Exhibit (e)
XXXXXXXX-XXXXXXXXX INSTITUTIONAL FUNDS
DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT (this "Agreement") is made as of this
__ day of _______, 1999 by and between Xxxxxxxx-Xxxxxxxxx Institutional Funds, a
Delaware business trust (the "Trust"), and Xxxxxxxx-Xxxxxxxxx Securities, a
California limited partnership (the "Distributor").
WHEREAS, the Trust is a diversified, open-end management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act");
WHEREAS, the Trust will consist of various series of shares of
beneficial interest created by its Board of Trustees from time to time (each a
"Fund" and collectively the "Funds") and various classes thereof;
WHEREAS, the Distributor is a broker-dealer registered under the
Securities Exchange Act of 1934, as amended, and a member of the National
Association of Securities Dealers, Inc. (the "NASD");
WHEREAS, the Trust desires to retain the Distributor as its agent
to provide services in connection with the distribution of shares of beneficial
interest ("shares") of each of the Funds and the Distributor is willing to
provide such services upon the terms set forth herein; and
WHEREAS, the Trust has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act, whereby the Trust will compensate the
Distributor for certain services rendered and costs incurred by the Distributor
in connection with distributing certain classes of shares of the Funds;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein set forth, the parties hereto agree as follows:
Section 1. APPOINTMENT OF DISTRIBUTOR.
The Trust hereby appoints the Distributor as its agent to act as
the principal underwriter and distributor of shares of the Funds, and the
Distributor hereby accepts such appointment and agrees to act hereunder. The
Trust hereby agrees during the term of this Agreement to sell shares of the
Funds exclusively to or through the Distributor on the terms and conditions set
forth below.
Section 2. PURCHASE OF SHARES FROM THE TRUST.
2.1 The Distributor shall have the right to sell as agent for
the Trust the
shares of a Fund needed, but not more than the shares needed, to fill
unconditional orders for shares placed with the Distributor by investors or
registered and qualified securities dealers and others ("selected dealers").
2.2 The shares of the Funds are to be sold by the Distributor or
selected dealers, as described in Section 5.4 hereof, to investors at the
offering price as set forth in the applicable prospectus and statement of
additional information for the Fund then in effect (the "Prospectus").
2.3 The Trust shall have the right to suspend the sale of its
shares at times when redemption is suspended pursuant to the conditions in
Section 3.3 hereof or at such other times as may be determined by the Trust's
Board of Trustees (the "Board").
2.4 The Trust, or any agent of the Trust designated in writing
by the Board, shall be promptly advised of all purchase orders for shares of the
Funds received by the Distributor or selected dealer. Any order may be rejected
by the Trust or the Distributor; provided, however, that the Trust and the
Distributor will not arbitrarily or without reasonable cause refuse to accept or
confirm orders for the purchase of shares of a Fund. 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 for the shares pursuant to the instructions of the Distributor
or selected dealer. Payment shall be made to the Trust (or its agent) in New
York Clearing House funds or federal funds. The Distributor agrees, and selected
dealers shall agree, to cause such payment and such instructions to be delivered
promptly to the Trust (or its agent).
Section 3. REDEMPTION OF SHARES BY THE TRUST.
3.1 Any of the outstanding shares of a Fund may be tendered for
redemption at any time, and the Trust agrees to repurchase or redeem the shares
so tendered in accordance with the Trust's Declaration of Trust and Bylaws and
the applicable provisions of the respective Fund's Prospectus. The price to be
paid to redeem or repurchase the shares shall be equal to the net asset value,
less a contingent deferred sales charge, if any, determined as set forth in the
applicable Prospectus (the "redemption price"). All payments by the Trust
hereunder shall be made in the manner set forth in Section 3.2 below.
3.2 The Trust (or its agent) shall pay the total amount of the
redemption price pursuant to the instructions of the Distributor or selected
dealer on or before the seventh calendar day subsequent to the Trust (or its
agent) having received the notice of redemption in proper form. The proceeds of
any redemption of shares shall be paid by the Trust (or its agent) to or for the
account of the redeeming shareholder, in each case in accordance with the
applicable provisions of the respective Fund's Prospectus.
3.3 Redemption of shares or payment therefor may be suspended
at times when the New York Stock Exchange is closed for other than customary
weekends and holidays, when trading on the Exchange is restricted, when an
emergency exists as a
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result of which disposal by the Funds of securities owned by it is not
reasonably practicable or when it is not reasonably practicable for the Funds
fairly to determine the value of its net assets, or during any other period when
the Securities and Exchange Commission, by order, so permits.
Section 4. DUTIES OF THE TRUST.
4.1 Subject to the possible suspension of the sale of shares of
a Fund, and the right to reject orders, as provided herein, the Trust agrees to
sell shares of the Funds so long as shares are available for sale.
4.2 The Trust (or its agent) shall furnish the Distributor
copies of all information, financial statements and other documents which the
Distributor may reasonably request for use in connection with the distribution
of shares, which information shall include one certified copy, upon request by
the Distributor, of all financial statements prepared for the Trust by its
independent public accountants. The Trust (or its agent) shall make available to
the Distributor such number of copies of the Prospectuses for each Fund and
annual and interim reports as the Distributor shall reasonably request.
4.3 The Trust shall use its best efforts to take from time to
time, but subject to the necessary approval of the Board and the shareholders,
all necessary action to register authorized shares under the Securities Act of
1933, as amended (the "1933 Act"), so that there will be available for sale such
number of shares of the Funds as the Distributor and the selected dealers
reasonably may expect to sell. The Trust shall file from time to time such
amendments, reports and other documents as may be necessary in order that there
will be no untrue statement of a material fact in the Trust's Registration
Statement on Form N-1A covering the shares of the Funds (the "Registration
Statement"), or necessary in order that there will be no omission to state a
material fact in the Registration Statement which omission would make the
statements therein misleading. 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 Registration Statement.
4.4 The Trust shall use its best efforts to qualify and maintain
the qualification of an appropriate number of shares of the Funds for sale under
the securities laws of such states as the Distributor and the Trust may approve;
provided that the Trust shall not be required to amend its Declaration of Trust
or Bylaws to comply with the laws of any state, to maintain an office in any
state, to change the terms of the offering of its shares in any state from the
terms set forth in its Registration Statement, to qualify as a foreign
corporation 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 its shares. Any such
qualification may be withheld, terminated or withdrawn by the Trust at any time
in its discretion. As provided in Section 8.1 hereof, the expense of
qualification and maintenance of qualification shall be borne by the Trust. 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.
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Section 5. DUTIES OF THE DISTRIBUTOR.
5.1 The Distributor shall devote reasonable time and effort to
effect sales of shares of the Funds, but shall not be obligated to sell any
specific number of shares. Sales of shares of a Fund shall be on the terms
described in its Prospectus. The Distributor shall compensate the selected
dealers as set forth in the Prospectus. To the extent not otherwise provided
herein, the Distributor shall bear all of the costs and expenses it incurs in
fulfilling its obligations hereunder.
5.2 In selling shares of the Funds, 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 selected dealer 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 applicable Prospectus for the
respective Fund and any sales literature approved by appropriate officers of the
Trust.
5.3 The Distributor shall adopt and follow procedures for the
confirmation of sales to investors and selected dealers, the collection of
amounts payable by investors and selected dealers on such sales and the
cancellation of unsettled transactions, as may be necessary to comply with the
requirements established by the NASD.
5.4 The Distributor shall have the right to enter into selling
group agreements with registered and qualified securities dealers and other
persons of its choice for the sale to the public of shares of the Funds,
provided that the Trust shall approve the form of such agreements. The
Distributor shall offer and sell shares only through such selected dealers as
are members in good standing of the NASD. Shares sold through selected dealers
shall be for sale by such dealers only at the offering price determined as set
forth in the Prospectus. The Distributor and selected dealers may repurchase
shares from an investor seeking to redeem such shares, for a fee, and, in turn,
redeem such shares with the applicable Fund.
5.5 The Distributor shall be the exclusive distributor of shares
of the Funds appointed by the Trust; however, the Distributor is an independent
contractor and may enter into like arrangements with other investment companies.
Section 6. PAYMENTS TO THE DISTRIBUTOR.
The Distributor shall receive and may retain any portion of any
front-end or contingent deferred sales charge which is imposed on sales and
redemptions of shares of the Funds and not reallowed to selected dealers as set
forth in the applicable Prospectus. Upon termination of this Agreement for any
reason, the obligation to pay any such contingent deferred sales charge on
shares sold prior to the date of termination shall survive the termination, and
the Trust (or its agent) shall collect and pay any such charges thereafter
imposed on such shares to the Distributor.
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Section 7. COMPENSATION OF THE DISTRIBUTOR UNDER THE PLAN.
7.1 The Trust shall compensate the Distributor for costs it
incurs, and the services and facilities it provides, under this Agreement
pursuant to the terms of the Plan, including amounts paid to securities dealers
or others under selling group agreements between the Distributor and such
dealers and others. Amounts payable under the Plan shall be determined by the
Board from time to time and shall be accrued daily and paid monthly or at such
other intervals as the Board may determine.
7.2 So long as the Plan or any amendment thereto is in effect,
the Distributor shall inform the Board of the commissions and other fees to be
paid by the Distributor to broker-dealers and others which have selling group
agreements with the Distributor. So long as the Plan (or any amendment thereto)
is in effect, at the request of the Board or any agent or representative of the
Trust, the Distributor shall provide such additional information as may
reasonably be requested concerning the activities of the Distributor hereunder
and the costs incurred in performing such activities.
7.3 Costs of the Distributor subject to compensation hereunder
are costs of performing distribution activities with respect to the shares of
the Funds and may include, among others:
(a) advertising for the Funds in various forms through any available
medium, including the cost of printing and mailing Prospectuses, and
periodic financial reports and sales literature to persons other than
current shareholders of the Trust;
(b) sales commissions and other fees paid to, or on account of,
broker-dealers and others which have entered into selling group
agreements with the Distributor with respect to shares of the Funds;
and
(c) indirect and overhead costs including (i) lease expenses, (ii)
salaries and benefits of personnel including operations and sales
support personnel, (iii) utility expenses, (iv) communications
expenses, (v) sales promotion expenses, (vi) expenses of postage,
stationery and supplies and (vii) general overhead.
Section 8. ALLOCATION OF EXPENSES.
8.1 The Trust shall bear all costs and expenses of the
continuous offering of shares of the Funds, including fees and disbursements of
its counsel and auditors, in connection with the preparation and filing of any
required registration statements and/or prospectuses under the 1940 Act or the
1933 Act, and preparing and mailing annual and periodic reports and proxy
materials to shareholders (including but not limited to the expense of
typesetting any such registration statements, prospectuses, annual or periodic
reports or proxy materials). The Trust shall also bear the costs and expenses of
qualifying the shares for sale, and, if necessary or advisable in connection
therewith, of qualifying the Trust as a broker or dealer, in such states or
other jurisdictions as shall be selected by the Trust and the Distributor
pursuant to Section 4.4 hereof, and the cost and expense payable to each such
state for continuing qualification therein until the Trust decides to
discontinue such qualification pursuant to Section 4.4
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hereof.
8.2 As set forth in Section 7 above, the Trust shall also bear
the expenses it assumes pursuant to the Plan with respect to shares, so long as
the Plan is in effect. If the Plan is terminated or discontinued, the costs
previously incurred by the Distributor in performing the duties set forth in
Section 5 hereof shall be borne by the Distributor and shall not be subject to
reimbursement by the Trust; provided, however, that the Distributor shall have
the continued right to receive all contingent deferred sales charges, if any, on
redemptions of shares of the Funds following the termination or discontinuation
of the Plan, as set forth in Section 6.
Section 9. INDEMNIFICATION.
9.1 The Trust agrees to indemnify, defend and hold the
Distributor, its partners and officers, and any person who controls the
Distributor within the meaning of Section 15 of the 1933 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 partners and officers or any such controlling person may incur
under the 1933 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 Prospectuses for any of the Funds or arising out of or based upon
any alleged omission to state a material fact required to be stated in the
Registration Statement or Prospectuses or necessary to make the statements
therein 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 Prospectuses; provided, however, that this
indemnity agreement shall not inure to the benefit of any such partner, officer
or controlling person unless a court of competent jurisdiction shall determine,
in a final decision on the merits, that the person to be indemnified was not
liable 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 ("disabling conduct"), or, in the absence of
such a decision, a reasonable determination, based upon a review of the facts,
that the indemnified person was not liable by reason of disabling conduct by (a)
a vote of a majority of a quorum of Trustees of the Trust who are neither
"interested persons" of the Trust as defined in Section 2(a)(19) of the 1940 Act
nor parties to the proceeding, or (b) an independent legal counsel in a written
opinion. The Trust's agreement to indemnify the Distributor, its partners and
officers and any such controlling person as aforesaid is expressly conditioned
upon the Trust's being promptly notified of any action brought against the
Distributor, its partners, officers or any such controlling person. The Trust
agrees promptly to notify the Distributor of the commencement of any litigation
or proceedings against it or any of its officers or Trustees in connection with
the issue and sale of any shares.
9.2 The Distributor agrees to indemnify, defend and hold the
Fund, its officers and Trustees and any person who controls the Trust, if any,
within the meaning of Section 15 of the 1933 Act, free and harmless from and
against any and all claims,
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demands, liabilities and expenses (including the cost of investigating or
defending against such claims, demands or liabilities and any counsel fees
incurred in connection therewith) which the Trust, its officers and Trustees or
any such controlling person may incur under the 1933 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 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
Prospectuses for any of the Funds 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 Prospectuses or necessary
to make such information not misleading. The Distributor's agreement to
indemnify the Trust, its officers and Trustees and any such controlling person
as aforesaid, is expressly conditioned upon the Distributor's being promptly
notified of any action brought against the Trust, its officers and Trustees or
any such controlling person.
9.3 No Trustee, officer, employee or agent of the Trust shall be
subject to any personal liability whatsoever, in his or her official or
individual capacity, to any person, including the Distributor, other than the
Trust or its shareholders, in connection with the property or affairs of the
Trust, save only that arising from his or her bad faith, willful misfeasance,
gross negligence or reckless disregard of his or her duty to such person; and
all such persons shall look solely to the Trust property for satisfaction of
claims of any nature against a Trustee, officer, employee or agent of the Trust
arising in connection with the affairs of the Trust. Moreover, the debts,
liabilities, obligations and expenses incurred, contracted for or otherwise
existing with respect to a Fund shall be enforceable against the assets and
property of such Fund only, and not against the assets and property of any other
series of the Trust.
Section 10. DURATION AND TERMINATION OF THIS AGREEMENT.
10.1 This Agreement shall become effective as of the date first
above written and, except as set forth in Section 6, shall remain in force with
respect to each Fund for two years from the date hereof and thereafter, but only
so long as such continuance is specifically approved at least annually by (a)
the Board, or by the vote of a majority of the outstanding voting securities of
the shares of the Fund, and (b) by the vote of a majority of those Trustees of
the Trust who are not parties to this Agreement or interested persons of any
such parties and who have no direct or indirect financial interest in this
Agreement or in the operation of the Plan or in any agreement related thereto
(the "Disinterested Trustees"), cast in person at a meeting called for the
purpose of voting upon such approval.
10.2 Except as set forth in Section 6, this Agreement may be
terminated with respect to a Fund at any time, without the payment of any
penalty, by a majority of the Disinterested Trustees or by vote of a majority of
the outstanding voting securities of the Fund, or by the Distributor, on not
less than sixty (60) days' written notice to the other party. Except as set
forth in Section 6, this Agreement shall automatically terminate in the event of
its assignment.
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10.3 The terms "affiliated person," "assignment," "interested
person" and "vote of a majority of the outstanding voting securities," when used
in this Agreement, shall have the respective meanings specified in the 1940 Act.
Section 11. AMENDMENTS TO THIS AGREEMENTS.
This Agreement may be amended with respect to a Fund by the
parties only if such amendment is specifically approved by (a) the Board, 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 Disinterested Trustees cast in person at a
meeting called for the purpose of voting on such amendment.
Section 12. GOVERNING LAW.
The provisions of this Agreement shall be construed and
interpreted in accordance with the internal laws (and not the laws of conflicts
of law) of the State of California as at the time in effect and the applicable
provisions of the 1940 Act. To the extent that the applicable law of the State
of California, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
Section 13. MISCELLANEOUS.
(a) Notices of any kind to be given to the Distributor by the
Trust shall be in writing and shall be duly given if mailed, delivered or
communicated by answer back facsimile transmission to the Distributor at 000
Xxxx Xxxxxxxx, 00xx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, Facsimile: (619)
687-8138, Attention: President, or at such other address or to such individual
as shall be so specified by the Distributor. Notices of any kind to be given to
the Trust hereunder by the Distributor shall be in writing and will be duly
given if mailed or delivered to the Trust at 000 Xxxx Xxxxxxxx, 00xx Xxxxx, Xxx
Xxxxx, Xxxxxxxxxx 00000, Facsimile: (000) 000-0000, Attention: President, or at
such other address or to such individual as shall be so specified by the Trust
to the Distributor.
(b) This Agreement constitutes the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to the subject matter hereof.
(c) The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect.
(d) If any provision of this Agreement is held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year above written.
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XXXXXXXX-XXXXXXXXX INSTITUTIONAL
FUNDS
By:
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E. Xxxxx Xxxxx, Jr.
Secretary
XXXXXXXX-XXXXXXXXX SECURITIES
By: Xxxxxxxx-Xxxxxxxxx Capital
Management Holdings, L.P.,
its General Partner
By: Xxxxxxxx-Xxxxxxxxx Capital
Management Holdings, Inc.,
its General Partner
By:
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E. Xxxxx Xxxxx, Jr.
Secretary
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