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Exhibit (e)(2)
FORM OF UNDERWRITING AGREEMENT
ING VARIABLE INSURANCE TRUST
[ADDRESS]
[CITY, STATE ZIP CODE]
___________, 2000
ING Pilgrim Securities, Inc.
0000 X. Xxxxxxxxxx Xxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
Re: Underwriting Agreement
Ladies and Gentlemen:
ING Variable Insurance Trust is a Delaware business trust operating as an
open-end management investment company (hereinafter referred to as the "Trust").
The trust is registered as such under the Investment Company Act of 1940, as
amended (the "1940 Act"), and its shares are registered under the Securities Act
of 1933, as amended (the "1933 Act"). The Trust on behalf of each of its
investment company portfolios listed in Schedule B attached, which may be
amended from time to time (each a "Fund" and collectively, the "Funds") desires
to offer and sell the authorized but unissued shares of the Funds to the public
in accordance with applicable federal and state securities laws.
You have informed us that ING Pilgrim Securities, Inc. is registered as a
broker-dealer under the provisions of the Securities Exchange Act of 1934 and is
a member in good standing of the National Association of Securities Dealers,
Inc. You have indicated your desire to act as the exclusive selling agent and
principal underwriter for the shares of the Funds. We have been authorized by
the Trust to execute and deliver this Agreement to you by a resolution of our
Board of Trustees (the "Trustees") adopted at a meeting of the Trustees, at
which a majority of Trustees, including a majority of our Trustees who are not
otherwise interested persons of our investment manager or its related
organizations, were present and voted in favor of the said resolution approving
this Underwriting Agreement.
1. Appointment of Underwriter. Upon the execution of this Agreement
and in consideration of the agreements on your part herein expressed and upon
the terms and conditions set forth herein, we hereby appoint you as the
exclusive distributor of the shares (other than sales made directly by the Trust
without sales charge) and agree that we will deliver to you such shares as may
be sold through your efforts. You agree to use your best efforts to promote the
sale of the shares, but you are not obligated to sell any specific number of the
shares.
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2. Independent Contractor. You will undertake and discharge your
obligations hereunder as an independent contractor and shall have no authority
or power to obligate or bind the Trust or the Funds by your actions, conduct or
contracts, except that you are authorized to accept orders for the purchase or
repurchase of the shares as our agent. You may appoint sub-agents or distribute
the shares through dealers (or otherwise) as you may determine necessary or
desirable from time to time. This Agreement shall not, however, be construed as
authorizing any dealer or other person to accept orders for sale or repurchase
on our behalf or to otherwise act as our agent for any purpose.
3. Offering Price. Shares of each Fund shall be offered at a price
equivalent to its net asset value plus, as appropriate, a variable percentage of
the public offering price as a sales load, as set forth in the Fund's
Prospectus. On each business day on which the New York Stock Exchange is open
for business, we will furnish you with the net asset value of the shares, which
shall be determined and become effective as of the time described in the Trust's
prospectus. The net asset value so determined shall apply to all orders for the
purchase of the shares received by dealers prior to the time as of which net
asset value is determined, and you are authorized in your capacity as our agent
to accept orders and confirm sales at such net asset value; provided that, such
dealers notify you of the time when they received the particular order and that
the order is placed with you prior the time as of which net asset value is
determined. To the extent that our Shareholder Servicing and Transfer Agent
(collectively, "Agent") and the Custodian(s) for any pension, profit-sharing,
employer or self-employed plan receive payments on behalf of the investors, such
Agent and Custodian(s) shall be required to record the time of such receipt with
respect to each payment, and the applicable net asset value shall be that which
is next determined and effective after the time of receipt by them. In all
events, you shall forthwith notify all of the dealers comprising your selling
group and the Agent and Custodian(s) of the effective net asset value as
received from us. Should we at any time calculate our net asset value more
frequently than once each business day, you and we will follow procedures with
respect to such additional price or prices comparable to those set forth above
in this Section 3.
4. Orders. You shall promptly advise us of all purchase orders for
shares of each Fund received by you. Any order may be rejected by us; provided,
however, that we and the Trust will not arbitrarily or without reasonable cause
refuse to accept or confirm orders for the purchase of shares of the Fund. We or
our agent will confirm orders upon receipt, will make appropriate book entries
and, upon receipt by the Trust (or its agent) of payment therefor, will deliver
deposit receipts for the shares.
5. Sales Commission.
(b) In respect of each Class of Shares other than Class B Shares:
(ii) You shall be entitled to receive a sales commission on
the sale of shares of each Fund in the amounts and according to the procedures
set forth in the Fund's Prospectus then in effect under the 1933 Act (including
any supplements or amendments thereto).
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(ii) In addition to the payments of the sales commissions to
you provided for in paragraph 5(a)(i), you may also receive reimbursement for
expenses or a maintenance or trail fee as may be required by and described in
the distribution plans adopted by the Funds pursuant to Rule 12b-1 under the
1940 Act (the "Distribution Plans").
(b) In respect of the Class B Shares of the Funds, the following
provisions shall apply:
(i) In consideration of your services as principal
underwriter of each Fund's Class B Shares pursuant to this Underwriting
Agreement and our distribution plan pursuant to Rule 12b-1 under the 1940 Act in
respect of such shares (the "Class B Distribution Plan"), we agree: (I) to pay
to you monthly in arrears your "Allocable Portion" (as hereinafter defined) of a
fee (the "Distribution Fee") which shall accrue daily in an amount equal to the
product of (A) the daily equivalent of 0.75 per annum multiplied by (B) the net
asset value of the Class B Shares of the Fund outstanding on such day, and (II)
to withhold from redemption proceeds your Allocable Portion of the Contingent
Deferred Sales Charges ("CDSCs") and to pay the same over to you or at your
direction.
(ii) The Allocation Schedule attached hereto as Schedule A
and each of the provisions set forth in clauses (I) through (V) of the second
sentence of Section 1(A) of the Class B Distribution Plan as in effect on the
date hereof, together with the related definitions, are hereby incorporated
herein by reference with the same force and effect as if set forth herein in
their entirety.
(iii) In addition to the payments of amounts provided for in
Section 5(b)(i) and (ii), you may also receive reimbursement for expenses or a
maintenance or trail fee as may be required by and described in the Class B
Distribution Plan.
(c) You may allow appointed sub-agents or dealers such
commissions or discounts (not exceeding the total sales commission) as you shall
deem advisable, so long as any such commissions or discounts are set forth in
each Fund's then current Prospectus, to the extent required by the applicable
federal and state securities laws.
6. Payment of Shares. At or prior to the time of delivery of any of
our shares you will pay or cause to be paid to the Custodian, for our account,
an amount in cash equal to the net asset value of such shares. In the event that
you pay for shares sold by you prior to your receipt of payment from purchasers,
you are authorized to reimburse yourself for the net asset value of such shares
from the offering price of such shares when received by you.
7. Redemption. (a) We represent that any of the outstanding shares of
the Fund may be tendered for redemption at any time, and we represent that the
Trust will repurchase or redeem the shares so tendered in accordance with the
Trust's Declaration of Trust and Bylaws and the applicable provisions of each
Fund's Prospectus. The price to be paid to redeem or repurchase the shares shall
be equal to the net asset value, less any applicable contingent deferred sales
charge, if any, determined as set forth in the applicable Prospectus (the
"redemption price").
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8. Registration of Shares. No shares shall be registered on our books
until (i) receipt by us of your written request therefor; (ii) receipt by the
Custodian and Agent of a certificate signed by an officer of the Trust stating
the amount to be received therefor; and (iii) receipt of payment of that amount
by the Custodian. We will provide for the recording of all shares purchased in
unissued form in "book accounts", unless a request in writing for certificates
is received by the Agent, in which case certificates for shares in such names
and amounts as is specified in such writing will be delivered by the Agent, as
soon as practicable after registration thereof on the books.
9. Purchases for Your Own Account. You shall not purchase shares for
your own account for purposes of resale to the public, but you may purchase
shares for your own investment account upon your written assurance that the
purchase is for investment purposes only and that the shares will not be resold
except through redemption by us.
10. Sale of Shares to Affiliates. You may sell the Class A and Class C
shares at net asset value, without a sales charge as appropriate, pursuant to a
uniform offer described in the Fund's current Prospectus (i) to our Trustees and
officers, our investment manager or your company or affiliated companies
thereof, (ii) to the bona fide, full time employees or sales representatives of
any of the foregoing who have acted as such for at least ninety (90) days, (iii)
to any trust, pension, profit-sharing, or other benefit plan for such persons,
or (iv) to any other person set forth in each Fund's then current Prospectus;
provided that such sales are made in accordance with the rules and regulations
under the 1940 Act and that such sales are made upon the written assurance of
the purchaser that the purchases are made for investment purposes only, not for
the purpose of resale to the public and that the shares will not be resold
except through redemption by us.
11. Allocation of Expenses.
(a) We will pay the following expenses in connection with the
sales and distribution of shares of each Fund:
(i) expenses pertaining to the preparation of our audited
and certified financial statements to be included in any amendments
("Amendments") to our Registration Statement under the 1933 Act, including the
Prospectuses and Statements of Additional Information included therein;
(ii) expenses pertaining to the preparation (including legal
fees) and printing of all Amendments or supplements filed with the Securities
and Exchange Commission, including the copies of the Prospectuses and Statements
of Additional Information included in such Amendments and the first ten (10)
copies of the definitive Prospectuses and Statements of Additional Information
or supplements thereto, other than those necessitated by or related to your
(including your "Parents") activities where such amendments or supplements
result in expenses which we would not otherwise have incurred;
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(iii) expenses pertaining to the preparation, printing, and
distribution of any reports or communications, including Prospectuses and
Statements of Additional Information, which are sent to our existing
shareholders;
(iv) filing and other fees to federal and state securities
regulatory authorities necessary to register and maintain registration of the
shares; and
(v) expenses of the Agent, including all costs and expenses
in connection with the issuance, transfer and registration of the shares,
including but not limited to any taxes and other governmental charges in
connection therewith.
(b) Except to the extent that you are entitled to reimbursement
under the provisions of any of the Distribution Plans for the Funds, you will
pay the following expenses:
(i) expenses of printing additional copies of the Prospectus
and Statement of Additional Information and any amendments or supplements
thereto which are necessary to continue to offer our shares to the public;
(ii) expenses pertaining to the preparation (excluding legal
fees) and printing of all amendments and supplements to our Registration
Statement if the Amendment or supplement arises from or is necessitated by or
related to your (including your "Parent") activities where those expenses would
not otherwise have been incurred by us; and
(iii) expenses pertaining to the printing of additional
copies, for use by you as sales literature, of reports or other communications
which have been prepared for distribution to our existing shareholders or
incurred by you in advertising, promoting and selling our shares to the public.
12. Furnishing of Information. We will furnish to you such information
with respect to our company and its shares, in such form and signed by such of
our officers as you may reasonably request, and we warrant that the statements
therein contained when so signed will be true and correct. We will also furnish
you with such information and will take such action as you may reasonably
request in order to qualify our shares for sale to the public under the Blue Sky
Laws or in jurisdictions in which you may wish to offer them. We will furnish
you at least annually with audited financial statements of our books and
accounts certified by independent public accountants, and with such additional
information regarding our financial condition, as you may reasonably request
from time to time.
13. Conduct of Business. Other than the currently effective Prospectus
and Statement of Additional Information, you will not issue any sales material
or statements except literature or advertising which conforms to the
requirements of federal and state securities laws and regulations and which have
been filed, where necessary, with the appropriate regulatory
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authorities. You will furnish us with copies of all such material prior to their
use and no such material shall be published if we shall reasonably and promptly
object.
You shall comply with the applicable federal and state laws and
regulations where our shares are offered for sale and conduct your affairs with
us and with dealers, brokers or investors in accordance with the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.
14. Redemption or Repurchase within Seven Days. If shares are tendered
to us for redemption or are repurchased by us within seven (7) business days
after your acceptance of the original purchase order for such shares, you will
immediately refund to us the full amount of any sales commission (net of
allowances to dealers or brokers) allowed to you on the original sale, and will
promptly, upon receipt thereof, pay to us any refunds from dealers or brokers of
the balance of sales commissions reallowed by you. We shall notify you of such
tender for redemption within ten (10) days of the day on which notice of such
tender for redemption is received by us.
15. Other Activities. Your services pursuant to this Agreement shall
not be deemed to be exclusive, and you may render similar services and act as an
underwriter, distributor or dealer for other investment companies in the
offering of their shares.
16. Term of Agreement. This Agreement shall become effective on the
date first written above or on such later date approved by the Trust's Board of
Trustees, including a majority of those Trustees who are not parties to this
Agreement or interested persons (as such term is defined in the Investment
Company Act of 1940) thereof. Unless terminated as provided herein, the
Agreement shall continue in full force and effect for two (2) years from the
effective date of this Agreement, and shall continue in effect from year to year
thereafter for successive one (1) year periods if approved at least annually (i)
by a vote of a majority of the outstanding voting securities of the Funds or by
a vote of the Trustees of the Trust, and (ii) by a vote of a majority of the
Trustees of the Trust who are not interested persons or parties to this
Agreement (other than as Trustees of the Trust), cast in person at a meeting
called for the purpose of voting on this Agreement.
17. Termination. This Agreement: (i) may be terminated at any time
without the payment of any penalty, either by vote of the Trustees of the Trust
or by a vote of a majority of the outstanding voting securities of the Funds, on
sixty (60) days' written notice to you; (ii) shall terminate immediately in the
event of its assignment; and (iii) may be terminated by you on sixty (60) days'
written notice to us.
18. Suspension of Sales. We reserve the right at all times to suspend
or limit the public offering of the shares upon written notice to you, and to
reject any order in whole or in part.
19. Miscellaneous. This Agreement shall be subject to the laws of the
State of Arizona and shall be interpreted and construed to further and promote
the operation of the Trust as an open-end investment company. As used herein,
the terms "Net Asset Value," "Offering
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Price," "Investment Company," "Open-End Investment Company," "Assignment,"
"Principal Underwriter," "Interested Person," "Parents," and "Majority of the
Outstanding Voting Securities," shall have the meanings set forth in the 1933
Act and the 1940 Act, as applicable, and the rules and regulations promulgated
thereunder.
20. Liability. Nothing contained herein shall be deemed to protect you
against any liability to us or to our shareholders to which you would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of your duties hereunder, or by reason of your reckless
disregard of your obligations and duties hereunder.
21. Amendment. This Agreement may be amended with respect to the Fund
by the parties only if such amendment is specifically approved by (a) the
Trustees or by the vote of a majority of the outstanding voting securities of
the Fund, and (b) by the vote of a majority of the distinerested Trustees cast
in person at a meeting called for the purpose of voting on such amendment.
If the foregoing meets with your approval, please acknowledge your
acceptance by signing each of the enclosed counterparts hereof and returning
such counterparts to us, whereupon this shall constitute a binding agreement as
of the date first above written.
Very truly yours,
ING VARIABLE INSURANCE TRUST
By: __________________________________
Title: __________________________________
Agreed to and Accepted:
ING PILGRIM SECURITIES, INC.
By: ______________________________
Title: ______________________________
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SCHEDULE A
to the Underwriting Agreement
UNDERWRITING AGREEMENT ALLOCATION PROCEDURES
CDSCs and Distribution Fees related to Shares of the Funds that are part of
portfolio series of ING Variable Insurance Trust [the "Trust"], as listed in the
attached Schedule B, shall be allocated by each Fund among ING Pilgrim
Securities, Inc. ("PSI") and any replacement principal underwriter for Shares of
such Fund (the "Successor Distributor") in accordance with this Schedule A.
Defined terms used in this Schedule A and not otherwise defined herein
shall have the meaning assigned to them in the Underwriting Agreement for Shares
of each Fund to which this Schedule A is attached. As used herein the following
terms shall have the meanings indicated.
"Commission Share" means, in respect of any Fund, each Share of such Fund
which is issued under circumstances which would normally give rise to an
obligation of the holder of such Share to pay a CDSC upon redemption of such
Share (including, without limitation, any Share of such Fund issued in
connection with a Free Exchange) and any such Share shall continue to be a
Commission Share of such Fund prior to the redemption (including a redemption in
connection with a Free Exchange) or conversion of such Share, even though the
obligation to pay the CDSC may have expired or conditions for waivers thereof
may exist.
"Date of Original Issuance" means in respect of any Commission Share, the
date with reference to which the amount of the CDSC payable on redemption
thereof, if any, is computed.
"Free Exchange" means an exchange of a Commission Share of one Fund for a
Commission Share of another Fund under circumstances where the CDSC which would
have been payable in respect of a redemption of the exchanged Commission Share
on the date of such exchange is waived and the Commission Share issued in such
exchange is treated as a continuation of the investment in the Commission Share
exchanged for purposes of determining the CDSC payable if such Commission Share
issued in the exchange is thereafter redeemed.
"Free Share" means, in respect of any Fund, each Share of such Fund, other
than a Commission Share, including, without limitation, any Share issued in
connection with the reinvestment of dividends or capital gains.
"Inception Date" means, in respect of any Fund, the first date on which
such Fund issued Shares.
"Net Asset Value" means, (i) with respect to any Fund, as of the date any
determination thereof is made, the net asset value of such Fund computed in the
manner such value is required to be computed by such Fund in its reports to its
shareholders, and (ii) with respect to any Share of such Fund as of any date,
the quotient obtained by dividing: (A) the net
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asset value of such Fund (as computed in accordance with clause (i) above)
allocated to Shares of such Fund (in accordance with the constituent documents
for such Fund) as of such date, by (B) the number of Shares of such Fund
outstanding on such date.
"Omnibus Share" means, in respect of the Fund, a Commission Share or Free
Share sold by one of the Selling Agents listed on Exhibit I to this Schedule. If
PSI and its Transferees reasonably determine that the Transfer Agent is able to
track all Commission Shares and Free Shares sold by any of the Selling Agents
listed on Exhibit I (taking into account all information provided to the
Transfer Agent by such Selling Agent on a schedule sufficient to enable the
Transfer Agent to Complete all required reports involving such information in a
timely manner), in the same manner as Commission Shares and Free Shares are
currently tracked in respect of Selling Agents not listed on Exhibit I, then
Exhibit I shall be amended to delete such Selling Agent from Exhibit I so that
Commission Shares and Free Shares sold by such Selling Agent will no longer be
treated as Omnibus Shares.
"Share" means, in respect of any Fund, each Class B share of such Fund.
PART I: ATTRIBUTION OF SHARES
Shares of each Fund, which are outstanding from time to time, shall be
attributed to PSI and any Successor Distributor in accordance with the following
rules;
(1) Commission Shares Other Than Omnibus Shares:
(a) Commission Shares (excluding Omnibus Shares) attributed to PSI shall be
Commission Shares (excluding Omnibus Shares) the Date of Original Issuance of
which occurred on or after the Inception Date of such Fund and on or prior to
the last day on which PSI acts as principal underwriter of Shares for such Fund.
(b) Commission Shares (excluding Omnibus Shares) attributable to the
Successor Distributor shall be Commission Shares (excluding Omnibus Shares) the
Date of Original Issuance of which occurs on or after the first day on which
such Successor Distributor acts as principal underwriter of Shares for such Fund
and on or prior to the last day such Successor for Distributor acts as principal
underwriter of Shares for such Fund.
(c) A Commission Share (other than an Omnibus Share) of a particular Fund
(the "Issuing Fund") issued in consideration of the investment of proceeds of
the redemption of a Commission Share of another Fund (the "Redeeming Fund") in
connection with a Free Exchange, is deemed to have a Date of Original Issuance
identical to the Date of Original Issuance of the Commission Share of the
Redeeming Fund and any such Commission Share will be attributed to PSI or the
Successor Distributor based upon such Date of Original Issuance in accordance
with Part I(a) and (b) above.
(d) A Commission Share (other than an Omnibus Share) redeemed (other than
in connection with a Free Exchange) or converted to a Class A share is
attributable to PSI or
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Successor Distributor based upon the Date of Original Issuance in accordance
with Part I(a), (b) and (c) above.
(2) Free Shares Other Than Omnibus Shares:
Free Shares (excluding Omnibus Shares) of a Fund outstanding on any date
shall be attributed to PSI or a Successor Distributor, as the case may be, in
the same proportion that the Commission Shares (excluding Omnibus Shares) of
such Fund outstanding on such date are attributed to it on such date; provided
that if PSI reasonably determines that the Transfer Agent or the Selling Agent
is able to produce monthly reports which track the Date of Original Issuance for
the Commission Shares related to such Free Shares, then the Free Shares shall be
allocated pursuant to clause 1(a), (b) and (c) above.
(3) Omnibus Shares:
Omnibus Shares of the Fund outstanding on any date shall be attributed to
PSI or a Successor Distributor, as the case may be, in the same proportion that
the Commission Shares which are not Omnibus Shares of the Fund outstanding on
such date are attributed to it on such date; provided that if PSI and its
transferees reasonably determine that the Transfer Agent is able to produce
monthly reports which track the Date of Original Issuance for the Omnibus
Shares, then the Omnibus Shares shall be allocated pursuant to clause 1(a), (b)
and (c) above.
PART II: ALLOCATION OF CDSCs
(1) CDSCs Related to the Redemption of Commission Shares Other Than Omnibus
Shares:
CDSCs in respect of the redemption of Commission Shares which are not
Omnibus Shares shall be allocated to PSI or Successor Distributor depending upon
whether the related redeemed Commission Share is attributable to PSI or
Successor Distributor, as the case may be, in accordance with Part I above.
(2) CDSCs Related to the Redemption of Omnibus Shares:
CDSCs in respect of the redemption of Omnibus Shares shall be allocated to
PSI or a Successor Distributor in the same proportion that CDSCs related to the
redemption of Commission Shares are allocated to each thereof; provided, that if
PSI and its transferees reasonably determine that the Transfer Agent is able to
produce monthly reports which track the Date of Original Issuance for the
Omnibus Shares, then the CDSCs in respect of the redemption of Omnibus Shares
shall be allocated among PSI and any Successor Distributors depending on whether
the related redeemed Omnibus Share is attributable to PSI or a Successor
Distributor, as the case may be, in accordance with Part I above.
PART III: ALLOCATION OF DISTRIBUTION FEES
Assuming that the Distribution Fee remains constant over time and among
Funds so that Part IV hereof does not become operative:
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(1) The portion of the aggregate Distribution Fees accrued in respect of
all Shares of all Funds during any calendar month allocable to PSI or a
Successor Distributor is determined by multiplying the total of such
Distribution Fees by the following fraction:
(A + C) /2
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(B + D) /2
where:
A = The aggregate Net Asset Value of all Shares of all Funds attributed to
PSI or such Successor Distributor, as the case may be, and outstanding at
the beginning of such calendar month
B = the aggregate Net Asset Value of all Shares of all Funds at the beginning
of such calendar month
C = The aggregate Net Asset Value of all Shares of all Funds attributed to
PSI or such Successor Distributor, as the case may be, and outstanding at
the end of such calendar month
D = The aggregate Net Asset Value of all Shares of all Funds at the end of
such calendar month
(2) If PSI reasonably determines that the Fund or its transfer agent is
able to produce automated monthly reports which allocate the average Net Asset
Value of the Commission Shares (or all Shares if available) of all Funds among
PSI and each Successor Distributor in a manner consistent with the methodology
detailed in Part I and Part III(1) above, the portion of the Distribution Fees
accrued in respect of all such Shares of all Funds during a particular calendar
month will be allocated to PSI or each Successor Distributor by multiplying the
total of such Distribution Fees by the following fraction:
(A) / (B)
where:
A = Average Net Asset Value of all such Shares of all Funds for such calendar
month attributed to PSI or such Successor Distributor, as the case may be
B = Total average Net Asset Value of all such Shares of all Funds for such
calendar month
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PART IV: ADJUSTMENT OF PSI'S SHARE AND SUCCESSOR DISTRIBUTORS' SHARES
If the terms of any Underwriting Agreement, any Plan, any Prospectus,
the Conduct Rules or any other applicable law change the rate at which
Distribution Fees or Service Fees are computed with reference to the Net Asset
Value of Shares of any Fund, these allocation procedures must be revised in
light of such changes in a manner which carries out the intent of these
allocation procedures.
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EXHIBIT I
To Schedule A
to the ING VARIABLE INSURANCE TRUST
Underwriting Agreement
SELLING AGENTS
Xxxxxxx Xxxxx
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SCHEDULE B
Name of Fund
ING Global Brand Names Fund
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