DRAFT
MUTUAL FUND DISTRIBUTION AND SHAREHOLDER SERVICES AGREEMENT
AGREEMENT made as of [date], 200 by and between Strong Investments, Inc.
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("Strong") and _________ ("Service Provider").
WITNESSETH:
WHEREAS, Strong serves as principal underwriter to the open-end investment
companies listed on Schedule A (each, a "Fund" and collectively, the "Funds"),
each of which is registered under the Investment Company Act of 1940, as amended
(the "Investment Company Act"); and
WHEREAS, Shares of the Funds are registered with the Securities and
Exchange Commission ("SEC") under the Securities Act of 1933, as amended (the
"Securities Act") and offered to the public through a prospectus ("Prospectus")
and statement of additional information ("SAI"); and
WHEREAS, Strong desires to appoint Service Provider, and Service Provider
desires to serve, as Strong's agent in providing distribution assistance and
shareholder services pertaining to the Funds.
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
it is hereby agreed by and between the parties hereto as follows:
Section 1 - Capacity in Which Services Will be Provided
(a) Service Provider agrees to act as Strong's agent in providing the
services under this Agreement. Service Provider will not act in a principal
capacity or as a principal underwriter to the Funds as defined in the Investment
Company Act. In acting as Strong's agent, Service Provider may rely solely and
conclusively on the representations contained in the Prospectus and SAI for each
Fund, as well as any other written marketing or other materials Strong provides
to Service Provider and Service Provider assumes no responsibility for the
accuracy of such materials.
(b) Services that Service Provider may provide include the following:
(i) Assist Strong in marketing shares of the Funds to Service
Provider's prospective and existing customers ("Customers");
(ii) Assist Strong in processing purchase, exchange and redemption
requests for Customers and in placing such orders with the Funds;
(iii) Provide periodic information to Customers about their
holdings of Fund shares;
(iv) Arrange for bank wires or federal funds wires;
(v) Respond to Customer inquiries concerning their investments in
the Funds and the services performed by Service Provider under this
Agreement;
(vi) Where required by law, forward Fund shareholder communications
(such as proxies, shareholder reports, financial statements and dividend,
distribution and tax notices) to Customers;
(vii) Assist Customers in changing dividend options, account
designations, and addresses; and
(viii) Provide such other similar services as Strong may reasonably
request to the extent permitted under applicable laws or regulations.
Section 2 - Processing of Customer Orders
Orders for the purchase of Fund shares shall be executed at the then current
public offering price per share (i.e., the net asset value per share ("NAV")
plus any applicable sales charge) and all orders for the redemption of any Fund
shares shall be executed at the net asset value per share less any applicable
deferred sales charge, redemption fee or similar charge or fee, if any.
Specifically, Service Provider will accept purchase and redemption orders from
Customers no later than the time each business day (typically, 3:00 p.m. Central
Time) that the Fund calculates its NAV per share in accordance with the
procedure(s) contained in the Prospectus (the "Pricing Deadline"). Customer
orders that are accepted by Service Provider each business day before the
Pricing Deadline will be priced at the Fund's NAV calculated as of the Pricing
Deadline.
Section 3 - Compensation
(a) In return for providing the services set forth in this Agreement,
Broker-Dealer shall be entitled to a reallowance set forth in the Prospectus of
the applicable Fund. This reallowance may take the form of a front-end,
deferred or asset-based sales charge, as defined in National Association of
Securities Dealers Inc. ("NASD") Conduct Rule 2830(b).
(b) In addition to the reallowance set forth above in paragraph (a),
Service Provider will be entitled to receive an asset-based service fee for each
Fund equal in amount to the percentage of net assets set forth in Schedule A to
this Agreement. The fee will be calculated and paid in the manner set forth in
Schedule A.
(c) In accordance with the terms in the Prospectus of the applicable Fund,
Broker-Dealer acknowledges that a reduced sales charge or no sales charge may be
available to Customers. Service Provider agrees to advise Strong promptly at its
request as to amounts of any and all purchases of Fund shares made by Service
Provider, as agent for its Customers, qualifying for a reduced sales charge or
no sales charge. If any shares sold with a sales charge are redeemed for the
account of the Fund or are tendered for redemption within seven (7) days after
the date of purchase: (i) Service Provider will refund to Strong the full
reallowance received by Service Provider on the sale; and (ii) Strong will pay
to the Fund its portion of the sales charge on the sale which had been retained
by Strong and shall also pay to the Fund the amount refunded by Service
Provider.
Section 4 - Representations
(a) Strong represents and warrants as of the date hereof and throughout
the term of this Agreement that:
(i) Strong is a broker-dealer registered with the SEC under the
Securities Exchange Act of 1934, as amended, a member of the NASD and
qualified to conduct business as a broker-dealer in each of the states in
which the Funds may be sold;
(ii) Strong serves as "principal underwriter" to the Funds within the
meaning of the Investment Company Act under one or more written agreements
that are validly executed, comply fully with applicable provisions of the
Investment Company Act and other applicable laws and regulations, and will
remain in full force and in effect throughout the term of this Agreement;
(iii) The amount and form of compensation payable to Service Provider
under Section 3 of this Agreement as well as any other cash and non-cash
compensation payable to Service Provider complies fully with applicable
provisions of the NASD Conduct Rules, including without limitation NASD
Conduct Rules 2820 and 2830, as well as other applicable laws and
regulations and such compensation is accurately and adequately disclosed in
compliance with all applicable laws and regulations;
(iv) All asset-based fees payable to Service Provider under this
Agreement for providing distribution-related services will: (i) comply
fully with the terms and conditions of Rule 12b-1 under the Investment
Company Act; (ii) be paid out of your own legitimate profits and be outside
the scope of that rule; or (iii) otherwise comply with applicable laws and
regulations;
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(v) The Prospectus and SAI for each Fund and any additional written
materials that Strong supplies to Customers comply in all material respects
with applicable regulatory and disclosure requirements;
(vi) Strong and the Funds are duly organized and validly existing
under the laws of the jurisdiction in which Strong and the Funds were
organized;
(vii) All authorizations (if any) required for Strong's lawful
execution of this Agreement and Strong's performance hereunder have been
obtained;
(viii) The shares of the Funds are registered under the Securities Act
of 1933 and have been qualified for sale under, or are exempt from the
requirements of the respective securities laws of applicable states and
jurisdictions and Strong will notify Service Provider promptly in the event
shares of the Funds cease to be qualified for sale under, or cease to
qualify for an exemption from the requirements of the respective securities
laws of applicable states and jurisdiction; and
(ix) Strong agrees to provide Service Provider with sufficient
quantities of Fund Prospectuses, proxy materials and other shareholder
communications to send to Customers at no cost to Service Provider. Strong
also agrees to reimburse Service Provider for any reasonable out-of-pocket
expenses, including the cost of any mailing agent, that Service Provider
may incur in mailing such materials.
(b) Service Provider represents and warrants that:
(i) Service Provider is either (A) a broker-dealer registered with
the SEC under the Securities Exchange Act of 1934, as amended, a member of
the NASD and qualified to conduct business as a broker-dealer in each of
the states in which the Funds may be sold, or (B) an entity exempt from
registration as a broker-dealer;
(ii) Service Provider is duly organized and validly existing under
the laws of the jurisdiction in which Service Provider was organized;
(iii) All authorizations required for Service Provider lawful
execution of this Agreement and Service Provider's performance hereunder
have been obtained;
(iv) Any information Service Provider provides to Customers
concerning the Funds will be based on information contained in the
Prospectus, or SAI for the Funds, or on promotional materials or sales
literature that Strong furnishes to the public;
(v) Service Provider will distribute Fund Prospectuses, proxy
materials and other shareholder communications to Customers in accordance
with applicable regulatory requirements, except to the extent Strong
expressly undertakes in writing to do so;
(vi) Service Provider will not effect any transactions (including,
without limitation, any purchases, exchanges and redemptions) in any Fund
shares, registered in the name of, or beneficially owned by, any Customer,
unless to Service Provider's knowledge, such Customer has granted to
Service Provider full right, power and authority to effect such
transactions on such Customer's behalf; and
(vii) Service Provider will obtain from each Customer for whom it acts
as agent for the purchase of Fund shares any taxpayer identification number
certification and such other information as may be required from time to
time under the Internal Revenue Code of 1986, as amended (the "Code"), and
the regulations thereunder, and provide Strong or its designee with timely
written notice of any failure to obtain such taxpayer identification number
certification or other information in order to enable the implementation of
any required withholding.
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Section 5 - Marketing Materials
Strong represents that all written and electronic advertisements and sales
materials pertaining to the Funds that Strong provides to Service Provider, its
affiliates, and their employees, agents and representatives are Strong's
responsibility and will be accurate and up-to-date as of the time they are
provided to Service Provider. In addition, Strong represents, warrants and
covenants that all advertisements and sales literature as defined in NASD
Conduct Rule 2210(a) will comply with all applicable NASD requirements and other
applicable laws, rules and regulations and that Strong will take all reasonable
actions to prevent the distribution to Service Provider personnel of any such
materials that are inconsistent with these representations.
Section 6 - Indemnification
(a) Strong will indemnify and hold harmless Service Provider, each
director, officer, employee, and agent of Service Provider, and each person who
is or may be deemed to be controlling, controlled by or under common control
with Service Provider from and against any and all direct and indirect claims,
damages, losses, liabilities, or expenses (including the reasonable costs of
investigation and reasonable attorney's and other legal fees) resulting from:
(i) the willful misconduct or negligence, as measured by industry standards, of
Strong, its agents and employees, in the performance of, or failure to perform,
Strong's obligations under this Agreement; provided, however, that Strong will
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not be liable for indemnification under this subparagraph to the extent that any
claim, damage, loss, liability, or expense results from the willful misconduct
or negligence, as measured by industry standards, of Service Provider or its
affiliates; (ii) any violation of any law, rule, or regulation relating to the
registration or qualification of shares of a Fund, except to the extent such
violation results from the willful misconduct or negligence, as measured by
industry standards, of Service Provider; (iii) any untrue statement, or alleged
untrue statement, of a material fact contained in any Fund's registration
statement or any offering documents, sales literature, or marketing materials
that Strong, a Fund or any affiliates provide to Service Provider, or any
omission, or alleged omission, to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; or (iv) any
breach or violation of the representations, warranties, or covenants set forth
in this Agreement. Such right of indemnification will survive the termination of
this Agreement.
(b) Service Provider will indemnify and hold harmless Strong and each of
its directors, officers, employees, and agents and each person who is or may be
deemed to be controlling, controlled by or under common control with Strong,
from and against any and all direct and indirect claims, damages, losses,
liabilities, or expenses (including the reasonable costs of investigation and
reasonable attorney's and other legal fees) resulting from (i) the willful
misconduct or negligence, as measured by industry standards, of Service
Provider, its agents and employees, in the performance of, or failure to
perform, its obligations under this Agreement; or (ii) any untrue statement, or
alleged untrue statement, of a material fact contained in offering documents,
sales literature, or marketing materials that Service Provider or any of its
affiliates produces and provides to Customers who are Fund shareholders, or any
omission, or alleged omission, to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, provided,
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however, that Service Provider will not be liable for indemnification hereunder
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to the extent that any claim, damage, loss, liability, or expense results from
the willful misconduct or negligence, as measured by industry standards, of
Strong or Strong's affiliates. This right of indemnification will survive the
termination of this Agreement.
(c) In no case shall the indemnification provided in this Section 6 be
available to protect any person against any liability to which any such person
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its or his obligations or duties hereunder, or
by reason of its or his reckless disregard of its or his obligations and duties
hereunder.
Section 7 - Arbitration
In the event of a dispute with respect to this Agreement that the parties are
unable to resolve themselves, such dispute will be settled by arbitration in
accordance with the then existing NASD Code of Arbitration Procedure ("NASD
Code"). The arbitrators will act by majority decision and their award may
allocate attorneys fees and arbitration costs between the parties. Their award
will be final and binding between the parties, and such award may be entered as
a judgment in any court of competent jurisdiction. The parties agree that, to
the extent permitted by the NASD Code, the arbitrators will be selected from the
securities industry.
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Section 8 - Confidentiality of Customer Information
The names, addresses and other information concerning Customers are and shall
remain the sole property of Service Provider. Neither Strong, its affiliates,
nor their officers, directors, employees or agents, or any control person of the
foregoing persons shall use such names, addresses or other information for any
purpose except in connection with the performance of Strong's duties and
responsibilities hereunder and except for shareholder servicing and
informational mailings relating to the Funds. Notwithstanding the foregoing,
this Section 8 shall not prohibit Strong or any of its affiliates from utilizing
for any purpose the names, addresses or other information concerning any of
Service Provider's Customers if such names, addresses or other information are
obtained in any manner other than from Service Provider pursuant to this
Agreement. The provisions of this Section 8 shall survive the termination of
this Agreement.
Section 9 - Non-Exclusivity of Agreement
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 Strong and Service
Provider. Except to the extent set forth above in Section 1 of this Agreement,
neither party hereto shall be, act as, or represent itself as, the agent or
representative of the other, nor shall either party have the right or authority
to 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. This
Agreement is not intended to, and shall not, create any rights against either
party hereto by any third party solely on account of this Agreement. Neither
party hereto shall use the name of the other party in any manner without the
other party's prior written consent, except: (i) as required by any applicable
federal or state law, rule, regulation or requirement; (ii) pursuant to any
promotional programs mutually agreed upon in writing by the parties hereto; and
(iii) that Service Provider may supply its Customers with a list of Funds
available under this Agreement.
Section 10 - Notices
Unless otherwise agreed to by both parties, all notices under this Agreement
will be given in writing and delivered by personal delivery or by postage
prepaid, registered or certified United Sates first class mail, return receipt
requested, or by facsimile, telecopier, telex, telegram or similar means of same
day delivery (with a confirming copy by mail as provided herein). Unless
otherwise notified in writing, all notices to Strong shall be given or sent to
Strong at its offices, located at:
[Address ]
Milwaukee, Wisconsin,
Attn.:
and all notices to Service Provider shall be given or sent to Service Provider
at Service Provider's address shown below.
Section 11 - Term and Termination of Agreement
This Agreement shall become effective only when accepted and signed by both
Strong and Service Provider, and may be terminated at any time by either party
hereto upon 30 days' prior written notice to the other party. After the date of
termination of this Agreement (the "Termination Date"), the compensation
described in Section 3 hereof will continue to be due with respect to any shares
held by Service Provider clients on the Termination Date for so long as such
shares are held in an account with Service Provider and Service Provider
continues to provide the services described in this Agreement. Service Provider
agrees that in the event of termination of the Agreement as provided in this
Section 11, it shall provide Strong with such reports and certificates as Strong
may reasonably request as necessary to determine that the continued payment of
compensation has been calculated in accordance with this Agreement.
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Section 12 - Assignability
This Agreement is not assignable within the meaning of the Investment Company
Act by either party without the other party's prior written consent, and any
attempted assignment in contravention hereof shall be null and void.
Section 13 - Schedules; Entire Agreement
All Schedules to this Agreement, as they may be amended from time to time, are
by this reference incorporated into and made a part of this Agreement. This
Agreement (including the Schedules hereto) constitutes the entire Agreement
between the parties as to the subject matter hereof and supersedes any and all
agreements, representations and warranties, written or oral, regarding such
subject matter made prior to the time at which this Agreement has been executed
and delivered by Service Provider.
Section 14 - Amendment
This Agreement may be amended only by a writing executed by each party, except
that Schedule A may be amended by Strong on 30 days' written notice to Service
Provider or such earlier time as shall be agreed to by the parties.
Section 15 - Custody
You acknowledge that Fund shares maintained by you hereunder are held in custody
for the exclusive benefit of Customers and shall be held free of any right,
charge, security interest, lien or claim against Service Provider in favor of
Strong.
Section 16 - Governing Law
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Wisconsin, without giving effect to principles of
conflicts of laws.
IN WITNESS WHEREOF the parties hereto have caused the Agreement to be duly
executed as of the date first written above.
STRONG INVESTMENTS, INC.
By___________________________
Name:
Title :
[NAME OF SERVICE PROVIDER]
By___________________________
Name:
Title:
Address:_____________________
_____________________________
_____________________________
NOTE: Please sign and return both copies of this Agreement to Strong. Upon
acceptance one countersigned copy will be returned to you for your files.
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SCHEDULE A
LIST OF FUNDS SUBJECT TO THIS AGREEMENT
CALCULATION AND AMOUNT OF ASSET-BASED SERVICE FEE PAYABLE TO SERVICE PROVIDER
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