Exhibit (m)(ii) under Form N-1A
Exhibit 1 under Item 601/Reg S-K
MUTUAL FUNDS
SALES AND SERVICE
AGREEMENT
This Agreement is entered into among the financial institution executing
this Agreement ("Financial Institution") and Edgewood Services, Inc.
("Distributor") acting as principal underwriter with respect to those series or
portfolios listed on the Exhibit hereto (referred to individually as the "Fund"
and collectively as the "Funds").
This Agreement contemplates that Distributor may make one or more of the
following payments to Financial Institution: (a) payment for sales commissions
as described in Section II; (b) payment for distribution services as described
in Section III; (c) payment for shareholder services as described in Section IV;
and/or (d) supplemental payments as described in Section V.
SECTION I - FINANCIAL INSTITUTION.
1. Status of Financial Institution as "Bank" or Registered Broker-Dealer.
Financial Institution represents and warrants to Distributor:
(a)(i) that it is a broker or dealer as defined in Section 3(a)(4) or
3(a)(5) of the Securities Exchange Act of 1934 ("Exchange Act"); that it is
registered with the Securities and Exchange Commission pursuant to Section
15 of the Exchange Act; that it is a member in good standing of the
National Association of Securities Dealers, Inc. ("NASD"); that its
customers' accounts are insured by the Securities Investors Protection
Corporation ("SIPC"); and that, during the term of this Agreement, it will
abide by all of the rules and regulations of the NASD including, without
limitation, the NASD Rules of Conduct. Financial Institution agrees to
notify Distributor immediately in the event of (1) the termination of its
coverage by the SIPC; (2) its expulsion or suspension from the NASD, or (3)
its being found to have violated any applicable federal or state law, rule
or regulation arising out of its activities as a broker-dealer or in
connection with this Agreement, or which may otherwise affect in any
material way its ability to act in accordance with the terms of this
Agreement. Financial Institution's expulsion from the NASD will
automatically terminate this Agreement immediately without notice.
Suspension of Financial Institution from the NASD for violation of any
applicable federal or state law, rule or regulation will terminate this
Agreement effective immediately upon Distributor's written notice of
termination to Financial Institution; or
(a)(ii) that it is a "bank," as that term is defined in Section 3(a)(6) of
the Exchange Act and that, during the term of this Agreement, it will abide
by the rules and regulations of those state and federal banking authorities
with appropriate jurisdiction over the Financial Institution, especially
those regulations dealing with the activities of the Institution as
described under this Agreement. Financial Institution agrees to notify
Distributor immediately of any action by or communication from state or
federal banking authorities, state securities authorities, the Securities
and Exchange Commission, or any other party which may affect its status as
a bank, or which may otherwise affect in any material way its ability to
act in accordance with the terms of this Agreement. Any action or decision
of any of the foregoing regulatory authorities or any court of appropriate
jurisdiction which affects Financial Institution's ability to act in
accordance with the terms of this agreement, including the loss of its
exemption from registration as a broker or dealer, will terminate this
Agreement effective upon Distributor's written notice of termination to
Financial Institution; and
(b) that Financial Institution is registered with the
appropriate securities authorities in all states in which its
activities make such registration necessary.
2. Financial Institution Acts as Agent for its Customers.
The parties agree that in each transaction in the shares of beneficial
interest or capital stock of any Fund ("Shares") and with regard to any services
rendered pursuant to this Agreement: (a) Financial Institution is acting as
agent for the customer; (b) each transaction is initiated solely upon the order
of the customer; (c) as between Financial Institution and its customer, the
customer will have full beneficial ownership of all Shares; (d) each transaction
shall be for the account of the customer and not for Financial Institution's
account; and (e) each transaction shall be without recourse to Financial
Institution provided that Financial Institution acts in accordance with the
terms of this Agreement. Financial Institution shall not have any authority in
any transaction to act as Distributor's agent or as agent for any Fund.
SECTION II - AGREEMENT FOR SALES OF FUND SHARES.
3. Execution of Orders for Purchase and Redemption of Shares.
(a) All orders for the purchase of any Shares shall be executed at the
then-current public offering price per share (i.e., the net asset value
per share plus the applicable initial sales load, if any) and all orders
for the redemption of any Shares shall be executed at the net asset value
per share of the applicable Class, in each case as described in the
prospectus of the Fund. Any applicable redemption fee or deferred sales
charge will be deducted by the Fund prior to the transmission of the
redemption proceeds to Financial Institution or its customer.
Distributor and the Funds reserve the right to reject any purchase
request in their sole discretion. If required by law, each transaction
shall be confirmed in writing on a fully disclosed basis and, if
confirmed by Distributor, a copy of each confirmation shall be sent
simultaneously to Financial Institution if Financial Institution so
requests.
(b) The procedures relating to all orders will be subject to the terms of
the prospectus (as used herein, references to the Fund's prospectus shall
also include the Fund's statement of additional information ("SAI"),
which is incorporated by reference into the prospectus) of each Fund and
Distributor's written instructions to Financial Institution from time to
time.
(c) Payments for Shares shall be made as specified in the applicable Fund
prospectus. If payment for any purchase order is not received in
accordance with the terms of the applicable Fund prospectus, Distributor
reserves the right, without notice, to cancel the sale and to hold
Financial Institution responsible for any loss sustained as a result
thereof.
4. Initial Sales Loads Payable to Financial Institution.
(a) On each order accepted by Distributor, in exchange for the
performance of sales services and/or distribution services, Financial
Institution will be entitled to receive the applicable dealer concession
set forth in the then current prospectus of the applicable Fund, subject
to any adjustment in the rate of such concession referred to below, from
the amount paid by Financial Institution's customer. The initial sales
loads for any Fund shall be those set forth in its prospectus. The rate
of the dealer concession payable to Financial Institution may be changed
at any time at Distributor's sole discretion upon written notice to
Financial Institution.
(b) Transactions may be settled by Financial Institution: (1) by payment
of the full purchase price less an amount equal to Financial
Institution's applicable percentage of the initial sales load, or (2) by
payment of the full purchase price, in which case Financial Institution
shall receive, not less frequently than monthly, the aggregate fees due
it on orders received and settled. Upon request, Financial Institution
shall provide Distributor with a report detailing the amounts retained by
Financial Institution under subparagraph (b)(1).
(c) It shall be the obligation of the Financial Institution either:
(i) to provide Distributor with all necessary information regarding the
application of the appropriate initial sales load to each transaction, or
(ii) to assess the appropriate initial sales load for each transaction
and to forward the public offering price, net of the amount of the
initial sales load to be reallowed to the Financial Institution, to the
appropriate Fund. Neither the Fund nor Distributor shall have any
responsibility to correct the payment or assessment of an incorrect
initial sales load due to the failure of the Financial Institution to
fulfill the foregoing obligation.
5. Advance Commissions Payable to Financial Institution.
Upon the purchase of certain Shares, as described in the applicable
prospectus, the Financial Institution may be entitled to receive an advance
commission from the Distributor as set forth in the Fund's current
prospectus. This amount is not to be considered an initial sales load and
should not be deducted from the public offering price of the Shares which
shall be forwarded to the Fund. Generally, a contingent deferred sales
charge ("CDSC") will be assessed upon the redemption of Shares with regard to
which an advance commission is paid by Distributor. In the event that
Financial Institution notifies Distributor in writing that Financial
Institution elects to waive such advance commission, and if the Fund's
prospectus or SAI permits such a waiver, the CDSC will not be charged upon
the redemption of the relevant Shares. To receive advance commission from
Distributor on Shares that are subject to a CDSC, Financial Institution must
open investor accounts with the Fund on a fully-disclosed basis or be able to
account for share ownership periods used in calculating the CDSC.
Furthermore, should the custody (or record ownership) of the shares of the
investor account(s) be transferred during the applicable CDSC holding period
(as described in the Fund prospectus or SAI) to a financial institution which
does not maintain investor accounts on a fully disclosed basis and does not
account for share ownership periods, the Financial Institution agrees to
reimburse Distributor prior to such transfer for advance commissions paid to
it by Distributor.
6. Delivery of Prospectuses to Customers.
Financial Institution will deliver or cause to be delivered to each
customer, at or prior to the time of any purchase of Shares, a copy of the
current prospectus of the applicable Fund and, upon request by a customer or
shareholder, a copy of the applicable Fund's current SAI and any annual or
semi-annual report ("Financial Report(s)"). Financial Institution shall not
make any representations concerning any Shares other than those contained in
the prospectus, SAI or Financial Report of the Fund or in any promotional
materials or sales literature furnished to Financial Institution by
Distributor or the Fund.
7. Indemnification.
(a) Financial Institution shall indemnify and hold harmless
Distributor, each Fund, the transfer agent of any Fund, and each of
their respective subsidiaries, affiliates, officers, directors, agents
and employees from all direct or indirect liabilities, losses or costs
(including attorneys fees) arising from, related to or otherwise
connected with: (1) any breach by Financial Institution of any
provision of this Agreement; or (2) any actions or omissions of
Distributor, any Fund, the transfer agent, and each of their
subsidiaries, affiliates, officers, directors, agents and employees in
reliance upon any oral, written or computer or electronically
transmitted instructions believed to be genuine and to have been given
by or on behalf of Financial Institution.
(b) The Distributor shall indemnify and hold harmless Financial
Institution and its respective subsidiaries, affiliates, officers,
directors, agents and employees from all direct or indirect
liabilities, losses or costs (including attorneys fees) arising from,
related to or otherwise connected with: (1) any breach by Distributor
of any provision of this Agreement; or (2) any actions or omissions of
Financial Institution and its subsidiaries, affiliates, officers,
directors, agents and employees in reliance upon any oral, written or
computer or electronically transmitted instructions believed to be
genuine and to have been given by or on behalf of the Distributor.
(c) The Distributor agrees to indemnify and hold harmless any Fund
for which Distributor is principal underwriter, each of its Directors,
each of its officers who have signed the Registration Statement and
each other person, if any, who controls such Fund within the meaning of
Section 15 of the Securities Act of 1933, as amended, but only with
respect to statements or omissions, if any, made in the Registration
Statement, or any prospectus, SAI, or any amendment or supplement
thereof (the "Filing(s)") in reliance upon, and in conformity with,
information furnished to such Fund about Distributor by or on behalf of
Distributor expressly for the use in the Filing(s). In case any action
shall be brought against any Fund or any other person so indemnified
based on the Filing(s), and with respect to which indemnity may be
sought against Distributor, Distributor shall have the rights and
duties given to such Fund to the extent that Distributor is distributor
to that Fund, and such Fund and each other person so indemnified shall
have the rights and duties given to Distributor by the provisions of
subsection (a) above.
(d) The agreement of the parties in this Paragraph to indemnify each
other is conditioned upon the party entitled to indemnification
(Indemnified Party) giving notice to the party required to provide
indemnification (Indemnifying Party) promptly after the summons or
other first legal process for any claim as to which indemnity may be
sought is served on the Indemnified Party. The Indemnified Party shall
permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting from it, provided that counsel for the
Indemnifying Party who shall conduct the defense of such claim or
litigation shall be approved by the Indemnified Party (which approval
shall not unreasonably be withheld), and that the Indemnified Party may
participate in such defense at its expense. The failure of the
Indemnified Party to give notice as provided in this subparagraph (c)
shall not relieve the Indemnifying Party from any liability other than
its indemnity obligation under this Paragraph. No Indemnifying Party,
in the defense of any such claim or litigation, shall, without the
consent of the Indemnified Party, consent to entry of any judgment or
enter into any settlement that does not include as an unconditional
term the giving by the claimant or plaintiff to the Indemnified Party
of a release from all liability in respect to such claim or litigation.
(e) The provisions of this Paragraph shall survive the termination of
this Agreement.
SECTION III - AGREEMENT TO PROVIDE DISTRIBUTION-RELATED ACTIVITIES.
8. Agreement under Rule 12b-1.
Financial Institution acknowledges that this Section III, together with
the Introduction to this Agreement, constitute a form of "Related Agreement"
under a plan ("Plan") adopted by a Fund in accordance with Rule 12b-1 under
the Investment Company Act of 1940 ("1940 Act"). Financial Institution agrees
to furnish such information to Distributor as necessary to comply with the
Plan and Rule 12b-1.
9. Distribution-Related Activities.
Certain Funds pay distribution fees under a Plan or Plans adopted under
Rule 12b-1 under the 1940 Act, as noted in the Fund's current prospectus.
Distributor hereby appoints Financial Institution to render or cause to be
performed one or more of the distribution-related activities and, to the
extent covered under the Plans, shareholder services referred to in Section
IV, to those Funds and their shareholders.
10. Distribution Fees Payable to Financial Institution.
During the term of this Section III, Distributor will pay Financial
Institution distribution fees for each class of shares ("Class") of a Fund as
set forth in Fund's current prospectus.
11. Term of Agreement.
This Related Agreement shall continue in effect for one year from the
date of its execution, and thereafter for successive periods of one year
provided the form of this Related Agreement is approved with respect to each
Class or Fund (as the case may be) at least annually by the Board of the
Fund, including a majority of the members of the Fund Board who are not
interested persons of the Fund and have no direct or indirect financial
interest in the operation of any Plan or in any related agreements to such
Plan ("Independent Board Members"), cast in person at a meeting called for
that purpose.
SECTION IV - AGREEMENT TO PROVIDE SHAREHOLDER SERVICES.
12. Shareholder Services.
Certain Funds pay a Shareholder Services Fee as noted in the Fund's
current prospectus. Financial Institution agrees to render or cause to be
rendered one or more of the personal services to shareholders of the Funds
and/or the maintenance of accounts of shareholders of the Funds ("Shareholder
Services") as outlined in the Fund's current prospectus. Financial
Institution further agrees to provide, upon request, a written description of
the Shareholder Services which Financial Institution is providing hereunder.
13. Shareholder Service Fees Payable to Financial Institution.
During the term of this Agreement, Distributor will pay Financial
Institution Shareholder Service Fees as set forth in the Fund's current
prospectus.
14. Acknowledgment by Financial Institution.
Financial Institution acknowledges that, to the extent a Fund's Plan
covers Shareholder Services and Shareholder Services Fees, such services and
fees are also subject to the terms of Section III of this Agreement.
SECTION V - SUPPLEMENTAL PAYMENTS.
15. Supplemental Payments to Financial Institution.
During the term of this Agreement, Distributor or their affiliates may
make Supplemental Payments to Financial Institution if and as set forth in
the Fund's current prospectus as additional compensation for services
described in Sections II, III or IV. Such payments will be made from the
assets, reasonable profits and/or resources of Distributor, the adviser to
the Fund, or the affiliates of either, and not from assets of the Funds nor
from fees payable under applicable Plans.
SECTION VI - MISCELLANEOUS.
16. Proration of Payments.
Fees paid pursuant to this Agreement are accrued daily and paid at
least quarterly. For the payment period in which this Agreement becomes
effective or terminates, there shall be an appropriate proration of the
payments referenced in Sections III, IV and V, on the basis of the number of
days that this Agreement is in effect during the quarter.
17. ERISA Assets.
(a) Financial Institution understands that the Department of Labor
views ERISA as prohibiting fiduciaries of discretionary ERISA assets
from receiving certain fees or other compensation from Funds in which
the fiduciary's discretionary ERISA assets are invested. Similar, the
common law of trusts in certain states prohibit fiduciaries from
receiving distribution-related compensation from funds in which the
fiduciary's discretionary trust assets are invested. Receipt of such
compensation could violate such provisions against fiduciary
self-dealing and conflict of interest and could subject the fiduciary
to penalties.
18. Customer Names Proprietary to Financial Institution.
(a) The names of Financial Institution's customers are and shall
remain Financial Institution's sole property and shall not be used by
Distributor or its affiliates for any purpose except the performance of
their respective duties and responsibilities under this Agreement and
except for servicing and informational mailings relating to the Funds.
Notwithstanding the foregoing, this Paragraph shall not prohibit
Distributor or any of its affiliates from utilizing the names of
Financial Institution's customers for any purpose if the names are
obtained in any manner other than from Financial Institution pursuant
to this Agreement.
(b) Neither party shall use the name of the other party in any manner
without the other party's written consent, except as required by any
applicable federal or state law, rule or regulation, and except
pursuant to any mutually agreed upon promotional programs.
(c) The provisions of this Paragraph shall survive the termination of
this Agreement.
19. Security Against Unauthorized Use of Funds' Recordkeeping Systems.
Financial Institution agrees to provide such security as is necessary
to prevent any unauthorized use of the Funds' recordkeeping system, accessed
via any computer hardware or software provided to Financial Institution by
Distributor.
20. Solicitation of Proxies.
Financial Institution agrees not to solicit or cause to be solicited
directly, or indirectly, at any time in the future, any proxies from the
shareholders of any or all of the Funds in opposition to proxies solicited by
management of any Fund, unless a court of competent jurisdiction shall have
determined that the conduct of a majority of the Board of the Fund
constitutes willful misfeasance, bad faith, gross negligence or reckless
disregard of their duties. This Paragraph will survive the term of this
Agreement.
21. Certification of Customers' Taxpayer Identification Numbers.
Financial Institution agrees to obtain any taxpayer identification
number certification from its customers required under Section 3406 of the
Internal Revenue Code, and any applicable Treasury regulations, and to
provide Distributor or their respective designee with timely written notice
of any failure to obtain such taxpayer identification number certification in
order to enable the implementation of any required backup withholding.
22. Notices.
Except as otherwise specifically provided in this Agreement, all
notices required or permitted to be given pursuant to this Agreement shall be
given in writing and delivered by personal delivery or by postage prepaid,
registered or certified United States first class mail, return receipt
requested, overnight courier services, or by facsimile or similar electronic
means of delivery (with a confirming copy by mail as provided herein).
Unless otherwise notified in writing, all notices to Distributor shall be
given or sent to it at Federated Xxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx
00000-0000, Attention: Secretary, Fax: 000-000-0000 (Phone: 000-000-0000).
All notices to Financial Institution shall be given or sent to it at its
address, fax number or e-mail address shown below.
23. Termination and Amendment.
(a) This Agreement shall become effective in this form as of the date
set forth below or as of the first date thereafter upon which Financial
Institution executes any transaction, performs any service, or receives
any payment pursuant hereto. This Agreement supersedes any prior
sales, distribution, shareholder service, or administrative service
agreements between the parties with respect to the Funds.
(b) This Agreement, including the Exhibit hereto, may be amended by
Distributor from time to time by the following procedure. Distributor
will mail a copy of the amendment to Financial Institution's address,
as shown below. Subject to any requirements imposed by any Plan, and
subject to any requirements imposed by Rule 12b-1, if Financial
Institution does not object to the amendment within thirty (30) days
after its receipt, or, regardless of any objection, as of the first
date thereafter upon which Financial Institution executes any
transaction, performs any service, or receives any payment pursuant
hereto, the amendment will become part of the Agreement. Financial
Institution's objection must be in writing and be received by
Distributor within such thirty days.
(c) In addition to the ability to amend or terminate this Agreement
under the provisions set forth in Paragraphs 1(a) and 23(b), Section
III and Section IV (to the extent Section IV is covered under a Plan)
of this Agreement may be terminated with respect to each Class or Fund,
as the case may be, as follows:
(i) at any time, without the payment of any penalty, by the
vote of a majority of the Independent Board Members of the Fund
or by a "vote of a majority of the outstanding voting securities"
of such Class or Fund, as the case may be, as defined in the 1940
Act on not more than sixty (60) days' written notice to the
parties to this Agreement;
(ii) automatically in the event of the Agreement's assignment as
defined in the 1940 Act, upon the termination of the
"Distributor's Contract" entered into between the Fund and
Distributor under Section 15(b) and (c) of the 1940 Act, or upon
the termination of the Plan relating to such Class or Fund, as
the case may be, covered under this Agreement;
(iii) by any party to the Agreement without cause by giving the
other party at least sixty (60) days' written notice of its
intention to terminate; and
(iv) at such other time as may be mutually agreed to in writing
by each party to this Agreement.
(d) The termination of this Agreement with respect to any one Class
or Fund will not cause the Agreement's termination with respect to any
other Class or Fund.
24. Severability.
If any provision or portion of this Agreement is at any time determined
to be invalid or unenforceable for any reason, the remaining provisions and
portions of this Agreement will be unaffected thereby and will remain in full
force and effect to the fullest extent permitted by law.
25. Governing Law.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Pennsylvania, without regard to conflict of laws principles
thereof. Financial Institution agrees that it shall bring any action or
proceeding against Distributor arising out of or related in any way to this
Agreement solely in a court of competition jurisdiction sitting in Allegheny
County or the Western District of Pennsylvania, and otherwise consents to the
jurisdiction of either court.
EDGEWOOD SERVICES, INC.
By:
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Vice President
Financial Institution:
By:
Name:
Title:
Date:
Attn.:
Address
City, State Zip Code
Phone number:
Fax number:
E-mail address:
EXHIBIT FOR
BANKNORTH FUNDS
(formerly: Stratevest Funds)
Edgewood Services, Inc. - Distributor
Banknorth Large Cap Core Fund
Banknorth Small/Mid Cap Core Fund
Banknorth Vermont Municipal Bond Fund
Banknorth Intermediate Bond Fund
