Exhibit 99.(e)(3)
XXXXXX XXXXXXX DISTRIBUTORS INC.
DEALER AGREEMENT
Xxxxxx Xxxxxxx Distributors Inc. ("Distributor") serves as the principal
underwriter for the Xxxxxx Xxxxxxx group of open-end management investment
companies, including any series or classes thereof (each, a "Fund," and,
collectively, the "Funds"), registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), pursuant to a distribution agreement with the
Funds. Distributor and ________________________________________ ("Dealer")
hereby agree that Dealer will participate in the distribution of shares
("Shares") of certain Funds, subject to the terms of this Agreement
("Agreement"), dated as of _________________________, 2006.
SECTION 1. LICENSING
a. Dealer represents and warrants that: (i) it is a broker-dealer
registered with the Securities and Exchange Commission ("SEC"); (ii) it is a
member in good standing of the National Association of Securities Dealers
("NASD"); (iii) it is licensed by the appropriate regulatory agency of each
state or other jurisdiction in which Dealer will offer and sell Shares of the
Funds; and (iv) each of its partners, directors, officers, employees, and agents
who will participate or otherwise be involved in the offer or sale of the Shares
or the performance by Dealer of its duties and activities under this Agreement
is either appropriately licensed or exempt from such licensing requirements by
the appropriate regulatory agency of each state or other jurisdiction in which
Dealer will offer and sell Shares of the Funds.
b. Dealer agrees that: (i) termination or suspension of its registration
with the SEC; (ii) termination or suspension of its membership with the NASD; or
(iii) termination or suspension of its license to do business by any state or
other jurisdiction shall immediately cause the termination of this Agreement.
Dealer further agrees to notify Distributor promptly in writing of any such
action or event.
c. Dealer agrees that this Agreement is in all respects subject to the
Conduct Rules of the NASD and such Conduct Rules shall control any provision to
the contrary in this Agreement. Without limiting the generality of the
foregoing, Dealer acknowledges that it is solely responsible for all suitability
determinations with respect to offers and sales of Shares of the Funds to
Dealer's customers and that Distributor has no responsibility for the manner of
Dealer's performance of, or for Dealer's acts or omissions in connection with,
the duties and activities Dealer performs under this Agreement.
d. Dealer agrees to be bound by and to comply with all applicable federal
and state laws and all rules and regulations promulgated thereunder generally
affecting the sale or distribution of mutual fund shares or classes of such
shares, including anti-money laundering laws and regulations and applicable
guidance issued by the Department of the Treasury, the SEC and the NASD.
SECTION 2. ORDERS
a. Dealer agrees to offer and sell Shares of the Funds (including classes
thereof) only at the regular public offering price applicable to such Shares and
in effect at the time of each transaction. The procedures relating to all orders
and the handling of each order (including the manner of computing the net asset
value of Shares and the effective time of orders received from Dealer) are
subject to: (i) the terms of the then-current prospectus and Statement of
Additional Information (including any supplements, stickers or amendments
thereto) relating to each Fund (or, as appropriate, class thereof), as filed
with the SEC (collectively, the "Prospectus"); (ii) the new account application
for each Fund (or, as appropriate, class thereof), as supplemented or amended
from time to time; and (iii) Distributor's written instructions and multiple
class pricing procedures and guidelines, if any, as provided to Dealer from time
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to time. To the extent that the Prospectus contains provisions that are
inconsistent with this Agreement or any other document, the terms of the
Prospectus shall be controlling.
b. In all offers and sales of the Shares to the public, Dealer is not
authorized to act as broker or agent for, or employee of, Distributor, any Fund
or any other dealer, and Dealer shall not represent to any third party that
Dealer has such authority or is acting in such capacity. Rather, Dealer agrees
that it is acting as principal for Dealer's own account or as agent on behalf of
Dealer's customers in all transactions in Shares, except as provided in Section
3.i. hereof.
c. All orders are subject to acceptance by Distributor in its sole
discretion and become effective only upon confirmation by Distributor.
Distributor reserves the unqualified right not to accept any specific order for
the purchase or sale of Shares.
d. Distributor agrees that it will accept from Dealer orders placed through
a remote terminal or otherwise electronically transmitted via the National
Securities Clearing Corporation ("NSCC") Fund/SERV system ("Fund/SERV"),
provided, however, that appropriate documentation thereof and agreements
relating thereto are executed by both parties to this Agreement, including, if
applicable (i.e., if the parties desire to participate in the NSCC's Networking
program ("Networking") with each other), the standard NSCC Networking Agreement,
and any other related agreements between Distributor and Dealer deemed
appropriate by Distributor. The parties acknowledge and agree that all
transactions conducted via Fund/SERV and all accounts opened or maintained
pursuant to Networking will be governed by applicable NSCC rules, guidelines and
procedures. Both parties further agree that, if the parties participate in
Networking, the standard NSCC Networking Agreement will control insofar as there
is any conflict between any provision of this Dealer Agreement and the standard
NSCC Networking Agreement.
e. Distributor reserves the right at any time, and without notice to
Dealer, to suspend the sale of Shares or to withdraw or limit the offering of
Shares.
f. Exchanges of Shares between Funds are permitted subject to the
requirements of the applicable Prospectus and Statements of Additional
Information.
SECTION 3. DUTIES OF DEALER
a. Dealer agrees to purchase Shares only from Distributor or from Dealer's
customers.
b. Dealer agrees to enter orders for the purchase of Shares only from
Distributor and only for the purpose of covering purchase orders Dealer has
already received from its customers or for Dealer's own bona fide investment.
c. Dealer agrees to date and time stamp all orders for the purchase or sale
of Shares received by Dealer, and to promptly forward such orders to Distributor
in time for processing at the public offering price next determined after
receipt of such orders by Dealer, in each case as described in the applicable
Prospectus. Dealer represents that it has procedures in place reasonably
designed to ensure that orders received by Dealer are handled in a manner
consistent with Rule 22c-1 under the 1940 and any SEC staff positions or
interpretations issued thereunder.
d. Dealer agrees not to withhold placing orders for Shares with Distributor
so as to profit itself as a result of such inaction.
e. Dealer agrees to maintain records of all purchases and sales of Shares
made through Dealer and to furnish Distributor or regulatory authorities with
copies of such records upon request. In
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that regard, Dealer agrees that, unless Dealer holds Shares as nominee for its
customers or participates in the NSCC Networking program, at certain matrix
levels, it will provide Distributor with all necessary information to comply
properly with all applicable federal, state and local reporting and record
keeping requirements, including, without limitation, backup and nonresident
alien withholding requirements for its customer accounts. Dealer represents and
agrees that all Taxpayer Identification Numbers ("TINs") provided are certified,
and that no account that requires a certified TIN will be established without
such certified TIN. With respect to all other accounts, including Shares held by
Dealer in omnibus accounts and Shares purchased or sold through the NSCC
Networking program, at certain matrix levels, Dealer agrees to perform all
federal, state and local tax reporting with respect to such accounts, including,
without limitation, redemptions and exchanges.
f. Dealer agrees to distribute or cause to be delivered to its customers
Prospectuses, proxy solicitation materials and related information and proxy
cards, semi-annual and annual shareholder reports and any other materials in
compliance with applicable legal requirements, except to the extent that
Distributor expressly undertakes in writing to do so on Dealer's behalf.
g. Dealer agrees that payment for Shares ordered from Distributor shall be
in Fed Funds, New York clearinghouse or other immediately available funds and
that such funds shall be received by Distributor by the earlier of: (A) the end
of the third (3rd) business day following Dealer's receipt of the customer's
order to purchase such Shares; or (B) the settlement date established in
accordance with Rule 15c6-1 under the Securities Exchange Act of 1934, as
amended (the "1934 Act"). If such payment is not received by Distributor by such
date, Dealer shall forfeit its right to any compensation with respect to such
order, and Distributor reserves the right, without notice, to cancel the sale,
or, at its option (in the case of Funds), to sell the Shares ordered back to the
Fund, in which case Distributor may hold Dealer responsible for any loss,
including loss of profit, suffered by Distributor resulting from Dealer's
failure to make payment. If a purchase is made by check, the purchase is deemed
made upon conversion of the purchase instrument into Fed Funds, New York
clearinghouse or other immediately available funds.
h. Dealer agrees that it shall assume responsibility for any loss to the
Fund caused by a correction to any order placed by Dealer that is made
subsequent to the trade date for the order to the extent such order correction
was not based on any negligence on Distributor's part. Dealer further agrees
that it will immediately pay such loss to the Fund upon notification.
i. Dealer agrees that, in connection with orders for the purchase of Shares
on behalf of any IRAs, 401(k) plans or other retirement plan accounts, by mail,
telephone, or wire, Dealer shall act as agent for the custodian or trustee of
such plans (solely with respect to the time of receipt of the application and
payments), and Dealer shall not place such an order with Distributor until it
has received from its customer payment for such purchase and, if such purchase
represents the first contribution to such a retirement plan account, the
completed documents necessary to establish the retirement plan.
j. Dealer agrees that it will not make any conditional orders for the
purchase or redemption of Shares and acknowledges that Distributor will not
accept conditional orders for Shares.
k. Dealer agrees that all out-of-pocket expenses incurred by it in
connection with its activities under this Agreement will be borne by Dealer.
l. Dealer agrees that it will maintain the required net capital as
specified by the rules and regulations of the SEC, NASD and other regulatory
authorities.
m. Dealer agrees that it will maintain, during the term of this Agreement,
appropriate broker's blanket bond insurance policies covering any and all acts
of Dealer's directors, trustees, officers, partners, employees, and agents
reasonably necessary in light of its obligations under this Agreement,
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with coverage limits in amounts standard in the industry, and adequate to
reasonably protect and indemnify Distributor and the Funds against any Loss
which any party may suffer or incur, directly or indirectly, as a result of any
action or omission by Dealer or Dealer's directors, officers, partners,
employees, and agents. The mere purchase and existence of insurance does not
reduce or release Dealer from liability incurred and/or assumed within the scope
of this Agreement. Dealer's failure to maintain insurance shall not relieve it
of liability under this Agreement.
SECTION 4. DEALER COMPENSATION
a. SALES CHARGES/DEALER CONCESSIONS. On each purchase of Shares by Dealer
from Distributor, the total sales charges and dealer concessions or commissions,
if any, payable to Dealer shall be as set forth in each Fund's Prospectus.
Dealer acknowledges that no sales charge or concession or commission will be
paid to Dealer on the reinvestment of dividends or capital gains reinvestment or
on Shares acquired in exchange for Shares of another Fund, or class thereof,
having the same sales charge structure as the Fund, or class thereof, from which
the exchange was made, in accordance with the Prospectus.
b. RULE 12b-1 PLAN PAYMENTS.
With respect to any Fund that offers Shares for which distribution
plans have been adopted under Rule 12b-1 under the Investment Company Act of
1940, as amended ("Rule 12b-1 Plans"), Distributor also is authorized to pay the
Dealer continuing distribution and/or service fees, as specified in the relevant
Fund Prospectus, with respect to Shares of any such Fund, to the extent that
Dealer provides distribution, marketing, administrative and other services and
activities regarding the promotion of such Shares and the maintenance of related
shareholder accounts. Each Rule 12b-1 Plan in effect on the date of this
Agreement is described in the relevant Fund's Prospectus.
In connection with the receipt of distribution fees and/or service
fees under Rule 12b-1 Plans applicable to Shares purchased by Dealer's
customers, Distributor directs Dealer to provide enhanced shareholder services
such as (i) processing purchase and redemption transactions; (ii) establishing
shareholder accounts; and (iii) providing certain information and assistance
with respect to the Funds. (Redemption levels of shareholder accounts assigned
to Dealer will be considered in evaluating Dealer's continued ability to receive
payments of distribution and/or service fees.) In addition, Dealer agrees to
support Distributor's marketing efforts by, among other things, granting
reasonable requests for visits to Dealer's office by Distributor's wholesalers
and marketing representatives, including all Funds covered by a Rule 12b-1 Plan
on Dealer's "approved," "preferred" or other similar product lists, if
applicable, and otherwise providing satisfactory product, marketing and sales
support. Further, Dealer agrees to provide Distributor with supporting
documentation concerning the shareholder services provided, as Distributor may
reasonably request from time to time.
All Rule 12b-1 Plan distribution and/or servicing fees shall be based
on the value of Shares attributable to Dealer's customers and eligible for such
payment, and shall be calculated at the rates set forth in the compensation
schedule then in effect. Without prior approval by a majority of the outstanding
shares of a Fund, the aggregate annual fees paid to Dealer pursuant to any Rule
12b-1 Plan shall not exceed the amounts stated as the "annual maximums" in each
Fund's Prospectus, which amount shall be a specified percent of the value of the
Fund's net assets held in Dealer's customers' accounts that are eligible for
payment pursuant to the Rule 12b-1 Plans (determined in the same manner as each
Fund uses to compute its net assets as set forth in its then current
Prospectus). To the extent Distributor waives any payments payable to
Distributor under such Rule 12b-1 Plan, the amounts payable to Dealer will be
reduced accordingly.
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In determining the amount payable to Dealer hereunder, Distributor
reserves the right to exclude any sales that it reasonably determines are not in
accordance with the terms of the Prospectus and provisions of this Agreement.
Dealer hereby acknowledges that all payments under Rule 12b-1 Plans
are subject to limitations contained in such Rule 12b-1 Plans and may be varied
or discontinued at any time.
c. ADDITIONAL PAYMENTS. In accordance with each Fund's Prospectus,
Distributor and/or the Funds' investment manager may, but are not obligated to,
make additional payments to dealers out of their own resources, and not as an
additional charge to the Funds, as compensation in connection with the sale,
distribution, retention and/or servicing of Fund shares. Such payments are in
addition to any distribution-related or transfer agency/shareholder servicing
fees that may be payable by the Funds or the Distributor. The types of sales
that qualify for such compensation, and any restrictions thereon, are outlined
in the Prospectuses.
d. QUALIFYING SALES. In accordance with the Funds' Prospectuses,
Distributor or any affiliate may, but is not obligated to, make payments to
dealers from Distributor's own resources as compensation for certain sales that
are made at net asset value ("Qualifying Sales"). If Dealer notifies Distributor
of a Qualifying Sale, Distributor may make a contingent advance payment up to
the maximum amount available for payment on the sale. If any of the Shares
purchased in a Qualifying Sale are redeemed within eighteen (18) months of the
end of the month of purchase, Distributor shall be entitled to recover any
advance payment attributable to the redeemed Shares by reducing any account
payable or other monetary obligation Distributor may owe to Dealer or by making
demand upon Dealer for repayment in cash. This "holding period" (i.e., currently
18 months) may be changed from time to time by the Distributor or its affiliates
to such other length of time as is disclosed in the then current Prospectus.
Distributor reserves the right to withhold advances to Dealer, if for any reason
Distributor believes that it may not be able to recover unearned advances from
Dealer.
e. REDUCED SALES CHARGE. Any sales charges and dealer concessions or
commissions are subject to reduction under a variety of circumstances as
described in each Fund's then current Prospectus. For an investor to obtain any
reduction, Distributor must be notified at the time of the sale that the sale
qualifies for the reduced sales charge. If Dealer fails to notify Distributor of
the applicability of a reduction in the sales charge at the time the trade is
placed, neither Distributor nor any Fund will be liable for amounts necessary to
reimburse any investor for the reduction that should have been affected.
f. NO OBLIGATION TO PAY. Distributor shall have no obligation to pay any
compensation to Dealer for the sale of Shares of a Fund until Distributor
receives the related compensation from the Fund, and Distributor's liability to
Dealer for such payments is limited solely to the related compensation that
Distributor receives from such Fund.
g. SUSPENSION/ELIMINATION OF COMPENSATION. Dealer acknowledges and agrees
that each Fund may, without prior notice, suspend or eliminate the payment of
any compensation, including Rule 12b-1 Plan payments or other dealer
compensation, by amendment, sticker or supplement to the then current Prospectus
for such Fund.
SECTION 5. MULTIPLE CLASSES OF SHARES; REDUCED SALES CHARGES
a. Distributor may, from time to time, provide Dealer with written
guidelines or standards relating to the sale, distribution or servicing of Funds
offering multiple classes of Shares, including classes offering different sales
charges, Rule 12b-1 Plan fees or other operating expenses.
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b. If applicable to a particular Fund, Dealer will not accept a purchase
order from a Client nor submit a purchase order to Distributor for Class A
shares of the Fund that qualifies for investment in Class D shares of such Fund.
c. In accordance with the terms of each applicable Prospectus, Dealer
acknowledges that a reduced sales charge or no sales charge (collectively,
"discounts") may be available to purchasers of Shares. Dealer represents that it
has, and will maintain during the term of this Agreement, adequate written
supervisory procedures and internal controls to ensure that Dealer's customers
receive all available discounts, and Dealer agrees: (i) to inform its customers
of applicable discount opportunities and to inquire about other qualifying
holdings that might entitle customers to receive discounts; (ii) to advise
Distributor, contemporaneously with each purchase order it forwards to
Distributor as agent for its customers, of the availability of any discounts;
and (iii) that in the event that Dealer fails to provide Distributor with
information concerning the availability of discounts as provided in (ii) above,
Dealer, and not Distributor or the Funds, shall be responsible for reimbursing
its customer any applicable discount amount.
SECTION 6. REDEMPTIONS, REPURCHASES AND EXCHANGES OF FUNDS
a. The Prospectus for each Fund describes the provisions whereby the Fund,
under all ordinary circumstances, will redeem Shares held by shareholders on
demand. Dealer agrees that it will not make any representations to shareholders
relating to the redemption of their Shares other than the statements contained
in the applicable Prospectus and the underlying organizational documents of the
Fund to which it refers, and that Dealer will pay as redemption proceeds to
shareholders the net asset value, minus any applicable redemption fee,
determined after receipt of the order as discussed in the Prospectus.
b. Dealer agrees not to repurchase any Shares from its customers at a price
below that next quoted by an Fund for redemption or repurchase, i.e., at the net
asset value of such Shares, less any applicable redemption fee, in accordance
with the Fund's Prospectus. Dealer shall, however, be permitted to sell Shares
for the account of the customer or record owner to an Fund at the repurchase
price then currently in effect for such Shares and may charge the customer or
record owner a fair service fee or commission for handling the transaction,
provided Dealer discloses the fee or commission to the customer or record owner.
Nevertheless, Dealer agrees that it shall not maintain a secondary market in
such repurchased Shares.
c. Dealer agrees that, with respect to a redemption order it has made, if
instructions in proper form, including any outstanding certificates, are not
received by Distributor within the time customary or required by law, the
redemption may be canceled without any responsibility or liability on
Distributor's part or on the part of any Fund, or Distributor, at its option,
may buy the shares redeemed on behalf of the Fund, in which latter case
Distributor may hold Dealer responsible for any loss, including loss of profit,
suffered by Distributor resulting from Distributor's failure to settle the
redemption.
d. Dealer agrees that if any Share is repurchased by any Fund or is
tendered for redemption within seven (7) business days after confirmation by
Distributor of the original purchase order from Dealer, Dealer shall forfeit its
right to any compensation with respect to such Share and shall forthwith refund
to Distributor the full compensation, if any, paid to Dealer on the original
sale. Distributor agrees to notify Dealer of such repurchase or redemption
within a reasonable time after settlement. Termination or cancellation of this
Agreement shall not relieve Dealer from its obligation under this provision.
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e. Dealer agrees that it will comply with any restrictions and limitations
on exchanges described in each Fund's Prospectus, including any restrictions or
prohibitions relating to frequent purchases and redemptions.
SECTION 7. FUND INFORMATION
a. Dealer agrees that neither it nor any of its partners, directors,
officers, employees, and agents is authorized to give any information or make
any representations concerning Shares of any Fund except those contained in the
Fund's Prospectus or in materials provided by Distributor.
b. Distributor will supply to Dealer reasonable quantities of Prospectuses,
sales literature, sales bulletins, and additional sales information as approved
by Distributor and the Funds. Dealer is not authorized to modify or translate
any such materials without Distributor's prior written consent. Dealer agrees to
use only advertising or sales material relating to the Funds that: (i) is
supplied by Distributor, or (ii) conforms to the requirements of all applicable
laws or regulations of any government or authorized agency having jurisdiction
over the offering or sale of Shares of the Funds and is approved in writing by
Distributor in advance of its use. Such approval may be withdrawn by Distributor
in whole or in part upon written notice to Dealer, and Dealer shall, upon
receipt of such notice, immediately discontinue the use of such sales
literature, sales bulletins and advertising.
SECTION 8. REGISTRATION OF SHARES
a. Distributor acts solely as agent for the Funds and Distributor shall
have no obligation or responsibility with respect to Dealer's right to purchase
or sell Shares in any jurisdiction.
b. Distributor shall furnish Dealer, upon request, information identifying
the states or jurisdictions in which it is believed that all necessary notice,
registration or exemptive filings for Shares have been made under applicable
securities laws such that offers and sales of Shares may be made in such states
or jurisdictions. Distributor shall have no obligation to make such notice,
registration or exemptive filings with respect to Shares in any state or
jurisdiction.
c. Dealer agrees not to transact orders for Shares in states or
jurisdictions in which it has been informed that Shares may not be sold or in
which it and its personnel are not authorized to sell Shares.
d. Distributor shall have no responsibility, under the laws regulating the
sale of securities in the United States or any foreign jurisdiction, with
respect to the qualification or status of Dealer or Dealer's personnel selling
Fund Shares.
e. Dealer agrees that it will make no offers or sales of Shares in any
foreign jurisdiction, except with the express written consent of Distributor.
SECTION 9. REPRESENTATIONS AND WARRANTIES
a. Distributor represents and warrants that:
(i) It is a corporation duly organized and existing and in good
standing under the laws of the state of Delaware and is duly
registered or exempt from registration as a broker-dealer in
all states and jurisdictions in which it provides services as a
non-exclusive distributor for the Funds.
(ii) It is a member in good standing of the NASD.
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(iii) It is empowered under applicable laws and by Distributor's
organizational documents to enter into this Agreement and
perform all activities and services of Distributor provided for
herein and that there are no impediments, prior or existing,
regulatory, self-regulatory, administrative, civil or criminal
matters affecting Distributor's ability to perform under this
Agreement.
(iv) All requisite actions have been taken to authorize Distributor
to enter into and perform this Agreement.
b. In addition to the representations and warranties found elsewhere in
this Agreement, Dealer represents and warrants that:
(i) It is duly organized and existing and in good standing under
the laws of the state, commonwealth or other jurisdiction in
which Dealer is organized and that Dealer will not offer Shares
of any Fund for sale in any state or jurisdiction where such
Shares may not be legally sold or where Dealer is not qualified
to act as a broker-dealer.
(ii) It is empowered under applicable laws and by Dealer's
organizational documents to enter into this Agreement and
perform all activities and services of the Dealer provided for
herein and that there are no impediments, prior or existing,
regulatory, self-regulatory, administrative, civil or criminal
matters affecting Dealer's ability to perform under this
Agreement.
(iii) All requisite actions have been taken to authorize Dealer to
enter into and perform this Agreement.
(iv) It is not, at the time of the execution of this Agreement,
subject to any enforcement or other proceeding with respect to
its activities under state or federal securities laws, rules or
regulations.
(v) It is a "financial institution" as defined in 31 U.S.C.
5312(a)(2) or (c)(1) and is regulated by a "Federal functional
regulator" as defined in 31 CFR Section 103.120(a)(2).
(vi) It shall notify Distributor, within a reasonable time, of any
claim or complaint or any enforcement action or other
proceeding with respect to Shares offered hereunder against
Dealer or its partners, affiliates, officers, directors,
employees or agents, or any person who controls Dealer, within
the meaning of Section 15 of the Securities Act.
(vii) It shall promptly send Distributor copies, if applicable, of
(i) any report(s) filed pursuant to NASD Conduct Rule 3070 with
respect to the sale of Shares offered under this Agreement,
including, without limitation, quarterly reports filed pursuant
to Rule 3070(c), (ii) any report(s) filed with another
self-regulatory organization pursuant to Rule 3070(e), and
(iii) any amendment(s) to Dealer's Form BD.
(viii) If any of the representations set forth in this Section 9 or
Section 11 at any time ceases to be true, Dealer shall promptly
notify Distributor of this fact. Such notice shall be provided
in accordance with Section 22.
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SECTION 10. INDEMNIFICATION
a. Dealer agrees to indemnify, defend and hold harmless Distributor, the
Funds and their directors, trustees, officers, employees, shareholders, agents,
affiliates and each person who controls or is controlled by Distributor, within
the meaning of the Securities Act of 1933, as amended (the "Securities Act"),
from any and all losses, claims, liabilities, costs, and expenses, including
attorney fees (collectively, "Losses"), that may be assessed against or suffered
or incurred by any of them howsoever they arise, and as they are incurred, which
relate in any way to: (i) Dealer's lack of good faith, negligence, or willful
misconduct in carrying out its duties and responsibilities under this Agreement;
(ii) the failure of Dealer to comply with any applicable law, rule or regulation
(including, without limitation, the securities laws and regulations of the
United States or any state or jurisdiction) in connection with the offer or sale
by Dealer of Shares of the Funds pursuant to this Agreement, or the discharge of
any of its other duties and responsibilities under this Agreement; (iii) any
alleged tort or breach of contract related to the offer or sale by Dealer of
Shares of the Funds pursuant to this Agreement (except to the extent that
Distributor's negligence or failure to follow correct instructions received from
Dealer is the cause of such Loss); (iv) any redemption or exchange pursuant to
instructions received from Dealer or its directors, trustees, officers,
partners, employees, agents, or affiliates; (v) incorrect investment
instructions received by Distributor from Dealer; or (vi) the breach by Dealer
of any of its representations and warranties specified herein or the Dealer's
failure to comply with the terms and conditions of this Agreement, whether or
not such action, failure, error, omission, misconduct or breach is committed by
Dealer or its directors, trustees, officers, partners, employees, agents,
affiliates or any person who controls or is controlled by Dealer within the
meaning of the Securities Act.
b. Distributor agrees to indemnify, defend and hold harmless Dealer and its
directors, trustees, officers, partners, employees, agents, affiliates and each
person who controls or is controlled by Dealer, within the meaning of the
Securities Act, from any and all Losses that may be assessed against or suffered
or incurred by any of them howsoever they arise, and as they are incurred, which
relate in any way to (i) Distributor's lack of good faith, gross negligence, or
willful misconduct in carrying out its duties and responsibilities under this
Agreement; (ii) the failure of Distributor to comply with any applicable law,
rule or regulation in connection with the discharge of its duties and
responsibilities under this Agreement; (iii) any untrue statement of a material
fact, or any omission to state a material fact, contained in a Prospectus or in
any written sales literature or other marketing materials provided by
Distributor to the Dealer, or (iv) the breach by Distributor of any of its
representations and warranties specified herein or Distributor's failure to
comply with the terms and conditions of this Agreement, whether or not such
action, failure, error, omission, misconduct or breach is committed by
Distributor or its directors, officers, employees agents, affiliates or any
person who controls or is controlled by Distributor within the meaning of the
Securities Act.
c. This Section 10 shall survive any termination of the Agreement.
SECTION 11. ANTI-MONEY LAUNDERING RESPONSIBILITY
a. Dealer represents and warrants that it is in compliance and will
continue to be in compliance with all applicable anti-money laundering laws and
regulations, including the Bank Secrecy Act, as amended by the USA PATRIOT Act,
and implementing regulations of the Bank Secrecy Act ("BSA Regulations") and
applicable guidance issued by the SEC and the guidance and rules of the
applicable Exchanges, SROs and the NASD (collectively, "Guidance").
b. In connection with Distributor's reliance on Dealer to perform Customer
Identification Program ("CIP") procedures on its behalf, Dealer represents and
warrants that (1) Dealer is subject to a rule implementing 31 U.S.C. 5318(h) and
maintains an anti-money laundering program consistent with the USA PATRIOT Act
and the rules thereunder; (2) Dealer is regulated by a Federal functional
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regulator as that term is defined under 31.C.F.R. Section 103.120(a)(2); (3)
Dealer has implemented a CIP compliant with Section 326 that enables Dealer to
form a reasonable belief that it knows the true identity of its customers,
including procedures to obtain information from and verify the identity of
customers, maintain records of the information used to verify identity,
determine whether the customer appears on any government list of known or
suspected terrorists or terrorist organizations, and provide customers with
adequate notice that the institution is requesting information to verify their
identities; and (4) Dealer will certify annually that it has implemented its
anti-money laundering program and that it or its agent will perform all aspects
of its CIP procedures with respect to customers referred to the Fund by the
Dealer.
c. Dealer represents and warrants that to the extent that any of its
customers who maintain Fund accounts is a current or former Senior Foreign
Political Figure ("SFPF"), an immediate family member of a SFPF, a person who is
widely known (or is actually known by the Dealer) to maintain a close personal
relationship with any such individual, or a corporation, business or other
entity that has been formed by or for the benefit of such individual, it has
conducted appropriate due diligence of such customer consistent with Section 312
of the USA PATRIOT Act and any applicable BSA Regulations and Guidance.
d. Dealer represents and warrants that to the extent its customers who
maintain Fund accounts are foreign banks, it has taken reasonable measures and
has obtained certifications and will obtain re-certifications that indicate that
the customers are not foreign shell banks, as defined in the BSA Regulations.
e. Dealer will take all reasonable and practicable steps to ensure that it
does not accept or maintain investments in any Fund, directly or indirectly,
from:
(i) A person or entity (A) who is or becomes subject to sanctions
administered by the U.S. Office of Foreign Assets Control
("OFAC"), is included in any executive order or is on the list of
Specially Designated Nationals and Blocked Persons maintained by
OFAC, or (B) whose name appears on such other lists of prohibited
persons and entities as may be mandated by applicable U.S. law or
regulation.
(ii) A foreign shell bank (i.e., a bank with no physical presence in
any country).
f. Dealer agrees to immediately notify in writing the Anti-Money Laundering
Compliance Officer of Distributor if it becomes aware of any suspicious activity
or pattern of activity or any activity that may require further review to
determine whether it is suspicious in connection with the Funds.
g. Dealer agrees that if the Funds or Distributor is required to supply
information, documentation or guidance to a securities regulatory organization
("SRO") or government department or agency about the CIP of the Funds or
Distributor or the measures taken to obtain information and to verify the
identity of specific clients of the Funds, Dealer shall allow such SRO or
government department or agency to examine its files.
SECTION 12. LATE TRADING COVENANT
Dealer covenants that it will transmit orders for the purchase or sale
of Shares on any business day that are based only on those transactions that
Dealer received and accepted as being in good order no later than the Close of
Trading for that business day.
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SECTION 13. MARKET TIMING/FREQUENT TRADING COVENANT
a. Dealer covenants that it shall cooperate with Distributor to identify
and discourage market timers and frequent traders. If any market timer buying or
redeeming Shares comes to the attention of Dealer, it will immediately notify
Distributor. Dealer acknowledges that Distributor may refuse a request to
purchase Shares if Distributor believes such purchase request includes a request
by a market timer or frequent trader. Dealer covenants that, unless it receives
a waiver from Distributor, it will enforce any and all policies adopted by the
Funds with respect to market timing and frequent trading, and shall impose on
shareholders, and remit to the applicable Fund, any applicable redemption or
short-term trading fees imposed by a Fund.
b. To the extent required by Rule 22c-2 under the 1940 Act, the Dealer
agrees to provide the Fund, upon written request, the taxpayer identification
number ("TIN"), if known, of any or all shareholders and the amount, date, name
or other identifier of any investment professional(s) associated with the
shareholder(s) or account(s) (if known), and transaction type (purchase,
redemption, transfer or exchange) of every purchase, redemption, transfer or
exchange of shares of the Fund held through one or more account(s) maintained by
the Dealer during the period covered by the request ("transaction information").
c. Requests must set forth a specific period, not to exceed ninety (90)
business days from the date of the request, for which transaction information is
sought. The Fund may request transaction information older than ninety (90)
business days from the date of the request as it deems necessary to investigate
compliance with policies established by the Fund for the purpose of eliminating
or reducing any dilution of the value of the outstanding shares of the Fund.
d. The Dealer agrees to transmit the requested transaction information that
is on its books and records to the Fund or its designee promptly, but in any
event not later than five (5) business days after receipt of a request. If the
requested transaction information is not on the Dealer's books and records, the
Dealer agrees to: (i) provide or arrange to provide to the Fund the requested
transaction information from shareholders who hold an account with an indirect
intermediary; or (ii) if directed by the Fund, block further purchases of shares
of the Fund from such indirect intermediary. In such instance, the Dealer agrees
to inform the Fund whether it plans to perform (i) or (ii). Responses required
by this paragraph must be communicated in writing and in a format mutually
agreed upon by the parties. To the extent practicable, the format for any
transaction information provided to the Fund should be consistent with the NSCC
Standardized Data Reporting Format. For purposes of this provision, an "indirect
intermediary" has the same meaning as in SEC Rule 22c-2 under the Investment
Company Act.
e. The Dealer agrees to execute written instructions from the Fund to
restrict or prohibit further purchases or exchanges of shares of the Fund by a
shareholder that has been identified by the Fund as having engaged in
transactions of the shares (directly or indirectly through the Dealer's account)
that violate market timing or frequent trading policies established by the Fund
for the purpose of eliminating or reducing any dilution of the value of the
outstanding shares of the Fund.
f. Instructions must include the TIN, if known, and the specific
restrictions(s) to be executed. If the TIN is not known, the instructions must
include an equivalent identifying number of the shareholder(s) or account(s) or
other agreed upon information to which the instruction relates.
g. The Dealer agrees to execute instructions as soon as reasonably
practicable, but not later than five (5) business days after receipt of the
instructions by the Dealer.
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h. The Dealer must provide written confirmation to the Fund that
instructions have been executed. The Dealer agrees to provide confirmation as
soon as reasonably practicable, but not later than ten (10) business days after
the instructions have been executed.
i. The Distributor agrees not to use the transaction information received
from the Dealer for marketing or any other similar purpose without the prior
written consent of the Dealer.
SECTION 14. CONFIDENTIALITY
All books, records, information and data pertaining to the business of the
other party ("Confidential Information") that are exchanged or received in
connection with this Agreement shall be kept confidential and shall not be
voluntarily disclosed to any other person, except (i) if such information is
already publicly available; (ii) as may be required solely for the purpose of
carrying out a party's duties and responsibilities under this Agreement; (iii)
as required by order or demand of a court or other governmental or regulatory
body or as otherwise required by law; (iv) as may be required to be disclosed to
a party's attorneys, accountants, regulatory examiners or insurers for
legitimate business purposes; or (v) with the express prior written permission
of the other party.
SECTION 15. PRIVACY
Dealer represents that it has adopted and implemented procedures to
safeguard customer information and records that are reasonably designed to: (a)
ensure the security and confidentiality of customer records and information; (b)
protect against any anticipated threats or hazards to the security or integrity
of customer records and information; (c) protect against unauthorized access to
or use of customer records or information that could result in substantial harm
or inconvenience to any customer; (d) protect against unauthorized disclosure of
non-public personal information to unaffiliated third parties; and (e) otherwise
ensure Dealer's compliance with SEC Regulation S-P, adopted pursuant to the
Xxxxx-Xxxxx-Xxxxxx Act of 1999, and any other federal and state privacy laws
which may be enacted in the future.
SECTION 16. TERMINATION; AMENDMENT
a. In addition to the automatic termination of this Agreement specified in
Section 1.b. of this Agreement, each party to this Agreement may unilaterally
cancel its participation in this Agreement by giving thirty (30) days prior
written notice to the other party. In addition, each party to this Agreement
may, in the event of a material breach of this Agreement by the other party,
terminate this Agreement immediately by giving written notice to the other
party, which notice sets forth in reasonable detail the nature of the breach.
Such notice shall be deemed to have been given and to be effective on the date
on which it was either delivered personally to the other party or any officer or
member thereof, or was sent in accordance with Section 22.
b. This Agreement shall terminate immediately upon the appointment of a
trustee under the Securities Investor Protection Act or any other act of
insolvency by Dealer.
c. The termination of this Agreement by any of the foregoing means shall
have no effect upon transactions entered into prior to the effective date of
termination and shall not relieve Dealer of its obligations, duties and
indemnities specified in this Agreement. A trade placed by Dealer subsequent to
its voluntary termination of this Agreement will not serve to reinstate the
Agreement. Reinstatement, except in the case of a temporary suspension of
Dealer, will only be effective upon written notification by Distributor.
12
d. This Agreement is not assignable or transferable and will terminate
automatically in the event of its "assignment," as defined in the 1940 Act, and
the rules, regulations and interpretations thereunder. Distributor may, however,
transfer any of its duties under this Agreement to any entity that controls or
is under common control with Distributor.
e. This Agreement may be amended by Distributor at any time by written
notice to Dealer. Dealer's placing of an order or accepting payment of any kind
after the effective date and receipt of notice of such amendment shall
constitute Dealer's acceptance of such amendment.
f. Dealer acknowledges and agrees that if Dealer terminates this Agreement,
Distributor may, without liability of any kind,
(i) refuse to establish any account with respect to any affected
customer;
(ii) delay the establishment of any account with respect to any
affected customer;
(iii) close accounts previously established with respect to any
affected customer;
(iv) refuse to engage in any transactions (except redemption
requests) with respect to any affected customer;
(v) cancel any pending transactions (except redemption requests)
with respect to any affected customer;
(vi) liquidate the account of any affected customer; and
(vii) return to the appropriate person securities or other property
held in such customer's account.
SECTION 17. SETOFF; DISPUTE RESOLUTION; GOVERNING LAW
a. Should any of Dealer's compensation accounts with Distributor have a
debit balance, or should Dealer otherwise owe any amounts to Distributor,
Distributor shall be permitted to offset and recover the amount owed from any
account Dealer has with Distributor, without notice or demand to Dealer.
b. In the event of a dispute concerning any provision of this Agreement,
either party may require the dispute to be submitted to binding arbitration
under the commercial arbitration rules and procedures of the NASD. The parties
agree that, to the extent permitted under such arbitration rules and procedures,
the arbitrators selected shall be from the securities industry. Judgment upon
any arbitration award may be entered by any state or federal court having
jurisdiction.
c. This Agreement shall be governed and construed in accordance with the
laws of the state of New York, without reference to the choice-of-law principles
thereof.
SECTION 18. INVESTIGATIONS AND PROCEEDINGS
The parties to this Agreement agree to cooperate fully in any securities
regulatory investigation or proceeding or any judicial proceeding with respect
to each party's activities under this Agreement and promptly to notify the other
party of any such investigation or proceeding.
13
SECTION 19. CAPTIONS
All captions used in this Agreement are for convenience only and are not to
be used in construing or interpreting any aspect hereof.
SECTION 20. SEVERABILITY
Whenever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law. If, however, any
provision of this Agreement is held, under applicable law, to be invalid,
illegal, or unenforceable in any respect, such provision shall be ineffective
only to the extent of such invalidity, and the validity, legality and
enforceability of the remaining provisions of this Agreement shall not be
affected or impaired in any way.
SECTION 21. SURVIVAL
The representations, warranties and covenants of the undersigned contained
in this Agreement, including, without limitation, Sections 1, 9, 11, 12, 13 and
the indemnification provisions contained in Section 10 hereof, shall survive any
termination of this Agreement.
SECTION 22. NOTICES
Every notice required by this Agreement will be in writing and deemed given
(i) the next business day if sent by a nationally recognized overnight courier
service that provides evidence of receipt, (ii) the same business day if sent by
3:00 p.m. (receiving party's time) by facsimile transmission and confirmed by a
telephone call, or (iii) on the third business day if sent by certified mail,
return receipt requested. Unless otherwise notified in writing, all notices
required to be given under this Agreement shall be given or sent to a party at
the address listed on Exhibit A attached hereto.
SECTION 23. NON-EXCLUSIVITY
Each of the parties acknowledges and agrees that this Agreement and the
arrangements described herein are intended to be non-exclusive and that each of
the parties is free to enter into similar agreements and arrangements with other
entities.
SECTION 24. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
will be an original and all of which together will be deemed one and the same
document.
SECTION 25. ENTIRE AGREEMENT
This Agreement contains the entire understanding of the parties hereto with
respect to the subject matter contained herein and supersedes all previous
agreements and/or understandings of the parties. This Agreement shall be binding
upon the parties hereto when signed by Dealer and accepted by Distributor.
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IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement
to be duly executed in its name and on its behalf by its duly authorized
representative on the date specified above.
XXXXXX XXXXXXX DISTRIBUTORS INC.
By:
---------------------------------
Name:
---------------------------
Title:
---------------------------
Date:
---------------------------
DEALER: _____________________________
By:
---------------------------------
Name:
---------------------------
Title:
---------------------------
Address: ________________________
_________________________________
_________________________________
_________________________________
Telephone: ______________________
Fax: ____________________________
NASD CRD # ______________________
TAX ID # ________________________
Dealer # ________________________
(Internal Use Only)
Date: ___________________________
15
EXHIBIT A
NOTICES
Notices required by the Agreement should be sent as follows:
If to the Dealer: ______________________________________
______________________________________
______________________________________
______________________________________
Attn.: _______________________________
Phone: _______________________________
Fax: _________________________________
If to the Fund: [Insert Fund Name]
Attn.: President
C/O General Counsel
Xxxxxx Xxxxxxx Investment Management
0000 Xxxxxx xx xxx Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
If to the Distributor: Xxxxxx Xxxxxxx Distributors Inc.
Attn.: General Counsel
Xxxxxx Xxxxxxx Investment Management
0000 Xxxxxx xx xxx Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
If to the Transfer Agent: Xxxxxx Xxxxxxx Trust
Harborside Financial Xxxxxx
Xxxxx Xxx, 0xx Xxxxx
Xxxxxx Xxxx, XX 00000
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