1
Exhibit 15 (e)
GRADISON GROWTH TRUST
PRINCIPAL UNDERWRITING AGREEMENT
--------------------------------
AGREEMENT made this 7th day of May, 1998 by and between
Gradison-Growth Trust (the "Trust"), an Ohio business trust, and XxXxxxxx &
Company Securities, Inc. (the "Distributor"), an Ohio corporation.
W I T N E S S E T H:
In consideration of the mutual convenants hereinafter contained,
the parties hereto agree as follows:
Section 1. APPOINTMENT OF THE DISTRIBUTOR.
(a) The Trust hereby appoints the Distributor as its agent to
arrange for the sale of shares of beneficial interest (the "Shares") of the
various series of the Trust (the "Series") on the terms and for the period set
forth in this Agreement, and the Distributor hereby accepts such appointment and
agrees to act hereunder.
(b) Should the Trust establish any additional series subsequent to
the date hereof for which the Trust wishes to appoint the Distributor as its
agent to arrange for the sale of the shares thereof under the terms of this
Agreement, the Trust shall provide the Distributor with a written notice to such
effect. If the Distributor is willing to serve in such capacity, it shall
provide the Trust with a written notice to such effect, whereupon the shares of
such series, together with the shares of the Series named in Section 1(a)
hereunder, shall be included in the term "Shares" hereunder, and such series,
together with the Series named in Section 1(a) hereunder, shall be included in
the term "Series" hereunder.
(c) It is understood that purchases of Shares of the Series may be
made through other broker-dealers entering into agreements with either the Trust
or the Distributor and directly through the Trust in the manner set forth in the
Prospectus. As used in this Agreement, the term "Prospectus" shall mean the
prospectus(es) and statement(s) of additional information included in the
Trust's Registration Statement and relating to the Series for which the
Distributor serves in
2
such capacity hereunder, and the term "Registration Statement" shall mean the
Registration Statement(s) most recently filed by the Trust with the Securities
and Exchange Commission and effective under the Securities Act of 1933, as
amended (the "1933 Act") and the Investment Company Act of 1940, as amended (the
"1940 Act"), as such Registration Statement is amended by any amendments thereto
at the time in effect.
Section 2. SERVICES AND DUTIES OF THE DISTRIBUTOR.
(a) The Distributor agrees to arrange to sell, as agent for the
Trust and from time to time during the term of this Agreement, the Shares of the
Series upon the terms described in the Prospectus.
(b) During the continuous public offering of the Shares of the
Series, the Distributor will hold itself available to receive orders,
satisfactory to the Distributor, for the purchase of such Shares and will accept
such orders on behalf of the Trust as of the time of receipt of such orders and
will transmit such orders as are so accepted to the Trust as promptly as
practicable. Purchase orders shall be deemed effective at the time and in the
manner set forth in the Prospectus.
(c) The Distributor, as agent for the Trust and in its discretion,
may enter into agreements with such registered and qualified retail
broker-dealers as it may select pursuant to which such broker-dealers may also
arrange for the sale or sell Shares of the Series.
(d) The offering price of the Shares of each Series shall be the
net asset value per share of each such Series next determined following receipt
of an order plus the sales charge, if any, as stated in the Prospectus. The
Trust shall furnish the Distributor, with all possible promptness, advice of
each computation of each Series' net asset value. The Distributor shall receive
the entire amount of any sales charge (initial or deferred) as compensation for
its services under this Agreement; however, the Distributor may reallow all or
any portion of such charge to broker-dealers entering into agreements with the
Distributor to sell Shares of the Series.
(e) In addition to the above, the Distributor shall also receive
compensation pursuant to any separate Distribution Plan or Agreement entered
into with the Trust.
3
(f) The Distributor hereby agrees to use its best efforts to find
purchasers who shall purchase the Shares of the Series; it shall not be
obligated to sell any certain number of such Shares and nothing herein contained
shall prevent the Distributor from entering into like distribution arrangements
with other investment companies so long as the performance of its obligations
hereunder is not impaired thereby.
(g) The Distributor is authorized on behalf of the Trust to
purchase Shares of the Series presented to it by dealers at the price determined
in accordance with, and in the manner set forth in the Prospectus.
Section 3. SERVICES NOT EXCLUSIVE. The services
4
furnished by the Distributor hereunder are not to be deemed exclusive and the
Distributor shall be free to furnish similar services to others so long as its
services under this Agreement are not impaired thereby. Nothing in this
Agreement shall limit or restrict the right of any director, officer or employee
of the Distributor, who may also be a Trustee, officer or employee of the Trust,
to engage in any other business or to devote his or her time and attention in
part to the management or other aspects of any other business, whether of a
similar or dissimilar nature.
Section 4. DUTIES OF THE TRUST.
(a) The Trust agrees to sell the Shares of the Series so long as it
has such Shares available for sale and to issue, if requested by the purchaser
and if provided for by the Trust, certificates for the Shares of the Series,
registered in such names and amounts as the Distributor has requested in
writing, as promptly as practicable after receipt by the Trust of the net asset
value thereof and written request of the Distributor therefor. The Trust may at
any time withdraw offerings of the Shares of one or more Series by notice to the
Distributor.
(b) The Trust shall keep the Distributor fully informed with regard
to its affairs and the affairs of the Series and 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 the Shares. This shall include, without limitation, one
certified copy of all financial statements of the Trust and the Series prepared
by independent accountants and such reasonable number of copies of its most
current Prospectus, and annual and interim reports as the Distributor may
request. The Trust shall cooperate fully in the efforts of the Distributor to
arrange for the sale of the Shares and in the performance of the Distributor's
duties under this Agreement.
(c) The Trust shall take, from time to time, all necessary action
to fix the number of authorized Shares of the Series and such steps, including
payment of the related filing fees, as may be necessary to register the same
under the 1933 Act so that there will be available for sale such number of
Shares of the Series as the Distributor may be expected to sell. The Trust
agrees to file from time to time such amendments, reports and other documents as
may be necessary in order that there may be no untrue statement of a material
fact in a Registration Statement or Prospectus, or necessary in order that there
may be no omission to state a material fact
5
in the Registration Statement or Prospectus which omission would make the
statements therein, in light of the circumstances under which they were made,
misleading.
(d) The Trust shall use its best efforts to qualify and maintain
the qualification of an appropriate number of the Shares of the Series for sale
under the securities laws of such states as the Distributor and the Trust may
approve, and, if necessary or appropriate in connection therewith, to qualify
and maintain the qualification of the Trust as a broker, dealer or agent in such
states; provided that the Trust shall not be required to amend the Declaration
of Trust or its By-Laws to comply with the laws of any state, to maintain an
office in any state, to change the terms of the offering of the Shares of the
Series in any state from the terms set forth in its Registration Statement or
Prospectus, to qualify as a foreign corporation, business trust or similar
entity in any state or to consent to service of process in any state other than
with respect to claims arising out of the offering of the Shares of the Series.
The Distributor shall furnish such information and other material relating to
its affairs and activities as may be required by the Trust in connection with
such qualifications.
Section 5. EXPENSES.
(a) The Trust shall bear all costs and expenses of the continuous
offering of the Shares of the Series in connection with: (i) fees and
disbursements of counsel and auditors, (ii) the preparation, filing and printing
of any registration statements and/or prospectuses required by and under the
federal securities laws, (iii) the preparation and mailing of annual and interim
reports and proxy materials to shareholders and (iv) the qualification of the
Shares for sale and of the Trust as a broker-dealer under the securities laws of
such states or other jurisdictions as shall be selected by the Trust and the
Distributor pursuant to Section 4(d) hereof and the cost and expenses payable to
each such state for continuing qualification therein. Any such costs and
expenses borne by the Trust which are attributable only to one Series will be
allocated to that Series; expenses which are not specifically allocable will be
allocated to each Series in a manner and on a basis determined in good faith by
the Trustees (including a majority of the Trustees who are not "interested
persons" (as defined in the 0000 Xxx) of the Trust, the Adviser or the
Distributor) to be fair and equitable.
(b) The Distributor shall bear the following expenses (on a Series
by Series basis, where applicable): (i) the costs and expenses of preparing,
printing and distributing any
6
materials not prepared by the Trust and other materials used by the Distributor
in connection with the offering of the Shares of the Series for sale to the
public, including the additional cost of printing copies of the Prospectus and
of annual and interim reports to shareholders other than the copies thereof
required for distribution to existing shareholders or for filing with any
federal and state securities authorities, (ii) the expenses of registration or
qualification of the Distributor as a dealer or broker under federal or state
laws and the expenses of continuing such registration or qualification; and
(iii) any other distribution or promotional expenses incurred by the Distributor
in connection with such offering, except for any such distribution or
promotional expenses as are paid by one or more Series pursuant to a Rule 12b-1
distribution plan.
Section 6. INDEMNIFICATION. The Trust agrees to indemnify, defend
and hold the Distributor, its officers and directors and any person who controls
the Distributor within the meaning of Section 15 of the 1933 Act or Section 20
of the Securities Exchange Act of 1934, as amended (the "1934 Act"), free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which the
Distributor, its officers, directors or any such controlling person may incur
under the 1933 Act, the 1934 Act, or under common law or otherwise, arising out
of or based upon any untrue statement of a material fact contained in the
Registration Statement or Prospectus or arising out of or based upon any alleged
omission to state a material fact required to be stated in either thereof or
necessary to make the statements in either thereof not misleading, except
insofar as such claims, demands, liabilities or expenses arise out of or are
based upon any such untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information furnished in
writing by the Distributor to the Trust for use in the Registration Statement or
Prospectus; provided, however, that this indemnity agreement, to the extent that
it might require indemnity of any person who is also an officer or director of
the Trust or who controls the Trust within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act, shall not inure to the benefit of such
officer, director or controlling person unless a court of competent jurisdiction
shall determine, or it shall have been determined by controlling precedent, that
such result would not be against public policy as expressed in the 1933 Act; and
further provided, that in no event shall anything contained herein be so
construed as to protect the Distributor against any liability to the Trust or to
its
7
security holders to which the Distributor would otherwise be subject by reason
of willful misfeasance, bad faith, or gross negligence in the performance of its
duties, or by reason of its reckless disregard of its obligations under this
Agreement. The Trust's agreement to indemnify the Distributor, its officers and
directors and any such controlling person as aforesaid is expressly conditioned
upon the Trust being promptly notified of any action brought against the
Distributor, its officers or directors, or any such controlling person, such
notification to be given by letter or telegram addressed to the Trust at its
principal business office. The Trust agrees promptly to notify the Distributor
of the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issue and sale of any of its
Shares.
The Trust shall be entitled to participate at its own expense in
the defense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this indemnity agreement. If the Trust elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by the Trust and satisfactory to indemnified defendants in the suit whose
approval shall not be unreasonably withheld. In the event that the Trust elects
to assume the defense of a suit, it will reimburse the indemnified defendants
for the reasonable fees and expenses of any counsel retained by the indemnified
defendants.
The Distributor agrees to indemnify, defend and hold the Trust, its
trustees and officers and any person who controls the Trust, if any, within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which the
Trust, its trustees or officers or any such controlling person may incur under
the 1933 Act, and the 1934 Act, or under common law or otherwise, but only to
the extent that such liability or expense incurred by the Trust, its trustees or
officers or such controlling person resulting from such claims or demands shall
arise out of or be based upon (i) any alleged untrue statement of a material
fact contained in information furnished in writing by the Distributor to the
Trust for use in the Registration Statement or Prospectus; (ii) any failure of
the Distributor or any investor purchasing Shares of a Series through the
Distributor to timely transmit good payment for the purchase of such Shares;
(iii) any breach of the obligations of the Distributor under Section 7 of this
Agreement; or (iv) arising out of any agreement between the
8
Distributor and any retail dealer or arising out of any supplemental sales
literature or advertising used by the Distributor in connection with its duties
under this Agreement. The Distributor's agreement to indemnify the Trust, its
trustees and officers and any such controlling person as aforesaid, is expressly
conditioned upon the Distributor being promptly notified of any event giving
rise to rights of indemnification hereunder, including any action brought
against the Trust, its trustees or officers or any such controlling person, such
notification being given to the Distributor at its principal business office.
The Distributor shall be entitled to participate, at its own expense, in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce the claim, but if the Distributor elects to assume the defense, the
defense shall be conducted by counsel chosen by the Distributor and satisfactory
to the indemnified defendants whose approval shall not be unreasonably withheld.
In the event the Distributor elects to assume the defense of any suit and retain
counsel, the defendants in the suit shall bear the fees and expenses of any
additional counsel retained by them. If the Distributor does not elect to assume
the defense of any suit, it will reimburse the indemnified defendants in the
suit for the reasonable fees and expenses of any counsel retained by them.
Section 7. COMPLIANCE WITH SECURITIES LAWS. The Trust represents
that it is registered as an open-end management investment company under the
1940 Act, and agrees that it will comply with all of the provisions of the 1940
Act and of the rules and regulations thereunder. The Trust and the Distributor
each agree to comply with all of the applicable terms and provisions of the 1940
Act, the 1933 Act and, subject to the provisions of Section 4(d), all applicable
state securities notification laws. The Distributor agrees to comply with all of
the applicable terms and provisions of the 1934 Act.
Section 8. TERM OF AGREEMENT. This Agreement shall commence on the
date first set forth above. This Agreement shall continue in effect for a period
more than one year from the date hereof only so long as such continuance is
specifically approved at least annually in conformity with the requirements of
the 1940 Act.
Section 9. TERMINATION. This Agreement may be terminated with
respect to any Series at any time, without the payment of any penalty, by vote
of a majority of the outstanding voting securities of the respective Series on
not more than sixty days' written notice to the Distributor. This Agreement may
also be terminated by the Distributor upon not
9
less than thirty days' written notice to the Trust. Any such notices shall be by
delivery in person or by registered or certified mail to the addresses of the
parties as specified below.
In the event of termination, any sums due the Distributor for
itself for accounts serviced prior to termination will be paid within ten days
after the end of the month of such termination.
This Agreement shall terminate automatically in the event of its
assignment (within the meaning of the 0000 Xxx) unless such automatic
termination shall be prevented by an order of exemption from the Securities and
Exchange Commission.
Section 10. NOTICES. Any notice required to be given pursuant to
this Agreement shall be deemed duly given if delivered or mailed by registered
mail, postage prepaid, (1) to the Distributor at Gradison Division XxXxxxxx &
Company Securities Inc., 000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxx 00000 or (2) to the
Trust at Gradison Growth Trust, 000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxx 00000.
Section 11. GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Ohio.
Section 12. AMENDMENT OF THIS AGREEMENT. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
10
Section 13. NON-LIABILITY OF SHAREHOLDERS, TRUSTEES, OFFICERS,
EMPLOYEES, REPRESENTATIVES AND AGENTS. A copy of the Declaration of Trust, as
amended, establishing the Trust is on file with the Secretary of the State of
Ohio, and notice is hereby given that this Agreement is executed on behalf of
the Trust by the Officers of the Trust as officers, and not individually, and
that the shareholders, trustees, officers, employees, representatives or agents
of the Trust shall not personally be bound by or liable under this Agreement,
nor shall resort be had to their private property for the satisfaction of any
obligation or claim thereunder, as more fully provided under the terms of the
Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year first above written.
GRADISON GROWTH TRUST
By _______________________________
Xxxxxx X. Xxxxxx
Chairman
XxXXXXXX & COMPANY SECURITIES, INC.
By ______________________________
Xxxxxxx X. Xxxxxx
Senior Managing Director
