Exhibit (h)(vi) under Form N-1A
Exhibit 10 under Item 601/ Reg. S-K
THE RIVERFRONT FUNDS
MUTUAL FUND
SALES AND SERVICE AGREEMENT
This Mutual Fund Sales and Service Agreement (the "Agreement") is entered
into between the financial institution executing this Agreement ("Financial
Institution"), and Edgewood Services, Inc. ("Edgewood") with respect to those
investment companies or series thereof listed in Exhibit A hereto (referred to
individually as the "Fund" and collectively as the "Funds") for whose shares of
beneficial interest ("Shares") Edgewood serves as principal underwriter.
A. Financial Institution.
1. Status of Financial Institution as "Bank" or Registered Broker-Dealer.
Financial Institution represents and warrants to Edgewood:
(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 (OExchange ActO); that it is
registered with the Securities and Exchange Commission pursuant to Section
15 of the Exchange Act; that it is a member of the National Association of
Securities Dealers, Inc.; 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 Fair
Practice. Financial Institution agrees to notify Edgewood 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
Edgewood'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
Edgewood immediately of any action by or communication from state or
federal banking authorities, state securities authorities, the Securities
and Exchange Commission, 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 Edgewood'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.
2. Financial Institution Acts as Agent for its Customers.
The parties agree that in each transaction in the Shares of any Fund 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 Edgewood's
agent or as agent for the Funds.
B. Sales of Fund Shares.
3. Execution of Orders for Purchase and Redemption of Shares.
(a) All orders for the purchase of any Shares shall be executed at the
then-current public offering price per share (i.e., the net asset value per
share plus the applicable initial sales load, if any) next calculated after
the time such order is received and accepted by Edgewood and all orders for
the redemption of any Shares shall be executed at the net asset value per
share (less any applicable contingent deferred sales charge), in each case
as described in the prospectus of the Fund. Any applicable redemption fee
or will be deducted by the Fund prior to the transmission of the redemption
proceeds to Financial Institution or its customer. Edgewood and the Funds
reserve the right to reject any purchase request in their sole discretion .
If required by law, each transaction shall be confirmed in writing on a
fully disclosed basis and, if confirmed by Edgewood, a copy of each
confirmation shall be sent simultaneously to Financial Institution if
Financial Institution so requests.
(b) The procedures relating to all orders will be subject to the terms of the
prospectus and statement of additional information and any documents
incorporated by reference therein (collectively, the "prospectus") of each
Fund and Edgewood's written instructions to Financial Institution from
time to time.
(c) Payments for Shares shall be made as specified in the applicable Fund
prospectus. If payment for any purchase order is not received in
accordance with the terms of the applicable Fund prospectus, Edgewood
reserves the right, without notice, to cancel the sale and to hold
Financial Institution responsible for any loss sustained as a result
thereof.
4. Initial Sales Loads Payable to Financial Institution.
(a) On each order accepted by Edgewood and a Fund, in exchange for the
performance of sales services, Financial Institution will be entitled to
receive from Edgewood the applicable percentage of the initial sales load,
if any, as established by Edgewood and described in, and limited by, the
applicable Fund's prospectus from the amount paid by Financial
Institution's customer (the "Dealer Reallowance"). The initial sales loads
for any Fund shall be those set forth in its prospectus. The portion of the
initial sales load payable to Financial Institution may be changed at any
time at Edgewood's sole discretion upon written notice to Financial
Institution.
(b) Transactions may be settled by Financial Institution: (1) by payment of
the full purchase price less an amount equal to the Dealer Reallowance, or
(2) by payment of the full purchase price, in which case Financial
Institution shall receive, not less frequently than monthly, the Dealer
Reallowance in respect of all orders received and settled during the
immediately preceding calendar month.
(c) It shall be the obligation of the Financial Institution either: (i) to
provide Edgewood 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 Edgewood. Neither the
Fund nor Edgewood 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.
(d) If any shares are sold by the Financial Institution with a sales load and
are redeemed for the account of the Fund or are tendered for redemption
within seven (7) business days after confirmation of the purchase order
for such shares, the Financial Institution agrees to refund to Edgewood
the full Dealer Reallowance received on the sale and Edgewood agrees to
pay to the Fund the portion of the sales load on the sale which Edgewood
has retained as well as any amoung refunded by the Financial Institution
and paid to Edgewood.
5. Advance Commissions Payable to Financial Institution.
Upon the purchase of certain Shares, as described in the applicable
prospectuses, Edgewood will pay Financial Institution an advance commission as
set forth on Exhibit A (or, if more recently published, the Fund's current
prospectus). 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 contingent deferred sales charge ("CDSC")
will be assessed upon the redemption of Shares with regard to which an advance
commission is paid by Edgewood; in the event that Financial Institution notifies
Edgewood in writing that Financial Institution elects to waive such advance
commission, and if the Fund's prospectus permits such a waiver, the CDSC will
not be charged upon the redemption of the relevant Shares. To receive advance
commission from Edgewood 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) 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 Edgewood
prior to such transfer for advance commissions paid to it by Edgewood.
C. Distribution Services.
6. Agreement to Provide Distribution Services.
(a) With regard to those Funds which pay asset-based sales charges (pursuant
to Distribution Plans adopted under Investment Company Act Rule 12b-1), as
noted on Exhibit A hereto (or, if more recently published, the Fund's
current prospectus), Edgewood hereby appoints Financial Institution to
render or cause to be rendered distribution and sales services to the
Funds and their shareholders.
(b) The services to be provided under this Paragraph (a) may include, but are
not limited to, the following:
(i) reviewing the activity in Fund accounts;
(ii) providing training and supervision of its personnel;
(iii) maintaining and distributing current copies of prospectuses and
shareholder reports;
(iv) advertising the availability of its services and products;
(v) providing assistance and review in designing materials to send to
customers and potential customers and developing methods of making
such materials accessible to customers and potential customers; and
(vi) responding to customers' and potential customers' questions about the
Funds.
7. Asset-Based Sales Loads Payable to Financial Institution.
During the term of this Agreement, Edgewood will pay Financial Institution
asset-based sales charges (also known as "Rule 12b-1 Fees") for each Fund as set
forth in Exhibit A to this Agreement (or, if more recently published, the Fund's
current prospectus). For the payment period in which this Agreement becomes
effective or terminates, there shall be an appropriate proration of the fee on
the basis of the number of days that this Agreement is in effect during the
month.
D. Shareholder Services.
8. Agreement to Provide Shareholder and Account Maintenance Services.
With regard to those Funds which pay a Shareholder Services Fee to
Financial Institutions, as noted on Exhibit A hereto (or, if more recently
published, the Fund's current prospectus), Financial Institution agrees to
render or cause to be rendered personal services to shareholders of the Funds
and/or the maintenance of accounts of shareholders of the Funds ("Shareholder
Services"). Financial Institution agrees to provide Shareholder Services which,
in its best judgment, are necessary or desirable for its customers who are
investors in the Funds. Financial Institution further agrees to provide
Edgewood, upon request, a written description of the Shareholder Services which
Financial Institution is providing hereunder.
9. Shareholder Service Fees Payable to Financial Institution.
During the term of this Agreement, Edgewood will pay Financial Institution
Shareholder Service Fees as set forth in Exhibit A to this Agreement (or, if
more recently published, the Fund's current prospectus). For the payment period
in which this Agreement becomes effective or terminates, there shall be an
appropriate proration of the fee on the basis of the number of days that this
Agreement is in effect during the month.
E. Supplemental Payments.
10. Supplemental Payments to Financial Institution.
During the term of this Agreement, Edgewood or its affiliates will make
Supplemental Payments to Financial Institution as additional compensation for
sales services; such payments will be made from the assets of Edgewood or its
affiliates, and not from assets of the Funds nor from fees payable under
applicable Distribution (Rule 12b-1) Plan. For the payment period in which this
Agreement becomes effective or terminates, there shall be an appropriate
proration of the payments on the basis of the number of days that this Agreement
is in effect during the month.
F. Miscellaneous.
11. 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 statutory prospectus of the Fund and, upon request by a customer or
shareholder, a copy of the Fund's current statement of additional information
and any information incorporated by reference therein. Financial Institution
shall not make any representations concerning any Shares other than those
contained in the prospectus or statement of additional information of the Fund
or in any promotional materials or sales literature furnished to Financial
Institution by Edgewood or the Fund. Financial Institution shall have no
authority to distribute any other sales material related to a Fund or its shares
without the prior written approval of Edgewood.
12. ERISA Assets.
(a) Financial Institution understands that the Department of Labor views ERISA
as prohibiting fiduciaries of discretionary ERISA assets from receiving
certain services fees or other compensation from funds in which the
fiduciary's discretionary ERISA assets are invested. To date, the
Department of Labor has not issued any exemptive order or advisory opinion
that would exempt fiduciaries from this interpretation. Without specific
authorization from the Department of Labor, fiduciaries should carefully
avoid investing discretionary assets in any fund pursuant to an arrangement
where the fiduciary is to be compensated by the fund for such investment.
Receipt of such compensation could violate ERISA provisions against
fiduciary self-dealing and conflict of interest and could subject the
fiduciary to substantial penalties.
(b) Financial Institution will not perform or provide any duties which would
cause it to be a fiduciary under Section 4975 of the Internal Revenue Code,
as amended. For purposes of that Section, Financial Institution understands
that any person who exercises any discretionary authority or discretionary
control with respect to any individual retirement account or its assets, or
who renders investment advice for a fee, or has any authority or
responsibility to do so, or has any discretionary authority or
discretionary responsibility in the administration of such an account, is a
fiduciary.
13. Indemnification.
(a) Financial Institution shall indemnify and hold harmless Edgewood, each
Fund, the transfer agents of the Funds, and their respective subsidiaries,
affiliates, officers, directors, agents and employees from all direct or
indirect liabilities, losses or costs (including attorneys fees) arising
from, related to or otherwise connected with: (1) any breach by Financial
Institution of any provision of this Agreement; or (2) any actions or
omissions of Edgewood, any Fund, the transfer agents of the Funds, and
their subsidiaries, affiliates, officers, directors, agents and employees
in reliance upon any oral, written or computer or electronically
transmitted instructions believed to be genuine and to have been given by
or on behalf of Financial Institution.
(b) Edgewood shall indemnify and hold harmless Financial Institution and its
subsidiaries, affiliates, officers, directors, agents and employees from
and against any and all direct or indirect liabilities, losses or costs
(including attorneys fees) arising from, related to or otherwise connected
with: (1) any breach by Edgewood of any provision of this Agreement; or (2)
any alleged untrue statement of a material fact contained in any Fund's
Registration Statement or Prospectus, or as a result of or based upon any
alleged omission to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading.
(c) The agreement of the parties in this Paragraph to indemnify each other is
conditioned upon the party entitled to indemnification (Indemnified Party)
giving notice to the party required to provide indemnification
(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 (c) 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.
(d) The provisions of this Paragraph 13 shall survive the termination of this
Agreement.
14. Customer Names Proprietary to Financial Institution.
(a) The names of Financial Institution's customers are and shall remain
Financial Institution's sole property and shall not be used by Edgewood, or
its affiliates for any purpose except the performance of their respective
duties and responsibilities under this Agreement and except for servicing
and informational mailings relating to the Funds. Notwithstanding the
foregoing, this Paragraph 14 shall not prohibit Edgewood, or any of its
affiliates from utilizing the names of Financial Institution's customers
for any purpose if the names are obtained in any manner other than from
Financial Institution pursuant to this Agreement.
(b) Neither party shall use the name of the other party in any manner without
the other party's written consent, except as required by any applicable
federal or state law, rule or regulation, and except pursuant to any
mutually agreed upon promotional programs.
(c) The provisions of this Paragraph 14 shall survive the termination of this
Agreement.
15. Security Against Unauthorized Use of Funds' Recordkeeping Systems.
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 Edgewood.
16. 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 the Fund or Funds, unless a court of competent jurisdiction shall
have determined that the conduct of a majority of the Board of Directors or
Trustees of the Fund or Funds constitutes willful misfeasance, bad faith, gross
negligence or reckless disregard of their duties. This Paragraph 16 will survive
the term of this Agreement.
17. Certification of Customers' Taxpayer Identification Numbers.
Financial Institution agrees to obtain any taxpayer identification number
certification from its customers required under Section 3406 of the Internal
Revenue Code, and any applicable Treasury regulations, and to provide Edgewood,
or its respective designee with timely written notice of any failure to obtain
such taxpayer identification number certification in order to enable the
implementation of any required backup withholding.
18. 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 Edgewood shall be given or sent to Edgewood or at their
offices located at X.X. Xxx 000, Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000, and all
notices to Financial Institution shall be given or sent to it at its address
shown below
19. Termination and Amendment.
(a) This Agreement shall become effective in this form as of the date set
forth below or as of the first date thereafter upon which Financial
Institution executes any transaction, performs any service, or receives
any payment pursuant hereto.
(b) This Agreement, including Exhibit A hereto, may be amended by Edgewood
from time to time by the following procedure. Edgewood will mail a copy of
the amendment to Financial Institution's address, as shown below. If
Financial Institution does not object to the amendment within thirty (30)
days after its receipt, the amendment will become part of the Agreement.
Financial Institution's objection must be in writing and be received by
Edgewood within such thirty days.
(c) This Agreement may be terminated as follows:
(i) at any time, without the payment of any penalty, by the vote of a majority
of the Trustees of the Fund, who are not interested persons of the Fund and
have no direct or indirect financial interest in the operation of the
applicable Distribution (12b-1) Plan or in any agreements relating to such
Plan, or by a vote of a majority of the outstanding voting securities of
the Fund as defined in the Investment Company Act of 1940 on not more than
sixty (60) days' written notice to the parties to this Agreement;
(ii) automatically in the event of the Agreement's assignment as defined
in the Investment Company Act of 1940, upon the termination of the
"Distributor's Contract" between the Fund and Edgewood, or upon the
termination of the Distribution Plan to which this Agreement is
related; and
(iii) by any party to the Agreement without cause by giving the other
party at least sixty (60) days' written notice of its intention to
terminate.
(d) The termination of this Agreement with respect to any one Fund will not
cause the Agreement's termination with respect to any other Fund.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
20. Governing Law.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Pennsylvania.
EDGEWOOD SERVICES, INC.
Clearing Operations
X.X. Xxx 000
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
By: /S/ XXXXXX X. XXXX Date: June 1, 1999
-------------------------
Name: Xxxxxx X. Xxxx
Title: Secretary, Edgewood Services, Inc.
USAA INVESTMENT MANAGEMENT COMPAY
Financial Institution Name
(Please Print or Type)
0000 XXXXXXXXXXXXXX XXXX
Xxxxxxx
XXX XXXXXXX XX 00000
---------------------------------------
City State Zip Code
By: /S/ XXXX X. XXXXXXXX
Authorized Signature
SENIOR VICE PRESIDENT
Title
XXXX X. XXXXXXXX
Print Name or Type Name
Dated:
THE RIVERFRONT FUNDS
MUTUAL FUND
SALES AND SERVICE AGREEMENT
EXHIBIT A
"INVESTOR A" SHARES
FUND(S)
The Riverfront U.S. Government Securities Money Market Fund
The Riverfront U.S. Government Income Fund
The Riverfront Income Equity Fund
The Riverfront Large Company Select Fund
The Riverfront Small Company Select Fund
The Riverfront Balanced Fund
INITIAL SALES LOAD DEALER CONCESSION
Under $100,000 4.50% 4.00%
$100,000 - $249,999 3.50% 3.00%
$250,000 - $499,999 2.50% 2.00%
$500,000 - $999,999 1.50% 1.00%
$1,000,000 and over 0.00% 0.00%
*No sales load is charged on the Money Market Fund.
12B-1 FEE SHAREHOLDER SERVICES FEE
Up to 0.25% of average net assets Up to 0.25% of average net assets.
"INVESTOR B" SHARES
FUND(S)
The Riverfront U.S. Government Income Fund
The Riverfront Income Equity Fund
The Riverfront Large Company Select Fund
The Riverfront Small Company Select Fund
The Riverfront Balanced Fund
ADVANCE COMMISSION
Up to 4.00% of the offering price per share on all sales.
12B-1 FEE
Up to 1.00% of average net assets. Such compensation shall not exceed
0.75% in the case of "distribution fees", and shall not exceed 0.25% in
the case of "service fees".
SHAREHOLDER SERVICES FEES
Up to 0.25% of average net assets.
