Exhibit 6a
EUCLID MUTUAL FUNDS
DISTRIBUTION AGREEMENT
April 16,1998
XXXXX SECURITIES CORP.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
The undersigned, Euclid Mutual Funds, a Delaware business trust (the
"Trust"), is an open-end management investment company registered under the
Investment Company Act of 1940 (the "1940 Act"). The Trust currently offers its
shares in one series, Euclid Market Neutral Fund, and currently issues four
classes of shares designated as Class A, Class B, Class C and Class I shares
(the "Class A, Class B, Class C and Class I Shares"). In the future, the Trust
may authorize and issue other series and other classes of shares
SECTION 1. General Duties as Distributor of the Trust's Shares. You are
hereby engaged, as agent of the Trust, to sell and solicit the sale of shares of
all classes of Euclid Market Neutral Fund and any series of the Trust
established in the future. In the performance of these duties, you shall be
subject to the requirements of this agreement (the "Agreement"), the applicable
provisions of the Trust's Agreement and Declaration of Trust and its By-Laws,
the Trust's Prospectuses and Statements of Additional Information, and
applicable federal and state law, all as amended and in effect from time to
time. During the term of this Agreement, you will use your best efforts to
solicit or otherwise promote sales of the Trust's shares in jurisdictions where
shares may legally be offered for sale.
SECTION 2. Dealers and Service Organizations. You may enter into dealer
agreements with qualified dealers, the form thereof to be as mutually agreed
upon by the Trust and you, and shall solicit such dealers for orders to purchase
shares of the Trust. You may also enter into Service Agreements, in appropriate
form and consistent with this Agreement and the 1940 Act, with securities
dealers, financial institutions or other industry professionals (severally, a
"Service Organization") for promotion of, administration of, and servicing
investors in, the Trust's shares.
SECTION 3. Sales Literature and Advertisements. All sales literature and
advertisements used by you in connection with the sale of the Trust's shares
must be submitted to the Trust for its advance approval. In connection with the
sale or arranging for the sale of the Trust's shares, you are authorized to give
only such information and to make only such representations as are contained in
the Trust's then-current Prospectuses and Statements of Additional Information
or in sales literature or advertisements approved by the Trust.
SECTION 4. Information Relating to the Trust. The Trust will keep you
fully informed with regard to its affairs, will furnish you with copies of all
financial statements and a signed copy of each report prepared by its
independent public accountants, and will cooperate fully with you in your
efforts to sell the Trust's shares and in the performance of your duties under
this Agreement.
SECTION 5. Filing of Registration Statements, etc. The Trust will from
time to time file (and furnish you with copies of) such registration statements,
amendments thereto, and reports or other documents as may be required under the
Securities Exchange Act of 1933, the 1940 Act, or the laws of the states in
which you desire to sell Trust shares.
SECTION 6. Offering Price; Net Asset Value Per Share, cancellation of Orders.
Shares of the Trust shall be offered and sold only at the price in effect at the
time of such sale ( the respective "Offering Prices") as described in the
Trust's then-current Prospectus and Statement of Additional Information. The
Trust shall receive not less than the full net asset value per share of all
shares sold. You may re-allow to dealers all or any part of the discount you are
allowed.
Shares shall be redeemed at the applicable redemption price (net asset
value per share less any applicable sales charge) as set
forth in the Trust's then-current Prospectus and Statement of Additional
Information.
Any references herein to "net asset value per share" refer to the net
asset value per share computed separately for each class of each series in
accordance with the Trust's Agreement and Declaration of Trust, its Prospectus
and Statement of Additional Information and the instructions of its Board of
Trustees, all as revised or amended from time to time. The Trust or its
investment manager will advise you as promptly as practicable of the net asset
value per share for each class of each series on each day that net asset values
are determined.
You shall reimburse the Trust for any loss caused to any series of the
Trust by the failure to settle of any purchase, redemption or repurchase order
accepted by you. In such event, you shall pay to the Trust, on at least an
annual basis, an amount equal to the losses (net of any gains) realized by any
series of the Trust as a result of such cancellations.
SECTION 7. Transactional Services. In addition to your duties as
Distributor, we understand that you may, in your discretion, perform additional
functions in connection with transactions of Trust shares but without any
additional charge by you to the Trust other than as specified in this Agreement
or the Trust's Rule 12b-1 Distribution Plan.
You may process or cause to be processed requests received from your
customers in connection with their purchase, redemption or submission for
repurchase of shares of any series, in the manner prescribed from time to time
by the Board, and shall arrange for payment for such shares to or from the
Trust's account with its custodian..
The processing of Trust transactions may include, but is not limited to:
compilation of all share transactions from your office; communication with
account executives in connection with the execution of transactions; recording
and reporting of these transactions as executed by the Trust's transfer agent in
your customer statements; rendering of periodic customer statements; and the
reporting of 1099 information at year end.
You may also provide other shareholder services, such as communicating
with Trust shareholders and other functions in administering customer accounts
for Trust shareholders. We understand that these services may result in cost
savings to the Trust or to the Manager, and the Manager may compensate you for
all or a portion of the costs incurred in performing such functions on behalf of
the Trust. Nothing herein is intended, nor shall be construed, as requiring you
to perform any of the foregoing functions and none of these functions performed
by you shall be deemed distribution services.
SECTION 8. Multiple Capacities. Nothing contained in this agreement shall
be deemed to prohibit you from acting, and being separately compensated for
acting, in one or more capacities on behalf of the Trust, including, but not
limited to, the capacities of investment manager, broker and distributor. The
Trust understands that you may act in one or more such capacities on behalf of
other investment companies and customers. You shall give the Trust equitable
treatment under the circumstances in supplying services in any capacity, but the
Trust recognizes that it is not entitled to receive preferential treatment from
you as compared with the treatment given to any other investment company or
customer. Whenever you shall act in multiple capacities on behalf of the Trust,
you shall maintain the appropriate separate accounts and records for each such
capacity.
SECTION 9. Payment of Fees and Expenses.
(a) For your services as Distributor, you shall receive the fees in
accordance with the plans adopted by each series (or class of a series) of the
Trust pursuant to Rule 12b-1 under the 1940 Act, and the fees set forth herein
or in the Trust's Prospectus and Statement of Additional Information. The Trust
will pay you in consideration of your services in connection with the
distribution of Class B Shares of any series your "Allocable Portion", as
hereinafter defined, of the distribution fee allowable under the Rules of
Conduct of NASD Regulation, Inc. (the "Rules of Conduct") in respect of such
Class B Shares of such series consisting of a distribution fee at the rate of
three quarters of one percent (0.75%) per annum of the average daily net asset
value of the Class B Shares of such series of the Trust (the "Distribution
Fee"). For purposes of applying the limitation set forth in the Rules of Conduct
on the maximum amount of the Distribution Fee payable in respect of the Class B
and Class C Shares of any series, the Trust hereby elects to add to six and one
quarter percent (6.25%) of the issue price of the Class B Shares or Class C
Shares, as the case may be, interest thereon at the rate of prime plus one
percent per annum. The Distribution Fee shall be calculated and accrued daily
and shall be paid to you, or at your direction, as soon as practicable after the
end of the calendar month in which it accrues, but in any event not later than
10 days after the end of each such month.
(b) For your services as Distributor of the Trust's shares, you shall also
receive the proceeds of any front-end sales charges or CDSCs referred to in
Section 5 hereof. The Trust shall withhold and pay over to you, or at your
direction, on the date redemption proceeds are paid to a Class B or Class C
Shareholder of the Trust, your Allocable Portion of the CDSC, if any, applicable
to such redemption.
(c) Furthermore, the Trust shall assume and pay, or reimburse you for,
expenses of preparing and printing quarterly, semi-annual and annual reports for
distribution to the Trust's then existing shareholders, of maintaining a current
prospectus and statement of additional information, of qualification of the
Trust's shares for sale in various jurisdictions and of preparing and printing
prospectuses and statements of additional information for distribution to the
Trust's then existing shareholders. You shall pay, directly or by reimbursing
the Trust, the expenses of preparing, printing and distributing all sales
literature of the Trust, including printing and distributing prospectuses
required for your purposes, except to the extent payable by the Trust in
accordance with the terms of an effective plan pursuant to Rule 12b-1 under the
1940 Act.
(d) You will be deemed to have fully earned your Allocable Portion of the
Distribution Fee and CDSC, if any (as the case may be), payable in respect of
Class B Shares of any series upon the sale of each "Initial Issue Commission
Share" (as hereinafter defined) of such Class B of such series taken into
account in determining your Allocable Portion of such Distribution Fee or CDSC,
if any, as the case may be.
(e) Except as provided in (f) below and notwithstanding anything to the
contrary set forth elsewhere is this Agreement, the Trust's obligation to pay
you your Allocable Portion of the Distribution Fee payable in respect of the
Class B Shares of each series shall be (to the extent you have assigned your
rights to your Allocable Portion) absolute and unconditional and shall not be
subject to dispute, offset, counterclaim or any defense whatsoever (it being
understood that such provision is not a waiver of the Trust's right to pursue
you and enforce such claims against your assets other than your right to the
Distribution Fees and CDSCs in respect of the Class B Shares of such series).
(f) The Trust's obligation to pay you your Allocable Portion of the
Distribution Fee payable in respect of the Class B Shares of each series shall
not be terminated or modified except to the extent required by a change in the
1940 Act or the Rules of Conduct enacted or promulgated after January 31, 1996
(a "Change-in-Applicable Law"), or in connection with a "Complete Termination"
(as hereinafter defined) of the Rule 12b-1 distribution plan in respect of the
Class B Shares of such series.
(g) The Trust will not waive or change any CDSC in respect of the Class B
Shares of any series, except as provided in the Trust's Prospectus or Statement
of Additional Information without your consent (or consent of your assigns).
(h) Except to the extent required by a Change-in-Applicable-Law, neither
the termination of your role as principal distributor of the Class B Shares of
any series, nor the termination of this Agreement nor the termination (other
than a "Complete Termination," as hereinafter defined) of the Rule 12b-1
distribution plan with respect to the Class B Shares will terminate your right
to your Allocable Portion of the CDSCs in respect of the Class B Shares of such
series that are sold prior to such termination.
(i) Except as provided in the Trust's Prospectus and Statement of
Additional Information, until you have been paid your Allocable Portion of the
Distribution Fees in respect of the Class B Shares of each series, the Trust
will not adopt a plan of liquidation in respect of such series without your
consent (or the consent of your assigns), which consent will not be unreasonably
withheld.
(j) You may sell and assign your rights to your Allocable Portion of the
Distribution Fees and CDSCs (but not your obligations to the Trust under this
Distribution Agreement) in respect of the Class B Shares of any series to raise
funds to make the expenditures related to the distribution of Class B Shares of
such series and in connection therewith, upon receipt of notice of such sale and
assignment, the Trust shall pay to the purchaser or assignee such portion of
your Allocable Portion of the Distribution Fees and CDSCs in respect of the
Class B Shares of such series so sold or assigned.
(k) For purposes of this Agreement, the term "Allocable Portion" means, in
respect of Distribution Fees and CDSCs payable in respect of the Class B Shares
of any series as applied to you, the portion of such Distribution Fees allocated
to you in accordance with the Allocation Schedule attached hereto as Exhibit A.
(l) For purposes of this Agreement, the term "Complete Termination" means,
in respect of the Rule 12b-1 distribution plan in respect of the Class B Shares
of any series, a termination of such plan involving the cessation of payments of
Distribution Fees thereunder in respect of Class B Shares of such series and the
cessation in payments of distribution fees pursuant to every other Rule 12b-1
plan of the Trust in respect of such series for every future class of shares of
such series which, in the good faith determination of the Board of Trustees, has
substantially similar economic characteristics to the Class B Shares taking into
account the total sales charge, sales charge and other
similar charges, it being understood that the existing Class A, existing Class
C, and existing Class I Shares do not have substantially similar economic
characteristics to the Class B Shares.
(m) For purposes of paragraph (d) above, the term "Initial Issue
Commission Share" shall mean, in respect of any series, a Class B Share which is
a Commission Share issued by such series under circumstances other than in
connection with a permitted free exchange with another fund. For purposes of the
foregoing definition a "Commission Share" shall mean, in respect of any series,
each Class B Share of such series which is issued under circumstances which
would normally give rise to an obligation of the holder of such Class B Share to
pay a CDSC upon redemption of such Share, including, without limitation, any
Class B Share of such series issued in connection with a permitted free exchange
as set forth in the Trust's then current Prospectus and Statement of Additional
Information ("Permitted Free Exchange"), and any such Class B Share shall not
cease to be a Commission Share prior to the redemption (including a redemption
in connection with a Permitted Free Exchange) or conversion even though the
obligation to pay the CDSC shall have expired or conditions for waivers thereof
shall exist.
SECTION 10. Liability of the Distributor, etc. You shall be liable for
your own acts and omissions caused by your willful misfeasance, bad faith or
gross negligence in the performance of your duties or by your reckless disregard
of your obligations under this agreement, and nothing herein shall protect you
against any such liability to the Trust or its shareholders. Subject to the
first sentence of this
Section, you shall not be liable for any action taken or omitted on advice,
obtained in good faith, of counsel, provided such counsel is satisfactory to the
Trust.
SECTION 11. Termination of Agreement, Assignment, etc. This agreement may
be terminated with respect to the Trust at any time, without the payment of any
penalty, on sixty days' written notice (i) by you; (ii) by the Trust, acting
pursuant to a resolution adopted by the Board; or (iii) by a vote of the holders
of the lesser of (1) 67% of the Trust's outstanding voting securities present at
a meeting if the holders of more than 50% of the outstanding shares of the Trust
are present or represented by proxy, or (2) more than 50% of the outstanding
shares of the Trust. This agreement shall automatically terminate in the event
of its assignment; provided, however, that this agreement has been approved by
the Board and the Disinterested Trustees of the Board in anticipation of your
transfer of the Allocable Portion in order for you to raise funds to cover
distribution expenses associated with Class B Shares and therefore such transfer
will not cause this agreement to terminate. Termination shall not affect the
rights of the parties which have accrued prior thereto, including, without
limitation, your right to be paid your Allocable Portion as provided in Section
9 hereof (subject to the limitations therein set forth).
SECTION 12. Duration of Agreement. Unless sooner terminated, this
agreement shall continue in effect for two years, and thereafter until
terminated, provided that such continuation of this agreement and the terms
thereof are specifically approved annually in accordance with the requirements
of the 1940 Act by a majority of the Trustees, including a majority of the
Trustees who are not interested persons of you or of the Trust, cast in person
at a meeting called for the purpose of voting on such approval.
SECTION 13. Definitions. The terms "assignment" and "interested person"
when used in this agreement shall have the meanings given such terms in the 1940
Act and the rules and regulations promulgated thereunder.
SECTION 14. Obligation of the Trust, etc. The Trust's Agreement and
Declaration of Trust is on file with the Secretary of the State of Delaware and
notice is hereby given that this agreement is made and executed on behalf of the
Trust, and not by the Trustees or officers of the Trust individually, and the
obligations of or arising out of this agreement are not binding upon the
Trustees, officers or shareholders of the Trust individually but are binding
only upon the assets and property of the Trust. Notice is hereby given that the
debts, liabilities, obligations and expenses incurred, contracted for or
otherwise existing with respect to a particular series of the Trust shall be
enforceable against the assets of such series only, and not against the assets
of the Trust generally.
SECTION 15. Counterparts. This Agreement may be executed by any one or
more of the parties in any number of counterparts, each of which shall be deemed
to be an original, but all such counterparts shall together constitute one and
the same instrument.
SECTION 16. Concerning Applicable Provisions of Law, etc. This agreement
is executed and delivered in New York, New York, and the laws of the State of
New York shall, except to the extent that any applicable provisions of Federal
law shall be controlling, govern the construction, validity and effect of this
agreement.
If the agreement set forth herein is acceptable to you, please so
indicate by executing the enclosed copy of this agreement and returning the same
to the undersigned, whereupon this contract shall constitute a binding contract
between the parties hereto effective upon such date on or after its initial
approval in accordance with the 1940 Act as may be agreed by the Trust and
Distributor, consistent with the requirements of the 1940 Act.
Very truly yours,
EUCLID MUTUAL FUNDS
By:__________________________
Name:
Title:
Accepted and agreed this
____ day of ____________, 1998
XXXXX SECURITIES CORP.
By: ___________________________
Name:
Title:
