Exhibit 5
BLACKROCK VARIABLE SERIES FUNDS, INC.
DISTRIBUTION AGREEMENT
AGREEMENT dated as of October 1, 2008 between BLACKROCK VARIABLE SERIES
FUNDS, INC., a corporation organized under the laws of Maryland (the "Company"),
and BLACKROCK INVESTMENTS, INC., a Delaware corporation (the "Distributor").
W I T N E S S E T H:
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended to date (the "Investment Company Act"), as a diversified
open-end investment company and it is affirmatively in the interest of the
Company to offer its shares for sale continuously to the separate accounts (the
"Separate Accounts") of insurance companies (the "Insurance Companies") pursuant
to a currently effective prospectus (the "Prospectus") under the Securities Act
of 1933 (the "Securities Act"); and
WHEREAS, the Company comprises sixteen separate funds (the "Funds"), each
of which pursues its own investment objective through separate investment
policies, and may in the future comprise one or more additional funds; and
WHEREAS, each of the Funds may offer one or more separate classes of
shares of common stock, par value $.10 per share; and
WHEREAS, the Distributor is a securities firm engaged in the business of
selling shares of investment companies either directly to purchasers or through
other securities dealers; and
WHEREAS, the Company and the Distributor wish to enter into an agreement
with each other with respect to the continuous offering to the Insurance
Companies for their Separate Accounts of the Class I shares, Class II shares and
Class III shares of the Funds (the "Shares") in order to promote the growth of
the Funds and facilitate the distribution of their Shares.
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of the Distributor. The Company hereby appoints the
Distributor as the principal underwriter and distributor of the Funds to sell
their Shares to the Insurance Companies for their Separate Accounts and the
Distributor hereby accepts such appointment. The Company, during the term of
this Agreement, shall sell its Shares to the Distributor upon the terms and
conditions set forth below.
Section 2. Exclusive Nature of Duties. The Distributor shall be the
exclusive representative of the Company to act as principal underwriter and
distributor of the Shares.
Section 3. Purchase of Shares from the Company.
(a) The Company will offer its Shares and the Distributor shall have the
right to buy from the Company the Shares needed, but not more than the Shares
needed (except for clerical errors in transmission) to fill unconditional orders
for the Shares placed with the Distributor by the Insurance Companies for their
Separate Accounts. The price which the Distributor shall pay for the Shares so
purchased from the Company shall be the net asset value per share, determined as
set forth in Section 3(c) hereof.
(b) The Shares are to be resold by the Distributor to the Insurance
Companies for their Separate Accounts at the net asset value per share.
(c) The net asset value of the Shares shall be determined as of fifteen
minutes following the close of trading on each day the New York Stock Exchange
is open for business, in accordance with the method set forth in the Prospectus
of the Company and guidelines established by the Board of Directors of the
Company. The Company may also cause the net asset value of the Shares to be
determined in substantially the same manner or estimated in such manner and as
of such other hour or hours as may from time to time be agreed upon in writing
by the Company and the Distributor. All payments to the Company hereunder shall
be made in the manner set forth in Section 3(e).
(d) The Company shall have the right to suspend the sale of the Shares at
times when redemption of any Shares is suspended pursuant to the condition set
forth in Section 4(b) hereof. The Company shall also have the right to suspend
the sale of the Shares if trading on the New York Stock Exchange shall have been
suspended, if a banking moratorium shall have been declared by Federal or New
York authorities, or if there shall have been some other extraordinary event
which, in the judgment of the Company, makes it impracticable to sell Shares.
(e) The Company, or any agent of the Company designated in writing by the
Company, shall be promptly advised of all purchase orders for the Shares
received by the Distributor. The Company (or its agent) will confirm orders upon
their receipt, will make appropriate book entries and, upon receipt by the
Company (or its agent) of payment therefor, will deliver deposit receipts or
certificates for such Shares pursuant to the instructions of the Distributor.
Payment shall be made to the Company in New York Clearing House funds. the
Distributor agrees to cause such payment and such instructions to be delivered
promptly to the Company (or its agent).
Section 4. Repurchase or Redemption of Shares by the Company.
(a) Any of the outstanding Shares may be tendered for redemption at any
time, and the Company agrees to repurchase or redeem any such Shares so tendered
in accordance with its obligations as set forth in Article VII of its Articles
of Incorporation, as amended from time to time, and in accordance with the
applicable provisions set forth in the Prospectus of the Company. The price to
be paid to redeem or repurchase Shares shall be equal to the net asset value per
share calculated in accordance with the provisions of Section 3(c) hereof. All
payments by the Company hereunder shall be made in the manner set forth below.
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The Company shall pay the total amount of the redemption price as defined
in the above paragraph pursuant to the instructions of the Distributor in New
York Clearing House funds on or before the third business day subsequent to its
having received the notice of redemption in proper form.
(b) Redemption of Shares of a Fund or payment therefor may be suspended
for any period during which trading on the New York Stock Exchange is restricted
as determined by the Securities and Exchange Commission or such Exchange is
closed (other than customary weekend and holiday closings), for any period
during which an emergency exists as defined by the Securities and Exchange
Commission as a result of which disposal of securities or determination of the
net asset value of such Fund is not reasonably practicable, and for such other
periods as the Securities and Exchange Commission may by order permit for the
protection of shareholders of the Fund.
Section 5. Duties of the Company.
(a) The Company 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 the
Company, and this shall include one certified copy, upon request by the
Distributor, of all financial statements prepared for the Company by independent
public accountants. The Company shall make available to the Distributor such
number of copies of its Prospectus as the Distributor shall reasonably request.
(b) The Company shall take, from time to time, but subject to the
necessary approval of its shareholders, all necessary action to fix the number
of its authorized Shares and to register Shares under the Securities Act, to the
end that there will be available for sale such number of Shares as investors may
reasonably be expected to purchase.
(c) The Company shall use its best efforts to qualify and maintain the
qualification of an appropriate number of the Shares for sale under the
securities laws of such states as the Distributor and the Company may approve,
if such qualification is required by such securities laws. Any such
qualification may be withheld, terminated or withdrawn by the Company at any
time in its discretion. As provided in Section 7(b) hereof, the expense of
qualification and maintenance of qualification of the Shares shall be borne by
the Company for the account of each Fund. The Distributor shall furnish such
information and other material relating to its affairs and activities as may be
required by the Company in connection with such qualification.
(d) The Company will furnish, in reasonable quantities upon request by the
Distributor, copies of annual and interim reports of the Company.
Section 6. Duties of the Distributor.
(a) The Distributor shall devote reasonable time and effort to effect
sales of Shares of the Company, but shall not be obligated to sell any specific
number of Shares. The services of the Distributor hereunder are not to be deemed
exclusive and nothing herein contained shall prevent the Distributor from
entering into distribution arrangements with other investment companies so long
as the performance of its obligations hereunder is not impaired thereby.
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(b) In selling the Shares of the Company, the Distributor shall use its
best efforts in all respects duly to conform with the requirements of all
federal and state laws and regulations and the regulations of the Financial
Industry Regulatory Authority ("FINRA"), relating to the sale of such
securities. Neither the Distributor nor any Insurance Company nor any other
person is authorized by the Company to give any information or to make any
representations, other than those contained in the registration statement or
related Prospectus and any sales literature specifically approved by the
Company.
(c) The Distributor shall require each Insurance Company to which it
sells, and which purchases, Shares to enter into a Sub-Agreement with the
Company substantially in the form attached to the Distribution Plan agreed to by
the Distributor in accordance with Rule 12b-1 under the Investment Company Act,
which authorizes the payment of a distribution fee to such Insurance Company.
Section 7. Payment of Expenses.
(a) The Company shall bear all costs and expenses of the Company relating
to the Funds, including fees and disbursements of its counsel and auditors, in
connection with the preparation and filing of any required registration
statements and prospectuses under the Investment Company Act, the Securities
Act, and all amendments and supplements thereto, and the expense of preparing,
printing, mailing and otherwise, distributing prospectuses, annual or interim
reports to shareholders and proxy materials.
(b) The Company shall bear, for the account of the Funds, the costs and
expenses of qualification of the Shares for sale, and, if necessary or advisable
in connection therewith, the Company shall bear the cost and expense of
qualifying the Company as a broker or dealer, in such states of the United
States or other jurisdictions as shall be selected by the Company and the
Distributor pursuant to Section 5(c) hereof and the cost and expenses payable to
each such state for continuing qualification therein until the Company decides
to discontinue such qualification pursuant to Section 5(c) hereof.
Section 8. Indemnification.
(a) The Company shall, for the account of the Funds, indemnify and hold
harmless the Distributor and each person, if any, who controls the Distributor
against any loss, liability, claim, damage or expense (including the reasonable
cost of investigating or defending any alleged loss, liability, claim, damage or
expense and reasonable counsel fees incurred in connection therewith) arising by
reason of any person acquiring any Shares, which may be based upon the
Securities Act, or on any other statute or at common law, on the ground that the
registration statement or related prospectus, as from time to time amended and
supplemented, or the annual or interim reports to shareholders of the Company
relating to the Funds, includes an untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading, unless such statement or omission
was made in reliance upon, and in conformity with, information furnished to the
Company in connection therewith by or on behalf of the Distributor; provided,
however that in no case (i) is the indemnity of the Company in favor of the
Distributor and any such controlling persons to be deemed to protect the
Distributor or any such controlling persons thereof against any liability to
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the Company or its security holders to which the Distributor or any such
controlling persons would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of its duties or by reason of
reckless disregard of its obligations and duties under this Agreement; or (ii)
is the Company to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Distributor or any such
controlling persons, unless the Distributor or such controlling persons, as the
case may be, shall have notified the Company in writing within a reasonable time
after the summons or other first legal process giving information or the nature
of the claim shall have been served upon the Distributor or such controlling
persons (or after the Distributor or such controlling persons shall have
received notice of such service on any designated agent), but failure to notify
the Company of any such claim shall not relieve it from any liability which it
may have to the person against whom such action is brought otherwise than on
account of its indemnity agreement contained in this paragraph. The Company will
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 such liability,
but if the Company elects to assume the defense, such defense shall be conducted
by counsel chosen by it and satisfactory to the Distributor or such controlling
person or persons, defendant or defendants in the suit. In the event the Company
elects to assume the defense of any such suit and retain such counsel, the
Distributor or such controlling person or persons, defendant or defendants in
the suit, shall bear the fees and expenses of any additional counsel retained by
them, but, in case the Company does not elect to assume the defense of any such
suit, it will reimburse the Distributor or such controlling person or persons,
defendant or defendants in the suit, for the reasonable fees and expenses of any
counsel retained by them. The Company shall promptly notify the Distributor of
the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Shares.
(b) The Distributor shall indemnify and hold harmless the Company and each
of its directors and officers and each person, if any, who controls the Company
against any loss, liability, claims, damage or expense described in the
foregoing indemnity contained in subsection (a) of this Section, but only with
respect to statements or omissions made in reliance upon, and in conformity
with, information furnished to the Company with respect to the Funds in writing
by or on behalf of the Distributor for use in connection with the registration
statement or related prospectus, as from time to time amended, or the annual or
interim reports to shareholders. In case any action shall be brought against the
Company or any person so indemnified, in respect of which indemnity may be
sought against the Distributor, the Distributor shall have the rights and duties
given to the Company, and the Company and each person so indemnified shall have
the rights and duties given to the Distributor by the provisions of subsection
(a) of this Section 8.
Section 9. Duration and Termination of this Agreement. This Agreement
shall become effective as of the date first above written and shall remain in
force as to each Fund until the second anniversary and thereafter, but only so
long as such continuance is specifically approved at least annually by (i) the
Board of Directors of the Company, or by the vote of a majority of the
outstanding voting securities of the Fund, cast in person or by proxy, and (ii)
a majority of those directors 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 upon such approval.
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This Agreement may be terminated at any time as to a Fund, without the
payment of any penalty, by the Board of Directors of the Company or by vote of a
majority of the outstanding voting securities of the Fund, or by the Adviser, on
sixty days' written notice to the other party. This Agreement shall
automatically terminate in the event of its assignment.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person" and "interested person," when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act.
Section 10. Amendments of this Agreement. This Agreement may be amended by
the parties only if such amendment is specifically approved by (i) the Board of
Directors of the Company, or by the vote of a majority of outstanding voting
securities of the Funds affected by the amendment, and (ii) a majority of those
directors of the Company 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.
Section 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
Investment Company Act. To the extent the applicable law of the State of New
York, or any of the provisions herein, conflicts with the applicable provisions
of the Investment Company Act, the latter shall control.
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IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers, all as of the day
and the year first above written.
BLACKROCK VARIABLE SERIES FUNDS, INC.
By: _________________________________
Name:
Title:
BLACKROCK INVESTMENTS, INC.
By: _________________________________
Name:
Title:
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