EXHIBIT NO. EX-99.7(c)
DEALER AGREEMENT
AGREEMENT, made as of this _____th day of ________________, 2002, by and between
Gartmore Distribution Services, Inc., or its surviving entity ("Distributor")
and ____________________ ("Dealer") whereby Dealer agrees to participate in the
distribution of the shares ("Shares") of the series and classes of Gartmore
Mutual Funds (the "Trust") as are listed on Exhibit A, and as may be amended
from time to time (each, a "Fund"). Dealer also agrees to provide distribution
and shareholder services to the Funds subject to the following terms and
conditions.
1. Dealer Authority. With respect to the distribution and sales of Shares,
Dealer shall have authority to act as limited agent of a Fund,
Distributor or any other dealer only with respect to facilitating the
purchase and sale of Shares as described herein. All orders are subject
to acceptance or rejection by Distributor or a Fund in its sole
discretion, and if accepted become effective only upon confirmation by
Distributor. Dealer shall have no authority to make any representations
concerning the Shares of a Fund except such representations as may be
contained in a Fund's then current prospectus, in its then current
Statement of Additional Information (collectively, the prospectus and
Statement of Additional Information for each Fund are the "Prospectus"),
and in such other printed information as a Fund or Distributor may
subsequently prepare or distribute to Dealer for purposes of selling the
Shares. Dealer shall have no authority to distribute any other sales
material relating to a Fund or any of its Shares without the prior
written approval of Distributor. Dealer agrees to follow any written
guidelines or standards relating to the sale or distribution of the
Shares as may be provided to Dealer by Distributor including the
provisions outlined in Exhibit B, as well as to follow any applicable
federal and/or state securities laws, rules or regulations affecting the
sale or distribution of shares of investment companies offering multiple
classes of shares.
2. Sales and Pricing of Shares. Dealer shall offer and sell Shares only at
their respective public offering prices, or the net asset values if
applicable, in accordance with the terms and conditions of the
Prospectus of a Fund whose Shares Dealer offers. An order for the
purchase of Shares shall be accepted at the time such order is received
by Distributor and at the price next determined unless the order is
otherwise rejected in accordance with Section 1 above. In addition,
Distributor will not accept any order from Dealer which is placed on a
conditional basis or subject to any delay or contingency prior to
execution. Dealer shall place orders for Shares only with Distributor,
shall date and time stamp all orders received by Dealer and promptly
shall transmit all orders to Distributor in time for processing at the
price next determined after receipt of the order by Dealer, in
accordance with the Prospectus of the Fund whose Shares are being sold.
Dealer shall confirm the transaction with its customer (hereinafter
"Client-shareholder") at the price confirmed in writing by the
Distributor. In the event of differences between verbal and written
price, written confirmations shall be considered final. Prices of the
Shares are computed by a Fund in accordance with its Prospectus.
1
3. Services to be Provided by Dealer. Dealer or its affiliates/designees
will maintain records of sales, redemptions and repurchases of Shares
and will furnish the Distributor with such records on request. Dealer
will also distribute Prospectuses and reports to the Client-shareholder
as described below, in compliance with applicable legal requirements
unless the parties expressly agree that Distributor will do so on
Dealer's behalf. Client-shareholders means those customers of the Dealer
who have entered into an agreement with the Dealer for brokerage,
investment advisory, trust, or shareholder services and who maintain an
interest in an account with the Funds registered in the name of the
Dealer.
With respect to shareholder services, Distributor hereby appoints Dealer
to render shareholder services to each of the 12b-1 Funds (as defined
below). Shareholder services may include, but are not limited to,
answering routine shareholder inquiries regarding the 12b-1 Funds;
providing information to shareholders on their investments in the 12b-1
Funds; providing personnel and communication equipment used in
connection therewith; and providing such other services as Distributor
may reasonably request. Dealer shall prepare such quarterly reports for
Distributor as shall reasonably be required by Distributor. Fees paid
under this Agreement for such shareholder services for the 12b-1 Funds
are in addition to, and not duplicative of, any fees paid for similar
services under a separate administrative servicing agreement for the
Funds.
4. Dealer Compensation.
(a) So long as this Agreement is in effect, on purchases from
Distributor of Shares of a Fund sold with a sales charge, Dealer shall
receive a discount from the public offering price (a "Dealer
Concession") at the specified percentages of the public offering price
set forth in Exhibit B and which may be modified from time to time by a
Fund.
Dealer shall not receive any Dealer Concession with respect to certain
transactions which are exempt from sales charges and will receive the
reduced Dealer Concessions which correspond to the reduced sales charges
applicable to certain types of transactions (e.g., transactions
involving letters of intent or rights of accumulation), as set forth in
a Fund's Prospectus, which are hereby incorporated herein by reference
and which may be modified from time to time by a Fund. Dealer shall not
share or rebate any portion of such Dealer Concessions or otherwise
grant any concessions, discounts or other allowances to any person who
is not a broker or dealer actually engaged in the investment banking or
securities business and is not a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"). Dealer will receive
Dealer Concessions as described above on all purchase transactions in
Client-shareholder accounts (excluding reinvestment of income dividends
and capital gains distributions) for which Dealer is designated as
Dealer of Record except where Distributor determines that any such
purchase was made with the proceeds of a redemption or repurchase of
Shares of a Fund whether or not the transaction constitutes the exercise
of the exchange or conversion privilege.
2
(b) In addition to the compensation described in Section 4(a) above and
subject to any limitations set forth in the NASD's Rules of Conduct,
including without limitation Rule 2830, Distributor will pay Dealer,
with respect to each of the Funds for which a Distribution Plan pursuant
to Rule 12b-1 of the Investment Company Act of 1940, as amended (the
"1940 Act"), is in place for such Shares and under which a fee may be
paid to broker-dealers for providing distribution or shareholder
services ("12b-1 Funds"), a monthly fee computed at the annual rate as
described in Exhibit A. The fee will be paid for the period Shares of
the 12b-1 Funds are held in accounts for which Dealer provides services
as described in Section 3 above; provided, however, that any waiver of
such fee by Distributor will apply likewise to Dealer and Distributor is
obligated to pay such fee to Dealer only so long as the Distributor is
reimbursed by such 12b-1 Funds for such fees.
If any Shares sold to Dealer under the terms of this Agreement are
repurchased by a Fund, or are tendered for redemption, within seven
business days after the date of Distributor's confirmation of the
original purchase by Dealer, Dealer shall promptly refund to Distributor
the full Dealer Concession received by Dealer pursuant to Section 4(a)
above or Distributor reserves the right to deduct such amount from any
current or future compensation due Dealer.
5. Dealer Authorization. Dealer hereby authorizes Distributor to act as its
agent in connection with all transactions in Client-shareholder accounts
for which Dealer is designated as Dealer of Record. All designations of
Dealer of Record and all authorizations of Distributor to act as
Dealer's agent shall cease upon the termination of this Agreement or
upon the Client-shareholders' instructions to transfer his or her
account to another Dealer of Record.
6. Payment for Shares. Payment for all Fund Shares purchased from
Distributor by Dealer shall be received by Distributor within the time
period defined by agreed-upon normal settlement procedure after
acceptance of Dealer's order. If such payment is not so received by the
Distributor, the Distributor and the Fund(s) reserve the right, without
notice, to immediately cancel the sale, or, at Distributor's option, to
sell the Shares ordered by Dealer back to the Fund in which latter case,
Distributor may hold Dealer responsible for any loss, suffered by
Distributor or by the Fund resulting from Dealer's failure to make
payment as described above.
7. Purchase of Shares. Dealer shall purchase Shares of the Fund only
through Distributor or from the Client-shareholders. If Dealer purchases
Shares from Distributor, Dealer agrees that all such purchases shall be
made only to cover orders already received by Dealer from the
Client-shareholders, or for Dealer's own bona fide investment without a
view to resale. If Dealer purchases Shares from the Client-shareholders,
Dealer agrees to pay such Client-shareholders the applicable net asset
value per share less any contingent deferred sales charge or redemption
fee that would be applicable if such Shares were then tendered for
redemption in accordance with the applicable Prospectus ("Repurchase
Price").
3
8. Limitation on Sale of Shares. Dealer shall sell Shares only:
(a) to the Client-shareholders at the prices described in Section 2
above; or
(b) to Distributor as agent for the Fund at the Repurchase Price. In
such a sale to Distributor, Dealer may act either as principal
for Dealer's own account or as agent for the Client-shareholder.
If Dealer acts as principal for its own account in purchasing
Shares for resale to Distributor, Dealer agrees to pay
Client-shareholder not less than nor more than the Repurchase
Price which Dealer received from Distributor. If Dealer acts as
agent for the Client-shareholder in selling Shares to
Distributor, Dealer agrees not to charge the Client-shareholder
more than a fair commission for handling the transaction.
9. Dealer's Representations and Warranties. Dealer hereby represents and
warrants to Distributor that:
(a) Dealer is willing and possesses the legal authority to provide
the services contemplated by this Agreement without violation of
applicable laws;
(b) Dealer is and shall remain throughout the term of this Agreement
a member in good standing of the NASD and shall immediately
notify Distributor should it cease to be a member of the NASD;
(c) Dealer is and shall remain throughout the term of this Agreement
a broker-dealer duly and properly registered and qualified under
all applicable laws, rules and regulations, including, but not
limited to, all state and federal securities laws, rules and
regulations, as may be necessary or appropriate for Dealer to
perform and observe all of its duties, obligations and covenants
set forth or contemplated by this Agreement;
(d) Dealer shall throughout the term of this Agreement comply with
the requirements of all applicable laws, rules and regulations,
including, but not limited to, federal and state securities
laws, the rules, regulations and orders of the Securities and
Exchange Commission and the NASD, in performing and observing
all of its duties, obligations and covenants set forth or
contemplated by this Agreement;
(e) Dealer shall not withhold placing with Distributor orders
received from the Client-shareholders so as to profit from such
withholding;
(f) Dealer shall not offer Shares of any Fund in any state where
such Shares are not qualified for sale under the Blue Sky Laws
and Regulations of such state or where Dealer is not qualified
to act as a dealer, except in appropriate circumstances when
4
under state laws and regulations the Share or the sales
transactions are exempt from qualification or dealer
registration is not required; and
(g) Dealer shall give Distributor at least 30 days advance written
notice of any event which will cause an assignment of this
Agreement (as defined in the 0000 Xxx) by Dealer or its
affiliates.
10. Indemnification. Dealer shall indemnify and hold harmless Distributor,
its affiliates and the Fund against any losses, claims, damages,
liabilities or expenses (including reasonable attorneys' fees and
expenses) resulting from (a) any negligence or misfeasance of Dealer or
any of its officers, directors, employees or registered representatives;
or (b) any violation of any law, rule or regulation or any failure to
perform or observe any obligations of Dealer set forth in this Agreement
by Dealer or any of its officers, directors, employees or registered
representatives.
Distributor shall indemnify and hold harmless Dealer and its affiliates
against any losses, claims, damages, liabilities or expenses (including
reasonable attorneys' fees and expenses) resulting from (a) any
negligence or misfeasance of the Funds, Distributor or any of its
officers, directors, employees or registered representatives; or (b) any
violation of any law, rule or regulation or any failure to perform or
observe any obligations of Distributor or the Funds set forth in this
Agreement by the Funds, Distributor or any of its officers, directors,
employees or registered representatives.
11. Provision of Sales Material. Distributor shall deliver to Dealer without
charge reasonable quantities of the Fund's Prospectuses with any
supplements thereto currently in effect, copies of current shareholder
reports of the Fund, proxy materials, and sales material issued by
Distributor from time to time.
12. Rule 12b-1 Agreement; Termination. This Agreement is a related agreement
under the Distribution Plan ("Rule 12b-1 Plan"), applicable for the
12b-1 Funds, as adopted pursuant to Rule 12b-1 under the 1940 Act. This
Agreement may be terminated as to the payments made by the 12b-1 Funds
under the Rule 12b-1 Plan at any time, without the payment of any
penalty, by the vote of a majority of the members of the Board of
Trustees of the Trust who are not interested persons of the Trust and
who have no direct or indirect financial interest in the operation of
the Rule 12b-1 Plan or in any related agreements to the Rule 12b-1 Plan
("Disinterested Trustees") or by a majority of the outstanding Shares,
each with respect to a class of a 12b-1 Fund, upon delivery of written
notice thereof to the parties to this Agreement.
This Agreement will terminate automatically in the event of its
assignment as defined in the 1940 Act or upon termination of the
Distributor underwriting agreement with the Fund. In addition, either
the Distributor or Dealer may terminate this Agreement upon at least 90
days written notice to the other party.
13. Complete Agreement. This Agreement supersedes and cancels any prior
agreement with respect to the sale of Shares of a Fund as listed in
Exhibit A, and may be amended at any time and from time to time
5
by written agreement of the parties hereto, subject to the approval of
the Board of Trustees of the Trust when applicable. Notwithstanding the
foregoing, Distributor may amend or modify the Exhibits incorporated
herein, as provided throughout this Agreement, by providing new exhibits
to Dealer. However, such amendment shall only become effective and part
of this Agreement and be considered binding upon Dealer upon Dealer's
first sale of Shares under the new Exhibits.
14. Choice of Law. This Agreement shall be governed by and construed to be
in accordance with substantive laws of the State of Delaware without
reference to choice of law principles thereof and in accordance with the
1940 Act. In the case of any conflict, the 1940 Act shall control. Each
party represents that the undersigned has authority to act, and to
execute this Agreement, on behalf of such party.
15. Notices. All communications and notices to Distributor should be sent to
the address below. Any communications or notice to Dealer shall be duly
given if mailed or delivered to Dealer at the address specified by
Dealer below.
16. Non-Exclusivity. Each of the parties acknowledges and agrees that this
Agreement and the arrangement described herein are intended to be
non-exclusive and that each of the parties is free to enter into similar
agreements and arrangements with other entities.
17. Confidentiality Terms. To protect Customer Information (defined below)
and to comply as may be necessary with requirements of the
Xxxxx-Xxxxx-Xxxxxx Act, the relevant state and federal regulations
pursuant thereto, including Regulation S-P, and state privacy laws (all
the foregoing referred to as "Privacy Law") the parties wish to include
the confidentiality and non-disclosure obligations set forth herein.
(a) Customer Information. "Customer Information" means any information
contained on an application of a customer ("Customer") or other form
and all nonpublic personal information about a Customer that a party
receives from the other party. "Customer Information" includes, by
way of example and not limitation, name, address, telephone number,
social security number, health information and personal financial
information (which may include consumer account number).
(b) Usage. The parties understand and acknowledge that they may be
financial institutions subject to Privacy Law, and any Customer
Information that one party receives from the other party is received
with limitations on its use and disclosure. The parties agree that
they are prohibited from using the Customer Information received
from the other party other than:
1) as required by law, regulation or rule (including any
anti-money laundering laws), or
2) to carry out the purposes for which one party discloses
Customer Information to the other party under
selling/dealer agreement(s), including use under an
exception permitted by Privacy Law in the ordinary course
of business to carry out the
6
purposes of such Agreement(s).
(c) Nondisclosure. Subject to the provisions of Usage above, the parties
will not disclose the Customer Information to any other person
without prior written permission from the other party.
(d) Safeguarding Customer Information. The parties shall establish and
maintain safeguards against the unauthorized access, destruction,
loss, or alteration of Customer Information in their control, which
are no less rigorous than those maintained by a party for its own
information of a similar nature. In the event of any improper
disclosure of any Customer Information, the party responsible for
the disclosure will immediately notify the other party.
(e) Survivability. The provisions of this Confidentiality Section
(paragraph 17) shall survive the termination of the Agreement.
18. Anti-Money Laundering Programs. The Parties have each adopted and
implemented anti-money laundering policies, procedures and controls that
comply and will continue to comply in all respects with the requirements
of applicable anti-money laundering laws and regulations. Each Party
will at all times during its relationship with the other Party strictly
adhere to its respective anti-money laundering policies, procedures and
controls.
(a) Anti-Money Laundering Policies. Each Party hereby represents and
warrants that it has anti-money laundering policies, and procedures,
which are in compliance with federal, state and local laws and
regulations, as amended.
(b) Due Diligence. The Dealer will verify the identities of, and conduct
due diligence (and, where appropriate, enhanced due diligence) with
regard to, all prospective Customers and, where applicable, the
principal beneficial owners on whose behalf a Customer makes an
investment in accordance with its anti-money laundering policies,
procedures and controls, and this Amendment.
(c) Anti-Money Laundering Records. The Dealer will hold evidence of the
identities of each Customer and, where applicable, the beneficial
owners on whose behalf a Customer makes an investment, in accordance
with its anti-money laundering policies, procedures and controls,
and this Amendment, and maintain such evidence for at least five
years following a Customer's final redemption from a mutual fund
distributed by the Distributor (the "Funds"). The Dealer shall make
such information available to the Distributor promptly upon request
without violating any Privacy Laws as described in Section 17.
(d) Prohibited Customers. The Dealer will take all reasonable and
practicable steps to ensure that it does not accept or
maintain investments in any Fund, directly or indirectly, from:
1) A person or entity whose name appears on:
7
(i) the List of Specially Designated Nationals and Blocked
Persons maintained by the U.S. Office of Foreign Assets
Control ("OFAC") and any other prohibited lists
determined by such office;
(ii) such other lists of prohibited persons and entities as
may be mandated by applicable U.S. law or regulation; or
(iii) such other lists of prohibited persons and entities as
may be provided to the Dealer by the Distributor;
2) A foreign shell bank (i.e., a bank with no physical presence in
any country); or
3) A person or entity resident in, or whose subscription funds
originate from, a country or territory that appears on a list
maintained by the Financial Action Task Force on Money
Laundering ("Non-Cooperative Jurisdiction").
(e) Notification. The Dealer will immediately notify the Distributor who
will in turn notify the Anti-Money Laundering Compliance Officer of
the Distributor if it knows, or has reason to suspect, that a
prospective or existing Customer, or the principal beneficial owners
on whose behalf a prospective or existing Customer has made or is
attempting to make, an investment, is person or entity whose name
appears on:
1) The List of Specially Designated Nationals and Blocked Persons
maintained by OFAC or any other prohibited lists determined by
OFAC;
2) Such other lists of prohibited persons and entities as may be
mandated by applicable law or regulation;
3) Such other lists of prohibited persons and entities as may be
provided by the Distributor;
4) A person or entity resident in, or organized or chartered under
the laws of, a Non-Cooperative Jurisdiction;
5) A person or entity resident in, or organized or chartered under
the laws of, a jurisdiction that has been designated by the
Secretary of the Treasury under Sections 311 or 312 of the USA
PATRIOT Act as warranting special measures due to money
laundering concerns; or
6) A person or entity who gives the Dealer reason to believe that
its subscription funds originate from, or are routed through, an
account maintained at a Foreign Shell Bank, an offshore bank, or
a bank organized or chartered under the laws of a
Non-Cooperative Jurisdiction.
(f) Suspicious Activity. The Dealer will immediately notify the
Distributor who will then in turn notify the Anti-Money Laundering
Compliance Officer of the Distributor if it becomes aware of
8
any suspicious activity or pattern of activity or any activity that
may require further review to determine whether it is suspicious.
(g) Survivability. The provisions of this Anti-Money Laundering Section
(paragraph 18) shall survive the termination of the Agreement.
19. Termination and Survival. In the event that this Agreement is terminated
under the terms and conditions described in such Agreement, the
indemnification provision contained in this Agreement shall continue
until the possibilities for damages or loss have expired.
20. Acceptance of Agreement. The parties may enter into this Amendment by
executing this document. In addition, the Dealer's placement of an order
or acceptance of payments of any kind after the Dealer's receipt of this
Amendment shall constitute the Dealer's acceptance of this Amendment
and, therefore, after such placement of an order or acceptance of
payment, this Amendment shall be binding as between the parties as of
the date of such order or payment.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers as of the day and year first written above.
DISTRIBUTOR, DEALER,
Gartmore Distribution Services, Inc. ------------------------
0000 Xxxxx Xxxx ------------------------
Xxxxxxxxxxxx, XX 00000 ------------------------
------------------------
------------------------------------------------
By: Xxxxxx Xxxxxxx
Senior Vice President By:
---------------------
9
EXHIBIT A
Any and all Gartmore Funds' funds are available for sale. The Broker/ Dealer
will receive the applicable 12b-1 fees and Dealer Concession based on funds sold
and class purchased as defined in the fund's prospectus.
10
EXHIBIT B
FUND/SERV PROCESSING PROCEDURES
AND
MANUAL PROCESSING PROCEDURES
The purchase, redemption and settlement of Shares of a Fund will normally follow
the Fund/SERV-Defined Contribution Clearance and Settlement Service ("DCCS")
Processing Procedures below and the rules and procedures of the SCC Division of
the National Securities Clearing Corporation ("NSCC") shall govern the purchase,
redemption and settlement of Shares of the Funds through NSCC by the Dealer. In
the event of equipment failure or technical malfunctions or the parties'
inability to otherwise perform transactions pursuant to the FUND/SERV Processing
Procedures, or the parties' mutual consent to use manual processing, the Manual
Processing Procedures below will apply.
It is understood and agreed that, in the context of Section 22 of the 1940 Act
and the rules and public interpretations thereunder by the staff of the
Securities and Exchange Commission (SEC Staff), receipt by the Dealer of any
Instructions from the Client-shareholder prior to the Close of Trade on any
Business Day shall be deemed to be receipt by the Funds of such Instructions
solely for pricing purposes and shall cause purchases and sales to be deemed to
occur at the Share Price for such Business Day, except as provided in 4(c) of
the Manual Processing Procedures. Each Instruction shall be deemed to be
accompanied by a representation by the Dealer that it has received proper
authorization from each Client-shareholder whose purchase, redemption, account
transfer or exchange transaction is effected as a result of such Instruction.
FUND/SERV-DCCS PROCESSING PROCEDURES
1. On each business day that the New York Stock Exchange (the "Exchange")
is open for business on which the Funds determine their net asset values
("Business Day"), the Distributor shall accept, and effect changes in
its records upon receipt of purchase, redemption, exchanges, account
transfers and registration instructions from the Dealer electronically
through Fund/SERV ("Instructions") without supporting documentation from
the Client-shareholder. On each Business Day, the Distributor shall
accept for processing any Instructions from the Dealer and shall process
such Instructions in a timely manner.
2. Distributor shall perform any and all duties, functions, procedures and
responsibilities assigned to it under this Agreement and as otherwise
established by the NSCC. Distributor shall conduct each of the foregoing
activities in a competent manner and in compliance with (a) all
applicable laws, rules and regulations, including NSCC Fund/SERV-DCCS
rules and procedures relating to Fund/SERV; (b) the then-current
Prospectus of a Fund; and (c) any provision relating to Fund/SERV in any
other agreement of the Distributor that would affect its duties and
obligations pursuant to this Agreement.
3. Confirmed trades and any other information provided by the Distributor
to the Dealer through Fund/SERV and pursuant to this Agreement shall be
accurate, complete, and in the
11
format prescribed by the NSCC.
4. Trade, registration, and broker/dealer information provided by the
Dealer to the Distributor through Fund/SERV and pursuant to this
Agreement shall be accurate, complete and, in the format prescribed by
the NSCC. All Instructions by the Dealer regarding each Fund/SERV
Account shall be true and correct and will have been duly authorized by
the registered holder.
5. For each Fund/SERV transaction, including transactions establishing a
Client-shareholder account with the Distributor, the Dealer shall
provide the Funds and the Distributor with all information necessary or
appropriate to establish and maintain each Fund/SERV transaction (and
any subsequent changes to such information), which the Dealer hereby
certifies is and shall remain true and correct. The Dealer shall
maintain documents required by the Funds to effect Fund/SERV
transactions. The Dealer certifies that all Instructions delivered to
Distributor on any Business Day shall have been received by the Dealer
from the Client-shareholder by the close of trading (generally 4:00 p.m.
Eastern Time ("ET")) on the Exchange (the "Close of Trading") on such
Business Day and that any Instructions received by it after the Close of
Trading on any given Business Day will be transmitted to Distributor on
the next Business Day.
MANUAL PROCESSING PROCEDURES
1. On each Business Day, the Dealer may receive Instructions from the
Client-shareholder for the purchase or redemption of shares of the Funds
based solely upon receipt of such Instructions prior to the Close of
Trading on that Business Day. Instructions in good order received by the
Dealer prior to the close of trading on any given Business Day
(generally, 4:00 p.m. ET (the "Trade Date") and transmitted to the
Distributor by no later than 9:30 a.m. ET the Business Day following the
Trade Date ("Trade Date plus One" or "TD+1"), will be executed at the
NAV ("Share Price") of each applicable Fund, determined as of the Close
of Trading on the Trade Date.
2. By no later than 6:00 p.m. ET on each Trade Date ("Price Communication
Time"), the Distributor will use its best efforts to communicate to the
Dealer via electronic transmission acceptable to both parties, the Share
Price of each applicable Fund, as well as dividend and capital gain
information and, in the case of funds that credit a daily dividend, the
daily accrual for interest rate factor (mil rate), determined at the
Close of Trading on that Trade Date.
3. As noted in Paragraph 1 above, by 9:30 a.m. ET on TD+1 ("Instruction
Cutoff Time") and after the Dealer has processed all approved
transactions, the Dealer will transmit to the Distributor via facsimile,
telefax or electronic transmission or system-to-system, or by a method
acceptable to the Dealer and the Distributor, a report (the "Instruction
Report") detailing the Instructions that were received by the Dealer
prior to the Funds' daily determination of Share Price for each Fund
(i.e., the Close of Trading) on Trade Date.
(a) It is understood by the parties that all Instructions from the
Client-shareholder shall be received and processed by the Dealer
in accordance with its standard transaction processing
procedures. The Dealer or its designees shall maintain records
sufficient
12
to identify the date and time of receipt of all
Client-shareholder transactions involving the Funds and shall
make or cause to be made such records available upon reasonable
request for examination by the Funds or its designated
representative or, at the request of the Funds, by appropriate
governmental authorities. Under no circumstances shall the
Dealer change, alter or modify any Instructions received by it
in good order.
(b) Following the completion of the transmission of any Instructions
by the Dealer to the Distributor by the Instruction Cutoff Time,
the Dealer will verify that the Instruction was received by the
Distributor and trades are pending by utilizing a remote
terminal or such other method acceptable to the Distributor.
(c) In the event that an Instruction transmitted by the Dealer on
any Business Day is not received by the Distributor by the
Instruction Cutoff Time, due to mechanical difficulties or for
any other reason beyond the Dealer's reasonable control, such
Instruction shall nonetheless be treated by the Distributor as
if it had been received by the Instruction Cutoff Time, provided
that the Dealer retransmits such Instruction by facsimile
transmission to the Distributor and such Instruction is received
by the Distributor's financial control representative no later
than 9:30 a.m. ET on TD+1. In addition, the Dealer will place a
phone call to a financial control representative of the
Distributor prior to 9:00 a.m. ET on TD+1 to advise the
Distributor that a facsimile transmission concerning the
Instruction is being sent.
(d) With respect to all Instructions, the Distributor's financial
control representative will manually adjust a Fund's records for
the Trade Date to reflect any Instructions sent by the Dealer.
(e) By no later than 4:00 p.m. on TD+1, and based on the information
transmitted to the Distributor pursuant to Paragraph 3(c) above,
the Dealer will use its best efforts to verify that all
Instructions provided to the Distributor on TD+1 were accurately
received and that the trades for each Account were accurately
completed and the Dealer will use its best efforts to notify
Distributor of any discrepancies.
4. As set forth below, upon the timely receipt from the Dealer of the
Instructions, the Fund will execute the purchase or redemption
transactions (as the case may be) at the Share Price for each Fund
computed as of the Close of Trading on the Trade Date.
(a) Except as otherwise provided herein, all purchase and redemption
transactions will settle on TD+1. Settlements will be through
net Federal Wire transfers to an account designated by a Fund.
In the case of Instructions which constitute a net purchase
order, settlement shall occur by the Dealer instructing the
trustee or custodian for the Plans to initiate a wire transfer
by 1:00 p.m. ET on TD+1 to the custodian for the Fund for
receipt by the Funds' custodian by no later than the Close of
Business at the New York Federal Reserve Bank on TD+1, causing
the remittance of the requisite funds to the Distributor to
cover such net purchase order. In the case of Instructions which
constitute a net redemption order, settlement shall occur by the
Distributor causing the remittance of the requisite funds to
cover such net redemption order by
13
Federal Funds Wire by 1:00 p.m. ET on TD+1, provided that the
Fund reserves the right to (i) delay settlement of redemptions
for up to seven (7) Business Days after receiving a net
redemption order in accordance with Section 22 of the 1940 Act
and Rule 22c-1 thereunder, or (iii) suspend redemptions pursuant
to the 1940 Act or as otherwise required by law. Settlements
shall be in U.S. dollars and a Fund may pay redemption proceeds
in whole or in part by a distribution in-kind of readily
marketable securities that it holds in lieu of cash in
conformity with applicable law or regulations.
(b) The Dealer or such other party as may be designated, as record
owner of each account ("Record Owner") will be provided with all
written confirmations required under federal and state
securities laws.
(c) On any Business Day when the Federal Reserve Wire Transfer
System is closed, all communication and processing rules will be
suspended for the settlement of Instructions. Instructions will
be settled on the next Business Day on which the Federal Reserve
Wire Transfer System is open. The original TD+1 Settlement Date
will not apply. Rather, for purposes of this Paragraph 4(c)
only, the Settlement Date will be the date on which the
Instruction settles.
(d) The Dealer shall, upon receipt of any confirmation or statement
concerning the accounts, promptly verify by use of the terminal
or by such other method acceptable to the Distributor and the
Dealer the accuracy of the information contained therein against
the information contained in the Dealer's internal
record-keeping system and shall promptly, but in no event not
more than seven days, advise the Distributor in writing of any
discrepancies between such information. The Distributor and the
Dealer shall cooperate to resolve any such discrepancies as soon
as reasonably practicable.
INDEMNIFICATION
In the event of any error or delay with respect to both the Fund/SERV Processing
Procedures and the Manual Processing Procedures outlined in Exhibit C herein:
(i) which is caused by the Funds or the Distributor, the Distributor shall make
any adjustments on the Funds' accounting system necessary to correct such error
or delay and the responsible party or parties shall reimburse the
Client-shareholder and the Dealer, as appropriate, for any losses or reasonable
costs incurred directly as a result of the error or delay but specifically
excluding any and all consequential punitive or other indirect damages or (ii)
which is caused by the Dealer or by any Client-shareholder or the Distributor
shall make any adjustment on the Funds' accounting system necessary to correct
such error or delay and the affected party or parties shall be reimbursed by the
Dealer for any losses or reasonable costs incurred directly as a result of the
error or delay, but specifically excluding any and all consequential punitive or
other indirect damages. In the event of any such adjustments on the Funds'
accounting system, Dealer shall make the corresponding adjustments on its
internal record-keeping system. In the event that errors or delays with respect
to the Procedures are contributed to by more than one party hereto, each party
shall be responsible for that portion of the loss or reasonable cost which
results from its error or delay. All parties agree to provide the other parties
prompt notice of any errors or delays of the type referred to herein and to use
reasonable efforts to take such action as may be appropriate to avoid or
mitigate any such costs or losses.
14
