VAM INSTITUTIONAL FUNDS, INC.
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made and entered into as of the 30th day of
September, 1997, by and between VAM Institutional Funds, Inc., a Minnesota
corporation (the "Company"), for and on behalf of each series of the Company
(each series is referred to hereinafter as a "Fund"), and Xxxxxxxxx Summit
Securities LLC, a Delaware limited liability company (the "Underwriter"). This
Agreement shall apply to the following Funds, each of which currently offers a
single class of shares:
Xxxxxx Xxxxxx & Xxxxxx Growth and Income Fund
VAM Financial Institutions Intermediate Duration Portfolio
VAM Financial Institutions Core Portfolio
VAM Short Duration Total Return Fund
VAM Intermediate Duration Total Return Fund
VAM Core Total Return Fund
VAM Mid Cap Stock Fund
VAM Growth Stock Fund
WITNESSETH:
1. Underwriting Services. The Company, on behalf of each Fund, hereby
engages the Underwriter, and the Underwriter hereby agrees to act, as principal
underwriter for each Fund in the sale and distribution of the shares of such
Fund to the public, either through dealers or otherwise. The Underwriter agrees
to offer such shares for sale at all times when such shares are available for
sale and may lawfully be offered for sale and sold.
2. Sale of Shares. The shares of each Fund are to be sold only on the
following terms:
(a) All subscriptions, offers, or sales shall be subject to
acceptance or rejection by the Company. Any offer for or sale of shares
shall be conclusively presumed to have been accepted by the Company if
the Company shall fail to notify the Underwriter of the rejection of
such offer or sale prior to the computation of the net asset value of
such shares next following receipt by the Company of notice of such
offer or sale.
(b) No share of a Fund shall be sold by the Underwriter (i)
for any consideration other than cash or, pursuant to any exchange
privilege provided for by the applicable currently effective Prospectus
or Statement of Additional Information (hereinafter referred to
collectively as the "Prospectus"), shares of any other investment
company for which the Underwriter acts as an underwriter, or (ii)except
in instances otherwise provided for by the applicable currently
effective Prospectus, for any amount less than the public offering
price per share, which shall be determined in accordance with the
applicable currently effective Prospectus.
3. Registration of Shares. The Company agrees to make prompt and
reasonable efforts to effect and keep in effect, at its expense, the
registration or qualification of each Fund's shares for sale in such
jurisdictions as the Company may designate.
4. Information to be Furnished to the Underwriter. The Company agrees
that it will furnish the Underwriter with such information with respect to the
affairs and accounts of the Company (and each Fund) as the Underwriter may from
time to time reasonably require, and further agrees that the Underwriter, at all
reasonable times, shall be permitted to inspect the books and records of the
Company.
5. Allocation of Expenses. During the period of this Agreement, the
Company shall pay or cause to be paid all expenses, costs and fees incurred by
the Company which are not assumed by the Underwriter. The Underwriter agrees to
provide, and shall pay costs which it incurs in connection with providing,
administrative or accounting services to shareholders of each Fund (such costs
are referred to as "Shareholder Servicing Costs"). Shareholder Servicing Costs
include all expenses of the Underwriter incurred in connection with providing
administrative or accounting services to shareholders of each Fund, including,
but not limited to, an allocation of the Underwriter's overhead and payments
made to persons, including employees of the Underwriter, who respond to
inquiries of shareholders regarding their ownership of Fund shares, or who
provide other administrative or accounting services not otherwise required to be
provided by the applicable Fund's investment adviser or transfer agent. The
Underwriter shall also pay all costs of distributing the shares of each Fund
("Distribution Expenses"). Distribution Expenses include, but are not limited
to, initial and ongoing sales compensation (in addition to sales loads) paid to
investment executives of the Underwriter and to other broker-dealers and
participating financial institutions; expenses incurred in the printing of
prospectuses, statements of additional information and reports used for sales
purposes; expenses of preparation and distribution of sales literature; expenses
of advertising of any type; an allocation of the Underwriter's overhead;
payments to and expenses of persons who provide support services in connection
with the distribution of Fund shares; and other distribution-related expenses.
6. Compensation to the Underwriter
(a) With respect to each Fund, it is understood and agreed by
the parties hereto that the sale of Fund shares will benefit the
Underwriter, which is an affiliate of the Fund's investment adviser or
sub-adviser, and therefore the Underwriter will receive no additional
compensation for services it performs hereunder in connection with
sales of fund shares, except as follows:
(i) In connection with sales of shares of Growth and
Income Fund, pursuant to the Company's Plan of Distribution
adopted on behalf of such Fund in accordance with Rule 12b-1
under the 1940 Act (the "Rule 12b-1 Plan"), Class A of such
Fund (the only class of shares currently outstanding) is
obligated to pay the Underwriter a total fee in connection
with the servicing of shareholder accounts of such class and
in connection with distribution-related services provided in
respect of such class, calculated and payable quarterly, at
the annual rate of .25% of the value of the average daily net
assets of such class. All or any portion of such total fee may
be payable as a Shareholder Servicing Fee, and all or any
portion of such total fee may be payable as a Distribution
Fee, as determined from time to time by the Company's Board of
Directors. Until further action by the Board of Directors, all
of such fee shall be designated and payable as a Shareholder
Servicing Fee.
(ii) In connection with the Underwriter's ongoing
servicing and/or maintenance of shareholder accounts for VAM
Financial Institutions Intermediate Duration Portfolio and VAM
Financial Institutions Core Portfolio, each Fund is obligated,
pursuant to the Company's Service Plan, to pay the Underwriter
a service fee, calculated and payable monthly, at the annual
rate of .05% of the value of the average daily net assets of
such Fund.
(b) Average daily net assets shall be computed in accordance
with the applicable currently effective Prospectus. Amounts payable to
the Underwriter under the Rule 12b-1 Plan may exceed or be less than
the Underwriter's actual Distribution Expenses and Shareholder
Servicing Costs. Similarly, amounts payable to the Underwriter under
the Service Plan may exceed or be less than the Underwriter's actual
Shareholder Servicing Costs. In the event such costs exceed amounts
payable to the Underwriter under the Rule 12b-1 Plan or the Service
Plan, the Underwriter shall not be entitled to reimbursement by the
Company.
(c) In each year during which this Agreement remains in
effect, the Underwriter will prepare and furnish to the Board of
Directors of the Company, and the Board will review, on a quarterly
basis, written reports that set forth the amounts expended under this
Agreement, the Rule 12b-1 Plan and the Service Plan, and the purposes
for which those expenditures were made.
7. Limitation of the Underwriter's Authority. The Underwriter shall be
deemed to be an independent contractor and, except as specifically provided or
authorized herein, shall have no authority to act for or represent any Fund or
the Company.
8. Subscription for Shares--Refund for Canceled Orders. The Underwriter
shall subscribe for the shares of a Fund only for the purpose of covering
purchase orders already received by it or for the purpose of investment for its
own account. In the event that an order for the purchase of shares of a Fund is
placed with the Underwriter by a customer or dealer and subsequently canceled,
the Underwriter shall forthwith cancel the subscription for such shares entered
on the books of the Fund, and, if the Underwriter has paid the Fund for such
shares, shall be entitled to receive from the Fund in refund of such payment the
lesser of:
(a) the consideration received by the Fund for said shares; or
(b) the net asset value of such shares at the time of
cancellation by the Underwriter.
9. Indemnification of the Company. The Underwriter agrees to indemnify
each Fund and the Company against any and all litigation and other legal
proceedings of any kind or nature and against any liability, judgment, cost, or
penalty imposed as a result of such litigation or proceedings in any way arising
out of or in connection with the sale or distribution of the shares of such Fund
by the Underwriter. In the event of the threat or institution of any such
litigation or legal proceedings against any Fund, the Underwriter shall defend
such action on behalf of the Fund or the Company at the Underwriter's own
expense, and shall pay any such liability, judgment, cost, or penalty resulting
therefrom, whether imposed by legal authority or agreed upon by way of
compromise and settlement; provided, however, the Underwriter shall not be
required to pay or reimburse a Fund for any liability, judgment, cost, or
penalty incurred as a result of information supplied by, or as the result of the
omission to supply information by, the Company to the Underwriter, or to the
Underwriter by a director, officer, or employee of the Company who is not an
"interested person," as defined in the provisions of the 1940 Act, of the
Underwriter, unless the information so supplied or omitted was available to the
Underwriter or the Fund's investment adviser without recourse to the Fund or the
Company or any such person referred to above.
10. Freedom to Deal With Third Parties. The Underwriter shall be free
to render to others services of a nature either similar to or different from
those rendered under this contract, except such as may impair its performance of
the services and duties to be rendered by it hereunder.
11. Effective Date, Duration and Termination of Agreement.
(a) The effective date of this Agreement is set forth in the
first paragraph of this Agreement. Unless sooner terminated as
hereinafter provided, this Agreement shall continue in effect for a
period of one year after the date of its execution, and from year to
year thereafter, but only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the
Company, and of the directors who are not "interested persons" (as
defined in the provisions of the 0000 Xxx) of the Company and have no
direct or indirect financial interest in the operation of the Rule
12b-1 Plan or in any agreement related to the Rule 12b-1 Plan
(including, without limitation, this Agreement), cast in person at a
meeting called for the purpose of voting on this Agreement.
(b) This Agreement may be terminated at any time with respect
to any Fund without the payment of any penalty, by the vote of a
majority of the members of the Board of Directors of the Company who
are not "interested persons" (as defined in the provisions of the 0000
Xxx) of the Company and have no direct or indirect financial interest
in the operation of the Rule 12b-1 Plan or in any agreement related to
the Rule 12b-1 Plan (including, without limitation, this Agreement), or
by the vote of a majority of the outstanding voting securities of such
Fund, or by the Underwriter, upon 60 days' written notice to the other
party.
(c) This Agreement shall automatically terminate in the event
of its "assignment" (as defined by the provisions of the 1940 Act).
(d) Wherever referred to in this Agreement, the vote or
approval of the holders of a majority of the outstanding voting
securities of a Fund shall mean the lesser of (i) the vote of 67% or
more of the voting securities of such Fund present at a regular or
special meeting of shareholders duly called, if more than 50% of the
Fund's outstanding voting securities are present or represented by
proxy, or (ii) the vote of more than 50% of the outstanding voting
securities of such Fund.
12. Amendments to Agreement. No material amendment to this Agreement
shall be effective until approved by the Underwriter and by vote of a majority
of the Board of Directors of the Company who are not interested persons of the
Underwriter.
13. Notices. Any notice under this Agreement shall be in writing,
addressed, delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate in writing for receipt of such notice.
IN WITNESS WHEREOF, the Company and the Underwriter have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
VAM INSTITUTIONAL FUNDS, INC.
By: ___/s/ Xxxxxx X. Abood_____
Name: Xxxxxx X. Xxxxx
Title: Secretary
XXXXXXXXX SUMMIT SECURITIES LLC
By: ____/s/ Xxxx X. Taft______
Name: Xxxx X. Xxxx
Title: President
