TRANS ADVISER FUNDS, INC.
DISTRIBUTION AGREEMENT
AGREEMENT made the 4th day of November 1996, between Trans Adviser
Funds, Inc. (the "Corporation"), a corporation organized under the laws of the
State of Maryland with its principal place of business at 000 Xxxx Xxxx Xxxxxx,
Xxxxxxx Xxxxx, Xxxxxxxx 00000, and Forum Financial Services, Inc. (the
"Distributor"), a corporation organized under the laws of the State of Delaware
with its principal place of business at Xxx Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxx
00000.
WHEREAS, the Corporation is registered under the Investment Company Act
of 1940, as amended (the "1940 Act") as an open-end management investment
company and may issue its shares of common stock, no par value (the "Shares"),
in separate series and classes; and
WHEREAS, the Corporation desires that the Distributor, as principal
underwriter, offer the Shares of the Corporation representing interests in each
of the classes now existing or in the future created in each of the separate
investment portfolios of the Corporation as listed from time to time on Schedule
A hereto (each a "Fund" and, collectively, the "Funds") and the Distributor is
willing to act as principal underwriter on the terms and conditions set forth in
this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Corporation and the Distributor do hereby agree
as follows:
SECTION 1. APPOINTMENT
The Corporation hereby appoints the Distributor, and the Distributor
hereby agrees, to act as distributor of the Shares for the period and on the
terms set forth in this Agreement. In connection therewith, the Corporation has
delivered to the Distributor copies of its Articles of Incorporation and Bylaws,
the Corporation's Registration Statement and all amendments thereto filed
pursuant to the Securities Act of 1933, as amended (the "Securities Act") or the
1940 Act (the "Registration Statement") and the current Prospectus and Statement
of Additional Information of each Fund (collectively, as currently in effect and
as amended or supplemented, the "Prospectus") and shall promptly furnish the
Distributor with all amendments of or supplements to the foregoing.
SECTION 2. DISTRIBUTION SERVICES
Subject to the direction and control of the Corporation's Board of
Directors (the "Board"), the Distributor shall serve as distributor of the
Shares.
(a) As agent of and distributor for the Corporation, the Distributor
shall offer, and solicit offers to subscribe to, the unsold balance of Shares as
shall then be effectively registered under the Securities Act and applicable
state securities laws. All subscriptions for Shares obtained by the Distributor
shall be directed to the Corporation for acceptance and shall not be binding on
the Corporation until accepted by it. The Distributor shall have no authority to
make
binding subscriptions on behalf of the Corporation. The Corporation reserves the
right to sell Shares directly to investors through subscriptions received by the
Corporation. The Distributor's rights hereunder shall not apply to Shares issued
in connection with (i) the merger or consolidation of the Corporation or its
series or classes with any other investment company or series or class thereof,
(ii) the Corporation's acquisition by purchase or otherwise of all or
substantially all of the assets or stock of any other investment company, or
(iii) the reinvestment in Shares by the Corporation's shareholders of dividends
or other distributions or any other offering by the Corporation of securities to
its shareholders.
(b) The Distributor shall use its best efforts to obtain subscriptions
to Shares upon the terms and conditions contained herein and in the Prospectus,
including the offering price. The Distributor shall send to the Corporation
promptly all subscriptions placed with the Distributor. The Corporation shall
advise the Distributor in its capacity as distributor of the approximate net
asset value per Share at any time requested by the Distributor which is a net
asset value determination time as disclosed in the Prospectus and at such other
times as it shall have been determined. The Corporation shall furnish to the
Distributor from time to time, for use in connection with the offering of
Shares, such other information with respect to the Corporation and Shares as the
Distributor may reasonably request. The Corporation shall supply the Distributor
with such copies of the Prospectus as the Distributor may request. The
Distributor may use its employees, agents and other persons who need not be its
employees, at its cost and expense, to assist it in carrying out its obligations
hereunder, but no such employee, agent or other person shall be deemed to be an
agent of the Corporation or have any rights under this Agreement.
(c) The Corporation reserves the right to suspend the offering of Shares
at any time, in the absolute discretion of the Board, and upon notice of such
suspension the Distributor shall cease to offer Shares.
(d) The Corporation and the Distributor will cooperate with each other
in taking such action as may be necessary to qualify Shares for sale under the
securities laws of such states as the Corporation may designate, provided that
the Distributor shall not be required to register as a broker-dealer or file a
consent to service of process in any such state. The Corporation shall pay all
fees and expenses of registering Shares under the Securities Act and of
registering or qualifying Shares and the Corporation's qualification under
applicable state securities laws. The Distributor shall pay all expenses
relating to its broker-dealer qualification.
(e) The Corporation represents that its Registration Statement and
Prospectus under the Securities Act have been or will be, as the case may be,
carefully prepared in conformity with the requirements of the Securities Act and
the rules and regulations of the Securities and Exchange Commission (the
"Commission") thereunder. The Corporation represents and warrants that its
Registration Statement and Prospectus contain or will contain all statements
required to be stated therein in accordance with the Securities Act and the
rules and regulations of the Commission thereunder, and that all statements of
fact contained or to be contained therein are or will be true and correct at the
time indicated or on the effective date as the case may be; and that the
Corporation's Registration Statement and Prospectus, when they shall become
effective or be authorized for use, will not include an untrue statement of a
material fact
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or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading to a purchaser of Shares. The
Corporation will from time to time file such amendment or amendments to its
Registration Statement and Prospectus as, in the light of future developments,
shall, in the opinion of the Corporation's counsel, be necessary in order to
have such Registration Statement and Prospectus at all times contain all
material facts required to be stated therein or necessary to make any statements
therein not misleading to a purchaser of Shares, but, if the Corporation shall
not file such amendment or amendments within fifteen days after receipt of a
written request from the Distributor to do so, the Distributor may, at its
option, terminate this Agreement immediately. The Corporation shall not file any
amendment to its Registration Statement and Prospectus without giving the
Distributor reasonable notice thereof in advance; provided, however, that
nothing in this Agreement contained shall in any way limit the Corporation's
right to file at any time such amendments to its Registration Statement and
Prospectus, of whatever character, as it deems advisable, such right being in
all respects absolute and unconditional. The Corporation represents and warrants
that any amendment to its Registration Statement and Prospectus hereafter filed
will, when it becomes effective, contain all statements required to be stated
therein in accordance with the 1940 Act and the rules and regulations of the
Commission thereunder, that all statements of fact contained therein will, when
the same shall become effective, be true and correct and that no such amendment,
when it becomes effective, will include an untrue statement of a material fact
or will omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading to a purchaser of Shares.
(f) The Corporation will indemnify, defend and hold the Distributor, its
several officers and directors, and any person who controls the Distributor
within the meaning of Section 15 of the Securities Act (collectively, the
"Distributor Indemnitees"), 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 reasonable counsel fees
incurred in connection therewith) which any Distributor Indemnitee may incur,
under the Securities Act, or under common law or otherwise, arising out of or
based upon any alleged untrue statement of a material fact contained in the
Corporation's Registration Statement and Prospectus under the Securities Act or
arising out of or based upon any alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in reliance upon, and in
comformity with, information furnished to the Corporation in connection
therewith by or on behalf of the Distributor; provided, however, that in no
event shall anything contained in this paragraph (f) be so construed as to
protect the Distributor against any liability to the Corporation or its 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 and duties under this
Section 2. This agreement to indemnify the Distributor Indemnitees is expressly
conditioned upon the Corporation being notified of any action brought against
any Distributor Indemnitee, such notification to be given by letter, facsimile
transmission or telegram to the Corporation and referring to the person against
whom such action is brought within ten days after the summons or other first
legal process shall have been served on such person. The failure so to notify
the Corporation of any such action shall not relieve the Corporation from any
liability which it may have to any Distributor Indemnitee otherwise than on
account of the indemnification provided for in this
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paragraph (f). The Corporation will be entitled to assume the defense of any
suit brought to enforce any such claim, and to retain counsel of good standing
chosen by it and approved by the Distributor, which approval shall not be
withheld unreasonably. In the event the Corporation elects to assume the defense
of any such suit and retain counsel of good standing approved by the
Distributor, the defendants in such suit shall bear the fees and expenses of any
additional counsel retained by any of them. In the event the Corporation does
not elect to assume the defense of any such suit, or in case the Distributor
does not approve of counsel chosen by the Corporation or has been advised that
it may have available defenses or claims which are not available to or conflict
with those available to the Corporation, the Corporation will reimburse any
Distributor Indemnitee named as defendant in such suit for the reasonable fees
and expenses of any counsel retained by any such person. The indemnification
provisions contained in this paragraph (f) and the Corporation's representations
and warranties in this Agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Distributor
Indemnitee and shall survive the sale of any Shares made pursuant to
subscriptions obtained by the Distributor. The indemnification provisions of
this paragraph (f) will inure exclusively to the benefit of the Distributor
Indemnitees and their respective successors and assigns. The Corporation agrees
promptly to notify the Distributor of the commencement of any litigation or
proceeding against the Corporation or any of its Directors or officers in
connection with the issue or sale of Shares.
(g) The Distributor agrees to indemnify, defend and hold the
Corporation, its several officers and directors, and any person who controls the
Corporation within the meaning of Section 15 of the Securities Act
(collectively, the "Corporation Indemnitees"), 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
reasonable counsel fees incurred in connection therewith) which any Corporation
Indemnitee may incur under the Securities Act, or under common law or otherwise,
but only to the extent that such liability or expense incurred by the
Corporation Indemnitees resulting from such claims or demands shall arise out of
or be based upon any alleged untrue statement of a material fact contained in
information furnished in writing by the Distributor in its capacity as
distributor to the Corporation for use in the Corporation's Registration
Statement or Prospectus under the Securities Act, or shall arise out of or be
based upon any alleged omission to state a material fact in connection with such
information required to be stated in the Registration Statement or Prospectus or
necessary to make such information not misleading. The Distributor's agreement
to indemnify the Corporation Indemnitees is expressly conditioned upon the
Distributor being notified of any action brought against a Corporation
Indemnitee, such notification to be given by letter, facsimile transmission or
telegram addressed and referring to the person against whom such action is
brought within ten days after the summons or other first legal process shall
have been served on such person. The Distributor shall have a right to control
the defense of such action, with counsel of its own choosing, satisfactory to
the Corporation, if such action is based solely upon such alleged misstatement
or omission on the Distributor's part, and in any other event the Distributor
and the Corporation Indemnitees named shall each have the right to participate
in the defense or preparation of the defense of any such action. The failure so
to notify the Distributor of any such action shall not relieve the Distributor
from any liability which it may have to any Corporation Indemnitee otherwise
than on account of the indemnification provisions in this paragraph (g).
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(h) The Corporation shall advise the Distributor immediately: (i) of any
request by the Commission for amendments to the Corporation's Registration
Statement or Prospectus or for additional information; (ii) in the event of the
issuance by the Commission of any stop order suspending the effectiveness of the
Corporation's Registration Statement or Prospectus or the initiation of any
proceedings for that purpose; (iii) of the happening of any material event which
makes untrue any statement made in the Corporation's Registration Statement or
Prospectus or which requires the making of a change in either thereof in order
to make the statements therein not misleading; and (iv) of all action of the
Commission with respect to any amendments to the Corporation's Registration
Statement or Prospectus which may from time to time be filed with the Commission
under the 1940 Act or the Securities Act.
SECTION 3. STANDARD OF CARE
The Distributor shall use its best judgment and efforts in rendering
services to the Corporation under this Agreement. The Distributor shall not be
liable to the Corporation for any error of judgment or mistake of law, for any
loss arising out of any investment, or for any action or inaction of the
Distributor in the absence of bad faith, willful misconduct or gross negligence
or based upon information, instructions or requests with respect to a Fund made
to the Distributor by an officer of the Corporation duly authorized. The
Distributor shall not be responsible or liable for any failure or delay in
performance of its obligations under this Agreement caused by circumstances
beyond its reasonable control.
SECTION 4. EXPENSES
Subject to any expense reimbursement arrangements between the
Distributor or others and the Corporation, the Corporation shall be responsible
and assumes the obligation for payment of all its expenses.
SECTION 5. COMPENSATION
(a) The Distributor shall be entitled to no compensation or
reimbursement of expenses for the distribution and service activities provided
by the Distributor pursuant to this Agreement, except to the extent such
compensation or reimbursement is provided, with respect to any Fund or any class
of a Fund, pursuant to a plan of distribution adopted under Rule 12b-1 under the
1940 Act.
(b) Notwithstanding anything in this Agreement to the contrary, the
Distributor and its affiliated persons may receive compensation or reimbursement
from the Corporation with respect to (i) the provision of distribution and
service activities on behalf of the Funds in accordance with any distribution
plan adopted by the Corporation pursuant to Rule 12b-1 under the 1940 Act, (ii)
the provision of shareholder support or other services, (iii) the provision of
management services or (iv) service as a Director or officer of the Corporation.
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SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to each Fund on
the date on which the Corporation's Registration Statement relating to the
shares of the Funds becomes effective and shall relate to every other Fund as of
the date on which the Corporation's Registration Statement relating to the
shares of such Fund becomes effective.
(b) This Agreement shall continue in effect for twenty-four months as it
pertains to a Fund and, thereafter, with respect to such Fund, shall continue in
effect for successive twelve-month periods, provided that such continuance is
specifically approved at least annually (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Fund and (ii) by a vote of
a majority of Directors of the Corporation (A) who are not parties to this
Agreement or interested persons of any such party and (B) with respect to each
class of a Fund, who do not have any direct or indirect financial interest in
any plan of distribution adopted under Rule 12b-1 under the 1940 Act applicable
to the class or in any agreements related to such plan, cast in person at a
meeting called for the purpose of voting on such approval. If the continuation
of this Agreement is not approved, the Distributor may continue to render the
services described herein in the manner and to the extent permitted by the 1940
Act.
(c) This Agreement may be terminated at any time with respect to a Fund,
without the payment of any penalty, (i) by the Board or by a vote of a majority
of the outstanding voting securities of the Fund or, with respect to each class
of a Fund for which there is an effective plan of distribution adopted under
Rule 12b-1 under the 1940 Act, a majority of Directors of the Corporation who do
not have any direct or indirect financial interest in any such plan or in any
agreements related to such plan, on 60 days' written notice to the Distributor
or (ii) by the Distributor on 60 days' written notice to the Corporation. This
Agreement shall automatically terminate in the event of its assignment.
SECTION 7. ACTIVITIES OF DISTRIBUTOR
Except to the extent necessary to perform its obligations under this
Agreement, nothing herein shall be deemed to limit or restrict the Distributor's
right, or the right of any of its officers, directors or employees (whether or
not they are a director, officer, employee or other affiliated person of the
Corporation) to engage in any other business or to devote time and attention to
the management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other company,
corporation, firm, individual or association.
SECTION 8. CONFIDENTIALITY
The Distributor agrees to treat all records and other information
related to the Corporation as proprietary information of the Corporation and, on
behalf of itself and its employees, to keep confidential all such information,
except that the Distributor may
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the Securities and Exchange
Commission;
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(b) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(c) release such other information as approved in writing by the
Corporation, which approval shall not be unreasonably withheld and may not be
withheld where the Distributor may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities or when so requested by the Corporation.
SECTION 9. MISCELLANEOUS
(a) Except for Schedule A, no provisions of this Agreement may be
amended or modified in any manner except by a written agreement properly
authorized and executed by both parties hereto and, if required by the 1940 Act,
by a vote of a majority of the outstanding voting securities of a Fund.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(c) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(d) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(e) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of New York.
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(f) The terms "vote of a majority of the outstanding voting securities,"
"interested person," "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
TRANS ADVISER FUNDS, INC.
/s/ Xxxxxx X. Xxxxxxx
------------------------------
Xxxxxx X. Xxxxxxx
President
FORUM FINANCIAL SERVICES, INC.
/s/ Xxxx X. Xxxxxx
------------------------------
Xxxx X. Xxxxxx
President
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TRANS ADVISER FUNDS, INC.
DISTRIBUTION AGREEMENT
Schedule A
FUNDS OF
TRANS ADVISER FUNDS, INC.
as of November 4, 1996
Growth/Value Fund
Aggressive Growth Fund
Intermediate Bond Fund
Kentucky Tax-Free Fund
Tennessee Tax-Free Fund
Money Market Fund
