PRINCIPAL SPECIAL MARKETS FUND, INC.
DISTRIBUTION AGREEMENT
Agreement executed as of April 22, 1993 by and between PRINCIPAL SPECIAL MARKETS
FUND, INC., a Maryland corporation (hereinafter sometimes called the "Fund") and
PRINCOR FINANCIAL SERVICES CORPORATION, an Iowa corporation (Hereinafter
sometimes called the "Distributor").
W I T N E S S E T H:
WHEREAS, The Fund and the Distributor wish to enter into an agreement setting
forth the terms upon which the Distributor will act as underwriter and
distributor of the Fund.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Fund hereby appoints the Distributor to act as principal
underwriter (as such term is defined in Section 2(a)(29) of the Investment
Company Act of 1940 (as amended)) of the shares of Capital Stock of the
portfolios set forth in Appendix A (the "Portfolios") of the Fund (hereinafter
sometimes called "shares"), and the Distributor agrees to act and perform the
duties and functions of underwriter in the manner and subject to the conditions
hereinafter set forth.
1. SOLICITATION OF ORDERS
The Distributor will use its best efforts (but only in states where it
may lawfully do so) to obtain from investors unconditional orders for
shares authorized for issue by the Fund and registered under the
Securities Act of 1933, as amended, provided the Distributor may in its
own discretion refuse to accept orders for shares from any particular
applicant. The Distributor does not undertake to sell any specific
number of shares of the Fund.
2. SALE OF SHARES
The Distributor is authorized to sell as agent on behalf of the Fund
authorized shares of the Fund by accepting unconditional orders placed
with the Distributor by investors in states wherever sales may lawfully
be made.
3. PUBLIC OFFERING PRICE
All shares of the Portfolios sold to investors by the Distributor as
agent for the Fund will be sold for the basic retail price, which basic
retail price shall be the net asset value per share.
4. DELIVERY OF PAYMENTS AND ISSUANCE OF SHARES
The Distributor will deliver to the Fund all payments made pursuant to
orders accepted by the Distributor upon receipt thereof by the
Distributor in its principal place of business.
After payment the Fund will issue shares of the applicable class of
Capital Stock by crediting the appropriate number of such shares to a
stockholder account in such names and such manner as specified in the
application or order relating to such shares. Certificates will be
issued only upon request by the shareholder.
5. SALE OF SHARES TO INVESTORS BY THE FUND
Any right granted to the Distributor to accept orders for shares or make
sales on behalf of the Fund will not apply to shares issued in
connection with the merger or consolidation of any other investment
company with the Fund or its acquisition, purchase or otherwise, of all
or substantially all the assets of any investment company or
substantially all the outstanding shares of any such company. Also, any
such right shall not apply to shares issued, sold or transferred,
whether Treasury or newly issued shares, that may be offered by the Fund
to its shareholders as stock dividends or splits for not less than "net
asset value".
6. AGREEMENTS WITH DEALERS OR OTHERS
In making agreements with any dealers or others, the Distributor shall
act only in its own behalf and in no sense as agent for the Fund and
shall be agent for the Fund only in respect of sales and repurchases of
Fund shares.
7. COPIES OF CORPORATE DOCUMENTS
The Fund will furnish the Distributor promptly with properly certified
or authenticated copies of any registration statements for the Fund
filed by it with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, or the Investment Company Act of
1940, as amended, together with any financial statements and exhibits
included therein and all amendments or supplements thereto hereafter
filed. Also, the Fund shall furnish the Distributor with a reasonable
number of printed copies of each semi-annual and annual report
(quarterly if made) of the Fund as the Distributor may request, and
shall cooperate fully in the efforts of the Distributor to sell and
arrange for the sale of the Fund's shares of Capital Stock and in the
performance by the Distributor of all of its duties under this
Agreement.
8. RESPONSIBILITY FOR CONTINUED REGISTRATION INCLUDING INCREASE IN SHARES
The Fund will assume the continued responsibility for meeting the
requirements of registration under the Securities Act of 1933, as
amended, under the Investment Company Act of 1940, as amended, and under
the securities laws of the various states where the Distributor is
registered as a broker-dealer. The Fund, subject to the necessary
approval of its shareholders, will increase the number of authorized
shares from time to time as may be necessary to provide the Distributor
with such number of shares as the Distributor may reasonably be expected
to sell.
9. SUSPENSION OF SALES
If and whenever the determination of asset value of a Portfolio is
suspended pursuant to applicable law, and such suspension has become
effective, until such suspension is terminated no further applications
for shares of that Portfolio shall be accepted. In addition, the Fund
reserves the right to suspend sales and the Distributor's authority to
accept orders for shares of any Portfolio on behalf of the Fund, if in
the judgment of the majority of its Board of Directors, or of its
Executive Committee if such Committee exists, it is in the best interest
of the Fund to do so, suspension to continue for such period as may be
determined by such majority; and in that event no shares of that
Portfolio will be sold by the Fund or by the Distributor on behalf of
the Fund while such suspension remains in effect except for shares
necessary to cover unconditional orders accepted by the Distributor
before the Distributor had knowledge of the suspension.
10. EXPENSES
The Fund will pay (or will enter into arrangements providing for the
payment of) all fees and expenses (1) in connection with the preparation
and filing of any registration statement or amendments thereto as
required under the Investment Company Act of 1940, as amended; (2) in
connection with the preparation and filing of any registration statement
and prospectus or amendments thereto under the Securities Act of 1933,
as amended, covering the issue and sale of the Fund's shares; and (3) in
connection with the registration of the Fund and qualification of its
shares for sale in the various states and other jurisdictions. The Fund
will also pay (or will enter into arrangements providing for the payment
of) the cost of (i) preparation and distribution to shareholders of
prospectuses, reports, tax information, notices, proxy statements and
proxies; (ii) preparation and distribution of dividend and capital gain
payments to shareholders; (iii) issuance, transfer, registry and
maintenance of open account charges; (iv) delivery, remittance,
redemption and repurchase charges; (v) communication with shareholders
concerning these items; and (vi) stock certificates. The Fund will pay
taxes including, in the case of redeemed shares, any initial transfer
taxes unpaid.
The Distributor shall assume responsibility for (or will enter into
arrangements providing for the payment of) the expense of printing
prospectuses used for the solicitation of new accounts of the
Portfolios. The Distributor will pay (or will enter into arrangements
providing for the payment of) the expenses of other sales literature for
the Portfolios, will pay all fees and expenses in connection with the
Distributor's qualification as a dealer under the Securities Exchange
Act of 1934, as amended, and in the various states, and all other
expenses in connection with the sale and offering for sale of shares of
the Fund which have not been herein specifically allocated to or assumed
by the Fund.
11. CONFORMITY WITH LAW
The Distributor agrees that in selling the shares of the Fund it will
duly conform in all respects with the laws of the United States and any
state or other jurisdiction in which such shares may be offered for sale
pursuant to this Agreement.
12. MEMBERSHIP IN NATIONAL ASSOCIATION OF SECURITIES DEALERS
The Fund recognizes that the Distributor is now a member of the National
Association of Securities Dealers, and in the conduct of its duties
under this Agreement the Distributor is subject to the various rules,
orders and regulations of such organization. The right to determine
whether such membership should or should not continue, or to join other
organizations, is reserved by the Distributor.
13. OTHER INTERESTS
It is understood that directors, officers, agents and stockholders of
the Fund are or may be interested in the Distributor as directors,
officers, stockholders, or otherwise; that directors, officers, agents,
and stockholders of the Distributor are or may be interested in the Fund
as directors, officers, stockholders or otherwise; that the Distributor
may be interested in the Fund as a stockholder or otherwise; and that
the existence of any dual interest shall not affect the validity hereof
or of any transaction hereunder except as otherwise provided in the
Articles of Incorporation of the Fund and the Distributor, respectively,
or by specific provision of applicable law.
14. INDEMNIFICATION
The Fund agrees to indemnify, defend and hold the Distributor, its
officers and directors, and any person who controls the Distributor
within the meaning of Section 15 of the Securities Act of 1933, free and
harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims,
demands or liabilities and any counsel fees incurred in connection
therewith) which the Distributor, its officers, directors or any such
controlling person may incur under the Securities Act of 1933, or under
common law or otherwise, arising out of or based upon any untrue
statement of a material fact contained in the
Fund's registration statement or prospectus or arising out of or based
upon any alleged omission to state a material fact required to be stated
in either thereof or necessary to make the statements in either thereof
not misleading, except insofar as such claims, demands, liabilities or
expenses arise out of or are based upon any such untrue statement or
omission made in conformity with information furnished in writing by the
Distributor to the Fund for use in the Fund's registration statement or
prospectus: provided, however, that this indemnity agreement, to the
extent that it might require indemnity of any person who is also an
officer or director of the Fund or who controls the Fund within the
meaning of Section 15 of the Securities Act of 1933, shall not inure to
the benefit of such officer, director or controlling person unless a
court of competent jurisdiction shall determine, or it shall have been
determined by controlling precedent that such result would not be
against public policy as expressed in the Securities Act of 1933, and
further provided, that in no event shall anything contained herein be so
construed as to protect the Distributor against any liability to the
Fund or to its security holders to which the Distributor would otherwise
be subject by reason of willful misfeasance, bad faith, or gross
negligence, in the performance of its duties, or by reason of its
reckless disregard of its obligations under this Agreement. The Fund's
agreement to indemnify the Distributor, its officers and directors and
any such controlling person as aforesaid is expressly conditioned upon
the Fund being promptly notified of any action brought against the
Distributor, its officers or directors, or any such controlling person,
such notification to be given by letter or telegram addressed to the
Fund. The Fund agrees promptly to notify the Distributor of the
commencement of any litigation or proceedings against it or any of its
directors in connection with the issue and sale of any shares of it
Capital Stock.
The Distributor agrees to indemnify, defend and hold the Fund, its
officers and directors and any person who controls the Fund, if any,
within the meaning of Section 15 of the Securities Act of 1933, free and
harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims,
demands liabilities and any counsel fees incurred in connection
therewith) which the Fund, its directors or officers or any such
controlling person may incur under the Securities Act of 1933 or under
common law or otherwise; but only to the extent that such liability or
expense incurred by the Fund, its directors or officers or such
controlling person resulting from such claims or demands shall arise out
of or be based upon any alleged untrue statement of a material fact
contained in information furnished in writing by the Distributor to the
Fund for use in the Fund's registration statement or prospectus or shall
arise out of or be based upon any alleged omission to state a material
fact in connection with such information required to be stated in the
registration statement or prospectus or necessary to make such
information not misleading. The Distributor's agreement to indemnify the
Fund, its directors and officers, and any such controlling person as
aforesaid is expressly conditioned upon the Distributor being promptly
notified of any action brought against the Fund, its officers or
directors or any such controlling person.
15. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the execution date specified
on page 1 of this Agreement and will remain in effect for more than two
years thereafter only so long as such continuance is specifically
approved, at least annually, either by the Board of Directors of the
Fund or by a vote of a majority of the outstanding voting securities of
the Fund, provided that in either event such continuation shall be
approved by the vote of a majority of the directors who are not
interested persons of the Distributor, Principal Mutual Life Insurance
Company, or the Fund cast in person at a meeting called for the purpose
of voting on such approval. This Agreement may be terminated on 60 days
written notice at any time, without the payment of any penalty, by the
Fund or by the Distributor. This Agreement shall terminate automatically
in the event of its assignment.
In interpreting the provisions of this paragraph 15, the definitions
contained in section 2(a) of the Investment Company Act of 1940 and the
rules thereunder (particularly the definitions of "interested person",
"assignment" and "voting security") shall be applied.
16. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the
party against which enforcement of the change, waiver, discharge or
termination is sought. If the Fund should at any time deem it necessary
or advisable in the best interests of the Fund that any amendment of
this Agreement be made in order to comply with the recommendations or
requirements of the Securities and Exchange Commission or other
governmental authority or to obtain any advantage under state or federal
tax laws and should notify the Distributor of the form of such
amendment, and the reasons therefor, and if the Distributor should
decline to assent to such amendment, the Fund may terminate this
Agreement forthwith. If the Distributor should at any time request that
a change be made in the Fund's Articles of Incorporation or By-laws, or
in its method of doing business, in order to comply with any
requirements of federal law or regulations of the Securities and
Exchange Commission or of a national securities association of which the
Distributor is or may be a member, relating to the sale of shares of the
Fund, and the Fund should not make such necessary change within a
reasonable time, the Distributor may terminate this Agreement forthwith.
17. ADDRESS FOR PURPOSES OF NOTICE
Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address
as such other party may designate for the receipt of such notices. Until
further notice to the other party, it is agreed that the address of the
Fund and that of the Distributor for this purpose shall be The Principal
Financial Group, Xxx Xxxxxx, Xxxx 00000-0000.
IN WITNESS WHEREOF, the parties hereof have caused this Agreement to be
executed in duplicate on the day and year first above written.
PRINCIPAL SPECIAL MARKETS FUND, INC. PRINCOR FINANCIAL SERVICES CORPORATION
By _/s/ A. S. Filean_________________ By _______/s/ S. L. Jones______________
A. S. Filean, Vice President X. X. Xxxxx, President
PRINCIPAL SPECIAL MARKETS FUND, INC.
DISTRIBUTION AGREEMENT - APPENDIX A
Portfolio
1. Mortgage-Backed Securities Portfolio
2. International Securities Portfolio
FIRST AMENDMENT TO THE
PRINCIPAL SPECIAL MARKETS FUND, INC.
DISTRIBUTION AGREEMENT
The Distribution Agreement executed and entered into by and between Principal
Special Markets Fund, Inc., an Maryland corporation, and Princor Financial
Services Corporation, an Iowa corporation, on the 22nd day of April, 1993, is
hereby amended to including the following:
PRINCIPAL SPECIAL MARKETS FUNDS, INC.
DISTRIBUTION AGREEMENT - APPENDIX A
Portfolio
1. International Emerging Markets Portfolio
2. International Securities Portfolio
3. International SmallCap Portfolio
4. Mortgage-Backed Securities Portfolio
Executed this ________ day of ________________, 1997
Principal Special Markets Fund, Inc.
by:_________________________________
Princor Financial Services Corporation
by:_________________________________
