Exhibit 6(iv) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
FORM OF
MUTUAL FUNDS
SALES AND SERVICE
AGREEMENT
This Agreement is entered into among the financial institution executing
this Agreement ("Financial Institution"), Federated Securities Corp. ("FSC"),
and Federated Shareholder Services ("FSS"), with respect to those investment
companies listed in Exhibit A hereto (referred to individually as the "Fund" and
collectively as the "Funds") for whose shares of beneficial interest or capital
stock ("Shares") FSC serves as Distributor and for whom FSS provides or
coordinates shareholder services. A. FINANCIAL INSTITUTION. 1. STATUS OF
FINANCIAL INSTITUTION AS "BANK" OR REGISTERED BROKER-DEALER.
Financial Institution represents and warrants to FSC and FSS:
(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 of
the National Association of Securities Dealers, Inc.; 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 Fair Practice.
Financial Institution agrees to notify FSC 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 FSC'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 FSC or FSS 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
FSC'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 any Fund 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 of the Funds; (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 FSC's
agent or as agent for the Funds. B. 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,
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. FSC 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 FSC, 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 of each Fund and FSC'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, FSC 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 FSC, in exchange for the performance of sales
and/or distribution services, Financial Institution will be entitled to
receive the applicable percentage of the initial sales load, if any, as
established by FSC 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 portion of the initial sales load payable to Financial
Institution may be changed at any time at FSC'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.
(c) It shall be the obligation of the Financial Institution either: (i) to
provide FSC 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
reallocated to the Financial Institution, to the appropriate Fund. Neither
the Fund nor FSC 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
prospectuses, FSC will pay Financial Institution an advance commission as set
forth on Exhibit A (or, if more recently published, 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 FSC; in the event that Financial Institution notifies FSC
in writing that Financial Institution elects to waive such advance commission,
and if the Fund's prospectus permits such a waiver, the CDSC will not be charged
upon the redemption of the relevant Shares. To receive advance commission from
FSC 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) 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 FSC prior to such transfer for advance
commissions paid to it by FSC. C. DISTRIBUTION SERVICES. 6. AGREEMENT TO PROVIDE
DISTRIBUTION SERVICES.
(a) With regard to those Funds which pay asset-based sales charges (pursuant to
Distribution Plans adopted under Investment Company Act Rule 12b-1), as
noted on Exhibit A hereto (or, if more recently published, the Fund's
current prospectus), FSC hereby appoints Financial Institution to render or
cause to be rendered distribution and sales services to the Funds and their
shareholders.
(b) The services to be provided under this Paragraph (a) may include, but are
not limited to, the following: (i) reviewing the activity in Fund accounts;
(ii)providing training and supervision of its personnel; (iii) maintaining
and distributing current copies of prospectuses and shareholder reports;
(iv)advertising the availability of its services and products; (v)
providing assistance and review in designing materials to send to customers
and potential customers and developing methods of making such
materials accessible to customers and potential customers; and
(vi)responding to customers' and potential customers' questions about the
Funds.
7. ASSET-BASED SALES LOADS PAYABLE TO FINANCIAL INSTITUTION.
During the term of this Agreement, FSC will pay Financial Institution
asset-based sales charges (also known as "Rule 12b-1 Fees") for each Fund as set
forth in Exhibit A to this Agreement (or, if more recently published, the Fund's
current prospectus). For the payment period in which this Agreement becomes
effective or terminates, there shall be an appropriate proration of the fee on
the basis of the number of days that this Agreement is in effect during the
quarter. D. SHAREHOLDER SERVICES. 8. AGREEMENT TO PROVIDE SHAREHOLDER AND
ACCOUNT MAINTENANCE SERVICES.
With regard to those Funds which pay a Shareholder Services Fee to
Financial Institutions, as noted on Exhibit A hereto (or, if more recently
published, the Fund's current prospectus), Financial Institution agrees to
render or cause to be rendered personal services to shareholders of the Funds
and/or the maintenance of accounts of shareholders of the Funds ("Shareholder
Services"). Financial Institution agrees to provide Shareholder Services which,
in its best judgment, are necessary or desirable for its customers who are
investors in the Funds. Financial Institution further agrees to provide FSS,
upon request, a written description of the Shareholder Services which Financial
Institution is providing hereunder.
9. SHAREHOLDER SERVICE FEES PAYABLE TO FINANCIAL INSTITUTION.
During the term of this Agreement, FSS will pay Financial Institution
Shareholder Service Fees as set forth in Exhibit A to this Agreement (or, if
more recently published, the Fund's current prospectus). For the payment period
in which this Agreement becomes effective or terminates, there shall be an
appropriate proration of the fee on the basis of the number of days that this
Agreement is in effect during the quarter.
E. SUPPLEMENTAL PAYMENTS.
10. SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTION.
During the term of this Agreement, FSC, FSS, or their affiliates will make
Supplemental Payments to Financial Institution as set forth in Exhibit A to this
Agreement (or, if more recently published, the Fund's current prospectus) as
additional compensation for services described in Paragraphs 6 or 8, above; such
payments will be made from the assets of FSC, FSS, or their affiliates, and not
from assets of the Funds nor from fees payable under applicable Distribution
(Rule 12b-1) Plans or Shareholder Services Agreement. For the payment period in
which this Agreement becomes effective or terminates, there shall be an
appropriate proration of the payments on the basis of the number of days that
this Agreement is in effect during the quarter. F. MISCELLANEOUS. 11. 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 Fund and, upon request by a customer or shareholder, a
copy of the Fund's current Statement of Additional Information. Financial
Institution shall not make any representations concerning any Shares other than
those contained in the prospectus or Statement of Additional Information of the
Fund or in any promotional materials or sales literature furnished to Financial
Institution by FSC or the Fund.
12. ERISA ASSETS.
(a) Financial Institution understands that the Department of Labor views ERISA
as prohibiting fiduciaries of discretionary ERISA assets from receiving
administrative service fees or other compensation from funds in which the
fiduciary's discretionary ERISA assets are invested. To date, the Department
of Labor has not issued any exemptive order or advisory opinion that would
exempt fiduciaries from this interpretation. Without specific authorization
from the Department of Labor, fiduciaries should carefully avoid investing
discretionary assets in any fund pursuant to an arrangement where the
fiduciary is to be compensated by the fund for such investment. Receipt of
such compensation could violate ERISA provisions against fiduciary
self-dealing and conflict of interest and could subject the fiduciary to
substantial penalties.
(b) Financial Institution will not perform or provide any duties which would
cause it to be a fiduciary under Section 4975 of the Internal Revenue Code,
as amended. For purposes of that Section, Financial Institution understands
that any person who exercises any discretionary authority or discretionary
control with respect to any individual retirement account or its assets, or
who renders investment advice for a fee, or has any authority or
responsibility to do so, or has any discretionary authority or discretionary
responsibility in the administration of such an account, is a fiduciary.
13. INDEMNIFICATION.
(a) Financial Institution shall indemnify and hold harmless FSC, FSS, each Fund,
the transfer agents of the Funds, and 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 FSC, FSS, any Fund, the transfer agents of the Funds, and 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) FSC shall indemnify and hold harmless Financial Institution and its
subsidiaries, affiliates, officers, directors, agents and employees from and
against any and all direct or indirect liabilities, losses or costs
(including attorneys fees) arising from, related to or otherwise connected
with: (1) any breach by FSC of any provision of this Agreement; or (2) any
alleged untrue statement of a material fact contained in any Fund's
Registration Statement or Prospectus, or as a result of or based upon any
alleged omission to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading.
(c) FSS shall indemnify and hold harmless Financial Institution and its
subsidiaries, affiliates, officers, directors, agents and employees from and
against any and all direct or indirect liabilities, losses or costs
(including attorneys fees) arising from, related to or otherwise connected
with any breach by FSS of any provision of this Agreement.
(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 13 shall survive the termination of this
Agreement. 14. 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 FSC, FSS, or
their 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 14 shall not prohibit FSC, FSS, or any of their
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 14 shall survive the termination of this
Agreement. 15. 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 FSC or
FSS.
16. 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 the Fund or Funds, unless a court of competent jurisdiction shall
have determined that the conduct of a majority of the Board of Directors or
Trustees of the Fund or Funds constitutes willful misfeasance, bad faith, gross
negligence or reckless disregard of their duties. This Paragraph 16 will survive
the term of this Agreement.
17. 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 FSC, FSS,
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.
18. 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 FSC or FSS shall be given or sent to FSC or FSS at their
offices located at Federated Investors Tower, Pittsburgh, Pennsylvania
15222-3779, and all notices to Financial Institution shall be given or sent to
it at its address shown below.
19. 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.
(b) With respect to each Fund, this Agreement shall continue in effect for one
year from the date of its execution, and thereafter for successive periods
of one year if the form of this Agreement is approved at least annually by
the Directors or Trustees of the Fund, including a majority of the members
of the Board of Directors or Trustees of the Fund who are not interested
persons of the Fund and have no direct or indirect financial interest in the
operation of the Fund's Distribution Plan or in any related documents to
such Plan ("Independent Directors or Trustees") cast in person at a meeting
called for that purpose.
(c) This Agreement, including Exhibit A hereto, may be amended by FSC and/or FSS
from time to time by the following procedure. FSC or FSS will mail a copy of
the amendment to Financial Institution's address, as shown below. If
Financial Institution does not object to the amendment within thirty (30)
days after its receipt, the amendment will become part of the Agreement.
Financial Institution's objection must be in writing and be received by FSC
or FSS within such thirty days.
(d) Notwithstanding subparagraph 19(b) and in addition to subparagraph 1(a),
this Agreement may be terminated as follows:
(i) at any time, without the payment of any penalty, by the vote of a
majority of the Independent Directors or Trustees of the Fund or by a
vote of a majority of the outstanding voting securities of the Fund as
defined in the Investment Company Act of 1940 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 Investment Company Act of 1940, upon the termination of the
"Distributor's Contract" between the Fund and FSC, upon termination of
the "Shareholder Services Agreement" between the Fund and FSS, or upon
the termination of the Distribution Plan to which this Agreement is
related; and
(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. (e) The
termination of this Agreement with respect to any one Fund will not cause the
Agreement's termination with respect to any other Fund.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
20. GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Pennsylvania.
FEDERATED SECURITIES CORP.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
By: Date:
Name:
Title:
FEDERATED SHAREHOLDER SERVICES
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
By: Date:
Name:
Title:
---------------------------------------
Financial Institution Name
(Please Print or Type)
---------------------------------------
Address
---------------------------------------
City State Zip Code
By:______________________________
Authorized Signature
---------------------------------------
Title
---------------------------------------
Print Name or Type Name
Dated:_____________________
EXHIBIT 1 TO MUTUAL FUND SALES AND SERVICE AGREEMENT
TOWER MUTUAL FUNDS
Tower Capital Appreciation Fund ("TCAF")
Class A Shares October 14, 1988
Class B Shares November 28, 1996
Tower Cash Reserve Fund ("TCRF")
Class A SharesOctober 14, 1988
Class B SharesMarch 10, 1998
Tower Louisiana Municipal Income Fund ("TLMIF") October 14, 1988
Tower U.S. Government Income Fund ("TUSGIF") October 14, 1988
Tower Total Return Bond Fund ("TTRBF") September 15, 1992
Tower U.S. Treasury Money Market Fund ("TUSTMMF") June 01, 1993
Tower Mid-Cap Equity Fund ("TMCEF")
Class A SharesMarch 10, 1998
Class B SharesMarch 10, 1998
