PRINCIPAL FUNDS DISTRIBUTOR, INC. SELLING AGREEMENT
PRINCIPAL FUNDS DISTRIBUTOR, INC. | ||
SELLING AGREEMENT | ||
This Selling Agreement (the “Agreement”) is made and entered into as of this _________ day | ||
of _______________, 201_, between Principal Funds Distributor, Inc. (“PFD”), a Washington | ||
corporation having a place of business at 0000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xx Xxxxxx | ||
Xxxxx, Xxxxxxxxxx 00000 and the undersigned counterparty (“Counterparty”). | ||
Whereas, each investment company, or investment portfolio or series thereof, for which | ||
PFD acts as distributor (each a “Fund” and jointly the “Funds”) is a management investment | ||
company registered under the Investment Company Act of 1940, as amended (the “1940 Act”), | ||
or an investment portfolio or series thereof, offers shares or units of beneficial interest for which | ||
PFD has been, or shall have been, designated as principal underwriter; | ||
Whereas, each Fund has entered into one or more distribution agreements with PFD (the | ||
"Distribution Agreement") for the distribution by PFD of those shares of the Funds listed in | ||
Schedule A of this Agreement (the “Shares”). To the extent provided in the Prospectus, certain | ||
classes of Shares may also be subject to a distribution plan (“Distribution Plan”) adopted | ||
pursuant to Rule 12b-1 under the 1940 Act; | ||
Whereas, Counterparty desires to agree with PFD to sell the Shares, as the same may | ||
from time to time be amended by PFD by written notice to Counterparty, to certain customers of | ||
Counterparty (“Customers”); | ||
Whereas, PFD and Counterparty desire to provide for the payment of sales loads, | ||
commissions, distribution fees and/or shareholder service fees to Counterparty with respect to | ||
sales of Shares and related shareholder services, in accordance with the applicable Prospectus | ||
(defined below) and this Agreement; | ||
NOW, THEREFORE, in consideration of the mutual agreements herein contained, it is | ||
hereby agreed by and between the parties hereto as follows: | ||
1. | Definition of Terms. As used herein, the term "Prospectus" means the prospectuses and, | |
unless the context otherwise requires, related statements of additional information | ||
(“SAI”), as the same are amended and supplemented from time to time, of each of the | ||
respective Funds and each of the respective classes of Shares of the respective Funds; the | ||
term “Business Day” means any day on which the New York Stock Exchange (“NYSE”) | ||
is open; the term “Market Close” means the close of regular trading on the NYSE on a | ||
Business Day, which close is generally 4:00 p.m. Eastern time; and the term “principal | ||
underwriter” has the definition provided in the 1940 Act. | ||
2. | Counterparty shall sell Shares that are now or hereafter available for sale to Customers, | |
and Counterparty will be responsible for proper instruction and training of sales | ||
personnel employed by Counterparty. Counterparty understands and agrees that the | ||
Shares can only be sold to eligible purchasers as indicated in the Prospectus. | ||
Counterparty understands and agrees that X-0, X-0, X-0, X-0 and R-5 class Shares were | ||
designed for sale to retirement plans (“Plans”). Counterparty shall be responsible for | ||
opening, approving and monitoring accounts for its Customers that purchase Shares and |
for the review and supervision of these accounts, all in accordance with the rules of the | |
Securities and Exchange Commission (“SEC”) and the NASD Conduct Rules of the | |
Financial Industry Regulatory Authority (“FINRA”) to the extent applicable to each | |
account. For X-0, X-0, X-0, X-0, X-0 and Institutional Class shares, such accounts on the | |
Funds records shall be either Plan level omnibus accounts or super omnibus accounts, | |
and accounts for Institutional Class shares will need to meet PFD’s minimum size | |
requirements, unless otherwise mutually agreed in writing. This Agreement does not | |
grant Counterparty any right to purchase Shares from the Fund (although it does not | |
preclude Counterparty from purchasing any such Shares for which Counterparty is an | |
eligible purchaser), nor does it constitute Counterparty an employee or agent of PFD or | |
any Fund for any purpose. | |
3. | All orders for the purchase of Shares of the Funds shall be executed at the then current |
public offering price per Share (i.e., the next determined net asset value per Share plus | |
any applicable sales charge), determined in accordance with the provisions of the | |
Prospectus. All orders for the redemption of Shares of the Funds shall be executed at the | |
redemption price (i.e., the net asset value per Share less any applicable contingent | |
deferred sales charge) determined in accordance with the provisions of the Prospectus. | |
The minimum initial purchase order shall be as set forth in the appropriate Prospectus. | |
Unless otherwise mutually agreed in writing between PFD and Counterparty, each | |
transaction for Shares shall be promptly confirmed in writing by the transfer agent to the | |
registered holder of the Shares. To the extent Counterparty receives a copy of | |
confirmations, Counterparty agrees that upon receipt of such confirmations, Counterparty | |
shall examine the same and promptly notify the transfer agent of any errors or | |
discrepancies that Counterparty discovers. Counterparty shall promptly bring to the | |
attention of the transfer agent any errors in such confirmations claimed by any | |
Customers. | |
4. | The Funds and PFD have each reserved the right to refuse at any time or times to sell any |
of the Shares for any reason, and the Funds and PFD have each reserved the right to | |
refuse at any time to accept an order for purchase of Shares for any reason. In ordering | |
Shares, Counterparty shall rely solely and conclusively on the representations contained | |
in the Prospectus of the relevant Fund. Counterparty agrees that Counterparty shall not | |
offer or sell any Shares, except in compliance with the Prospectus, the NASD Conduct | |
Rules of FINRA, the USA PATRIOT Act of 2001, as amended (the “Patriot Act”) and all | |
applicable federal and state laws and the rules and regulations of applicable regulatory | |
agencies or authorities including, but not limited to, in the case of offers made to or | |
through Plans, any written directives of the sponsor of such Plan, and in the case of an | |
account intended to qualify under Section 408 of the Internal Revenue Code of 1986, as | |
amended (the “Code”), any written directives of the owner or beneficiary of such | |
account, and in the case of an account intended to qualify under Section 530 of the Code | |
or Section 220 of the Code, the individual designated in the agreement as responsible for | |
investment decisions. In connection with offers to sell, and sales of, Shares, Counterparty | |
agrees to deliver or cause to be delivered to each person or Plan to the extent required, to | |
whom any such offer or sale is made, at or prior to the time of such offer or sale, a copy | |
of the relevant Prospectus, and upon request, the relevant SAI. |
Counterparty further agrees to obtain for each Customer (including each Plan participant) | |
to whom Counterparty sells Shares any taxpayer identification number certification | |
required under Section 3406 of the Code or any successor provision, and the regulations | |
thereunder, and to provide the transfer agent or PFD 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 in accordance with Section 3406 of | |
the Code or any successor provision and the regulations thereunder. Counterparty is | |
responsible for Counterparty’s compliance with all applicable tax laws, rules and | |
regulations governing Counterparty’s performance under the Agreement. | |
Unless otherwise mutually agreed in writing between PFD and Counterparty, PFD shall | |
deliver or cause to be delivered to each Customer that purchases Shares through | |
Counterparty and is a registered holder of Shares in the records of the Funds, copies of all | |
annual and interim reports, proxy solicitation materials and any such other information | |
and materials relating to the relevant Fund or class of Shares thereof and prepared by or | |
on behalf of PFD, a Fund, its investment adviser, investment sub-adviser, custodian, | |
transfer agent or dividend disbursing agent for the purpose of distribution to such | |
Customer. PFD agrees to supply Counterparty with copies of the Prospectus, annual | |
reports, interim reports, proxy solicitation materials and any such other information and | |
materials relating to each Fund and each class of Shares in reasonable quantities upon | |
request. Counterparty acknowledges that any materials or information that PFD furnishes | |
to Counterparty, other than Prospectuses, annual and interim reports to shareholders and | |
proxy solicitation materials prepared by the Fund, are the sole responsibility of PFD and | |
not the responsibility of the Fund. | |
5. | Counterparty shall not make any representation concerning any Shares or class of Shares |
other than those contained in the relevant Prospectus or in any promotional materials or | |
sales literature furnished to Counterparty by PFD. Counterparty shall not furnish, or | |
cause to be furnished, to any person, or display or publish, or cause to be displayed or | |
published, any information or materials relating to PFD, an affiliated advisor of PFD, any | |
Fund or class of Shares (including, without limitation, promotional materials and sales | |
literature, advertisements, press releases, announcements, statements, posters, signs, | |
correspondence or other similar materials), except such information and materials as may | |
be furnished to Counterparty by PFD and such other information and materials as may be | |
approved in writing by PFD prior to use by Counterparty. Rather than requiring | |
Counterparty to submit all such information and materials to PFD for review, | |
Counterparty will submit to PFD for review samples of the kinds of information and | |
materials, and the consent by PFD need only be obtained once with respect to future use | |
of such information and materials if future versions are not materially changed in terms | |
of how information and materials about PFD, its affiliate, any Fund or class of Shares are | |
presented. And provided that Counterparty will not use such information or materials | |
without then current performance information to the extent such updating would be | |
necessary. Counterparty acknowledges that Customers choosing between classes should | |
carefully consider the fee structures of the classes in order to determine the most | |
appropriate investment class. Counterparty will be responsible for the proper instruction | |
and training of all sales personnel employed by Counterparty. Counterparty is solely | |
responsible for determining whether a Fund, and which Share class of that Fund, is | |
suitable for Counterparty’s Customer. |
6. | Each exchange of Shares (the investment of the proceeds from the redemption of Shares | |
of one class of a Fund into the Shares of another class of the same Fund or the same or | ||
another class of another Fund) shall, where available, be made in accordance with, and | ||
subject to, the terms of the Prospectus, including the right of a Fund to suspend sales. | ||
7. | The procedures relating to orders and the handling thereof will be subject to the terms of | |
the Prospectus and to instructions received by Counterparty from PFD or the Funds’ | ||
transfer agent from time to time. No conditional orders will be accepted. Except as may | ||
otherwise be agreed in writing by Counterparty and PFD, all orders will be processed on | ||
the Business Day they are received in proper form by the transfer agent, except that | ||
orders received by the transfer agent after Market Close on each Business Day will be | ||
processed on the following Business Day. Receipt of orders in “proper form” means | ||
received in “good order” according to industry standards as reasonably determined by | ||
Principal. Counterparty agrees that purchase orders placed by Counterparty will be made | ||
only for the purpose of covering purchase orders already received from Customers. In | ||
the event that Counterparty makes purchases of Shares on behalf of a third-party | ||
securities dealer or broker (“Third-Party Selling Agent”), Counterparty agrees that it shall | ||
be responsible for any and all acts or omissions of the Third-Party Selling Agent, | ||
including without limitation any obligation with respect to determining the suitability of | ||
transactions for the Customer, as if such acts or omissions were its own. Counterparty | ||
shall place purchase orders from Customers with the transfer agent immediately and shall | ||
not withhold the placement of such orders so as to profit Counterparty; provided, | ||
however, that the foregoing shall not prevent the purchase of Shares by Counterparty for | ||
bona fide investment by Counterparty itself, and provided further that any Shares | ||
purchased for Counterparty’s bona fide investment will not be resold except through | ||
redemption by the Funds. Counterparty agrees that it shall not effect any transactions | ||
(including, without limitation, any purchases and redemptions) in any Shares registered | ||
in the name of, or beneficially owned by, any Customer unless such Customer has | ||
granted Counterparty full right, power and authority to effect such transactions on behalf | ||
of such Customer. | ||
8. | ||
8.1 | Except to the extent caused by PFD’s negligence or willful misconduct, | |
Counterparty will indemnify and hold harmless PFD, the Funds and all of their | ||
affiliates, and their officers, directors, employees, agents, and assignees against all | ||
losses, claims, demands, liabilities, and expenses, including reasonable legal and | ||
other expenses incurred in defending such claims or liabilities, whether or not | ||
resulting in any liability to any of them, or which they or any of them may incur | ||
(“Losses”), arising out of or in connection with: (i) Counterparty’s offer or sale of | ||
any securities pursuant to this Agreement; or (ii) Counterparty’s breach of any | ||
representations, warranties, terms or conditions of this Agreement, other than any | ||
Losses arising from any untrue statement or alleged untrue statement of material | ||
fact contained in a Prospectus or in any application filed with any state regulatory | ||
agency in order to register or qualify under the securities laws thereof (the “Blue | ||
Sky Applications”), or which shall arise out of or be based upon any omission or | ||
alleged omission to state therein a material fact required to be stated in the |
Prospectus or any of the Blue Sky Applications or which is necessary to make the | ||
statements or a part thereof not misleading. | ||
8.2 | Except to the extent caused by Counterparty’s negligence or willful misconduct, | |
PFD will indemnify and hold harmless Counterparty and all of its affiliates, and | ||
their officers, directors, employees, agents, and assignees against all Losses, | ||
arising out of or in connection with: (i) PFD’s breach of any representations, | ||
warranties, terms or conditions of this Agreement; or (ii) any untrue statement or | ||
alleged untrue statement of a material fact contained in a Prospectus, or in any | ||
Blue Sky Application, or which shall arise out of or be based upon any omission | ||
or alleged omission to state therein a material fact required to be stated in the | ||
Prospectus or any of the Blue Sky Applications or which is necessary to make the | ||
statements or a part thereof not misleading. | ||
8.3 | In any event, no party shall be liable for any special, consequential or incidental | |
damages. | ||
8.4 | The indemnification obligations contained in this Section 8 shall survive the | |
termination of this Agreement. | ||
9. | ||
9.1 | Counterparty agrees that payment for orders from Counterparty for the purchase | |
of Shares will be made in accordance with the terms of this Agreement and the | ||
Prospectus. | ||
9.2 | On or before the settlement date of each purchase order of Shares, Counterparty | |
shall either (i) remit to an account designated by PFD with the transfer agent an | ||
amount equal to the then current public offering price of such Shares being | ||
purchased, less any dealer allowance, if any, that shall be payable by PFD to | ||
Counterparty with respect to such purchase order as determined by PFD in | ||
accordance with the terms of the Prospectus; or (ii) remit to an account designated | ||
by PFD with the transfer agent an amount equal to the then-current public | ||
offering price of such Shares as determined by PFD in accordance with the terms | ||
of the applicable Prospectus, in which case the dealer allowance, if any, with | ||
respect to such purchase order, as determined by PFD in accordance with the | ||
terms of the Prospectus, shall be payable to Counterparty within one month of | ||
Counterparty’s remittance. If payment for any purchase order for the Shares is | ||
not received in accordance with the terms of the Prospectus, this Agreement and | ||
applicable law (and, in the case of Institutional Class, Class X-0, X-0, X-0, X-0, | ||
X-0 and Class P Shares, within one (1) Business Day after acceptance of the | ||
order), PFD and the Funds reserve the right, without notice, to cancel the sale or | ||
redeem the Shares ordered, and Counterparty shall be responsible for any loss | ||
sustained as a result thereof. PFD and the Funds reserve the right to change any | ||
sales charge, dealer allowance and/or service fee by supplementing or otherwise | ||
revising the Prospectus or SAI, as applicable. | ||
9.3 | If any Shares sold under the terms of this Agreement are tendered for redemption | |
within seven (7) Business Days after confirmation of Counterparty’s purchase |
order for such Shares, or if Shares that would otherwise be subject to a contingent | |
deferred sales charge are redeemed in a transaction on which such contingent | |
deferred sales charge is waived, Counterparty shall forthwith refund to PFD the | |
full dealer allowance or sales commission received by Counterparty on the sale of | |
such Shares. | |
9.4 | In addition to the fees set forth above in this Section 9, PFD agrees, subject to the |
other terms and conditions of the Prospectus, this Agreement and any attached | |
schedule, to pay Counterparty a service fee, and Counterparty agrees to accept the | |
same as full payment for the services undertaken by it as described in this | |
Agreement, accrued daily and payable monthly as set forth in the Prospectus or | |
SAI. Counterparty acknowledges that such fee will be paid solely from monies | |
received by PFD under the Distribution Agreement entered into pursuant to the | |
respective Distribution Plan; accordingly, any obligation of PFD to pay | |
Counterparty any service fee shall not arise unless and until PFD receives from | |
the relevant Fund monies intended to be used by PFD for such purpose and in | |
amounts sufficient for such purpose. Under the Distribution Plans, each Fund is | |
authorized to make expenditures of Fund assets for various distribution and | |
support services. Counterparty understands and agrees that (i) all service fees are | |
subject to the limitations contained in the Distribution Agreement and the | |
respective Distribution Plans, which may be amended or terminated at any time, | |
and (ii) Counterparty’s failure to provide services as agreed in this Agreement | |
will render Counterparty ineligible to receive service fees. | |
9.5 | Any sales charge applicable to any sale of Shares by Counterparty and any dealer |
discount applicable to any order from Counterparty for the purchase of Shares | |
accepted by PFD or transfer agent shall be that percentage of the applicable public | |
offering price determined as set forth in the Funds' then current Prospectus and/or | |
SAI. The rates of any sales charge and/or dealer discount for Shares are subject to | |
change by PFD, and any orders placed after the effective date of such change will | |
be subject to the rate(s) in effect at the time of receipt of the purchase payment by | |
PFD. | |
9.6 | In determining the amount of any dealer allowance or sales commission payable |
to Counterparty hereunder, PFD reserves the right to exclude any sales which | |
PFD reasonably determines are not made in accordance with the terms of the | |
applicable Prospectus and the provisions of this Agreement. Counterparty shall | |
be solely responsible for identifying to PFD or transfer agent any orders which are | |
or may be eligible for reductions in or eliminations of sales charges in accordance | |
with the Prospectus. Unless, at the time of transmitting an order, Counterparty | |
advises the transfer agent to the contrary in writing, such transmission will be | |
deemed a representation by Counterparty that the Shares ordered will be the total | |
holdings of the Customer for whom the order is transmitted. In each case where a | |
sales charge reduction or elimination is applicable, Counterparty agrees to furnish | |
to the transfer agent sufficient information to permit confirmation of qualification | |
for the sales charge reduction or elimination, and acceptance of the order is | |
subject to such confirmation. Sales charge reductions or eliminations may be | |
modified or terminated at any time at the sole discretion of each Fund. |
9.7 | In accordance with the Prospectus, an affiliate of PFD (or PFD on such affiliate’s | |
behalf) may pay to Counterparty, with respect to Shares of Principal Funds - | ||
Strategic Asset Management Portfolios, a revenue sharing fee accrued daily and | ||
payable monthly at the annual rate of 0.50% for Class A Shares (0.125% for Class | ||
C Shares) of the average daily net assets of such Shares sold prior to March 1, | ||
2006, and held continuously by Customers, in addition to any dealer allowance, | ||
sales commissions and/or service fees payable by PFD set forth above. This fee | ||
may be modified or terminated at any time upon notice to Counterparty. | ||
Counterparty may decline to accept this fee at any time upon Counterparty’s | ||
written notice to PFD. | ||
9.8 | Termination or cancellation of this Agreement shall not relieve Counterparty from | |
the requirements of this Section 9. | ||
10. | ||
10.1 | Counterparty agrees to provide distribution assistance and administrative support | |
services in connection with the purchase, exchange and redemption of Shares by | ||
Customers including, but not limited to, distributing sales literature, answering | ||
routine telephone or written Customer inquiries regarding the Funds, assisting in | ||
the establishment and maintenance of accounts (for X-0, X-0, X-0, X-0, X-0 and | ||
Institutional Class shares, such accounts shall, unless otherwise agreed in writing, | ||
be omnibus accounts) in the Funds and in the processing of purchases, exchanges | ||
and redemptions of Shares, making the Funds' investment plans and dividend | ||
options available, and assisting the shareholders with tax information. | ||
Counterparty shall also provide such other information and services in connection | ||
with the Shares as may be reasonably requested from time to time. Counterparty | ||
shall assess the suitability of transactions for the Customer. | ||
10.2 | For omnibus accounts, Counterparty shall maintain all historical Customer | |
records consistent with the requirements of all applicable laws, rules and | ||
regulations. Upon request of PFD or transfer agent, Counterparty shall provide | ||
copies of written communications regarding the Funds to or from such Customers | ||
in omnibus accounts. Counterparty shall upon request make available to PFD or | ||
transfer agent such records or communications as may be necessary to determine | ||
the number of Customers in each Counterparty omnibus account. | ||
10.3 | For omnibus accounts, a Fund shall recognize Counterparty as a single | |
shareholder and unallocated account in the Fund and will not maintain separate | ||
accounts for Customers in such omnibus accounts. Neither the Funds, nor | ||
transfer agent, nor PFD shall be responsible for providing recordkeeping or | ||
administrative services to Customers in omnibus accounts. The official records of | ||
transactions of Counterparty’s omnibus accounts and the number of shares in such | ||
accounts shall be determined by transfer agent. Counterparty shall bear | ||
responsibility for any discrepancies between its omnibus accounts and the | ||
Customer accounts and for the maintenance of all records regarding the | ||
Customers, the Customer’s transactions, and the Customers’ interest in the | ||
omnibus accounts. |
10.4 | For omnibus accounts, Counterparty assumes sole responsibility for reconciliation | |
of Customer accounts with its omnibus account at transfer agent. PFD will have | ||
transfer agent assist Counterparty with such reconciliation where necessary. | ||
11. | Counterparty hereby represents and warrants that: (i) Counterparty is a corporation, | |
partnership or other business entity duly organized and validly existing in good standing | ||
under the laws of the jurisdiction in which it is organized; (ii) the execution and delivery | ||
of this Agreement and the performance of the transactions contemplated hereby have | ||
been duly authorized by all necessary action and all other authorizations and approvals (if | ||
any) required for Counterparty’s lawful execution and delivery of this Agreement and | ||
Counterparty’s performance hereunder have been obtained; (iii) upon execution and | ||
delivery by Counterparty, and assuming due and valid execution and delivery by PFD, | ||
this Agreement will constitute a valid and binding agreement, enforceable against | ||
Counterparty in accordance with its terms; (iv) any and all fees provided for in this | ||
Agreement will be promptly disclosed by Counterparty to its Customers including, if | ||
applicable, to any Plans; and (v) the receipt of the fees described in this Agreement by | ||
Counterparty will not be a non-exempt “prohibited transaction” as such term is defined in | ||
Section 406 of ERISA and Section 4975 of the Code. PFD is not and does not hold itself | ||
out to be a Plan fiduciary, and Counterparty agrees not to use PFD’s name or any of the | ||
information it provides in a manner to suggest otherwise. | ||
12. | Counterparty further represents and warrants that Counterparty is a member of FINRA or | |
is exempt from registration as a broker-dealer under the Securities Exchange Act of 1934, | ||
as amended (the “1934 Act”). Counterparty agrees to give written notice to PFD if it | ||
shall cease to be registered or exempt from registration as a broker-dealer under the 1934 | ||
Act and, with respect to any sales of Shares in the United States, Counterparty agrees to | ||
abide by the NASD Conduct Rules of FINRA. Counterparty and PFD agree to comply | ||
with all applicable federal and state laws, rules and regulations. If Counterparty is a | ||
foreign dealer, not eligible for membership in FINRA, Counterparty still agrees to abide | ||
by all rules and regulations of FINRA. Counterparty further agrees that it will not sell, | ||
offer for sale or solicit offers to purchase Shares of Funds in any jurisdiction where such | ||
Shares have not been qualified for sale. PFD agrees to inform Counterparty, from time to | ||
time and upon request, as to the jurisdictions in which PFD believes the Shares have been | ||
registered or qualified for sale under, or are exempt from the requirements of, the | ||
respective securities laws of such jurisdictions. PFD shall have no obligation or | ||
responsibility to make Shares available for sale to Customers in any jurisdiction. | ||
Counterparty agrees to notify PFD immediately in the event of Counterparty’s expulsion | ||
or suspension from FINRA. Counterparty’s expulsion from FINRA will automatically | ||
terminate this Agreement immediately without notice by PFD. Counterparty’s | ||
suspension from FINRA will terminate this Agreement effective immediately upon | ||
written notice of termination to Counterparty by PFD. Counterparty represents that it is | ||
currently a member of the Securities Investor Protection Corporation (“SIPC”) and, while | ||
this Agreement is in effect, will continue to be a member of SIPC. Counterparty agrees | ||
to notify PFD immediately if its SIPC membership status changes. |
13. | ||
13.1 | “Confidential Information” of any party shall mean such party’s ideas, | |
expressions, trade secrets, customer lists, products, policies, forms, business | ||
methods, business plans, software and information from third parties (such as | ||
software and its related documentation) in respect of which such party has a duty | ||
of confidentiality, “nonpublic personal information” of such party’s “customers” | ||
(each, for purposes of this Section 13, as defined in Rule 3 of Regulation S-P), as | ||
well as information which from all relevant circumstances should reasonably be | ||
assumed by a party to be confidential information of the other party, whether or | ||
not marked “Confidential Information.” Confidential Information of a party shall | ||
be held in confidence by the other party to the same extent and in at least the | ||
same manner as such party protects its own Confidential Information, but in no | ||
case to a lesser extent or manner than a reasonable degree of care under the | ||
circumstances. Except as otherwise permitted by law, each party agrees not to | ||
use or disclose to any affiliate or third party, either orally or in writing, any | ||
Confidential Information for any purpose other than the purpose for which the | ||
Confidential Information was provided to that party. Without limiting any of the | ||
foregoing, each party agrees to take all precautions that are reasonably necessary | ||
to protect the security of the Confidential Information. Each party agrees to | ||
restrict access to the Confidential Information to its employees who need to know | ||
that information to perform that respective party’s duties under this agreement. | ||
Each party agrees, upon the other party’s request, either to return to the requesting | ||
party or destroy all tangible items containing any Confidential Information it | ||
received or learned from the requesting party, including all copies, abstractions | ||
and compilations thereof and to destroy, delete or otherwise render unreadable all | ||
electronic or computer copies or records of or relating to same, without retaining | ||
any copies of the items required to be returned except to the extent that retention | ||
of such copies is required by applicable law or regulation; provided, however, that | ||
the obligations set forth in this sentence shall not apply to any Confidential | ||
Information that is or becomes relevant to an individual’s status as a consumer or | ||
customer of the receiving party. The obligations of this Section 13.1 extend to all | ||
of a party’s employees, agents, affiliates and contractors and each party shall | ||
inform such persons of their obligations hereunder. | ||
13.2 | Each party will, upon learning of any unauthorized disclosure or use of the other | |
party’s Confidential Information, notify the other party promptly and cooperate | ||
fully with that party to protect such Confidential Information. | ||
13.3 | The obligations in this Section 13 shall not restrict any disclosure by either party | |
pursuant to any applicable state or federal laws, subpoena, by order of any court | ||
or government agency (provided that the disclosing party shall give prompt | ||
written notice to the non-disclosing party of such subpoena, order or other | ||
demand for disclosure and shall make all reasonable efforts to allow the other | ||
party an opportunity to seek a protective order or other judicial relief), or pursuant | ||
to a request from FINRA or other self-regulatory organization or to audits or | ||
inquiries from any other state or federal regulatory agency if a party is legally | ||
required to provide such agency with access to such records. Information shall not |
be considered Confidential Information under this Agreement and the restrictions | |
on disclosure under this Section 13 shall not apply to the extent such information | |
(1) is independently developed by the other party without violating the disclosing | |
party’s proprietary rights, (2) is or becomes publicly known (other than through | |
unauthorized disclosure), (3) is intentionally disclosed by the owner of such | |
information to a third party free of any obligation of confidentiality, (4) is already | |
known by such party without an obligation of confidentiality other than pursuant | |
to this Agreement or of any confidentiality agreements entered into before the | |
effective date of this Agreement as evidenced by the written records of such | |
party, or (5) is rightfully received by a party free of any obligation of | |
confidentiality. | |
13.4 The parties agree that they shall abide by the applicable provisions of all | |
applicable privacy laws and shall each establish commercially reasonable controls | |
to ensure the confidentiality of the Confidential Information and to ensure that the | |
Confidential Information is not disclosed contrary to the provisions of this | |
Agreement or any applicable privacy laws and regulations. Without limiting the | |
foregoing, each party shall implement such physical and other security measures | |
as are necessary to (i) ensure the security and confidentiality of the Confidential | |
Information, (ii) protect against any threats or hazards to the security and integrity | |
of the Confidential Information and (iii) protect against any unauthorized access | |
to or use of the Confidential Information. In addition, each party shall use the | |
Confidential Information of the other party solely for the purpose of providing | |
services to Customers investing in one or more Funds. Each party shall have the | |
right, during regular office hours and upon reasonable notice, to audit the other | |
party to ensure compliance with the terms of this Agreement and all applicable | |
privacy laws and regulations. The provisions of this Section 13 shall survive the | |
termination of this Agreement. | |
14. | To the extent that any duties and responsibilities under the Agreement are delegated to an |
agent or subcontractor, the party shall take reasonable steps to ensure that such agents | |
and subcontractors adhere to the same requirements. Each party shall have the right, | |
during regular office hours and upon reasonable notice, to audit the records of the other | |
party to ensure compliance with the terms of this Agreement and all applicable privacy | |
laws and regulations. | |
15. | PFD hereby represents and warrants that: (i) it is a corporation duly organized and validly |
existing in good standing under the laws of the jurisdiction in which it is organized; (ii) | |
the execution and delivery of this Agreement and the performance of the transactions | |
contemplated hereby have been duly authorized by all necessary action and all other | |
authorizations and approvals (if any) required for PFD’s lawful execution and delivery of | |
this Agreement and PFD’s performance hereunder have been obtained; (iii) upon | |
execution and delivery by PFD, and assuming due and valid execution and delivery by | |
Counterparty, this Agreement will constitute a valid and binding agreement, enforceable | |
against PFD in accordance with its terms. | |
16. | Neither this Agreement nor the performance of the services of the respective parties |
hereunder shall be considered to constitute an exclusive arrangement, or to create a |
partnership, association or joint venture between PFD and Counterparty. Neither party | |
hereto shall be, act as, or represent itself as, the employee, agent or representative of the | |
other party hereto, nor shall either party hereto have the right or authority to make any | |
representation or assume, create or incur any liability or any obligation of any kind, | |
express or implied, against or in the name of, or on behalf of, the other party hereto. | |
Except as specifically stated in this Agreement, this Agreement is not intended to, and | |
shall not, create any rights against either party hereto by any third party (other than the | |
Funds) solely on account of this Agreement. Neither party hereto shall use the name of | |
any other party hereto in any manner without the other party’s prior written consent, | |
except as required by any applicable federal or state law, rule or regulation. | |
17. | Except as otherwise specifically provided herein, all notices required or permitted to be |
given pursuant to this Agreement shall be given in writing and delivered by personal or | |
overnight delivery, first class mail or facsimile (with confirming copy by delivery or mail | |
as provided herein). Unless otherwise notified in writing, all notices to PFD shall be | |
given or sent to PFD at 0000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xx Xxxxxx Xxxxx, | |
Xxxxxxxxxx 00000; and all notices to Counterparty shall be given or sent to Counterparty at | |
Counterparty’s address shown below or to another address as provided in writing by | |
Counterparty to PFD. | |
18. | This Agreement shall become effective upon written acceptance by PFD and may be |
terminated at any time by either party hereto upon prior written notice to the other party | |
hereto. To the extent not prohibited by law, this Agreement, including any schedules | |
hereto, may be amended as provided in any written notice delivered by PFD to | |
Counterparty and otherwise may be amended only by a written instrument signed by both | |
of the parties hereto. This Agreement may not be assigned by either party without prior | |
written consent of the other party hereto, provided, however, that a change in control of | |
PFD or assignment by PFD to an affiliate shall not constitute an assignment of this | |
Agreement, and a change in control of Counterparty shall not constitute an assignment of | |
this Agreement provided that PFD receives written notice at least thirty (30) days prior to | |
such change in control. This Agreement constitutes the entire agreement and | |
understanding between the parties hereto relating to the subject matter hereof and | |
supersedes any and all prior or contemporaneous agreements, representations and | |
warranties, written or oral, regarding such subject matter between the parties or between | |
Counterparty and a Fund’s principal underwriter. Counterparty agrees that PFD shall | |
have no obligations to Counterparty other than those expressly provided herein. In the | |
event of any conflict between the terms of this Agreement and the Prospectus, the terms | |
of the Prospectus shall control. | |
19. | This Agreement shall apply to the Shares of all of the classes listed on Schedule A of all |
Funds for which PFD acts as principal underwriter, whether such Funds or classes are | |
currently established or are established hereafter, and whether such Shares are currently | |
outstanding or being offered or are offered and sold in the future. PFD may amend | |
Schedule A by written notice to Counterparty. | |
20. | Counterparty agrees to provide to PFD and each Fund such information as shall |
reasonably be requested by PFD or a Fund with respect to the service fees paid to | |
Counterparty under this Agreement. Counterparty will permit representatives of PFD and |
each Fund reasonable access to its personnel and records to monitor the quality of | |
services being provided by Counterparty pursuant to this Agreement. Counterparty shall | |
promptly deliver to each Fund such information as shall reasonably be necessary to | |
permit the Fund directors of each Fund to make an informed determination to continue | |
the respective Distribution Plans. | |
21. | Counterparty agrees that it shall be responsible for monitoring its Customers’ accounts |
for a pattern of purchases, redemptions and/or exchanges of Shares that potentially | |
indicates excessive trading or “market timing.” Counterparty agrees that, in the event that | |
it should come to the attention of Counterparty that any of its Customers are engaging in | |
a pattern of purchases, redemptions and/or exchanges of Shares that potentially indicates | |
excessive trading or “market timing,” Counterparty shall promptly notify PFD and the | |
Funds of such pattern and shall cooperate fully with PFD and the Funds in investigation | |
and, if deemed necessary or appropriate by PFD and the Funds, terminating any such | |
pattern of trading, including, without limitation, by refusing such Customer’s orders to | |
purchase or exchange Shares. | |
22. | PFD hereby advises Counterparty that the Funds have adopted written policies and |
procedures reasonably designed to detect and prevent frequent and/or disruptive trading | |
in Shares. Counterparty agrees to cooperate with PFD and its affiliates to effect such | |
policies and procedures of the Funds as follows: | |
22.1 Agreement to Provide Information. Counterparty agrees to provide the Fund, | |
upon written request, the taxpayer identification number (“TIN”), the | |
Individual/International Taxpayer Identification number (“ITIN”), or other | |
government-issued identifier (“GII”), if known, of any or all Shareholder(s) (as | |
defined below) of each account held of record by Counterparty and the amount, | |
date, name or other identifier of any investment professional(s) associated with | |
the Shareholder(s) or account (if known), and transaction type (purchase, | |
redemption, transfer, or exchange) of every purchase, redemption, transfer or | |
exchange of Shares held through an account maintained by Counterparty during | |
the period covered by the request. | |
22.1.1 Period Covered by Request. Requests must set forth a specific period, not | |
to exceed ninety (90) calendar days from the date of the request, for which | |
transaction information is sought. The Fund may request transaction | |
information older than ninety (90) calendar days from the date of the | |
request as it deems necessary to investigate compliance with policies | |
established by the Fund for the purpose of eliminating or reducing any | |
dilution of the value of the outstanding shares issued by the Fund. | |
22.1.2 Form and Timing of Response. (a) Counterparty agrees to provide, | |
promptly upon request of the Fund or its designee, the requested | |
information specified above. If requested by the Fund or its designee, | |
Counterparty agrees to use best efforts to determine promptly whether any | |
specific person about whom it has received identification and transaction | |
information specified above is itself a financial intermediary ("Indirect | |
Intermediary") and, upon further request of the Fund or its designee, |
promptly either (i) provide (or arrange to have provided) the information | |
set forth above for those shareholders who hold an account with an | |
Indirect Intermediary or (ii) restrict or prohibit the Indirect Intermediary | |
from purchasing, in nominee name on behalf of other persons, securities | |
issued by the Fund. Counterparty additionally agrees to inform the Fund | |
whether it plans to perform (i) or (ii). (b) Responses required by this | |
Section 22 must be communicated in writing in a format mutually agreed | |
upon by the parties; and (c) To the extent practicable, the format for any | |
transaction information provided to the Fund should be consistent with the | |
National Securities Clearing Corporation (“NSCC”) Standardized Data | |
Reporting Format. | |
22.1.3 Limitations on Use of Information. The Fund agrees not to use the | |
information received pursuant to this Section 22 for marketing or any | |
other similar purpose without the prior written consent of Counterparty. | |
22.2 | Agreement to Restrict Trading. Counterparty agrees to execute written |
instructions from the Fund to restrict or prohibit further purchases or exchanges of | |
Shares by a Shareholder who has been identified by the Fund as having engaged | |
in transactions of the Fund’s Shares (directly or indirectly through the | |
Counterparty’s account) that violates policies established or utilized by the Fund | |
for the purpose of eliminating or reducing any dilution of the value of the | |
outstanding Shares issued by the Fund. | |
22.2.1 Form of Instructions. Instructions to restrict or prohibit trading must | |
include the TIN, ITIN, or GII, if known, and the specific restriction(s) to | |
be executed. If the TIN, ITIN, or GII is not known, the instructions must | |
include an equivalent identifying number of the Shareholder(s) or | |
account(s) or other agreed upon information to which the instruction | |
relates. | |
22.2.2 Timing of Response. Counterparty agrees to execute instructions from the | |
Fund to restrict or prohibit trading as soon as reasonably practicable, but | |
not later than five (5) Business Days after receipt of the instructions by the | |
Counterparty. | |
22.2.3 Confirmation by Counterparty. Counterparty must provide written | |
confirmation to the Fund that instructions from the Fund to restrict or | |
prohibit trading have been executed. Counterparty agrees to provide | |
confirmation as soon as reasonably practicable, but not later than ten | |
(10) Business Days after the instructions have been executed. | |
22.3 | Definitions. For purposes of this Section 22: |
22.3.1 The term “Fund” includes the fund’s principal underwriter and transfer | |
agent. The term does not include any “excepted funds” as defined in | |
SEC Rule 22c-2(b) under the Investment Company Act of 1940. |
22.3.2 The term “Shares” means the interests of Shareholders corresponding to | ||
the redeemable securities of record issued by the Fund under the | ||
Investment Company Act of 1940 that are held by Counterparty. | ||
22.3.3 The term “Shareholder” means the beneficial owner of Shares, whether | ||
the Shares are held directly or by Counterparty in nominee name. The | ||
term “Shareholder” means the Plan participant notwithstanding that the | ||
Plan may be deemed to be the beneficial owner of Shares. | ||
22.3.4 The terms “written” and “writing” include electronic writings and | ||
facsimile transmissions. | ||
22.3.5 The term “intermediary” means a “financial intermediary” as defined in | ||
SEC Rule 22c-2. | ||
22.3.6 The term “purchase” does not include the automatic reinvestment of | ||
dividends. | ||
22.3.7 The term “promptly” as used in 22.1.2 means as soon as practicable but in | ||
no event later than ten (10) Business Days from Counterparty’s receipt of | ||
the request for information from the Fund or its designee. | ||
23. | In the event of any dispute arising out of or relating to this Agreement, the parties agree | |
to attempt in good faith to resolve the dispute first by direct negotiation and then, if that is | ||
not successful, by mediation with a neutral third-party mediator acceptable to both | ||
parties. Mediation expenses will be shared equally by the parties. Any dispute arising | ||
out of or relating to this Agreement which is not settled by agreement of the parties | ||
within a reasonable time will be settled exclusively in a binding arbitration. The parties | ||
further agree that any contract, agreement or understanding between a party and its | ||
affiliates, subsidiaries, agents, delegates and designees shall contain a provision binding | ||
the affiliate, subsidiary, agent, delegate or designee to the terms of this Arbitration | ||
Provision. | ||
23.1 | The location of any arbitration proceeding will be in Polk County, Iowa. The | |
arbitration will be governed by the rules and regulations of the Code of | ||
Arbitration Procedure adopted by FINRA, except in the event that FINRA is | ||
unwilling to accept jurisdiction of the matter, such arbitration will be held in | ||
accordance with the rules and regulations of the American Arbitration Association | ||
(“AAA”) under the Commercial Arbitration Procedures then in effect. The | ||
arbitrators will be selected and the arbitration conducted in accordance with the | ||
FINRA or AAA rules, as appropriate, except that the provisions of this | ||
Agreement will control over the FINRA or AAA rules. The number of arbitrators | ||
will be three (3). To the extent practicable, the arbitrators shall be attorneys or | ||
retired attorneys specializing in securities law. | ||
23.2 | The parties will share equally in the fees and expenses of the arbitrators and the | |
cost of the facilities used for the arbitration hearing, but will otherwise bear their | ||
respective costs incurred in connection with the arbitration. Depositions will not |
be allowed, but information may be exchanged by other means. The parties agree | ||
to use their best efforts to ensure that the arbitrators are selected promptly and that | ||
the arbitration hearing is conducted no later than 3 months after the arbitrators are | ||
selected. | ||
23.3 | The arbitrators must decide the dispute in accordance with the substantive law | |
which would govern the dispute had it been litigated in court. This requirement | ||
does not, however, mean that the award is reviewable by a court for errors of law | ||
or fact. Following the arbitration hearing, the arbitrators will issue an award and a | ||
separate written decision which summarizes the reasoning behind the award and | ||
the legal basis for the award. Any award of the arbitrators will be limited to | ||
compensatory damages and will be conclusive and binding on each party. | ||
Judgment upon the award may be entered in any federal district court. The | ||
arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. Sections 1- | ||
16, to the exclusion of state laws inconsistent therewith, and judgment upon the | ||
award may be entered in any court having jurisdiction. | ||
23.4 | The dispute resolution procedures set forth above will be the sole and exclusive | |
procedures for the resolution by the parties of any disputes which arise out of or | ||
are related to this Agreement, except that a party may seek preliminary or | ||
temporary injunctive relief from a court if, in the party’s sole judgment, such | ||
action is necessary to avoid irreparable harm or to preserve the status quo. If a | ||
party seeks judicial injunctive relief as described in this paragraph, the parties will | ||
continue to participate in good faith in the dispute resolution procedures described | ||
above. The parties agree that no court which a party petitions to grant the type of | ||
preliminary injunctive relief described in this paragraph may award damages or | ||
resolve the dispute. Venue for any judicial proceeding for preliminary or | ||
temporary injunctive relief will be in Polk County, Iowa, and any objections or | ||
defenses based on lack of personal jurisdiction or venue are hereby expressly | ||
waived | ||
24. | This Agreement shall be governed by, and construed in accordance with, the laws of the | |
State of Iowa, without giving effect to principles of conflict of laws. | ||
25. | ||
25.1 | Counterparty hereby represents and certifies to PFD that it is aware of, and in | |
compliance with, all applicable anti-money laundering laws, regulations, rules and | ||
government guidance, including the reporting, recordkeeping and compliance | ||
requirements of the Bank Secrecy Act (“BSA”), as amended by the Patriot Act, its | ||
implementing regulations, and related Securities and Exchange Commission and | ||
self-regulatory organization rules and regulations. Counterparty hereby certifies | ||
to PFD that, to the extent required by the Patriot Act, it has a comprehensive anti- | ||
money laundering compliance program that includes: internal policies, | ||
procedures and controls for complying with the Patriot Act; a designated | ||
compliance officer or officers; an ongoing training program for appropriate | ||
employees; and an independent audit function. |
25.2 | Counterparty also hereby certifies to PFD that, to the extent applicable, it is in | |
compliance with the economic sanctions programs administered by the U.S. | ||
Treasury Department’s Office of Foreign Assets Control (“OFAC”), and has an | ||
OFAC compliance program that satisfies all applicable laws, regulations and | ||
sanctions programs administered by the U.S. Treasury Department’s Office of | ||
Foreign Laws and Regulations. | ||
25.3 | Counterparty represents that it adopted a Customer Identification Program in | |
compliance with applicable laws, rules and regulations and will verify the identity | ||
of Customers who open accounts with PFD on or after October 1, 2003 and who | ||
invest in Shares. | ||
25.4 | Except to the extent restricted by applicable law, Counterparty hereby agrees to | |
notify PFD in writing at 0000 Xxxxxxxxxx Xxxx., Xxx 000, Xx Xxxxxx Xxxxx, XX | ||
00000, Attn: Anti-Money Laundering Compliance Officer, or such other address | ||
as provided in writing by PFD to Counterparty, promptly whenever questionable | ||
activity or potential indications of suspicious activity or OFAC matches are | ||
detected with respect to the Funds. | ||
25.5 | Counterparty hereby undertakes to notify PFD promptly if any of the foregoing | |
certifications cease to be true and correct for any reason. | ||
26. | PFD and Counterparty hereby agree to abide by all terms and conditions set forth in the | |
Investment Company Institute’s Standardized Networking Agreement (“Networking | ||
Agreement”) which is currently in effect and which each party has signed in good faith. | ||
Said “Standardized Agreement” is on file at the NSCC for each of the parties to this | ||
Agreement. Each party will notify immediately the other party to this Agreement should | ||
that party amend, cancel or otherwise terminate their Networking Agreement. | ||
27. | This Agreement may be executed in one or more counterparts, each of which will be | |
deemed an original, but all of which together shall constitute one and the same | ||
instrument. If any provision of this Agreement should be invalid, illegal or in conflict | ||
with any applicable state or federal law or regulation, such law or regulation shall control, | ||
to the extent of such conflict, without affecting the remaining provisions of this | ||
Agreement. |
IN WITNESS WHEREOF the parties hereto have caused the Agreement to be duly executed as | |
of the day and year first written above. | |
Principal Funds Distributor, Inc. | |
(Counterparty – insert full name) | |
By: | By: |
Name: | Name: |
Title: | Title: |
Date: | Address: |
Tel.#: | |
Fax #: | |
Date: |