PRINCOR FINANCIAL SERVICES CORPORATION
The Principal Financial Group
SMB Sales Support
Des Moines, Iowa 50392-0470
(000) 000-0000
FAX: (000) 000-0000
PRINCIPAL INVESTORS FUND
SELLING GROUP AGREEMENT
Princor Financial Services Corporation ("Princor", "We" or "Us") is the
principal underwriter, as defined in the Investment Company Act of 1940, of the
shares ("Shares") of the Principal Investors Fund, Inc. (the "Fund"), an
open-end investment company incorporated in the state of Maryland. We understand
that _____________________________ ("You") are a member of the National
Association of Securities Dealers, Inc. ("NASD") and, on the basis of this
understanding, invite you to become a member of the Selling Group to distribute
Shares of the Fund according to the following terms and conditions:
1. Each party to this Agreement represents that it currently is and, while
this Agreement is in effect, will continue to be a member in good standing
of the NASD and agrees to abide by all rules and regulations of that
association, including the NASD Rules of Conduct. If you are a foreign
dealer, not eligible for membership in the NASD, you still agree to abide
by the rules and regulations of the NASD. Both parties agree to comply with
all applicable state and federal laws, rules and regulations of the
Securities and Exchange Commission ("SEC"), and other authorized United
States or foreign regulatory agencies. You agree that you will not sell,
offer for sale, or solicit Shares in any state where they have not been
qualified for sale. You further agree that any sale of Shares to an
employee benefit plan is either not a prohibited transaction under the
Employee Retirement Security Act of 1974 or is covered under a prohibited
transaction exemption. You will solicit applications and sell Shares only
in accordance with the terms and on the basis of the representations
contained in the then current Prospectus, Statement of Additional
Information and any supplemental information furnished by us.
2. You must represent that you are currently a member of the Securities
Investors Protection Corporation ("SIPC") and, while this Agreement is in
effect, will continue to be a member of SIPC. You agree to notify us
immediately if your SIPC membership status changes.
3. Orders for Shares received pursuant to this Agreement and accepted by us
will be at the current public offering price applicable to each order as
established by the then current Fund Prospectus. Both the Fund and we
reserve the right, without notice to you, to suspend sales or withdraw the
offering of Shares temporarily or permanently, or to cancel this Agreement,
which shall be construed in accordance with the laws of the state of Iowa.
All orders are subject to acceptance by us and the Fund and each reserve
the right to reject any order in whole or in part.
4. Shares may only be purchased through us. Purchases through us shall be made
only for the purpose of covering purchase orders already received from your
customers, and we agree that we will not place orders for the purchase of
Shares from the Fund except to cover purchase orders already received by
us.
5. The Fund has adopted Distribution Plan(s) (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940 (the "1940 Act") for certain
Classes of the Fund. Each Agreement defines services to be provided by
Selling Group members for which they will be compensated pursuant to the
Plan.
(a) As a Selling Group Member, you agree to provide distribution
assistance and administrative support services in connection with the
distribution of Shares to customers who may from time to time directly
or beneficially own Shares, including but not limited to distributing
sales literature, answering routine customer inquiries regarding the
Fund, assisting in the establishment and maintenance of accounts in
the Fund, making the Fund's investment plans and dividend options
available, and providing such other information and services in
connection with the distribution of the Fund Shares as may be
reasonably requested from time to time.
(b) For such services, you will be compensated in accordance with the
applicable attached Exhibit. Each party shall be responsible for
compensating its own registered representative(s) pursuant to its own
policies and procedures.
(c) The Plan may be terminated at any time without payment of any penalty
by the Fund in accordance with the rules governing such plans
promulgated by the SEC.
(d) The provisions of the Plan are incorporated herein and made a part
hereof by reference, and will continue in full force and effect so
long as its continuance is approved at least annually pursuant to Rule
12b-1.
6. You agree that you will not withhold placing customers' orders so as to
profit yourself as a result of such withholding.
7. You agree to sell Shares only to (a) your customers at the public offering
price then in effect; or (b) us as agent for the Fund or to the Fund itself
at the redemption price, as described in the Fund's then current Prospectus
or Statement of Additional Information.
8. Settlement shall be made promptly, but in no case later than three (3)
business days after our acceptance of the order or, if so specified by you,
we will make delivery by draft on you, the amount of which draft you agree
to pay on presentation to you. If payment is not so received or made, the
right is reserved forthwith to cancel the sale or, at our option, to resell
the Shares to the Fund at the then prevailing offering price in which
latter case you agree to be responsible for any loss resulting to the Fund
or to us from your failure to make payment as stated.
9. If any Shares sold under the terms of this Agreement are repurchased by the
Fund or by us as agent, or are tendered to the Fund for redemption within
seven (7) business days after the date of our confirmation to you of the
original purchase order therefor, you agree to pay forthwith to us the full
amount of the compensation allowed to you on the original sale. We shall
notify you of such repurchase within ten (10) days of the effective date of
such repurchase.
10. No person is authorized to make any representation concerning the Fund or
its Shares except those contained in the then current Prospectus, Statement
of Additional Information or any such information as may be released by the
Fund as information expressly supplemental to such Prospectus or Statement
of Additional Information. In purchasing Shares through us you shall rely
solely on the representations contained in the then current Prospectus,
Statement of Additional Information and supplemental information previously
mentioned.
11. Additional copies of any Prospectus, Statement of Additional Information or
supplemental information issued by us will be supplied by us to Selling
Group Members in reasonable quantities upon request.
12. In no transaction shall you have any authority whatsoever to act as agent
of the Fund or of us or of any other Selling Group Member. Nothing in this
Agreement shall constitute either party the agent of the other or
constitute you or the Fund the agent of the other. In all transactions in
the Shares between you and us, we are acting as agent for Fund and not as
principal.
13. All communications to us shall be sent to The Principal Financial Group,
SMB Sales Support, Des Moines, Iowa 50392-0470. Any notice to you shall be
duly given if mailed or electronically sent to you at your address as
registered from time to time with the NASD.
14. This Agreement may be terminated upon written notice by either party at any
time, and shall automatically terminate upon its attempted assignment by
you, whether by operation of law or not.
15. We reserve the right, from time to time, to modify the compensation you are
entitled to receive under paragraph 5.
16. You agree to indemnify the Fund and us and to hold the Fund and us harmless
from any damages or expenses resulting from any wrongful act or omission,
not in compliance with this Agreement by you or any of your employees,
representatives or agents.
17. The parties to this Agreement hereby agree to indemnify and hold harmless
each other, their officers and directors, and any person who is or may be
deemed to be a controlling person of each other, from and against any
losses, claims, damages, liabilities or expenses (including reasonable fees
of counsel) to which any such person or entity may become subject insofar
as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) arise out of or are based upon:
(a) any untrue statement or alleged untrue statement of material fact, or
any omission or alleged omission to state a material fact made or
omitted by it;
(b) any willful misfeasance or gross misconduct by it in the performance
of its duties and obligations thereunder; or
(c) joint case work, wherefore the parties are only responsible for
supervising and controlling the conduct and activities of each party's
respective registered representatives with regard to the distribution
and servicing of Shares.
18. In the event of a sale made by your registered representative and our
registered representative ("joint sale"), each party is responsible for
reviewing each joint sale to determine if the purchase is suitable for the
prospective customer. All original documentation including every
application and all supporting documentation must be sent to us for
processing. We will provide you copies of account applications and other
periodic reports.
(a) If you deem a sale to be unsuitable, you must notify us of that
determination. If we decide to accept the trade we assume 100% of the
responsibility for the trade and agree to hold you and your registered
representative harmless. You will not receive compensation for such
sales.
(b) We will be designated as the "Broker-Dealer of Record" on Principal
Self-Directed Brokerage Accountssm. Principal Self-Directed Brokerage
Accountssm allow 401(k) plan members to develop their own portfolios
of individual stocks, bonds, mutual funds and other investments.
(c) Each party will notify the other immediately upon becoming aware of
any customer complaint, regulatory inquiry either written or verbal,
or upon any disciplinary action taken against a registered
representative by either party to this Agreement, the NASD, or any
state or federal regulatory body which relates to any sale or pending
sale of Shares pursuant to this Agreement.
19. This Agreement shall become effective upon complete execution, and shall
supersede any and all prior Selling Group Agreements relating to Fund
Shares. All amendments to this Agreement shall take effect with respect to
and on the date of any orders placed by you after the date set forth in the
notice of amendment sent to you by us.
20. No obligation not expressly assumed by us in this Agreement shall be
implied.
21. If any part or provision of this Agreement shall be finally determined to
be invalid or unenforceable under applicable law by a court of competent
jurisdiction, that part or provision shall be ineffective to the extent of
such invalidity or enforceability only, without in any way affecting the
remaining parts of said part or provision or the remaining parts or
provisions of the Agreement.
22. This Agreement is in all respects subject to the Rules of Conduct of the
NASD that shall control any provisions to the contrary in this Agreement.
23. If the foregoing represents your understanding, please so indicate by
signing in the proper space below.
PRINCOR FINANCIAL SERVICES CORPORATION
By:
Title:
We accept the offer set forth above, which constitutes a Selling Group Agreement
with us.
BY:
Signature
TITLE:
Please type or print name
MEMBER:
ADDRESS:
DATE:
Please sign the Selling Group Agreement in duplicate and return both copies to
SMB Sales Support. We will return an original executed copy for your files.
EXHIBIT A - Compensation Schedules
You are paid Dealer Compensation in accordance with the following schedule(s)
based on each employer sponsored retirement plan's assets pursuant to the
Principal Investors Fund Selling Group Agreement as follows:
General Guidelines
This Exhibit A only applies to assets in the Advisors Select and Advisors
Preferred Share Classes. Compensation will not be paid, nor will it accrue,
until the Principal Investors Fund Selling Group Agreement has been fully
executed.
Compensation is paid at the end of the first calendar year quarter following
receipt of assets. Compensation is calculated according to Schedule A and
Schedule B at an annual rate that accrues daily and is payable quarterly.
Standard Compensation Schedule
Unless otherwise agreed upon, compensation is paid according to the following
schedules. For exceptions, see the Non-Standard Compensation Schedule section
below.
First-Year Deposits* Compensation Schedule A
The first $4 million 1.00%
The next $6 million 0.50%
Excess over $10 million 0.25%
Subsequent Year Deposits Compensation Schedule B
All assets 0.25%
*Compensation starts to accrue when plan assets are received. If a plan's
transfer assets are not received during the first quarter in which plan assets
(payroll deductions) are received, compensation is paid pursuant to Schedule A
for the quarter during which plan transfer assets are received and the following
three quarters (not to exceed 5 quarters from the first payment of
compensation).
Example 1: The plan is established during the 2nd quarter and payroll
deductions from the plan are received during the 2nd quarter. The plan's
transfer assets are also received in the 2nd quarter. Compensation based on
the payroll deduction assets plus the transfer asset amount is paid
pursuant to Schedule A at the close of the 2nd, 3rd and 4th quarters of
that year as well as the 1st quarter of the following year.
Example 2: The plan is established during the 2nd quarter and payroll
deductions from the plan are received during the 2nd quarter. Compensation
based on the payroll deductions is paid at the close of the 2nd quarter.
The plan transfer assets are received in the 3rd quarter. Compensation
based on the payroll deduction assets plus the transfer asset amount is
paid pursuant to Schedule A at the close of the 3rd and 4th quarters of
that year as well as the 1st and 2nd quarters of the following year.
Example 3: The plan is established during the 2nd quarter and payroll
deductions from the plan are received during the 2nd quarter. Compensation
based on the payroll deduction assets is paid at the close of the 2nd and
3rd quarters. The plan transfer assets are received in the 4th quarter.
Compensation based on the payroll deduction assets plus the transfer assets
amount is paid pursuant to Schedule A at the close of the 4th quarter of
that year as well as the 1st and 2nd quarters of the following year.
Non-Standard Compensation Schedule
Schedules other than the Standard Compensation Schedule may be used.
Non-standard compensation must be pre-approved (prior to the sale) by the home
office of the Principal Financial Group according to guidelines determined by
its Underwriting Department.
