintain at all times during the
term of this Agreement, appropriate internal controls for the
segregation of purchase and redemption orders received prior to the
daily cut-off times disclosed in each Fund's Prospectus, from purchase
and redemption orders received after the daily cut-off times disclosed
in each Fund's prospectus as and to the extent required by the 1940
Act.
(c) The parties shall each be deemed to repeat all the foregoing
representations and warranties made by it at the time of any transaction subject
to this Agreement.
28. Disclosure Documents and Sales Literature
(a) Distributor will furnish to Financial Institution such number of copies of
the current prospectus for any Shares (including the SAI if expressly
requested) and periodic reports for any Fund ("Disclosure Documents") of a
Fund as required to fulfill Financial Institution's obligations herein. In
addition, Distributor will furnish such number of copies of available
promotional materials and sales literature as Financial Institution may
reasonably request. Financial Institution will follow Distributor's written
instructions regarding the use of any such sales literature. Financial
Institution will not prepare any written communications (other than
individual correspondence with a customer or as required by law) that refer
to the Funds or Distributor in any manner, unless Financial Institution has
obtained Distributor's prior written approval.
(b) In recommending and selling Shares, Financial Institution shall rely solely
on the representations contained in the Disclosure Documents and authorized
promotional materials and sales literature, and neither Financial
Institution nor any of its representatives will make any representations
concerning Shares except as contained therein.
29. Use of Electronic Means to Perform Certain Duties and Receive Documents
(a) The parties may agree from time to time to set appropriate security
procedures and to perform electronically certain of their obligations under
this Agreement, including without limitation the posting of updates to the
fee Exhibit, the delivery of Disclosure Documents, opening accounts,
transmitting purchase, exchange, and redemption orders, and delivering and
maintaining shareholder communications.
(b) Where Financial Institution (i) has obtained the informed consent of the
underlying beneficial owner of an account in the Funds, and (ii) is the
record owner of such account in the Funds, Financial Institution hereby
consents to the electronic delivery, via Fund's website ("Website"), of all
Disclosure Documents. Financial Institution acknowledges that Distributor
utilizes portable document format ("PDF") files for Disclosure Documents on
the Website, and that Financial Institution might incur costs in connection
with the delivery of Disclosure Documents (e.g. on-line time). If
Financial Institution does not already have access to the Adobe Acrobat
Reader software necessary to view PDF files of Disclosure Documents on the
Website, Financial Institution acknowledges that such software can be
obtained for free through the Help tab on the Website. Financial
Institution further acknowledges that notice of updates to the Disclosure
Documents shall be provided by Distributor, as appropriate, on the account
statement that is regularly provided to Financial Institution.
(c) Financial Institution acknowledges and agrees that Distributor (i) offers
the Website solely as a convenience on an "as is" and "as available" basis;
(ii) may discontinue the Website's availability at any time; and (iii)
disclaims all express and implied warranties regarding the Website,
including without limitation any warranty of merchantability, fitness for a
particular purpose, or arising from course of dealing or performance.
Financial Institution further acknowledges and agrees that in no event
shall Distributor, any Fund, or any of their affiliates or employees be
liable (in contract, tort, or otherwise) to Financial Institution, its
registered representatives, or third parties for (i) Financial
Institution's use or non-use of the Website and any data or information in
connection therewith; (ii) any delay, malfunction, or lack of security
associated with, or caused by, the Website; or (iii) acts or omissions of
third parties, including without limitation any entity which has licensed
software or systems to Distributor or any of its affiliates in connection
with the Website. Except as strictly necessary pursuant to this Agreement,
Financial Institution shall not make or permit any disclosure or use of the
Website or any related documentation or information without Distributor's
prior written consent. Financial Institution agrees to provide such
security necessary to prevent any unauthorized use of the Website. The
provisions of this paragraph shall survive the termination of this
Agreement.
(d) As a condition to using the Website, Financial Institution shall complete
and regularly update, or cause the same, all such applications,
authorizations, and other documents that may be required from time to time
by Distributor, the Funds, and any entity that has licensed software or
systems to Distributor or the Funds in connection with the Website. In
addition, Financial Institution shall immediately notify Distributor if any
password issued to Financial Institution in connection herewith is or may
be jeopardized.
(e) Financial Institution agrees to provide such security as is necessary to
prevent any unauthorized use of the Funds' recordkeeping system, accessed
via any computer hardware or software provided to Financial Institution by
Distributor. Financial Institution represents and warrants that it has
examined and tested the internal systems that it has developed to support
the services outlined in this Agreement and, as of the date of this
Agreement, has no knowledge of any situation or circumstance that will
inhibit the system's ability to perform the expected functions or inhibit
Financial Institution's ability to provide the expected services.
30. No Third-Party Rights
Except with respect to Section 7 "Indemnification," this Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement (including the Funds). Nothing expressed or referred
to in this Agreement will be construed to give anyone other than the parties to
this Agreement any legal or equitable right, remedy or claim under or with
respect to this Agreement or any provision of this Agreement. In no event shall
Distributor or any Fund be obligated to make any payment under this Agreement to
any person other than Financial Institution.
31. Non-Exclusivity
Distributor acknowledges and agrees that Financial Institution may enter into
agreements similar to this Agreement with other mutual funds and distributors.
Financial Institution acknowledges and agrees that Distributor and the Funds may
enter into agreements similar to this Agreement with other broker/dealers for
sales and services of Fund Shares.
32.
5 Revised 10/7/04
