PRINCOR FINANCIAL SERVICES CORPORATION
The Principal Financial Group
Xxx Xxxxxx, Xxxx 00000-0000
(000) 000-0000
DEALER
SELLING AGREEMENT
FOR SHARES OF
THE PRINCOR FAMILY OF MUTUAL FUNDS
Dealer Selling Agreement between Princor Financial Services Corporation
("Princor", "We" or "Us") and _________________________________________
("Dealer" or "You") dated as of --------------------------.
As Distributor and Principal Underwriter for the Princor Funds (hereinafter
collectively referred to as the "Funds" and individually as a "Fund"), each an
open-end investment company of which we are, or may become, Distributor and
whose shares are offered to the public at an offering price which may or may not
include a sales charge, we invite you to become a Selected Dealer to distribute
shares of the Funds.
1. Each Fund offers two classes of shares - one class which bears a
front-end load (the "Class A Shares) and one class which bears a
deferred load (the "Class B Shares"). (The Class A Shares and the Class
B Shares are collectively referred to as the "Shares"). Class A Shares
of the Money Market Funds are offered at net asset value, without any
sales charge.
2. Orders for shares received from you and accepted by us will be at the
current public offering price applicable to each order as established
by the then current Prospectus of each Fund. The procedure relating to
the handling of orders shall be subject to instructions which we shall
forward from time to time to all Selected Dealers. Each Fund reserves
the right to withdraw shares from sale temporarily or permanently. All
orders are subject to acceptance or rejection by us and the Fund, each
in its sole discretion.
3. The sales charge applicable to any sale of Class A Shares by you and
the dealer discount applicable to any order from you for the purchase
of Class A Shares accepted by us shall be that percentage of the
applicable public offering price determined as set forth in the Funds'
then current Prospectus and/or Statement of Additional Information.
The rates of any sales charge and/or dealer discount for Class A Shares
are subject to change by us from time to time, 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 payment by us.
Any such sales charges and discounts to selected dealers are subject to
reductions under a variety of circumstances as may be described in the
Funds' then current Prospectus and/or Statement of Additional
Information. To obtain any such reductions, we must be notified when a
sale takes place which would qualify for the reduced charge. There is
currently no sales charge, selling concession or discount on purchases
of Shares by the reinvestment of dividends or capital gains
distributions, or when there is a transfer from one Fund to another
Fund or from one account to another account.
4. If you sell Class B Shares, we will pay you a sales commission equal to
the percentage of the aggregate net asset value of such Class B shares
sold as set forth in the Funds' then current Prospectus and/or
Statement of Additional Information.
We will pay such sales commissions to you bi-monthly on the 15th and
last day of each month.
The rates of any sales charge and/or dealer discount for Class B Shares
are subject to change by us from time to time, 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 payment by us.
We shall be entitled to any contingent deferred sales charges ("CDSC")
on any Shares sold. If, with respect to any Class B Shares sold by you,
any CDSC is waived as provided in the Funds' then current Prospectus
and/or Statement of Additional Information, then in any such case you
shall remit to us promptly upon notice an amount equal to the
commissions or a portion of the commission paid on such shares.
5. Redemption of Shares will be made at the net asset value of such Shares
in accordance with the then current Prospectus and Statement of
Additional Information of the Funds less, in the case of Class B
Shares, any applicable CDSC payable to us.
6. All of the Funds (the "Plan Funds") have adopted a Distribution Plan
(the "Plan") pursuant to Rule 12b-1 under the Investment Company Act of
1940 (the "1940 Act"). No such Agreement has been adopted by Princor
Cash Management Fund or Princor Tax-Exempt Cash Management Fund for its
Class A shares. Each Agreement defines service to be provided by
Selected Dealers for which they will be compensated pursuant to the
Plan.
(a) As a Selected Dealer, you agree to provide distribution assistance
and administrative support services in connection with the distribution of
shares of the Plan Funds to customers who may from time to time directly or
beneficially-owned Shares, including but not limited to distributing sales
literature, answering routine customer inquiries regarding the Plan Funds,
assisting in the establishment and maintenance of accounts in the Plan Funds and
in the processing of purchases and redemptions of Shares, making the Plan Funds'
investment plans and dividend options available, and providing such other
information and services in connection with the distribution of Plan Funds
Shares as may be reasonably requested from time to time.
(b) For such services, you will be compensated in accordance
with the then current Prospectus of the Plan Funds.
(c) The Plan may be terminated at any time without payment of any
penalty by any Fund in accordance with the rules governing
such plans promulgated by the Securities and Exchange
Commission.
(d) The provisions of the Plan are incorporated herein and made a
part hereof by reference, and will continue in full force and
effect so long as its continuance is approved at least
annually pursuant to Rule 12b-1.
7. Each party to this Agreement represents that it currently is and, while
this Agreement is in effect, will continue to be a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD") and agrees to
abide by all Rules and Regulations of that Association, including the NASD Rules
of Fair Practice. If you are a foreign dealer, not eligible for membership in
the Association, you still agree to abide by the Rules and Regulations of the
Association. We both agree to comply with all applicable state and federal laws,
rules and regulations of the Securities and Exchange Commission and other
authorized United States or foreign regulatory agencies. You further agree that
you will not sell, offer for sale, or solicit shares of the Funds in any state
where they have not been qualified for sale. You will solicit applications and
sell shares only in accordance with the terms and on the basis of the
representations contained in the appropriate prospectus and any supplemental
literature furnished by us.
8. IT IS AGREED
(a) That neither of us shall withhold placing customers' orders for shares
so as to profit as a result of such withholding.
(b) We shall not purchase shares from the Funds except for the purpose of
covering purchase orders already received, and you shall not purchase shares of
the Funds except for the purpose of covering purchase orders already received by
you or for your own bona fide investment purposes, provided, however, any shares
purchased for your own bona fide investment purposes will not be resold except
through redemption of the Funds. Delivery of certificates, if any, for Shares
purchased shall be made by a Fund only against receipt of the purchase price. If
payment for the Shares purchased and all necessary applications and documents
required by the Funds or us are not received within five business days or such
shorter time as may be required by law, the sale may be cancelled forthwith
without any responsibility or liability on our part or on the part of the Funds
(in which case you will be responsible for any loss, including loss of profit,
suffered by a Fund resulting from your failure to make payments or provide
documents as aforesaid), or, at our option, we may cause the Shares ordered to
be redeemed by the relevant Fund (in which case we may hold you responsible for
any loss).
(c) We shall accept only unconditional orders. Any right granted to you to
sell shares on behalf of the Funds will not apply to shares issued in connection
with the merger or consolidation of any other investment company with a 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 a
Fund to its shareholders as stock dividends or splits for not less than "net
asset value."
(d) We reserve the right to reject any order or application for
shares or to withdraw the offering of shares entirely, and to
change any sales charge and dealer concession, provided that
no such change shall affect concessions on orders accepted by
us prior to notice of such change, unless such change results
from a reduction in sales charges because of legal
requirements.
(e) You shall not purchase shares of a Fund from a shareholder at
a price per share which is lower than the current net asset
value per share which is next computed after the receipt of
the tender of such shares by the shareholder.
(f) If shares of the Fund are tendered for redemption within seven business
days after confirmation by us of your original purchase order for such shares,
(i) you shall immediately refund to us the full concession allowed to you on the
original sale, and (ii) we shall pay to the Fund our share of the "sales charge"
on the original sale by us, and shall also pay to the Fund the refund which we
received under (i) above. You shall be notified by us of such redemption within
ten days of the date on which proper request for redemption is delivered to us
or the Fund. Termination or cancellation of this Agreement shall not relieve you
or us from requirements of this subparagraph (f).
(g) This agreement may not be assigned or transferred in any
manner including by operation of law.
9. We will furnish you, without charge, reasonable quantities of
Prospectuses and sales material or supplemental literature relating to
the sale of shares of the Funds.
10. In all sales of shares, you act as principal and are not employed by us
as broker-agent or employee. You are not authorized to act for us nor to make
any representations in our behalf. In purchasing or selling shares hereunder you
are entitled to rely only upon the current Prospectus and supplemental
literature approved in writing by us. In the offer and sale of shares of the
Funds, you shall not use any Prospectus or supplemental literature not approved
in writing by us. No person is authorized to make any representations concerning
shares of the Funds except those contained in a current Prospectus and
supplemental literature approved in writing by us. You will use your best
efforts in the promotion of sales of Shares and will be responsible for the
proper instruction and training of all sales personnel employed by you. In
making sales of Shares, you and your personnel will conform to the compliance
standards set forth in Exhibit A hereto.
11. You will indemnify, defend, and hold harmless our firm and all of its
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, including but not limited to alleged violations
of the Securities Act of 1933, as amended and/or to the Securities Exchange Act
of 1934, as amended, arising out of the offer or sale of any securities pursuant
to this Agreement, or arising out of the breach of any of the terms and
conditions of this Agreement, other than any claim, demand, or liability arising
from any untrue statement or alleged untrue statement of a material fact
contained in a prospectus for the Funds, as filed and in effect with the SEC, or
any amendment or supplement thereto, or in any application prepared or approved
in writing by our counsel and 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, which indemnity provision shall
survive the termination of this Agreement.
12. No obligation not expressly assumed by us in this Agreement shall be
implied.
13. Either party to this Agreement may terminate this Agreement by written
notice to the other party. We may modify this Agreement at any time by
written notice to you. Any notice shall be deemed to have been given on
the date upon which it was either delivered personally or by fax
transmission to the other party or to any office or member thereof, or
was mailed post-paid or delivered to a telegraph office for
transmission at his or its address as shown herein.
14. All communications to us should be sent to the above address. Any
notice to you shall be duly given if mailed or telegraphed to you at the address
specified by you herein.
15. This Agreement shall be construed in accordance with the laws of the
State of Iowa and shall be binding upon both parties hereto when signed
by both of us in the spaces provided below. This Agreement shall not be
applicable to shares of the Funds in any state in which those shares
are not qualified for sale.
16. This Agreement shall be binding upon both parties hereto when executed
by both parties and supersedes any prior agreement or understanding
between us and you with respect to the sale of the Shares and any of
the Funds.
17. This Agreement is in all respects subject to Section 26 of the Rules of
Fair Practice of the NASD which shall control any provisions to the
contrary in this Agreement.
18. If the foregoing represents your understanding, please so indicate by
signing in the proper space below.
Very truly yours,
PRINCOR FINANCIAL SERVICES CORPORATION
By:
Title:
We accept the offer set forth above, which constitutes a Selling Agreement with
us.
BY:
TITLE:
DEALER:
ADDRESS:
DATE:
APPENDIX A
Compliance Standards
Princor Financial Services Corporation ("Princor"), as distributor for the
Princor Funds which offers their shares on both a front-end load and deferred
load basis, has established compliance standards setting forth the basis upon
which shares of the Princor Funds may be sold. These standards are designed for
each broker/dealer ("dealer") which distributes shares of the Princor Funds and
for such dealer's financial advisers.
As Princor Funds are offered with two different arrangements of sales and
distribution fees, it is important for an investor not only to choose a fund
that best suits his or her investment objectives, but also to choose the sales
financing method which best suits the investor's particular situation. To assist
clients of those firms which distribute shares of the Princor Funds in these
decisions and to ensure proper supervision of Princor Fund purchase
recommendations, Princor requires that such dealers adhere to the following
compliance standards when selling Princor Funds:
1. Any purchase that results in a shareholder having less than $250,000
invested in Princor accounts that are aggregated for rights of accumulation
purposes may be either front-end load (Class A) or subject to a contingent
deferred sales charge (Class B).
The dealer's branch office manager (or other appropriate reviewing officer)
must review for suitability the purchase order ticket for shares subject to
either a front-end or a contingent deferred sales charge, given the
relevant facts and circumstances, including but not limited to:
(a) the specific purchase order dollar amount;
(b) the length of time the investor expects to
hold the shares purchased; and
(c) any other relevant circumstances, such as the
availability of purchases under letters of
intent or pursuant to rights of accumulation.
2. Any mutual fund purchase order that results in a
shareholder having $250,000 or more invested in
Princor accounts that are aggregated for rights of
accumulation purposes should be for shares
which are subject to a front-end sales load
(Class A shares) because there are few
circumstances under which it is advantageous for
an investor to place such an order for Class B
shares. Such an order placed for shares subject
to a contingent deferred sales charge must be
approved by the dealer's regional director (or a
person of comparable status) and confirmed in
writing by the investor.
General Guidelines
There are instances where one financing method may be more advantageous to an
investor than the other. For example, investors who qualify for a significant
discount on a front-end sales load may determine that a front-end load purchase
is preferable to payment of the higher SEC Rule 12b-1 distribution fee and the
contingent deferred sales charge imposed upon Class B shares.
On the other hand, an investor whose order would not qualify for a discount may
wish to defer the sales load and have all funds invested in shares initially.
Responsibility of Branch Office Manager
(or other appropriate reviewing officer)
The dealer's branch office manager or other appropriate reviewing officer (the
"Reviewing Officer") must ensure that the registered representative has advised
the client of the available financing methods offered by the Princor Funds, and
the impact of choosing one method over another. In certain instances, it may be
appropriate for the branch office manager to discuss the purchase directly with
the client.
Effectiveness
These compliance guidelines are effective immediately upon execution of a dealer
agreement with Princor with respect to any order for shares of any Princor Fund
for which Princor acts as distributor.
Questions relating to these compliance guidelines should be directed by the
dealer to its national mutual fund sales and marketing group or its Legal
Department or Compliance Director. Princor will advise dealers of any changes in
these guidelines in the future.