EXHIBIT (e)(1)
DISTRIBUTION AGREEMENT
AGREEMENT made as of July 12, 2005 between the Arrivato/Dow Xxxxx Funds
(the "Trust"), having an office at , and BISYS Fund Services Limited Partnership
("Distributor"), having an office at 000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000.
WHEREAS, the Trust is an open-end management investment company, organized
as a [Massachusetts J business trust and registered with the Securities and
Exchange Commission (the "Commission") under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, it is intended that Distributor act as the distributor of the
shares of beneficial interest ("Shares") of each series of the Trust, as listed
on Schedule A, and such series as are hereafter created (all of the foregoing
series individually referred to herein as a "Fund" and collectively as the
"Funds").
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services as Distributor.
1.1 Distributor will act as agent of Trust on behalf of each Fund for the
distribution of the Shares covered by the registration statement of Trust then
in effect under the Securities Act of 1933, as amended (the "Securities Act")
and the 1940 Act. As used in this Agreement, the term "registration statement"
shall mean the registration statement of the Trust and any amendments thereto,
then in effect, including Parts A (the Prospectus), B (the Statement of
Additional Information) and C of each registration statement, as filed on Form
N-IA, or any successor thereto, with the Commission, together with any
amendments thereto. The term "Prospectus" shall mean the then current form of
Prospectus and Statement of Additional Information used by the Funds, in
accordance with the rules of the Commission, for delivery to shareholders and
prospective shareholders after the effective dates of the above-referenced
registration statements, together with any amendments and supplements thereto.
The Trust will notify Distributor in advance of any proposed changes to Schedule
A to this Agreement.
1.2 Consistent with the understanding between the Funds and the
Distributor, Distributor may solicit orders for the sale of the Shares and may
undertake such advertising and promotion as it believes reasonable in connection
with such solicitation. The Trust understands that Distributor is now and may in
the future be the distributor of the shares of many other investment companies
or series, including investment companies having investment objectives similar
to those of the Trust. The Trust further understands that shareholders and
potential shareholders in the Trust may invest in shares of such other
investment companies. The Trust agrees that Distributor's duties to other
investment companies shall not be deemed in conflict with its duties to the
Trust under this Section 1.2.
1.3 Consistent with the understanding between the Funds and the
Distributor, and subject to the last sentence of this Section 1.3, Distributor
may engage in such activities as it deems appropriate in connection with the
promotion and sale of the Shares, which may include advertising, compensation of
underwriters, dealers and sales personnel, the printing and mailing of
Prospectuses to prospective shareholders other than current shareholders, and
the printing and mailing of sales literature. Distributor may enter into dealer
agreements and other selling agreements with broker-dealers and other
intermediaries; provided, however, that Distributor shall have no obligation to
make any payments to any third parties, whether as finder's fees, compensation
or otherwise, unless (i) Distributor has received a corresponding payment from
the applicable Fund's Distribution Plan (as defined in Section 2 of this
Agreement), the Fund's investment adviser (the "Adviser") or from another source
as may be permitted by applicable law, and (ii) such corresponding payment has
been approved by the Trust's Board of Trustees.
1.4 In its capacity as distributor of the Shares, all activities of the
Distributor and its partners, agents, and employees shall comply with all
applicable laws, rules and regulations, including, without limitation, the 1940
Act, all applicable rules and regulations promulgated by the Commission
thereunder, and all applicable rules and regulations adopted by any securities
association registered under the Securities Exchange Act of 1934.
1.5 Whenever in their judgment such action is warranted by unusual market,
economic or political conditions or by abnormal circumstances of any kind, the
Trust's officers may upon reasonable notice instruct the Distributor to decline
to accept any orders for or make any sales of the Shares until such time as
those officers deem it advisable to accept such orders and to make such sales.
1.6 The Trust agrees to inform the Distributor from time to time of the
states in which the Fund or its administrator has registered or otherwise
qualified shares for sale, and the Trust agrees at its own expense to execute
any and all documents and to furnish any and all information and otherwise to
take all actions that may be reasonably necessary in connection with the
qualification of the Shares for sale in such states as the Distributor may
designate.
1.7 The Trust shall furnish from time to time, for use in connection with
the sale of the Shares, such supplemental information with respect to the Funds
and the Shares as Distributor may reasonably request; and the Trust warrants
that the statements contained in any such supplemental information will fairly
show or represent what they purport to show or represent. The Trust shall also
furnish Distributor upon request with: (a) unaudited semi-annual statements of
the Funds' books and accounts prepared by the Trust, (b) a monthly itemized list
of the securities in the Funds, (c) monthly balance sheets as soon as
practicable after the end of each month, and (d) from time to time such
additional information regarding the financial condition of the Funds as the
Distributor may reasonably request.
1.8 The Trust represents and warrants to Distributor that all registration
statements, and each Prospectus, filed by the Trust with the Commission under
the Securities Act and the 1940 Act shall be prepared in conformity with
requirements of said Acts and rules and regulations of the Commission
thereunder. The registration statement and Prospectus shall contain all
statements required to be stated therein in conformity with said Acts and the
rules and regulations of the Commission thereunder, and all statements of fact
contained in any such registration statement and Prospectus are true and correct
in all material respects. Furthermore, neither any registration statement nor
any Prospectus includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading to a purchaser of the Shares. The foregoing
representations and warranties shall continue throughout the term of this
Agreement and be deemed to be of a continuing nature, applicable to all Shares
distributed hereunder. The Trust may, but shall not be obligated to, propose
from time to time such amendment or amendments to any registration statement and
such supplement or supplements to any Prospectus as, in the light of future
developments, may, in the opinion of the Trust's counsel, be necessary or
advisable. If the Trust shall not propose any amendment or amendments and/or
supplement or supplements within 15 days after receipt by the Trust of a written
request from Distributor to do so, Distributor may, at its option, terminate
this Agreement. In such case, the Distributor will be held harmless from, and
indemnified by Trust for, any liability or loss resulting from the failure to
implement such amendment. The Trust shall not file any amendment to any
registration statement or supplement to any Prospectus without giving
Distributor reasonable notice thereof in advance; provided, however, that
nothing contained in this Agreement shall in any way limit the Trust's right to
file at any time such amendments to any registration statement and/or
supplements to any Prospectus, of whatever character, as the Trust may deem
advisable, such right being in all respects absolute and unconditional.
1.9 The Trust authorizes the Distributor and dealers to use any Prospectus
in the form furnished by the Trust from time to time in connection with the sale
of the Shares.
1.10 The Distributor may utilize agents in its performance of its services
and, with prior notice to the Trust, appoint in writing other parties qualified
to perform specific administration services reasonably acceptable to the Trust
(individually, a "SubAgent") to carry out some or all of its responsibilities
under this Agreement; provided, however, that a Sub-Agent shall be the agent of
the Distributor and not the agent of the Trust, and that the Distributor shall
be fully responsible for the acts of such Sub-Agent and shall not be relieved of
any of its responsibilities hereunder by the appointment of a Sub-Agent.
1.11 The Distributor shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust in connection with the
matters to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the Distributor's part in the
performance of its duties, from reckless disregard by the Distributor of its
obligations and duties under this Agreement, or from the Distributor's failure
to comply with laws, rules and regulations applicable to it in connection with
its activities hereunder. The Trust agrees to indemnify, defend and hold
harmless the Distributor, its officers, partners, employees, and any person who
controls the Distributor within the meaning of Section 15 of the Securities
Act (collectively, "Distributor Indemnitees"), from and against any and all
claims, demands, liabilities and expenses (including the reasonable cost of
investigating or defending such claims,
demands or liabilities and any reasonable counsel fees incurred in connection
therewith) (collectively, "Claims") which the Distributor Indemnitees may incur
under the Securities Act or under common law or otherwise (a) as the result of
the Distributor acting as distributor of the Funds and entering into selling
agreements, participation agreements, shareholder servicing agreements or
similar agreements with financial intermediaries on behalf of the Trust; (b)
arising out of or based upon (i) any untrue statement, or alleged untrue
statement, of a material fact contained in any registration statement or any
Prospectus, (ii) any omission, or alleged omission, to state a material fact
required to be stated in any registration statement or any Prospectus or
necessary to make the statements therein not misleading, or (iii) any untrue
statement, or alleged untrue statement, of a material fact in any Trust-related
advertisement or sales literature, or any omission, or alleged omission, to
state a material fact required to be stated therein to make the statements
therein not misleading, in either case notwithstanding the exercise of
reasonable care in the preparation or review thereof by the Distributor; or (c)
arising out of or based upon the electronic processing of orders over the
internet at the Trust's request; provided, however, that the Trust's agreement
to indemnify the Distributor Indemnitees pursuant to this Section 1.11 shall not
be construed to cover any Claims (A) pursuant to subsection (b) above to the
extent such untrue statement, alleged untrue statement, omission, or alleged
omission, was furnished in writing, or omitted from the relevant writing
furnished, as the case may be, to the Trust by the Distributor for use in the
registration statement or in corresponding statements made in the Prospectus,
advertisement or sales literature; (B) arising out of or based upon the willful
misfeasance, bad faith or gross negligence of the Distributor in the performance
of its duties or the Distributor's reckless disregard of its obligations and
duties under this Agreement; or (C) arising out of or based upon the
Distributor's failure to comply with laws, rules and regulations applicable to
it in connection with its activities hereunder.
In the event of a Claim for which the Distributor Indemnitees may be
entitled to indemnification hereunder, the Distributor shall provide the Trust
with written notice of the Claim, identifying the persons against whom such
Claim is brought, promptly following receipt of service of the summons or other
first legal process, and in any event within 10 days of such receipt. The Trust
will be entitled to assume the defense of any suit brought to enforce any such
Claim if such defense shall be conducted by counsel of good standing chosen by
the Trust and approved by the Distributor, which approval shall not be
unreasonably withheld. In the event any such suit is not based solely on an
alleged untrue statement, omission, or wrongful act on the Trust's part, the
Distributor shall have the right to participate in the defense. In the event the
Trust elects to assume the defense of any such suit and retain counsel of good
standing so approved by the Distributor, the Distributor Indemnitees in such
suit shall bear the fees and expenses of any additional counsel retained by any
of them, but in any case where the Trust does not elect to assume the defense of
any such suit or in case the Distributor reasonably withholds approval of
counsel chosen by the Trust, the Trust will reimburse the Distributor
Indemnitees named as defendants in such suit, for the reasonable fees and
expenses of any counsel retained by them to the extent related to a Claim
covered under this Section 1.11. The Trust's
indemnification agreement contained in this Section 1.11 shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of the Distributor Indemnitees, and shall survive the delivery of any
Shares.
1.12 The Distributor agrees to indemnify, defend and hold harmless the
Trust, its officers, Trustees, employees, and any person who controls the Trust
within the meaning of Section 15 of the Securities Act (collectively, "Trust
Indemnitees"), from and against any and all Claims which the Trust Indemnitees
may incur under the Securities Act or under common law or otherwise, arising out
of or based upon (a) any untrue statement, or alleged untrue statement, of a
material fact contained in any registration statement, Prospectus, or
Trust-related advertisement or sales literature, or upon any omission, or
alleged omission, to state a material fact in such materials that would be
necessary to make the information therein not misleading, which untrue
statement, alleged untrue statement, omission, or alleged omission, was
furnished in writing, or omitted from the relevant writing furnished, as the
case may be, to the Trust by the Distributor for use in the registration
statement or in corresponding statements made in the Prospectus, or
advertisement or sales literature; (b) the willful misfeasance, bad faith or
gross negligence of the Distributor in the performance of its duties, or the
Distributor's reckless disregard of its obligations and duties under this
Agreement, or (c) the Distributor's failure to comply with laws, rules and
regulations applicable to it in connection with its activities hereunder (other
than in respect of Trust-related advertisements or sales literature that fails
to comply with applicable laws notwithstanding the exercise of reasonable care
in the preparation and review thereof by the Distributor).
In the event of a Claim for which the Trust Indemnitees may be entitled to
indemnification hereunder, the Trust shall provide the Distributor with written
notice of the Claim, identifying the persons against whom such Claim is brought,
promptly following receipt of service of the summons or other first legal
process, and in any event within ten (10) days of such receipt. The Distributor
will be entitled to assume the defense of any suit brought to enforce any such
Claim if such defense shall be conducted by counsel of good standing chosen by
the Distributor and approved by the Trust, which approval shall not be
unreasonably withheld. In the event any such suit is not based solely on an
alleged untrue statement, omission, or wrongful act on the Distributor's part,
the Trust shall have the right to participate in the defense. In the event the
Distributor elects to assume the defense of any such suit and retain counsel of
good standing so approved by the Trust, the Trust Indemnitees in such suit shall
bear the fees and expenses of any additional counsel retained by any of them,
but in any case where the Distributor does not elect to assume the defense of
any such suit or in case the Trust reasonably withholds approval of counsel
chosen by the Distributor, the Distributor will reimburse the Trust Indemnitees
named as defendants in such suit, for the reasonable fees and expenses of any
counsel retained by them to the extent related to a Claim covered under this
Section 1.12. The Distributor's indemnification agreement contained in this
Section 1.12 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of the Trust Indemnitees, and shall
survive the delivery of any Shares.
1.13 No Shares shall be offered by either the Distributor or the Trust
under any of the provisions of this Agreement and no orders for the purchase or
sale of Shares hereunder shall be accepted by the Trust if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
Securities Act or if and so long as a current Prospectus as required by Section
1 O(b )(2) of said Securities Act is not on file with the Commission; provided,
however, that: (a) the Distributor will not be obligated to cease offering
shares until it has received from the Trust written notice of such events, and
(b) nothing contained in this Section 1.13 shall in any way restrict or have an
application to or bearing upon the Trust's obligation to repurchase Shares from
any shareholder in accordance with the provisions of the Trust's Prospectus,
Agreement and Declaration of Trust, or Bylaws.
1.14 The Trust agrees to advise the Distributor as soon as reasonably
practical by a notice in writing delivered to the Distributor:
(a) of any request by the Commission for amendments to the
registration statement or Prospectus then in effect or for
additional information;
(b) in the event of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or
Prospectus then in effect or the initiation by service of process on
the Trust of any proceeding for that purpose;
(c) of the happening of any event that makes untrue any statement of
a material fact made in the registration statement or Prospectus
then in effect or which requires the making of a change in such
registration statement or Prospectus in order to make the statements
therein not misleading; and
(d) of any action of the Commission with respect to any amendment to
any registration statement or Prospectus which may from time to time
be filed with the Commission, which could reasonably be expected to
have a material negative impact upon the offering of Shares.
For purposes of this section, informal requests by or acts of the Staff of
the Commission shall not be deemed actions of or requests by the Commission
unless they would reasonably be expected to have a material negative impact upon
the offering of Shares.
2. Fees.
2.1 Attached as Schedule B to this Agreement are all plans of distribution
under Rule 12b-l under the 1940 Act approved by the Funds and in effect
(collectively, the "Distribution Plan"). The Funds will deliver to Distributor
promptly after any changes thereto updated copies of the Distribution Plan. For
its services under this Agreement, the Distributor shall be compensated and
reimbursed for its expenses as set forth on Schedules C and D to this
Agreement. If the Funds have a Distribution Plan that permits and authorizes
them to compensate and reimburse the Distributor and required board approvals
have been given, then the Funds shall be responsible for all such compensation
and reimbursements or such portions of it as have been permitted and authorized
under the Distribution Plan. It is contemplated by the Distributor that the
Adviser shall compensate and reimburse the Distributor for its provision to the
Funds of any distribution services for which the Funds are not authorized to
compensate and reimburse the Distributor. The fees set forth on Schedules C and
D are subject to change by Distributor upon 30 days advance notice.
2.2 If: (i) the Distributor properly receives fees from the Funds under
the Distribution Plan, other than for services rendered or expenses incurred,
that the Distributor is not obligated to pay to third party broker-dealers, plan
administrators or others ("Retained Fees"), and (ii) the Funds have authority
under the Distribution Plan to pay for some or all of the Distributor's services
under this Agreement ("Permitted Services"), then all of the Retained Fees will
either be (a) returned to the Funds and/or (b) credited against the compensation
payable by the Funds to. the Distributor for Permitted Services; provided,
however, that in no event shall any Retained Fees be applied in a manner that
results in a reduction of any obligation of the Adviser to compensate the
Distributor for services under this Distribution Agreement.
3. Sale and Payment.
3.1 Shares of a Fund may be subject to a sales load and may be subject to
the imposition of a distribution fee pursuant to the Distribution Plan referred
to above. To the extent that Shares of a Fund are sold at an offering price
which includes a sales load or subject to a contingent deferred sales load with
respect to certain redemptions (either within a single class of Shares or
pursuant to two or more classes of Shares), such Shares shall hereinafter be
referred to collectively as "Load Shares" (and in the case of Shares that are
sold with a front-end sales load, "Front-end Load Shares", or Shares that are
sold subject to a contingent deferred sales load, "CDSL Shares"). Funds that
issue Front-End Load Shares shall hereinafter be referred to collectively as
"Front-End Load Funds." Funds that issue CDSL Shares shall hereinafter be
referred to collectively as "CDSL Funds." Front-end Load Funds and CDSL Funds
may individually or collectively be referred as "Load Funds." Under this
Agreement, the following provisions shall apply with respect to the sale of, and
payment for, Load Shares.
3.2 The Distributor shall have the right to offer Load Shares at their net
asset value and to sell such Load Shares to the public against orders therefor
at the applicable public offering price, as defined in Section 4 hereof. The
Distributor shall also have the right to. sell Load Shares to. dealers against
orders therefor at the public offering price less a concession determined by the
Distributor, which concession shall not exceed the amount of the sales charge
o.r underwriting discount, if any, referred to in Section 4 below.
3.3 Prior to the time of delivery of any Load Shares by a Load Fund to, or
on the order of, the Distributor, the Distributor shall payor cause to. be paid
to the Load Fund or to. its order an amount in New York cleared funds equal to
the applicable net asset value of such Shares. The
Distributor may retain so. much of any sales charge or underwriting discount as
is not allowed by the Distributor as a concession to dealers.
3.4 With respect to CDSL Funds, the following provisions shall be
applicable:
(a) The Distributor shall be entitled to receive all contingent deferred
sales load charges, 12b-l payments and all distribution and service fees set
forth in the Distribution Plan adopted by a CDSL Fund (collectively, the "CDSL
Payments") with respect to CDSL Shares. The Distributor may assign or sell to a
third party (a "CDSL Financing Entity") all or a part of the CDSL Payments on
CDSL Shares that the Distributor is entitled to receive under this Agreement.
The Distributor's right to the CDSL Payments on such CDSL Shares, if assigned or
sold to a CDSL Financing Entity, shall continue after termination of this
Agreement.
(b) The Distributor may assign or sell to a CDSL Financing Entity all or
part of the CDSL Payments the Distributor is entitled to receive. The
Distributor's right to payment of CDSL Payments, if assigned or sold to a CDSL
Financing Entity, shall continue after termination of this Agreement. Otherwise,
(unless the Distributor is legally entitled to receive such fees as the
financing entity) the right to receive all CDSL Payments in respect of periods
subsequent to the termination of this Agreement shall terminate upon termination
of this Agreement. In the event Distributor assigns or sells all or a part of
the CDSL Payments to a CDSL Financing Entity and this Agreement is subsequently
terminated, Distributor shall have no obligation to assist the CDSL Financing
Entity in connection with such CDSL Financing Entity's right to receive such
CDSL Payments subsequent to such termination.
(c) The Distributor shall not be required to offer or sell CDSL Shares of
a CDSL Fund unless and until it has received a binding commitment from a CDSL
Financing Entity (a "Commitment") satisfactory to. the Distributor which
Commitment shall cover all expenses and fees related to the offer and sale of
such CDSL Shares including, but not limited to, dealer reallowances, financing
commitment fees, and legal fees. If at any time during the term of this
Agreement the then-current CDSL financing is terminated through no fault of the
Distributor, the Distributor shall have the right to immediately cease offering
or selling CDSL Shares until substitute financing becomes effective.
(d) The Distributor and the Trust hereby agree that the terms and
conditions set forth herein regarding the offer and sale of CDSL Shares may be
amended upon approval of both parties in order to comply with the terms and
conditions of any agreement with a CDSL Financing Entity to finance the costs
for the offer and sale of CDSL Shares so long as such terms and conditions are
in compliance with the Distribution Plan.
4. Public Offering Price.
The public offering price of a Load Share shall be the net asset value of
such Load Share next determined, plus any applicable sales charge, all as set
forth in the current Prospectus of the
Load Fund. The net asset value of Load Shares shall be determined in accordance
with the then-current Prospectus of the Load Fund.
5. Issuance of Shares.
The Trust reserves the right to issue, transfer or sell Load Shares at net
asset values (a) in connection with the merger or consolidation of the Trust or
the Load Fund(s) with any other investment company or the acquisition by the
Trust or the Load Fund(s) of all or substantially all of the assets or of the
outstanding Shares of any other investment company; (b) in connection with a pro
rata distribution directly to the holders of Shares in the nature of a stock
dividend or split; (c) upon the exercise of subscription rights granted to the
holders of Shares on a pro rata basis; (d) in connection with the issuance of
Load Shares pursuant to any exchange and reinvestment privileges described in
any then-current Prospectus of the Load Fund; and (e) otherwise in accordance
with any then-current Prospectus of the Load Fund.
6. Term, Duration and Termination.
This Agreement shall become effective with respect to each Fund as of the
date first written above (the "Effective Date") (or, if a particular Fund is not
in existence on such date, on the earlier of the date an amendment to Schedule A
to. this Agreement relating to that Fund is executed or the Distributor begins
providing services under this Agreement with respect to. such Fund) and, unless
sooner terminated as provided herein, shall continue for a two year period
following the Effective Date. Thereafter, if not terminated, this Agreement
shall continue with respect to a particular Fund automatically for successive
one-year terms, provided that such continuance is specifically approved at least
annually (a) by the vote of a majority of those members of the Trust's Board of
Trustees who. are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting for the purpose of voting on such
approval and (b) by the vote of the Trust's Board of Trustees or the vote of a
majority of the outstanding voting securities of such Fund. This Agreement is
terminable without penalty with 60 days' prior written notice, by the Trust's
Board of Trustees, by vote of a majority of the outstanding voting securities of
the Trust, or by the Distributor. This Agreement will also. terminate
automatically in the event of its assignment. (As used in this Agreement, the
terms "majority of the outstanding voting securities," "interested persons" and
"assignment" shall have the same meaning as ascribed to. such terms in the 1940
Act.)
7. Privacy.
Nonpublic personal financial information relating to consumers or
customers of the Funds provided by, or at the direction of, the Trust to the
Distributor, or collected or retained by the Distributor to. perform its duties
as distributor, shall be considered confidential information. The Distributor
shall not disclose or otherwise use any nonpublic personal financial information
relating to present or former shareholders of the Funds other than for the
purposes for which that information was disclosed to the Distributor, including
use under an exception in Rules 13, 14 or 15 of Securities and Exchange
Commission Regulation S-P in the ordinary course of business to
carry out those purposes. The Distributor shall have in place and maintain
physical, electronic and procedural safeguards reasonably designed to protect
the security, confidentiality and integrity of, and to prevent unauthorized
access to or use of, records and information relating to consumers and customers
of the Funds. The Trust represents to the Distributor that it has adopted a
Statement of its privacy policies and practices as required by Securities and
Exchange Commission Regulation S-P and agrees to provide the Distributor with a
copy of that statement annually.
8. Anti-Money Laundering Compliance.
8.1 Each of Distributor and the Trust acknowledges that it is a financial
institution subject to. the USA Patriot Act of 2001 and the Bank Secrecy Act
(collectively, the" AML Acts"), which require, among other things, that
financial institutions adopt compliance programs to guard against money
laundering. Each represents and warrants to the other that it is in compliance
with and will continue to comply with the AML Acts and applicable regulations in
all relevant respects. The Distributor shall also provide written notice to each
person or entity with which it entered an agreement prior to the date hereof
with respect to sale of the Trust's Shares, such notice informing such person of
anti-money laundering compliance obligations applicable to financial
institutions under applicable laws and, consequently, under applicable
contractual provisions requiring compliance with laws.
8.2 The Distributor shall include specific contractual provisions
regarding anti-money laundering compliance obligations in agreements entered
into by the Distributor with any dealer that is authorized to effect
transactions in Shares of the Trust.
8.3 Each of Distributor and the Trust agrees that it will take such
further steps, and cooperate with the other as may be reasonably necessary, to
facilitate compliance with the AML Acts, including but not limited to the
provision of copies of its written procedures, policies and controls related
thereto. ("AML Operations"). Distributor undertakes that it will grant to the
Trust, the Trust's anti-money laundering compliance officer and regulatory
agencies, reasonable access to copies of Distributor' s AML Operations, books
and records pertaining to the Trust only. It is expressly understood and agreed
that the Trust and the Trust's compliance officer shall have no access to any of
Distributor's AML Operations, books or records pertaining to other clients of
Distributor.
9. Notices.
Any notice provided hereunder shall be sufficiently given when sent by
registered or certified mail to the party required to. be served with such
notice at the following address: if to the Trust, to. it at [funds to. insert
name and address); and if to Distributor, to it at 000 Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, Attention: Broker Dealer Chief Compliance Officer, with a
copy to BISYS Distribution Services, 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000,
Attention: President, or at such other address as such party may from time to
time specify in writing to the other party pursuant to this Section.
10. Confidentiality.
During the term of this Agreement, the Distributor and the Trust may have access
to confidential information relating to such matters as either party's business,
trade secrets, systems, procedures, manuals, products, contracts, personnel, and
clients. As used in this Agreement, "Confidential Information" means information
belonging to the Distributor or the Trust which is of value to such party and
the disclosure of which could result in a competitive or other disadvantage to
either party, including, without limitation, financial information, business
practices and policies, know-how, trade secrets, market or sales information or
plans, customer lists, business plans, and all provisions of this Agreement.
Confidential Information includes information developed by either party in the
course of engaging in the activities provided for in this Agreement, unless: (i)
the information is or becomes publicly known without breach of this Agreement,
(ii) the information is disclosed to the other party by a third party not under
an obligation confidentiality to the party whose Confidential Information is at
issue of which the party receiving the information should reasonably be aware,
or (iii) the information is independently developed by a party without reference
to the other's Confidential Information. Each party will protect the other's
Confidential Information with at least the same degree of care it uses with
respect to its own Confidential Information, and will not use the other party's
Confidential Information other than in connection with its duties and
obligations hereunder. Notwithstanding the foregoing, a party may disclose the
other's Confidential Information if (i) required by law, regulation or legal
process or if requested by any Agency; (ii) it is advised by counsel that it may
incur liability for failure to make such disclosure; (iii) requested to by the
other party; provided that in the event of (i) or (ii) the disclosing party
shall give the other party reasonable prior notice of such disclosure to the
extent reasonably practicably and cooperate with the other party (at such other
party's expense) in any efforts to prevent such disclosure.
11. Governing Law.
This Agreement shall be construed in accordance with the laws of the State
of New York and the applicable provisions of the 1940 Act.
12. Prior Agreements.
This Agreement constitutes the complete agreement of the parties as to the
subject matter covered by this Agreement, and supersedes all prior negotiations,
understandings and agreements bearing upon the subject matter covered by this
Agreement.
13. Amendments.
No amendment to this Agreement shall be valid unless made in writing and
executed by both parties hereto.
14. Matters Relating to the Trust as a Delaware Business Trust.
It is expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Trust personally, but shall bind only the trust property of the
Trust. The execution and delivery of this Agreement have been authorized by the
Trustees, and this Agreement has been signed and delivered by an authorized
officer of the Trust, acting as such, and neither such authorization by the
Trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on them
personally, but shall bind only the trust property of the Trust as provided in
the Trust's Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first written
above.
Arrivato/Dow Xxxxx Funds
By: _______________________
Name:
Title:
BISYS Fund Services Limited Partnership
By: BISYS FUND SERVICES, INC., its
General Partner
By:__________________________
Name:
Title:
SCHEDULE A
FUNDS
[BISYS to insert list]
SCHEDULE B
DISTRIBUTION PLAN
[Trust to insert copies]
SCHEDULE C
COMPENSATION OF THE DISTRIBUTOR
1. BASIC DISTRIBUTION SERVICES. For providing the distribution entity and
related infrastructure and platform, including requisite registrations and
qualifications, premises, personnel, compliance, ordinary fund board meeting
preparation, maintenance of selling agreements, clearance of advertising and
sales literature with regulators, filing appropriate documentation for advisory
representatives to qualify as registered representatives of the Distributor
(provided that the Adviser is solely responsible for its representatives'
meeting examination requirements) and their related registrations and fees,
ordinary supervisory services, overhead, Financial Research Corporation's Mutual
Fund Views on the News and Monitor publications, and return on investment, the
Distributor shall receive an annual fee of $25,000, billed monthly.
2. SPECIAL DISTRIBUTION SERVICES. For special distribution services, including
those set forth on Schedule D to this Agreement, such as additional personnel,
registrations, marketing services, printing and fulfillment, website services,
proprietary distribution expertise for particular circumstances, and any other
services in addition to the basic distribution services covered by Paragraph I
above, the Distributor shall be reimbursed promptly upon invoicing its expenses
for such services, including: (a) all costs to support additional personnel; (b)
regulatory fees including NASD CRD costs associated with marketing materials;
and (c) printing, postage and fulfillment costs, and (d) amounts payable under
additional agreements to which Distributor is a party.
3. SPECIAL CONDUIT SITUATIONS. If the Distribution Plan, or any other Fund plans
of distribution under Rule 12b-l that contemplate up front and/or recurring
commission and/or service payments to broker dealers, retirement plan
administrators or others by the Distributor with respect to back-end loads,
level loads, or otherwise, unless expressly agreed otherwise in writing between
the parties, all such payments shall be made to the Distributor, which shall act
as a conduit for making such payments to such brokerdealers, retirement plan
administrators or others.
4. OTHER PAYMENTS BY THE DISTRIBUTOR. If the Distributor is required to make any
payments to third parties in respect of distribution, which payments are
contemplated by the parties to the distribution agreement or otherwise arise in
the ordinary course of business, the Distributor shall be promptly reimbursed
for such payments upon invoicing them.
5. FEE ADJUSTMENTS. The fixed fees and other fees expressed as stated dollar
amounts in this Schedule C and in this Agreement are subject to annual
increases, commencing on the one-year anniversary date of the date of this
Agreement, in an amount equal to the percentage increase in consumer prices for
services as measured by the United States Consumer Price Index entitled "All
Services Less Rent o.f Shelter," or a similar index should such index no. longer
be
published, since such one-year anniversary or since the date of the last fee
increase, as applicable.
SCHEDULE D
SPECIAL DISTRIBUTION SERVICES AND FEES
Services
1. Wholesaling Personnel Services
Wholesaling Personnel may be external wholesalers and/or internal wholesalers.
Services include soliciting support of the Funds with selling broker dealers;
participating in promotional meetings, presentations, conferences and other and
forums; identifying high potential personnel of the Adviser and selling broker
dealers; and assisting with mail solicitations and literature fulfillment.
Fees
Wholesaling Personnel Services Fees
For each individual constituting the Wholesaling Personnel employed by the
Distributor pursuant to this Agreement, the Distributor shall receive annually
an amount equal to the sum of:
(i) all compensation paid annually by the Distributor to the employee; plus
(ii) a management oversight fee equal to: (a) if one to four Wholesaling
Personnel are employed, 30% of the salary compensation and 5% of the bonus or
commission compensation, or (b) if five or more Wholesaling Personnel are
employed, 25% of the salary compensation and 5% of the bonus or commission
compensation; plus
(iii) 18% of the total compensation (covering costs of the Distributor's
employee benefits that are provided by the Distributor).
In addition, the Distributor shall be reimbursed for all related costs to
support, educate and train and maintain compliance oversight of Wholesaling
Personnel and other personnel such as sales management, marketing and
performance reporting personnel (including time and expenses, continuing
education, seminars, rent, supplies, phone, computers, firm element, license,
registration)
Upon any termination of Wholesaling Personnel at the request of the Funds
or upon termination of this Agreement by the Funds for any reason other than
cause, the Distributor will be reimbursed its severance costs with respect to
such terminated Wholesaling Personnel.
2. MARKETING AND RELATED SERVICES
Marketing Execution: services include identification and development of
appropriate marketing and communications programs, projects and other
initiatives; collaboration on initiating, researching, developing, and
delivering appropriate sales and marketing materials; and management of
marketing and advertising projects.
Performance Reporting: services include creation of templates for monthly fact
sheets and quarterly fact sheets; populating templates with performance data
obtained from third parties; and coordinating steps needed for final printing
and distribution.
Creative Communication and Editorial Services: services include preparing drafts
of textual commentary and management discussion and analysis for annual; and
semiannual reports, including portfolio manager interviews; providing creative
design and direction; and coordinating production, including typesetting
(initial composition and changes to composition), charts and ancillary items.
Production Timing:
No timing guarantees can be made for completion of monthly and quarterly
fact sheets where any of the information needed to produce the reports is
generated by service providers other than the Distributor. However, a basic
estimate of turnaround time may be given based upon when the unit receives all
necessary data in good order. Under normal conditions, the Performance Reporting
unit expects to make proofs ready for review (either printed or electronic PDF
format) by the 4th business day after the final piece of data is received. If
compliance review is necessary (e.g., when Morningstar ratings data is used) an
additional 2 days may be required for review.
Printing turnaround (once the factsheets are signed-off by the client) is
usually approximately 4-5 calendar days with most jobs shipping by the 5th day.
If requested, final electronic PDF files may be generated and e-mailed on
the day the job is signed off on by the client. These PDFs may be distributed
and printed as necessary until the final printed pieces arrive.
Marketing Execution: Quote available upon request.
Performance Reporting
Monthly Reports
Monthly Updating and Typesetting -- $850 - $1,000 per sheet per month (for
an All-in- One style report) Initial Design and Setup (I-time charge) --
$500 per sheet
Quarterly Reports
Quarterly Updating and Typesetting -- $300 - $350 per Fund sheet per Share
Class per quarter
Initial Design and Setup per Fund sheet (I-time charge) -- $500 per Fund
sheet
Annual & Semi-Annual Reports
Coordination:
$3,000 Initial Fee (includes Chairman's Letter and 1 st Fund)
$500 for each additional Fund
NOTE: The above charges do not include the typesetting, printing, shipping,
fulfillment, Xxxxx filing or quick-turnaround charges that may be incurred from
the financial printer. The above fees are for coordinating the project only.
Creative Communication and Editorial Services
Quote available upon request.
3. FRC SERVICES
FRC's program components include:
-Market Analytics Publications: Quote available upon request.
-Market Analytics Publications -Advanced Research Publications
-Analyst Support -SME Direct Access
-Advanced Research Publications:
The Trust acknowledges that certain FRC publications may be provided only to
parties that have entered into a written agreement or addendum that sets forth
the terms of use of such publications and the associated fee. The Trust will
notify the Distributor whether the Trust or the Adviser or both will enter into
such an agreement or addendum. The Trust acknowledges that if only one of the
Trust or the Adviser enters into such agreement or addendum, the other party
will be prohibited from receiving or using such publications.
FRC SERVICE FEES
Market Analytics Publications: Quote available upon request.
Advanced Research Publications:
Topic Briefs
FRC Focus (typical cost is approximately $1,500)
White Papers - FRC Vision (typical cost is approximately $2,500)
Research Studies (costs vary, however typically range between $3,500 and
$12,500)
Analyst Support: Quote available upon request
SME Direct Access: Quote available upon request
Other FRC Fees:
Client participation in funding FRC Franchise Level program: $12,500
All subsequent content and support hours may be purchased at a 20% discount from
standard pricing.
Expenses Applicable to Special Distribution Services
Except as expressly set forth above, out-of-pocket expenses incurred by
Distributor in the performance of its services under this Agreement are not
included in the above fees. Such out-of pocket expenses may include, without
limitation:
-reasonable travel and entertainment costs;
-expenses incurred by the Distributor in qualifying, registering and maintaining
the registration of the Distributor and each individual comprising Wholesaling
Personnel as a registered representative of the Distributor under applicable
federal and state laws and rules of the NASD, e.g., CRD fees and state fees;
-sponsorships, Promotions, Sales Incentives;
-any and all compensation to be paid to a third party as paying agent for
distribution activities (platform fees, finders fees, sub-TA fees, 12b-1 pass
thru, commissions, etc.);
-costs and expenses incurred for telephone service, photocopying and office
supplies; advertising costs;
-costs for printing, paper stock and costs of other materials, electronic
transmission, courier, talent utilized in sales materials (e.g. models), design
output, photostats, photography, and illustrations;
-packaging, shipping, postage, and photocopies; and
-taxes that are paid or payable by the Distributor or its affiliates in
connection with its services hereunder, other than taxes customarily and
actually imposed upon the income that the Distributor receives hereunder.
