Exhibit 5
DISTRIBUTION AGREEMENT
AGREEMENT made as of the date set forth in Schedule A attached hereto
between the investment company named on Schedule A (the "Trust"), on behalf of
each of its series listed on Schedule A (the "Funds"), and FAM DISTRIBUTORS,
INC., a Delaware corporation, (the "Distributor").
W I T N E S S E T H
WHEREAS, the Trustees of the Trust (the "Trustees") are authorized to
establish separate series relating to separate portfolios of securities, and the
Trustees have established and designated the Funds as series of the Trust; and
WHEREAS, each of the Funds may offer one or more separate classes of
shares, with the par value per share, if any, set forth on Schedule A (the
"Shares"); and
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "Investment Company Act"), as an open-end investment company;
and
WHEREAS, the Funds have an initial subscription period (expected to run
from _____ to ______), a guarantee period (the "Guarantee Period") (expected to
run from ________ to __________) and a post-guarantee period (the
"Post-Guarantee Period") (expected to run from ________ to _________); and
WHEREAS, Shares of the Funds will not be offered during the Guarantee
Period; and
WHEREAS, it is affirmatively in the interest of the Funds to offer their
Shares for sale continuously during the initial subscription period and the
Post-Guarantee Period; 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 Trust and the Distributor wish to enter into an agreement
with each other with respect to the subscription offering and the continuous
offering during the Post-Guarantee Period of each class of each Fund's Shares;
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of the Distributor. The Trust hereby appoints the
Distributor as the principal underwriter and distributor of each Fund to sell
the Shares to eligible investors (as defined below) and hereby agrees during the
term of this Agreement (other than during the Guarantee Period) to sell the
Shares to the Distributor upon the terms and conditions herein set forth.
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Section 2. Exclusive Nature of Duties. The Distributor shall be the Funds'
exclusive representative to act as principal underwriter and distributor of the
Shares, except that:
a. The Trust may, with respect to any Fund, upon written notice to the
Distributor, from time to time designate other principal underwriters and
distributors of the Shares with respect to areas other than the United States as
to which the Distributor may have expressly waived in writing its right to act
as such. If such designation is deemed exclusive, the right of the Distributor
under this Agreement to sell the Shares in the areas so designated shall
terminate, but this Agreement shall remain otherwise in full effect until
terminated in accordance with the other provisions hereof.
b. The exclusive rights granted to the Distributor to purchase Shares from
each Fund shall not apply to Shares issued in connection with the merger or
consolidation of any other investment company or personal holding company with a
Fund or a Fund's acquisition by purchase or otherwise of all (or substantially
all) the assets or the outstanding shares of any such company.
c. Such exclusive rights also shall not apply to Shares issued by a Fund
pursuant to reinvestment of dividends or capital gains distributions.
d. Such exclusive rights also shall not apply to Shares issued by a Fund
pursuant to any conversion, exchange or reinstatement privilege afforded
redeeming shareholders or to any other Shares as shall be agreed between the
Trust and the Distributor from time to time.
Section 3. Purchase of Shares from the Trust.
a. Prior to the continuous offering of the Shares of a Fund during the
Post-Guarantee Period, commencing on a date agreed upon by the Trust and the
Distributor, the Distributor may solicit subscriptions for Shares during a
subscription period which shall last for such period as may be agreed upon by
the parties hereto. If so, the subscriptions will be payable within three
business days after the termination of the subscription period, at which time
the Shares will be issued against payment and such Fund will commence
operations.
b. After the subscription offering, if any such offering is made, and the
Guarantee Period, or at such other time agreed to by the Distributor and the
Trust, each Fund will commence an offering of Shares and thereafter the
Distributor shall have the right to buy from the Trust the Shares needed, but
not more than the Shares needed (except for clerical errors in transmission) to
fill unconditional orders for Shares of a Fund placed with the Distributor by
eligible investors or financial intermediaries. Investors eligible to purchase
each class of Shares of each Fund shall be those persons so identified in the
currently effective prospectus and statement of additional information of a Fund
(the "prospectus" and "statement of additional information," respectively) under
the Securities Act of 1933, as amended (the "Securities Act"), relating to such
class of Shares of such Fund ("eligible investors"). The price that the
Distributor shall pay for Shares so purchased from a Fund shall be the net asset
value, determined as set forth in Section 3(e) hereof, used in determining the
public offering price on which such orders were based.
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c. The Shares are to be resold by the Distributor to eligible investors at
the public offering price, as set forth in Section 3(d) hereof, or to financial
intermediaries having agreements with the Distributor pursuant to Section 7
hereof.
d. The public offering price of each class of Shares, i.e., the price per
share at which the Distributor or financial intermediaries may sell the Shares
to eligible investors, shall be the public offering price as set forth in the
prospectus and statement of additional information relating to such class of
Shares, or as otherwise permissible under the federal and state securities laws.
If the public offering price does not equal an even cent, the public offering
price may be adjusted to the nearest cent. All payments to the Funds hereunder
shall be made in the manner set forth in Section 3(g).
e. The net asset value of Shares shall be determined by the Trust or any
agent of the Trust in accordance with the method set forth in each Fund's
prospectus and statement of additional information and guidelines established by
the Trustees.
f. The Trust shall have the right to suspend the sale of Shares of any
Fund at any time. In addition, the Trust shall have the right to suspend the
sale of Shares at times when redemption is suspended pursuant to the conditions
set forth in Section 4(b) hereof. The Trust shall also have the right to suspend
the sale of 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 event that, in the
judgment of the Trust, makes it impracticable or inadvisable to sell the Shares.
g. The Trust, or any agent of the Trust designated in writing by the
Trust, shall be promptly advised of all purchase orders for Shares received by
the Distributor. Any order may be rejected by the Trust; provided, however, that
the Trust will not arbitrarily or without reasonable cause refuse to accept or
confirm orders for the purchase of Shares. The Trust (or its agent) will confirm
orders upon their receipt, will make appropriate book entries and, upon receipt
by the Trust (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 Trust through National Securities Clearing
Corporation ("NSCC"), in New York Clearing House funds or by Federal Funds wire.
The Distributor agrees to cause such payment and such instructions to be
delivered promptly to the Trust (or its agent).
Section 4. Repurchase or Redemption of Shares by the Trust.
a. Any of the 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 Article VI of the Trust's
Agreement and Declaration of Trust, as amended from time to time, and in
accordance with the applicable provisions set forth in the prospectus and
statement of additional information 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 provisions of Section 3(e) hereof (or in
the case of a redemption on the Guarantee Maturity Date (as defined in each
Fund's prospectus) at the redeeming shareholder's Guaranteed Amount (as defined
in each Fund's prospectus)), less any contingent deferred sales charge ("CDSC"),
redemption fee or other charge(s), if any, set forth in the prospectus and
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statement of additional information relating to the applicable Fund. All
payments by a Fund hereunder shall be made in the manner set forth below. The
redemption or repurchase by a Fund of any of the Shares purchased by or through
the Distributor will not affect the sales charge secured by the Distributor or
any financial intermediary in the course of the original sale, except that if
any Shares are tendered for redemption or repurchase within seven business days
after the date of the confirmation of the original purchase, the right to the
sales charge shall be forfeited by the Distributor and the financial
intermediary that sold such Shares.
Each Fund shall pay the total amount of the redemption price as defined in
the above paragraph pursuant to the instructions of the Distributor through
NSCC, in New York Clearing House funds or by Federal Funds wire on or before the
seventh business day subsequent to its having received the notice of redemption
in proper form. The proceeds of any redemption of Shares shall be paid by each
Fund as follows: (i) any applicable CDSC shall be paid to the Distributor, and
(ii) the balance shall be paid to or for the account of the shareholder, in each
case in accordance with the applicable provisions of the prospectus and
statement of additional information.
b. Redemption of Shares or payment may be suspended at times when the New
York Stock Exchange is closed, when trading on said Exchange is closed, when
trading on said Exchange is suspended, when trading on said Exchange 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 the Trust fairly to determine the value of the net assets of the
Fund, or during any other period when the Securities and Exchange Commission, by
order, so permits.
Section 5. Duties of the Trust.
a. The Trust shall furnish to the Distributor copies of all information,
financial statements and other papers that the Distributor may reasonably
request for use in connection with the distribution of Shares of any Fund, and
this shall include, upon request by the Distributor, one certified copy of all
financial statements prepared for the Trust by independent public accountants.
The Trust shall make available to the Distributor such number of copies of each
Fund's prospectus and statement of additional information as the Distributor
shall reasonably request.
b. The Trust shall take, from time to time, but subject to any necessary
approval of a Fund's shareholders, all necessary action to fix the number of
authorized Shares and such steps as may be necessary to register the same under
the Securities Act to the end that there will be available for sale such number
of Shares as the Distributor reasonably may be expected to sell.
c. The Trust 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 Trust may approve. Any
such qualification may be withheld, terminated or withdrawn by the Trust at any
time in its discretion. As provided in Section 8(c) hereof, the expense of
qualification and maintenance of qualification shall be borne by the Funds. The
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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
qualification.
d. The Trust will furnish, in reasonable quantities upon request by the
Distributor, copies of the Funds' annual and interim reports.
Section 6. Duties of the Distributor.
a. The Distributor shall devote reasonable time and effort to effect sales
of Shares but shall not be obligated to sell any specific number of Shares. The
services of the Distributor to the Trust hereunder are not to be deemed
exclusive and nothing herein contained shall prevent the Distributor from
entering into like arrangements with other investment companies so long as the
performance of its obligations hereunder is not impaired thereby.
b. In selling the Shares, 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 securities. Neither the Distributor nor any
financial intermediary having an agreement with the Distributor to offer and
sell Shares pursuant to Section 7 hereof, nor any other person is authorized by
the Trust to give any information or to make any representations, other than
those contained in the registration statement or related prospectus and
statement of additional information and any sales literature specifically
approved by the Trust.
c. The Distributor shall adopt and follow procedures, as approved by the
officers of the Trust, 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 National Association of Securities Dealers, Inc. (the "NASD"), as such
requirements may from time to time exist.
Section 7. Agreements with Financial Intermediaries.
a. The Distributor shall have the right to enter into agreements with
financial intermediaries of its choice for the sale of Shares and to fix therein
the portion of the sales charge 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 to financial intermediaries shall be for resale 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.
b. 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.
Section 8. Payment of Expenses.
a. Each Fund shall bear all costs and expenses of the Fund, as incurred,
including fees and disbursements of its counsel and auditors, in connection with
the preparation
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and filing of any required registration statements and/or prospectuses and
statements of additional information 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).
b. The Distributor shall be responsible for any payments made to financial
intermediaries. In addition, after the prospectuses, statements of additional
information and annual and interim reports have been prepared and set in type,
the Distributor shall bear the costs and expenses of printing and distributing
any copies thereof to be used in connection with the offering of Shares to
financial intermediaries or eligible investors pursuant to this Agreement. The
Distributor shall bear the costs and expenses of preparing, printing and
distributing any other literature used by the Distributor or furnished by it for
use by financial intermediaries in connection with the offering of the Shares
for sale to eligible investors and any expenses of advertising incurred by the
Distributor in connection with such offering. It is understood and agreed that
so long as any Distribution Plan pursuant to Rule 12b-1 under the Investment
Company Act with respect to a particular class of Shares of a Fund remains in
effect, any expenses incurred by the Distributor hereunder in connection with
distribution and/or account maintenance activities for such class of Shares, as
applicable, may be paid from amounts recovered by it from the Fund under such
Plan.
c. The Funds shall bear the cost and expenses of qualification of the
Shares for sale pursuant to this Agreement and, if necessary or advisable in
connection therewith, of qualifying the Trust as a broker or dealer in such
states of the United States or other jurisdictions as shall be selected by the
Trust 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 Trust decides to discontinue such qualification pursuant to Section 5(c)
hereof.
Section 9. Indemnification.
a. Each Fund shall 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), as incurred, 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 and statement of additional information, as from
time to time amended and supplemented, or an annual or interim report to the
Fund's shareholders, 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
Fund in connection therewith by or on behalf of the Distributor; provided,
however, that in no case (i) is the indemnity of the Fund in favor of the
Distributor and any such controlling persons to be deemed to protect such
Distributor or any such controlling persons thereof against any liability to the
Fund 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
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performance of their duties or by reason of the reckless disregard of their
obligations and duties under this Agreement; or (ii) is the Fund 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 Fund in writing within a reasonable time after the summons or other first
legal process giving information of 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 Fund of any such
claim shall not relieve it from any liability that it may have to the person
against whom such action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. Each Fund 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 Fund 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 a Fund 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, as incurred, of any additional counsel retained by them, but in case
the Fund 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, as incurred, of
any counsel retained by them. Each Fund 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 any of the
Shares.
b. The Distributor shall indemnify and hold harmless the Trust and each of
its Trustees and officers, the applicable Fund, and each person, if any, who
controls the Trust against any loss, liability, claim, damage or expense, as
incurred, 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 Fund in writing by or
on behalf of the Distributor for use in connection with the registration
statement or related prospectus and statement of additional information, as from
time to time amended, or the annual or interim reports to shareholders. In case
any action shall be brought against the Trust 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 Trust, and the Trust
and each person so indemnified shall have the rights and duties given to the
Distributor by the provisions of subsection (a) of this Section 9.
Section 10. Fee-Based or Other Programs. In connection with certain
fee-based or other programs offered by a Fund's investment adviser or its
affiliates or by financial intermediaries having agreements with the Distributor
pursuant to Section 7 hereof, the Distributor and its affiliates are authorized
to offer and sell shares of the Funds, as agent for the Trust, to participants
in such programs. Similarly, any Shares of a Fund sold through a fee-based or
other program offered by a financial intermediary shall be sold by such
intermediary acting as agent. The terms of this Agreement shall apply to such
sales, including terms as to the offering price of Shares, the proceeds to be
paid to the Funds, the duties of the Distributor, the payment of expenses and
indemnification obligations of the Funds and the Distributor.
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Section 11. Duration and Termination of this Agreement. This Agreement
shall become effective as of the date indicated on Schedule A and shall remain
in force with respect to any Fund until the second anniversary of the inception
date with respect to such Fund as set forth on Schedule A, and thereafter, but
only for so long as such continuance is specifically approved at least annually
by (i) the Trustees or, with respect to any one Fund, by the vote of a majority
of the outstanding voting securities of that Fund and (ii) by the vote of a
majority of those Trustees 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.
This Agreement may be terminated at any time, without the payment of any
penalty, with respect to any Fund or Funds by the Trustees or by vote of a
majority of the outstanding voting securities of the applicable Fund(s), or by
the Distributor, 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 12. Amendments of this Agreement. This Agreement may be amended by
the parties with respect to a Fund only if such amendment is specifically
approved by (i) the Trustees or by the vote of a majority of outstanding voting
securities of the applicable Fund and (ii) by the vote of a majority of those
Trustees 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 13. 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
XXXXXXX XXXXX PRINCIPAL PROTECTED TRUST
on behalf of each of its series listed on
Schedule A
By:_____________________________________
Name:
Title:
FAM DISTRIBUTORS, INC.,
By:_____________________________________
Name:
Title:
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SCHEDULE A
Date of Agreement (preamble): ________ __, 2002
Termination date of Agreement (Section 11): ________ __, 2004
Name of Trust (preamble): Xxxxxxx Xxxxx Principal Protected Trust
Name of Fund (preamble): Inception Date with respect
to Fund (Section 11):
Xxxxxxx Xxxxx Fundamental Growth Principal Protected Fund _______ __, 2002
Xxxxxxx Xxxxx Basic Value Principal Protected Fund _______ __, 2002
Par Value of shares (recitals): None
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