FORM OF UNDERWRITER DEALER AGREEMENT
Effective: January 31, 1999
Securities Dealer: ______________
Security Distributors, Inc. ("we" or "us") invites you to participate in the
distribution of shares of the Security Mutual Funds (the "Funds") for which we
now or in the future serve as principal underwriter, subject to the terms of
this Agreement. We will notify you from time to time of the Funds which are
eligible for distribution and the terms of compensation under this Agreement.
This Agreement supersedes any prior underwriter dealer agreements between us, as
stated in paragraph 16 below.
1. Licensing.
(a) You represent that you are a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD") and are presently
licensed to the extent necessary by the appropriate regulatory agency
of each state in which you will offer and sell shares of the Funds. You
agree that termination or suspension of such membership with the NASD,
or of your license to do business by any state or federal regulatory
agency, at any time shall terminate or suspend this Agreement forthwith
and shall require you to notify us in writing of such action. This
Agreement is in all respects subject to the Conduct Rules of the NASD
which shall control any provision to the contrary in this Agreement.
(b) You agree to notify us immediately in writing if at any time you are
not a member in good standing of the Securities Investor Protection
Corporation ("SIPC").
2. Sales of Fund Shares. You may offer and sell shares of each Fund and class
only at the public offering price which shall be applicable to, and in
effect at the time of, each transaction. The procedures relating to all
orders and the handling of them shall be subject to the terms of the then
current prospectus and statement of additional information (hereafter, the
"prospectus") and new account application, including amendments, for each
such Fund, and our written instructions from time to time. This Agreement is
not exclusive, and either party may enter into similar agreements with third
parties.
3. Duties of Dealer: In General. You agree:
(a) To act as principal, or as agent on behalf of your customers, in all
transactions in shares of the Funds. You shall not have any authority
to act as agent for the issuer (the Funds), for us, or for any other
dealer in any respect, nor will you represent to any third party that
you have such authority or are acting in such capacity.
(b) To purchase shares only from us or from your customers.
(c) To enter orders for the purchase of shares of the Funds only from us
and only for the purpose of covering purchase orders you have already
received from your customers or for your own bona fide investment.
(d) To maintain records of all sales and redemptions of shares made through
you and to furnish us with copies of such records on request.
(e) To distribute prospectuses and reports to your customers in compliance
with applicable legal requirements, except to the extent that we
expressly undertake to do so on your behalf.
(f) That you will not withhold placing customers' orders for shares so as
to profit yourself as a result of such withholding or place orders for
shares in amounts just below the point at which sales charges are
reduced so as to benefit from a higher sales charge applicable to an
amount below the breakpoint.
(g) That if any shares confirmed to you hereunder are repurchased or
redeemed by any of the Funds within seven business days after such
confirmation of your original order, you shall forthwith refund to us
the full concession allowed to you on such orders. We shall forthwith
pay to the appropriate Fund our share, if any, of the "charge" on the
original sale and shall also pay to such Fund the refund from you as
herein provided. We shall notify you of such repurchase or redemption
within a reasonable time after settlement. Termination or cancellation
of this Agreement shall not relieve you or us from the requirements of
this subparagraph.
(h) That if payment for the shares purchased is not received within the
time customary or the time required by law for such payment, the sale
may be canceled forthwith without any responsibility or liability on
our part or on the part of the Funds, or at our option, we may sell the
shares which you ordered back to the Funds, in which latter case we may
hold you responsible for any loss to the Funds or loss of profit
suffered by us resulting from your failure to make payment as
aforesaid. We shall have no liability for any check or other item
returned unpaid to you after you have paid us on behalf of a purchaser.
We may refuse to liquidate the investment unless we receive the
purchaser's signed authorization for the liquidation.
(i) That you shall assume responsibility for any loss to the Funds caused
by a correction made subsequent to trade date, provided such correction
was not based on any error, omission or negligence on our part, and
that you will immediately pay such loss to the Funds upon notification.
(j) That if on a redemption which you have ordered, instructions in proper
form, including outstanding certificates, are not received within the
time customary or the time required by law, the redemption may be
canceled forthwith without any responsibility or liability on our part
or on the part of any Fund, or at our option, we may buy the shares
redeemed on behalf to the Fund, in which latter case we may hold you
responsible for any loss to the Fund or loss of profit suffered by us
resulting from your failure to settle the redemption.
4. Conditional Orders; Certificates. We will not accept from you any
conditional orders for shares of any of the Funds. Delivery of certificates
for shares purchased shall be made by the Funds only against constructive
receipt of the purchase price, subject to deduction for your concession and
our portion of the sales charges, if any, on such sale. No certificates will
be issued unless specifically requested.
5. Dealer Compensation. On each purchase of shares by you from us, the total
sales charges and your dealer concessions shall be as stated in each Fund's
then current prospectus, subject to NASD rules and applicable state and
federal laws. Such sales charges and dealer concessions are subject to
reductions under a variety of circumstances as described in the Funds'
prospectuses. For an investor to obtain these reductions, we must be
notified at the time of the sale that the sale qualifies for the reduced
charges. If you fail to notify us of the applicability of a reduction in the
sales charge at the time the trade is placed, neither we nor any of the
Funds will be liable for amounts necessary to reimburse any investor for the
reduction which should have been effected.
6. Redemptions. Redemptions or repurchases of shares will be made at the net
asset value of such shares, less any applicable deferred sales or redemption
charges, in accordance with the applicable prospectuses. Except as permitted
by applicable law, you agree not to purchase any shares from your customers
at a price lower than the redemption or repurchase prices then computed by
the Funds. You shall, however, be permitted to sell shares for the account
of the record owner to the Funds at the repurchase price then currently in
effect for such shares and may charge the owner a fair commission for
handling the transaction.
7. Exchanges. Telephone exchange orders will be effective only for uncertified
shares and may be subject to any fees or other restrictions set forth in the
applicable prospectuses. You may charge the shareholder a fair commission
for handling an exchange transaction. Exchanges from a Fund sold with no
sales charge to a Fund which carries a sales charge, and exchanges from a
Fund sold with a sales charge to a Fund which carries a higher sales charge
may be subject to a sales charge in accordance with the terms of each Fund's
prospectus. You will be obligated to comply with any additional exchange
policies described in each Fund's prospectus.
8. Transaction Processing. All orders are subject to acceptance by us and by
the Fund or its transfer agent, and become effective only upon confirmation
by us. If required by law, each transaction shall be confirmed in writing on
a fully disclosed basis and if confirmed by us, a copy of each confirmation
shall be sent simultaneously to you if you so request. All sales are made
subject to receipt of shares by us from the Funds. We reserve the right in
our discretion, without notice, to suspend the sale of shares or withdraw
the offering of shares entirely. Telephone orders will be effected at the
price(s) next computed on the day they are received from you if, as set
forth in each Fund's current prospectus, they are received prior to the time
the price of its shares is calculated. Orders received after that time will
be effected at the price(s) computed on the next business day. All orders
must be accompanied by payment in U.S. dollars. Orders payable by check must
be drawn payable in the U.S. dollars on a U.S. bank, for the full amount of
the investment.
9. Multiple Classes. We may from time to time provide to you written compliance
guidelines or standards relating to the sale or distribution of Funds
offering multiple classes of shares with different sales charges and
distribution-related operating expenses. In addition, you will be bound by
an applicable rules or regulations of government agencies or self-regulatory
organizations generally affecting the sale or distribution of mutual funds
offering multiple classes of shares.
10. Rules 12b-1 Plans. You are also invited to participate in all Plans adopted
by the Funds (the "Plan Funds") pursuant to Rule 12b-1 under the 1940 Act.
To the extent you provide administrative and other services, including, but
not limited to, furnishing personal and other services and assistance to
your customers who own shares of a Plan Fund, answering routine inquiries
regarding a Fund, assisting in changing account designations and addresses,
maintaining such accounts or such other services as a Fund may require, to
the extent permitted by applicable statutes, rules or regulations, we shall
pay you a Rule 12b-1 servicing fee. To the extent that you participate in
the distribution of Fund shares which are eligible for a Rule 12b-1
distribution fee, we shall also pay you a Rule 12b-1 distribution fee. All
Rule 12b-1 servicing and distribution fees shall be based on the value of
shares attributable to customers of your firm and eligible for such
payment, and shall be calculated on the basis and 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 you pursuant to each 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 your
customers' accounts which are eligible for payment pursuant to this
Agreement (determined in the same manner as each Fund uses to compute its
net assets as set forth in its effective Prospectus).
The Plans and provisions of any agreement relating to such plans must be
approved annually by a vote of the Plan Funds, for their review on a
quarterly basis, a written report of the amount expended under the Plans
and the purposes for which such expenditures were made.
The Plans and provisions of any agreement relating to such Plans must be
approved annually by a vote of the Plan Funds' Directors, including such
persons who are not interested persons of the Plan Funds and who have no
financial interest in the Plans or any related agreement ("Rule 12b-1
Directors"). The Plans or the provisions of this Agreement relating to such
Plans may be terminated at any time by the vote of a majority of the Plan
Funds' Boards of Directors, including Rule 12b-1 Directors, or by a vote of
a majority of the outstanding shares of the Plan Funds, on sixty (60) days'
written notice, without payment of any penalty. The Plans or the provisions
of this Agreement may also be terminated by any act that terminates the
Distribution Agreement between us and the Plan Funds. In the event of the
termination of the Plans for any reason, the provisions of this Agreement
relating to the Plans will also terminate.
Continuation of the Plans and provisions of this Agreement relating to such
Plans are conditioned on Rule 12b-1 Directors being ultimately responsible
for selecting and nominating any new Rule 12b-1 Directors. Under Rule
12b-1, Directors of any of the Plan Funds have a duty to request and
evaluate, any persons who are party to any agreement related to a Plan have
a duty to furnish, such information as may reasonably be necessary to an
informed determination of whether the Plan or any agreement should be
implemented or continued. Under Rule 12b-1, Plan Funds are permitted to
implement or continue Plans or the provisions of this Agreement relating to
such Plans from year-to-year only if, based on certain legal
considerations, the Boards of Directors are able to conclude that the Plans
will benefit the Plan Funds. Absent such yearly determination the Plans and
the provisions of this Agreement relating to the Plans must be terminated
as set forth above. In addition, any obligation assumed by a Fund pursuant
to this Agreement shall be limited in all cases to the assets of such Fund
and no person shall seek satisfaction thereof from shareholders of a Fund.
You agree to waive payment of any amounts payable to you by us under a
Fund's Plan of Distribution pursuant to Rule 12b-1 until such time as we
are in receipt of such fee from the Fund.
The provisions of the Rule 12b-1 Plans between the Plan Funds and us,
insofar as they relate to Plans, shall control over the provisions of this
Agreement in the event of any inconsistency.
11. Registration of Shares. Upon request, we shall notify you of the states or
other jurisdictions in which each Fund's shares are currently registered or
qualified for sale to the public. We shall have no obligation to register or
qualify, or to maintain registration or qualification of, Fund shares in any
state or other jurisdiction. We shall have no responsibility, under the laws
regulating the sale of securities in any U.S. or foreign jurisdiction, for
the qualification or status of persons selling Fund shares or for the manner
of sale of Fund shares. Except as stated in this paragraph, we shall not, in
any event, be liable or responsible for the issue, form, validity,
enforceability and value of such shares or for any matter in connection
therewith, and no obligation not expressly assumed by us in this Agreement
shall be implied. Nothing in this Agreement, however, shall be deemed to be
a condition, stipulation or provision binding any person acquiring any
security to waive compliance with any provision of the Securities Act of
1933, or of the rules and regulations of the Securities and Exchange
Commission, or to relieve the parties hereto from any liability arising
under the Securities Act of 1933.
12. Fund Information. No person is authorized to give any information or make
any representations concerning shares of any Fund except those contained in
the Fund's current prospectus or in materials issued by us as information
supplemental to such prospectus. We will supply prospectuses, reasonable
quantities of supplemental sale literature, sales bulletins, and additional
information as issued. You agree not to use other advertising or sales
material relating to the Funds except that which (a) conforms to the
requirements of any applicable laws or regulations of any government or
authorized agency in the U.S. or any other country, having jurisdiction over
the offering or sale of shares of the Funds, and (b) is approved in writing
by us in advance of such use. Such approval may be withdrawn by us in whole
or in part upon notice to you, and you shall, upon receipt of such notice,
immediately discontinue the use of such sales literature, sales material and
advertising. You are not authorized to modify or translate any such
materials without our prior written consent.
13. Indemnification. You further agree to indemnify, defend and hold harmless
us, the Funds, their officers, directors and employees from any and all
losses, claims, liabilities and expenses arising out of (1) any alleged
violation of any statute or regulations (including without limitation the
securities laws and regulations of the United States or any state or foreign
country) or any alleged tort or breach of contract, in or related to the
offer and sale by you of shares of the Funds pursuant to this Agreement
(except to the extent that our negligence or failure to follow correct
instructions received from you is the cause of such loss, claim, liability
or expense), (2) any redemption or exchange pursuant to telephone
instructions received from you or your agents or employees, or (3) the
breach by you of any of the terms and conditions of this Agreement.
14. Termination; Succession; Amendment. Each party to this Agreement may cancel
its participation in this Agreement by giving written notice to the other
party. 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 mailed postpaid or delivered to a
telegraph office for transmission to the other party's Chief Legal Officers
at the addresses shown herein or in the most recent NASD Manual. This
Agreement shall terminate immediately upon the appointment of a Trustee
under the Securities Investor Protection Act or any other act of insolvency
by you. 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. A trade placed by you subsequent to your voluntary
termination of this Agreement will not serve to reinstate the Agreement.
Reinstatement, except in the case of a temporary suspension of a dealer,
will only be effective upon written notification by us. Unless terminated,
this Agreement shall be binding upon each party's successors or assigns.
This Agreement may be amended by us at any time by written notice to you and
your placing of an order or acceptance of payments of any kind after the
effective date and receipt of notice of any such Amendment shall constitute
your acceptance of such Amendment.
15. Setoff; Dispute Resolution. Should any of your concession accounts with us
have debit balance, we may offset and recover the amount owed from any other
account you have with us, without notice or demand to you. 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 of the NASD or the American Arbitration Association.
Judgment upon any arbitration award may be entered by any state or federal
court having jurisdiction. This Agreement shall be construed in accordance
with the laws of the State of Kansas, not including any provision which
would require the general application of the law of another jurisdiction.
16. Acceptance; Cumulative Effective. This Agreement is cumulative and
supersedes any agreement previously in effect. It shall be binding upon the
parties hereto when signed by us and accepted by you. If you have a current
dealer agreement with us, your first trade or acceptance of payments from us
after receipt of this Agreement, as it may be amended pursuant to paragraph
14, above, shall constitute your acceptance of its terms. Otherwise, your
signature below shall constitute your acceptance of its terms.
SECURITY DISTRIBUTORS, INC.
By:
--------------------------------
Xxxx Xxxx, President
000 Xxxxxxxx, Xxxxxx, Xxxxxx 00000-0000
Attention: Chief Legal Officer (for legal notices only) 785/431-3000
Dealer: If you have NOT previously signed a Dealer Agreement with us, please
complete and sign this section and return the original to us.
DEALER NAME:
By:
(Signature)
Name:
Title:
Address:
Telephone:
NASD CRD #
