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Exhibit (15)(b)(ii)
SERVICE AND COMMISSION AGREEMENT
Agreement made as of this 1st day of February, 1994, by and between The
Winsbury Company Limited Partnership d.b.a. The Winsbury Company (the
"Distributor"), having its principal place of business at 0000 Xxxx
Xxxxxx-Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxx, and Security Distributors, Inc.
("SDI"), having its principal place of business at 000 Xxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxx 00000, and Security Benefit Group, Inc. ("SBG"), having its principal
place of business at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxx 00000, and First of
America Brokerage Services, Inc. ("FOABS"), having its principal place of
business at 000 Xxxxx Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx 00000-0000, relating
to shareholder support services in connection with the sale of certain units of
beneficial interest ("Investor B Shares") of The Parkstone Group of Funds (the
"Trust").
WHEREAS, the Trust is an open-end management investment company, organized as a
Massachusetts business trust and registered with the Securities and Exchange
Commission (the "SEC") under the Investment Company Act of 1940 (the "1940
Act");
WHEREAS, the Trust offers three separate classes of shares, including Investor
B Shares for each of the non-money market investment portfolios of the Trust
(individually, a "Fund"; collectively the "Funds") that are identified in
Schedule A hereto;
WHEREAS, the Investor B shareholders of each Fund have adopted a Distribution
Plan (the "Investor B Plan") pursuant to Rule 12b-1 under the 1940 Act;
WHEREAS, the Investor B Plan authorizes the Distributor to enter into
agreements with third parties to implement such Plan;
WHEREAS, it is intended (1) that SBG provide financing assistance related to
the distribution of Investor B shares and (2) that shareholder support services
be provided to certain Investor B shareholders, each in accordance with the
Investor B Plan;
WHEREAS, the Distributor and SDI have entered into a Shareholder Services and
Financing Agreement dated as of February 1, 1994 (the "Financing Agreement");
WHEREAS, the Distributor and FOABS have entered into a Dealer Agreement dated
as of February 1, 1994 (the "Dealer Agreement");
WHEREAS, FOABS intends to perform certain brokerage and related services in
connection with the purchase of Investor B shares by its customers
("Customers") and to maintain shareholder accounts by such Customers; and
WHEREAS, SBG intends to provide financing assistance, consistent with the
Investor B Plan, in connection with the services performed by FOABS.
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NOW, THEREFORE, intending to be legally bound, the Distributor, SDI, SBG and
FOABS hereby agree as follows:
1. SERVICES
1.1 FOABS shall place orders to purchase Investor B Shares, as agent for
Customers, pursuant to the terms of the Dealer Agreement.
1.2 FOABS shall continuously provide shareholder liaison services to
Customers who become Investor B shareholders, responding to inquiries
and providing such information as FOABS and SDI mutually determine to be
appropriate in order to properly maintain such shareholder accounts.
1.3 FOABS shall provide at its own expense such office space, equipment,
facilities and personnel as may be reasonably necessary or beneficial in
order to provide such services to Customers.
2. FEES
2.1 FOABS shall be entitled to receive from SBG, within seven business days
from the date of receipt by the Fund's transfer agent of a purchase
order in proper form, the fees determined in accordance with the terms
set forth in Schedule B hereto.
2.2 The Distributor shall within two business days from the date of receipt
by the Fund's transfer agent of a purchase order in proper form, notify
SDI and SBG by facsimile transmission of the Customer account number,
Fund and purchase amount of each order for which FOABS shall be entitled
to a fee pursuant to Section 2.1 of this Agreement.
2.3 SDI or SBG shall notify the Distributor of the amount of all fees paid
to FOABS pursuant to Section 2.1 during a calendar month within five (5)
business days of the end of such month.
3. PAYMENTS TO SBG AND SDI
The parties acknowledge that SBG and SDI shall be entitled to receive the
amounts identified in the Financing Agreement and the schedules thereto, as now
in effect or subsequently amended, including any contingent deferred sales
charges applicable to redemptions by Customers, in consideration of their
service hereunder and under the Financing Agreement.
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4. REPRESENTATIONS AND WARRANTIES
4.1 Each party hereto represents and warrants to each other party to this
Agreement that it has full corporate power and authority to enter into
and perform this Agreement and that it is not subject to any order,
writ, injunction, law, rule or regulation of any governmental authority
which would be violated by its execution, delivery or performance of
this Agreement.
4.2 FOABS represents and warrants to SDI and SBG that, to the best of its
knowledge after due inquiry and investigation, each party other than
FOABS with whom SDI, SBG and the Distributor enter into an agreement for
terms and conditions substantially similar to this Agreement shall
possess the legal authority to provide shareholder support services
without violation of any applicable laws and regulations (including
Federal banking laws, if applicable).
5. INDEMNIFICATION
5.1 Each party (the "Indemnifying Party") hereto shall indemnify all other
parties to this Agreement and hold such parties harmless from any claims
or assertions relating to the lawfulness of the Indemnifying Party's
participation in this Agreement and the performance of such Indemnifying
Party's obligations hereunder, as well as such Indemnifying Party's
activities relating to the performance of its obligations, if any, under
the Dealer Agreement and the Financing Agreement.
5.2 FOABS shall indemnify SDI and hold SDI harmless from any claims or
assertions arising from the acts of any other entity or person with
which SDI subcontracts for the provision of shareholder support services
to Investor B shareholders and shall further indemnify SDI and hold it
harmless from any claims or assertions relating to the legal authority
of such other entity or person to provide shareholder support services
without violation of any applicable laws and regulations (including
Federal banking laws, if applicable).
5.3 If any claim is asserted for which one party may seek indemnification
from an Indemnifying Party, the Indemnifying Party shall be given notice
and shall have the right to manage its own defense, including the
selection and engagement of legal counsel and the Indemnifying party
shall bear all costs of such defense.
6. EFFECTIVE DATE
This Agreement will become effective on the date indicated on the first page of
this Agreement.
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7. TERMINATION
7.1 This Agreement will automatically terminate in the event of its
assignment, as that term is defined in the Investment Company Act of
1940 and rules thereunder.
7.2 This Agreement will automatically terminate in the event of the
termination of the Dealer Agreement or Financing Agreement.
7.3 This Agreement may be terminated without penalty by any party hereto
upon sixty (60) days' prior written notice to each other party or upon
such earlier date to which the parties hereto may agree.
7.4 This Agreement may also be terminated with respect to any Fund at any
time without penalty by the vote of a majority of the members of the
Board of Trustees of the Trust who are not "interested persons" (as such
term is defined in the 0000 Xxx) and who have no direct or indirect
financial interest in the Plan relating to such Fund or any agreement
relating to such Plan, including this Agreement, or by a vote of a
majority of the Shares of such Fund on sixty (60) days' written notice.
8. COMMISSION CHARGEBACK
8.1 In the event that with respect to a Fund or Funds, the Investor B Plan,
the Dealer Agreement, the Financing Agreement, and this Agreement, or
any of them is terminated, and SBG has not been otherwise paid the
Unrecovered Commissions (as defined in Section 8.3), SDI may request and
FOABS agrees to refund to SBG the Unrecovered Commissions (as defined in
Section 8.3) within 30 days of the Termination Date.
8.2 Each party hereto acknowledges and agrees that payments of the
distribution fees and service fees payable to SDI and SBG under the
Financing Agreement may be suspended with respect to a Fund by the
Distributor to effect compliance with Article III, Section 26(d)(2) of
the Rules of Fair Practice promulgated by the National Association of
Securities Dealers (the "NASD Asset-Backed Sales Charge Rule"). In the
event that the NASD Asset-Backed Sales Charge Rule requires suspension
of such payments with respect to a Fund, FOABS agrees to refund to SBG
commissions received pursuant to this Agreement in an amount equal to
the payments suspended thereby ("Suspended Payments"). FOABS shall make
such refund to SBG in the same manner and frequency as such Suspended
Payments would have been received by SBG under the Financing Agreement;
provided, however, that FOABS shall be obligated to make such refund
with respect to a Fund only for such time as the NASD Asset-Backed Sales
Charge Rule prohibits the payment of distribution fees and service fees
by the Distributor.
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8.3 "Unrecovered Commissions" shall be calculated as of the Termination Date
by adding (1) "Net Commission Payments" and (2) the sum of the "Monthly
Yield Payments." Net Commission Payments are the total cumulative
commissions paid or accrued to be paid by SBG to participating
organizations in connection with sales of Investor B shares pursuant to
this Agreement or a similar agreement from the date of this Agreement to
the Termination Date, less an amount equal to the total cumulative
distribution fees, service fees and CDSCs paid or accrued for payment by
the Distributor to SBG pursuant to the Financing Agreement and amounts
paid by FOABS pursuant to Section 8.2. A Monthly Yield Payment is
determined for each month (or portion of a month) in the period from the
date of this Agreement to the Termination Date by multiplying the
"Average Daily Net Cumulative Payment" by the Rate in effect for that
month. The Rate is based on the Prime Rate as published in the Wall
Street Journal on the first business day of each month plus .25 percent.
The Average Daily Net Cumulative Payment is the average of the amounts
determined, on each day of the month for which the calculation is being
made, by subtracting the cumulative distribution fees, service fees and
CDSCs received by SBG from the Distributor and amounts paid by FOABS
pursuant to Section 8.2 from the cumulative commission payments made by
SBG to participating organizations in connection with sales of Investor
B shares.
In the event that the Termination Date occurs more than twelve (12)
months following the date of this Agreement, then the sum of the Monthly
Yield Payments calculated in each successive 12-month period during the
period from the date of this Agreement to the Termination Date shall be
considered, only for purposes of calculating subsequent Monthly Yield
Payments, to be a commission payment made by SBG to participating
organizations in connection with sales of Investor B shares on the first
day of the succeeding 12-month period. The total commissions paid to
participating organizations in connection with sales of Investor B shares
as referred to in this Section shall not include any amounts refunded to
SBG pursuant to Section 8.2.
In the event that Unrecovered Commissions calculated as of the
Termination Date is an amount of $0 or less, FOABS shall have no
obligation to refund such commissions to SBG.
8.4 The "Termination Date" shall be determined as follows: (i) in the event
of assignment of this Agreement as set forth in Section 7.1, the date on
which the assignment is deemed to have occurred under the 1940 Act; (ii)
in the event that the Dealer Agreement or Financing Agreement is
terminated, the date upon which such termination is deemed to have
occurred; (iii) in the event this Agreement is terminated by either
party as set forth in Section 7.3, the date upon which such termination
is deemed to have occurred; or (iv) in the event this Agreement is
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terminated by the Trustees or Shareholders as set forth in Section 7.4,
the date on which such vote is certified by inspectors of the vote.
9. GENERAL
9.1 Except as otherwise specified herein, all notices and other
communications to a party will be duly given if mailed, telegraphed or
telecopied to the appropriate address set forth on page 1 hereof, or at
such other address as the party may provide in writing to the other
parties.
9.2 All covenants, agreements, representations, and warranties made herein
shall be deemed to have been material and relied on by each party,
notwithstanding any investigation made by any other party or on behalf
of any party, and shall survive the execution and delivery of this
Agreement. If this Agreement terminates, the parties agree that the
provisions set forth in 8.1 through 8.4 will remain in effect. The
invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of any other term or provision
hereof. The headings in this Agreement are for convenience of reference
only and shall not alter or otherwise affect the meaning hereof. This
Agreement may be executed in any number of counterparts which together
shall constitute one instrument and shall be governed by and construed
in accordance with the laws (other than the conflict of laws rules) of
the State of Ohio.
9.3 The names "The Parkstone Group of Funds" and "Trustees of The Parkstone
Group of Funds" refer respectively to the trust created and the
trustees, as trustees but not individually or personally, acting from
time to time under a Declaration of Trust dated as of March 25, 1987, to
which reference is hereby made and a copy of which is on file at the
Office of the Secretary of the Commonwealth of Massachusetts and
elsewhere as required by law, and to any and all amendments thereto so
filed or hereafter filed. The obligations of "The Parkstone Group of
Funds" entered into in the name of or on behalf thereof by any of the
trustees, representatives or agents are not made individually, but in
such capacities, and are not binding upon any of the trustees,
shareholders, or representatives of the Group personally, but bind only
the assets of the Group and all persons dealing with any series of
shares of the Group must look solely to the assets of the Group
belonging to such series for the enforcement of any claims against the
Group.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first
written above.
THE WINSBURY COMPANY LIMITED
PARTNERSHIP
By: The Winsbury Corporation, General Partner
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
Senior Vice President
SECURITY DISTRIBUTORS, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Vice President
SECURITY BENEFIT GROUP, INC.
By: /s/ Xxxx X. Xxxxxxxxxx
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Xxxx X. Xxxxxxxxxx
Executive Vice President
FIRST OF AMERICA BROKERAGE SERVICES,
INC.
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
President and Chief Executive Officer
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SCHEDULE A Dated: January 31, 1994
THE PARKSTONE GROUP OF FUNDS
Investor B Shares
1. Parkstone Equity Fund
2. Parkstone Small Capitalization Fund
3. Parkstone International Discovery Fund
4. Parkstone High Income Equity Fund
5. Parkstone Balanced Fund
6. Parkstone Bond Fund
7. Parkstone Limited Maturity Bond Fund
8. Parkstone U.S. Government Income Fund
9. Parkstone Intermediate Government Obligations Fund
10. Parkstone Municipal Bond Fund
11. Parkstone Michigan Municipal Bond Fund
THE WINSBURY COMPANY LIMITED
PARTNERSHIP
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
Senior Vice President
SECURITY DISTRIBUTORS, INC.
By: /s/ Xxx X. Xxx
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Xxx X. Xxx
Secretary
SECURITY BENEFIT GROUP, INC.
By: /s/ Xxxx X. Xxxxxxxxxx
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Xxxx X. Xxxxxxxxxx
Executive Vice President
FIRST OF AMERICA BROKERAGE SERVICE,
INC.
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
President and Chief Executive Officer
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SCHEDULE B
COMMISSION RATE
The amounts payable pursuant to this Agreement shall be computed at the rate of
4.00% of the net asset value of Investor B Shares purchased by FOABS, as agent
for its customers.
These amounts may be changed as the parties hereto may agree and as disclosed
in the most current prospectuses of the Investor B Shares.
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