Exhibit e(ii)
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 1st day of October, 2004, by and between the
HALLMARK INVESTMENT SERIES TRUST, a Delaware business trust (the "Trust"), on
behalf of each of its series listed on Exhibit A, attached hereto, as such
Exhibit may be amended from time to time (each a "Fund" and collectively the
"Funds"), severally and not jointly, and RESRV PARTNERS, INC., a New York
corporation (the "Distributor").
WITNESSETH:
WHEREAS, each Fund is a series of the Trust, a registered investment
company under the Investment Company Act of 1940, as amended (the "Investment
Company Act"), and an indefinite number of shares of the Trust, par value
$0.001, have been registered under the Investment Company Act and the Securities
Act of 1933, as amended (the "Securities Act"), to be offered for sale to the
public in accordance with the terms and conditions set forth in the registration
statement of each such Fund as it may be amended from time to time (each a
"Registration Statement"); and
WHEREAS, each Fund may offer one or more classes of shares; and
WHEREAS, it is in the interest of each Fund and its shareholders to offer
its shares for sale on a continuous basis; and
WHEREAS, the Distributor is a securities firm engaged in the business of
selling shares of investment companies either directly to purchasers or through
financial intermediaries, including, without limitation, brokers, dealers,
retirement plans, financial consultants, registered investment advisers and
mutual fund supermarkets ("Financial Intermediaries"); and
WHEREAS, the Fund and the Distributor wish to enter into an agreement with
each other with respect to the continuous offering of certain classes of each
Fund's shares as set out on Exhibit B hereto, as such Exhibit may be amended
from time to time (the "Shares");
NOW, THEREFORE, the parties agree as follows:
Appointment of the Distributor. Each Fund hereby appoints the Distributor
as its distributor to sell its Shares pursuant to such Fund's current
Distribution Plan, adopted under Rule 12b-1 of the Investment Company Act, as
amended from time to time (the "Distribution Plan"), and hereby agrees during
the term of this Agreement to sell the Shares through the Distributor upon the
terms and conditions herein set forth. In this capacity, the Distributor will
have the right to enter into agreements with Financial Intermediaries, in a form
approved by the Fund, as provided herein. The Distributor hereby accepts such
appointment and agrees to use the Distributor's best efforts to sell the Shares.
It is understood that the Distributor does not undertake to sell all or any
specific portion of the Shares of the Fund.
Financial Intermediaries. The Distributor will have the right to enter
into agreements ("Selling Agreements") with Financial Intermediaries of the
Distributor's choice for the sale of the Shares or for other services in regard
to the Shares and to fix therein the portion of the 12b-1 fees that may be
allocated to the financial intermediaries on such terms and conditions as the
Distributor shall deem necessary or appropriate; provided, however, that the
Distributor shall periodically inform the Trustees of the nature and substance
of such agreements. Shares sold through financial intermediaries shall be for
sale by such intermediaries only at the public offering price(s) set forth in
the applicable prospectus and statement of additional information or as
otherwise permissible under the federal and state securities laws. Each such
Financial Intermediary must be in good standing with each applicable designated
examining authority ("DEA"). With respect to financial intermediaries who are
acting as brokers or dealers within the United States, the Distributor shall
offer and sell Shares only to such financial intermediaries who are members in
good standing of the NASD and who agree to abide by the rules and regulations of
the NASD, as amended from time to time. With respect to non-U.S. brokers, the
Distributor may only enter into Selling
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Agreements with those brokers who agree to abide by the rules and regulations of
the NASD.
Terms of Selling Agreements. All Selling Agreements shall be in a form
approved by the Trust. Each Selling Agreement shall require the respective
Financial Intermediary to conform to the provisions of this Distribution
Agreement, the Distribution Plan and Registration Statement of each Fund covered
by such agreement, the pricing provisions thereof, and all rules and regulations
of each governmental authority having jurisdiction over the sale of the subject
Shares. Each Selling Agreement shall also require the Financial Intermediary to
provide, on request, all reasonable relevant information regarding the policies,
procedures and reports of such Financial Intermediary.
Distribution Assistance. In addition, the Fund desires that the
Distributor form a group of selected dealers, to render distribution assistance
to the Fund in return for distribution assistance payments from both the Fund
and Reserve Management Company, Inc. ("RMCI"), each Fund's investment adviser.
Price of Shares. The Shares shall be sold to eligible investors by the
Distributor or a Financial Intermediary at the public offering price for the
respective class of Shares, determined as set forth in each Fund's Registration
Statement, as from time to time amended. The amount that the Distributor shall
pay to the respective Fund for Shares so sold shall be the net asset value,
determined as set forth in each Fund's Registration Statement, used in
determining the public offering price on which such orders were based. The net
asset value of Shares shall be determined by the Fund or any agent of the Fund
in accordance with the method set forth in each Fund's Registration Statement
and guidelines established by the Trustees.
Registration of Shares. Each Fund agrees that it will use its best efforts
to continue the effectiveness of its Registration Statement under the Securities
Act and the Investment Company Act. The Fund further agrees to prepare and file
any amendment to its Registration Statement, and any supplemental data, as may
be necessary in order to comply with the Securities Act and the Investment
Company Act. The Fund will furnish the Distributor with a reasonable number of
copies of the Prospectus, as amended, for use in connection with the sale of the
Shares.
Qualification of the Shares for Sale. Each Fund will take such steps as
may be necessary and feasible to qualify and maintain the qualification of its
Shares for sale under the securities laws of such states as the Distributor and
that Fund may approve. Any such qualification may be withheld, terminated or
withdrawn by a Fund at any time in its discretion in any jurisdiction where the
Fund shall deem such qualification disadvantageous. The Distributor shall
furnish such information and other material relating to its affairs and
activities as may be required by a Fund in connection with such qualification.
Each Fund shall bear the cost and expenses of qualification of its Shares for
sale pursuant to this Agreement and, if necessary or advisable in connection
therewith, of the qualification of the Fund as a broker or dealer in such states
of the United States or other jurisdictions as shall be selected by the Funds
and the Distributor, and the cost and expenses payable to each such state for
continuing qualification therein until the Fund decides to discontinue such
qualification.
Eligible Investors. Investors eligible to purchase each class of Shares of
each Fund ("eligible investors") shall be those persons so identified in the
currently effective Registration Statement of the Fund relating to such class of
Shares.
Purchase Orders. The Distributor shall promptly advise each Fund, or any
agent of the Fund designated in writing by that Fund, of all purchase orders for
Shares received by the Distributor. Unless an order is rejected by the Fund, as
provided herein, a Fund or its agent will confirm orders upon their receipt,
will make appropriate book entries and, upon receipt by a Fund or its agent of
payment for such Shares, will deliver deposit receipts for the Shares pursuant
to the instructions of the Distributor. The Distributor agrees to cause such
payment and such instructions to be delivered promptly to the Fund or its agent.
Each Fund agrees to issue confirmations on the Distributor's behalf promptly and
to retain a copy of such confirmations for the Distributor, if so
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directed.
Right to Reject Orders. The Distributor shall have the right to accept or
reject orders for the purchase of Fund Shares. Any purchase payment which the
Distributor may receive in connection with a rejected purchase order will be
returned promptly to the purchaser or originating broker. Any order may be
rejected by a Fund; provided, however, that a Fund will not arbitrarily or
without reasonable cause refuse to accept or confirm orders for the purchase of
Shares from eligible investors.
Suspension of Sales. Each Fund shall have the right to suspend the sale of
its Shares at times when the New York Stock Exchange (the "NYSE") is closed,
when trading on the NYSE is suspended, when trading on the NYSE is restricted,
if a banking moratorium shall have been declared by Federal or New York
authorities, if there shall have been some other event, which, in the judgment
of the Fund, makes it impracticable or inadvisable to sell the Shares, if it is
not reasonably practicable for the Fund fairly to determine the value of its net
assets, or during any other period when the Securities and Exchange Commission
(the "SEC"), by order, so permits. A Fund may also suspend the offering of its
Shares at any time if required by the provisions of any statute, order, rule or
regulation of any governmental body having jurisdiction over the Fund or the
sale of its Shares. When requested by a Fund at any such time, the Distributor
will suspend the sales of such Fund's shares.
Redemption of Shares. Outstanding Shares may be tendered for redemption at
any time, and each Fund agrees to repurchase or redeem the Shares so tendered in
accordance with its obligations as set forth in its Declaration of Trust, as
amended from time to time, and in accordance with the applicable provisions set
forth in the Registration Statement relating to the applicable Fund. The price
to be paid to redeem or repurchase the Shares shall be equal to the net asset
value calculated in accordance with the method set forth in each Fund's
Registration Statement and guidelines established by the Trustees. Redemption of
Shares or payments may be suspended at times when the NYSE is closed, when
trading on the NYSE is suspended, when trading on the NYSE is restricted, when
an emergency exists as a result of which disposal by a Fund of securities owned
by it is not reasonably practicable or it is not reasonably practicable for a
Fund fairly to determine the value of its net assets, or during any other period
when the SEC, by order, so permits.
Expenses. Each Fund, or the investment adviser to each Fund, shall bear
the costs and expenses of the Fund, including fees and disbursements of its
counsel and auditors, in connection with the preparation and filing of any
required registration statements under the Investment Company Act, the
Securities Act, and all amendments and supplements thereto, and preparing and
mailing annual and interim reports and proxy materials to Shareholders
(including but not limited to the expense of setting in type any such
registration statements, prospectuses, statements of additional information,
annual or interim reports or proxy materials). The Distributor shall be
responsible for any payments made to financial intermediaries.
Information to be Provided to the Distributor. Each Fund shall furnish to
the Distributor copies of all information, financial statements and other papers
which the Distributor may reasonably request for use in connection with the
distribution of Shares of that Fund, and this shall include, upon request by the
Distributor, one certified copy of all financial statements prepared for the
Fund by independent public accountants. Each Fund shall make available to the
Distributor such number of copies of the prospectus and statement of additional
information as the Distributor shall reasonably request. Each Fund will furnish,
in reasonable quantities, upon request by the Distributor, copies of its annual
and interim reports.
Information to be Provided to the Fund. The Distributor will furnish to
the Fund any pertinent information pertaining to the Distributor that is
required to be inserted with or in any supplemental sales literature to be used
in connection with the sales of Shares.
Compliance. In selling the Shares of the Funds, the Distributor shall use
its best efforts in all respects duly to conform with the requirements of all
Federal and state laws relating to the sale of such
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securities. The Distributor shall comply with all applicable provisions of the
Investment Company Act, the Securities Act, all other federal and state laws,
rules and regulations and NASD rules governing the issuance and sale of Fund
shares. Neither the Distributor nor any financial intermediary having an
agreement to offer and sell shares, nor any other person, is authorized by any
Fund to give any information or to make any representations, other than as
contained in the Registration Statement in effect from time to time, or in any
supplemental sales literature provided by or specifically approved by such Fund
for use in connection with the sales of its Shares. The Distributor shall adopt
and follow procedures, as approved by the officers of each Fund, for the
confirmation of sales to eligible investors and financial intermediaries, the
collection of amounts payable by eligible investors and financial intermediaries
on such sales, and the cancellation of unsettled transactions, as may be
necessary to comply with the requirements of the NASD, as such requirements may
from time to time exist.
Indemnification. In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties hereunder on the
Distributor's part, the Fund agrees to indemnify the Distributor against any and
all claims, demands, liabilities and expenses which the Distributor may incur
under the Securities Act, or common law or otherwise, arising out of or based
upon any alleged untrue statement of a material fact contained in any
registration statement or Prospectus of the Fund, or any omission to state a
material fact therein, the omission of which makes any statement contained
therein misleading, unless such statement or omission was made in reliance upon,
and in conformity with information furnished to the Fund in connection therewith
by the Distributor or on the Distributor's behalf.
The Distributor agrees to indemnify the Fund against any and all claims,
demands, liabilities and expenses which the Fund may incur under the Securities
Act, or common law or otherwise, arising out of or based upon any alleged untrue
statement of a material fact contained in any registration statement or
Prospectus of the Fund, or any omission to state a material fact therein if such
statement or omission was made in reliance upon, and in conformity with
information furnished to the Fund in connection therewith by the Distributor or
on the Distributor's behalf.
Services Not Exclusive. The Distributor's services to the Funds are not to
be deemed to be exclusive, and the Distributor shall be free to render
underwriting and distribution or other services to others (including other
investment companies) and to engage in other activities, so long as the
Distributor's services under this Agreement are not impaired thereby. It is
understood and agreed that the Distributor's officers or Trustees of the Fund
may serve as the Distributor's officers or Trustees to the extent permitted by
law; and that the Distributor's officers and Trustees are not prohibited from
engaging in any other business activity or from rendering services to any other
person, or from serving as partners, officers or Trustees of any other firm or
corporation, including other investment companies.
Duration and Termination. This Agreement shall remain in effect for one
year from its effective date and may be continued thereafter if approved at
least annually by the vote of a majority of the board of Trustees of the Trust,
and of the Trustees who are not interested persons of the Fund, as defined in
the Investment Company Act, and have no direct or indirect financial interest in
the operation of the plan or in any agreements related to the plan (the
"Independent Trustees"), cast in person at a meeting called for the purpose of
voting on such Agreement.
This Agreement shall terminate automatically in the event of its
assignment, as defined in the Investment Company Act. This Agreement may also be
terminated at any time without payment of any penalty by a majority of the
"Independent Trustees" as defined in the Plan or by vote of a majority of the
outstanding voting securities of the Fund as defined in the Plan (on not more
than 60 day's written notice to the Distributor at the Distributor's principal
place of business). or the Distributor, on not more than 60 day's written notice
addressed to the Fund at its principal place of business, may terminate this
Agreement.
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Amendments of this Agreement. This Agreement may be amended by the parties
only if such amendment is specifically approved by (i) the Board of Trustees or
by the vote of a majority of outstanding voting securities of the Fund and (ii)
by the vote of a majority of those Trustees of the Fund who are not parties to
this Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval.
Governing Law. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New York as at the time
in effect and the applicable provisions of the Investment Company Act. To the
extent that the applicable law of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
Personal Liability. The Declaration of Trust of the Trust, together with
all amendments thereto (the "Declaration"), which is on file in the office of
the Secretary of the State of Delaware, provides that the name of the Fund
refers to the Trustees under the Declaration collectively as Trustees, not as
individuals or personally; and no Trustee, shareholder, officer, employee or
agent of a Fund shall be held to any personal liability, nor shall resort be had
to their private property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of a Fund, but the Trust property only
shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
HALLMARK INVESTMENT SERIES TRUST,
By:______________________________
Accepted:
RESRV PARTNERS, INC.
By:_________________________________
Xxxx X. Xxxxxxxx, President