DISTRIBUTION AGREEMENT
This Agreement made this day of May, 1999 by and between
ALLEGIANCE INVESTMENT TRUST, a Delaware business trust (the "Trust"), and FIRST
FUND DISTRIBUTORS, INC., a Delaware corporation (the "Distributor").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end management
investment company under the Investment Company Act of 1940 (the "1940 Act");
and it is in the interest of the Trust to
offer its shares for sale continuously; and
WHEREAS, the Distributor is registered as a broker-dealer
under the Securities Exchange Act of 1934 (the "1934 Act") and is a member in
good standing of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, the Trust and the Distributor wish to enter into an
agreement with each other with respect to the continuous offering of the shares
of each existing and future series (the
"Shares") of the Trust;
NOW, THEREFORE, the parties agree as follows:
1. APPOINTMENT OF DISTRIBUTOR. The Trust hereby appoints the
Distributor as exclusive agent to sell and to arrange for the sale of the
Shares, on the terms and for the period set forth in this Agreement, and the
Distributor hereby accepts such appointment and agrees to act hereunder directly
and/or through the Trust's transfer agent in the manner set forth in the
Prospectuses (as defined below). It is understood and agreed that the services
of the Distributor hereunder are not exclusive, and the Distributor may act as
principal underwriter for the shares of any other registered investment company.
2. SERVICES AND DUTIES OF THE DISTRIBUTOR.
(a) The Distributor agrees to sell the Shares, as
agent for the Trust, from time to time during the term of this Agreement upon
the terms described in a Prospectus. As used in this Agreement, the term
"Prospectus" shall mean a prospectus and statement of additional information
included as part of the Trust's Registration Statement, as such prospectus and
statement of additional information may be amended or supplemented from time to
time, and the term "Registration Statement" shall mean the Registration
Statement most recently filed from time to time by the Trust with the Securities
and Exchange Commission ("SEC") and effective under the Securities Act of 1933
(the "1933 Act") and the 1940 Act, as such Registration Statement is amended by
any amendments thereto at the time in effect. The Distributor shall not be
obligated to sell any certain number of Shares.
(b) Upon commencement of operations of the series,
the Distributor will hold itself available to receive orders, satisfactory to
the Distributor, for the purchase of the Shares and will accept such orders and
will transmit such orders and funds received by it in payment for such Shares as
are so accepted to the Trust's transfer agent or custodian, as appropriate, as
promptly as practicable. Purchase orders shall be deemed accepted and shall be
effective at the time and in the manner set forth in the series' Prospectuses.
The Distributor shall not make any short sales of Shares.
( c) The offering price of the Shares shall be the
net asset value per share of the Shares, plus the sales charge, if any,
(determined as set forth in the Prospectuses). The Trust shall furnish the
Distributor, with all possible promptness, an advice of each computation of net
asset value and offering price.
(d) The Distributor shall have the right to enter
into selected dealer agreements with securities dealers of its choice ("selected
dealers") for the sale of Shares. Shares sold to selected dealers shall be for
resale by such dealers only at the offering price of the Shares as set forth in
the Prospectuses. The Distributor shall offer and sell Shares only to such
selected dealers as are members in good standing of the NASD.
3. DUTIES OF THE TRUST.
(a) MAINTENANCE OF FEDERAL REGISTRATION. The Trust
shall, at its expense, take, from time to time, all necessary action and such
steps, including payment of the related filing fees, as may be necessary to
register and maintain registration of a sufficient number of Shares under the
1933 Act. The Trust agrees to file from time to time such amendments, reports
and other documents as may be necessary in order that there may be no untrue
statement of a material fact in a Registration Statement or Prospectus, or
necessary in order that there may be no omission to state a material fact in the
Registration Statement or Prospectus which omission would make the statements
therein misleading.
(b) MAINTENANCE OF "BLUE SKY" QUALIFICATIONS. The
Trust shall, at its expense, use its best efforts to qualify and maintain the
qualification of an appropriate number of Shares for sale under the securities
laws of such states as the Distributor and the Trust may approve, and, if
necessary or appropriate in connection therewith, to qualify and maintain the
qualification of the Trust or the series as a broker or dealer in such states;
provided that the Trust shall not be required to amend its Agreement and
Declaration of Trust or By-Laws to comply with the laws of any state, to
maintain an office in any state, to change the terms of the offering of the
Shares in any state, to change the terms of the offering of the Shares in any
state from the terms set forth in Prospectuses, 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 and sale of the Shares.
The Distributor shall furnish such information and other material relating to
its affairs and activities as may be required by the Trust or its series in
connection with such qualifications.
(c) COPIES OF REPORTS AND PROSPECTUSES. The Trust
shall, at its expense, keep the Distributor fully informed with regard to its
affairs and in connection therewith shall furnish to the Distributor copies of
all information, financial statements and other papers which the Distributor may
2
reasonably request for use in connection with the distribution of Shares,
including such reasonable number of copies of Prospectuses and annual and
interim reports as the Distributor may request and shall cooperate fully in the
efforts of the Distributor to sell and arrange for the sale of the Shares and in
the performance of the Distributor under this Agreement.
4. CONFORMITY WITH APPLICABLE LAW AND RULES. The Distributor
agrees that in selling Shares hereunder it shall conform in all respects with
the laws of the United States and of any state in which Shares may be offered,
and with applicable rules and regulations of the NASD.
5. INDEPENDENT CONTRACTOR. In performing its duties hereunder,
the Distributor shall be an independent contractor and neither the Distributor,
nor any of its officers, directors, employees, or representatives is or shall be
an employee of the Trust in the performance of the Distributor's duties
hereunder. The Distributor shall be responsible for its own conduct and the
employment, control, and conduct of its agents and employees and for injury to
such agents or employees or to others through its agents or employees. The
Distributor assumes full responsibility for its agents and employees under
applicable statutes and agrees to pay all employee taxes thereunder.
6. INDEMNIFICATION.
(a) INDEMNIFICATION OF TRUST. The Distributor agrees
to indemnify and hold harmless the Trust and each of its present or former
Trustees, officers, employees, representatives and each person, if any, who
controls or previously controlled the Trust within the meaning of Section 15 of
the 1933 Act against any and all losses, liabilities, damages, claims or
expenses (including the reasonable costs of investigating or defending any
alleged loss, liability, damage, claims or expense and reasonable legal counsel
fees incurred in connection therewith) to which the Trust or any such person may
become subject under the 1933 Act, under any other statute, at common law, or
otherwise, arising out of the acquisition of any Shares by any person which (i)
may be based upon any wrongful act by the Distributor or any of the
Distributor's directors, officers, employees or representatives, or (ii) may be
based upon any untrue statement or alleged untrue statement of a material fact
contained in a Registration Statement, Prospectus, shareholder report or other
information covering Shares filed or made public by the Trust or any amendment
thereof or supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission was made in
reliance upon and in conformity with information furnished to the Trust by the
Distributor. In no case (i) is the Distributor's indemnity in favor of the
Trust, or any person indemnified to be deemed to protect the Trust or such
indemnified person against any liability to which the Trust or such person would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of the Trust's or such person's duties or by
reason of reckless disregard of the Trust's or such person's obligations and
duties under this Agreement or (ii) is the Distributor to be liable under its
indemnity agreement contained in this Paragraph with respect to any claim made
against the Trust or any person indemnified unless the Trust or such person, as
the case may be, shall have notified the Distributor in writing of the claim
within a reasonable time after the summons or other first written notification
giving information of the nature of the claim shall have been served upon the
3
Trust or upon such person (or after the Trust or such person shall have received
notice of such service on any designated agent). However, failure to notify the
Distributor of any such claim shall not relieve the Distributor from any
liability which the Distributor may have to the Trust or any person against whom
such action is brought otherwise than on account of the Distributor's indemnity
agreement contained in this Paragraph.
The Distributor shall be entitled to participate, at its own
expense, in the defense, or, if the Distributor so elects, to assume the defense
of any suit brought to enforce any such claim, but, if the Distributor elects to
assume the defense, such defense shall be conducted by legal counsel chosen by
the Distributor and satisfactory to the Trust, and to the persons indemnified as
defendant or defendants, in the suit. In the event that the Distributor elects
to assume the defense of any such suit and retain such legal counsel, the Trust,
and the persons indemnified as defendant or defendants in the suit, shall bear
the fees and expenses of any additional legal counsel retained by them. If the
Distributor does not elect to assume the defense of any such suit, the
Distributor will reimburse the Trust and the persons indemnified defendant or
defendants in such suit for the reasonable fees and expenses of any legal
counsel retained by them. The Distributor agrees to promptly notify the Trust of
the commencement of any litigation of proceedings against it or any of its
officers, employees or representatives in connection with the issue or sale of
any Shares.
(b) INDEMNIFICATION OF THE DISTRIBUTOR. The Trust
agrees to indemnify and hold harmless the Distributor and each of its present or
former directors, officers, employees, representatives and each person, if any,
who controls or previously controlled the Distributor within the meaning of
Section 15 of the 1933 Act against any and all losses, liabilities, damages,
claims or expenses (including the reasonable costs of investigating or defending
any alleged loss, liability, damage, claim or expense and reasonable legal
counsel fees incurred in connection therewith) to which the Distributor or any
such person may become subject under the 1933 Act, under any other statute, at
common law, or otherwise, arising out of the acquisition of any Shares by any
person which (i) may be based upon any wrongful act by the Trust or any of the
Trust's Trustees, officers, employees or representatives, or (ii) may be based
upon any untrue statement or alleged untrue statement of a material fact
contained in a Registration Statement, Prospectus, shareholder report or other
information covering Shares filed or made public by the Trust or any amendment
thereof or supplement thereto, or the omission or alleged omission to state
therein 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 conformity with information furnished to the Trust by the
Distributor. In no case (i) is the Trust's indemnity in favor of the
Distributor, or any person indemnified to be deemed to protect the Distributor
or such indemnified person against any liability to which the Distributor or
such person would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of such person's duties or by
reason of reckless disregard of such person's obligations and duties under this
Agreement or (ii) is the Trust to be liable under their indemnity agreement
contained in this Paragraph with respect to any claim made against Distributor,
or person indemnified unless the Distributor, or such person, as the case may
be, shall have notified the Trust in writing of the claim within a reasonable
time after the summons or other first written notification giving information of
the nature of the claim shall have been served upon the Distributor or upon such
4
person (or after the Distributor or such person shall have received notice of
such service on any designated agent). However, failure to notify the Trust of
any such claim shall not relieve the Trust from any liability which the Trust
may have to the Distributor or any person against whom such action is brought
otherwise than on account of the Trust's indemnity agreement contained in this
Paragraph.
The Trust shall be entitled to participate, at its own
expense, in the defense, or, if the Trust so elects, to assume the defense of
any suit brought to enforce any such claim, but if the Trust elects to assume
the defense, such defense shall be conducted by legal counsel chosen by the
Trust and satisfactory to the Distributor and to the persons indemnified as
defendant or defendants, in the suit. In the event that the Trust elects to
assume the defense of any such suit and retain such legal counsel, the
Distributor, the persons indemnified as defendant or defendants in the suit,
shall bear the fees and expenses of any additional legal counsel retained by
them. If the Trust does not elect to assume the defense of any such suit, the
Trust will reimburse the Distributor and the persons indemnified as defendant or
defendants in such suit for the reasonable fees and expenses of any legal
counsel retained by them. The Trust agrees to promptly notify the Distributor of
the commencement of any litigation or proceedings against it or any of its
Trustees, officers, employees or representatives in connection with the issue or
sale of any Shares.
7. AUTHORIZED REPRESENTATIONS. The Distributor is not
authorized by the Trust to give on behalf of the Trust any information or to
make any representations in connection with the sale of Shares other than the
information and representations contained in a Registration Statement or
Prospectus filed with the SEC under the 1933 Act and/or the 1940 Act, covering
Shares, as such Registration Statement and Prospectus may be amended or
supplemented from time to time, or contained in shareholder reports or other
material that may be prepared by or on behalf of the Trust for the Distributor's
use. This shall not be construed to prevent the Distributor from preparing and
distributing tombstone ads and sales literature or other material as it may deem
appropriate. No person other than the Distributor is authorized to act as
principal underwriter (as such term is defined in the 0000 Xxx) for the Trust.
8. TERM OF AGREEMENT. The term of this Agreement shall begin
on the date first above written, and unless sooner terminated as hereinafter
provided, this Agreement shall remain in effect for a period of two years from
the date first above written. Thereafter, this Agreement shall continue in
effect from year to year, subject to the termination provisions and all other
terms and conditions thereof, so long as such continuation shall be specifically
approved at least annually by (i) the Board of Trustees or by vote of a majority
of the outstanding voting securities of each series of the Trust and, (ii) by
the vote, cast in person at a meeting called for the purpose of voting on such
approval, of a majority of the Trustees of the Trust who are not parties to this
Agreement or interested persons of any such party. The Distributor shall furnish
to the Trust, promptly upon its request, such information as may reasonably be
necessary to evaluate the terms of this Agreement or any extension, renewal or
amendment hereof.
5
9. AMENDMENT OR ASSIGNMENT OF AGREEMENT. This Agreement may
not be amended or assigned except as permitted by the 1940 Act, and this
Agreement shall automatically and immediately terminate in the event of its
assignment.
10. TERMINATION OF AGREEMENT. This Agreement may be terminated
by either party hereto, without the payment of any penalty, on not more than
upon 60 days' nor less than 30 days' prior notice in writing to the other party;
provided, that in the case of termination by the Trust such action shall have
been authorized by resolution of a majority of the Trustees of the Trust who are
not parties to this Agreement or interested persons of any such party, or by
vote of a majority of the outstanding voting securities of each series of the
Trust.
11. MISCELLANEOUS. The captions in this Agreement are included
for convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same
instrument.
Nothing herein contained shall be deemed to require the Trust
to take any action contrary to its Agreement and Declaration of Trust or
By-Laws, or any applicable statutory or regulatory requirement to which it is
subject or by which it is bound, or to relieve or deprive the Board of Trustees
of the Trust of responsibility for and control of the conduct of the affairs of
the Trust.
12. DEFINITION OF TERMS. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or otherwise derived
from a term or provision of the 1940 Act shall be resolved by reference to such
term or provision of the 1940 Act and to interpretation thereof, if any, by the
United States courts or, in the absence of any controlling decision of any such
court, by rules, regulations or orders of the SEC validly issued pursuant to the
1940 Act. Specifically, the terms "vote of a majority of the outstanding voting
securities", "interested persons," "assignment," and "affiliated person," as
used in Paragraphs 8, 9 and 10 hereof, shall have the meanings assigned to them
by Section 2(a) of the 1940 Act. In addition, where the effect of a requirement
of the 1940 Act reflected in any provision of this Agreement is relaxed by a
rule, regulation or order of the SEC, whether of special or of general
application, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
13. COMPLIANCE WITH SECURITIES LAWS. The Trust represents that
it is registered as an open-end management investment company under the 1940
Act, and agrees that it will comply with all the provisions of the 1940 Act and
of the rules and regulations thereunder. The Trust and the Distributor each
agree to comply with all of the applicable terms and provisions of the 1940 Act,
the 1933 Act and, subject to the provisions of Section 4(d), all applicable
"Blue Sky" laws. The Distributor agrees to comply with all of the applicable
terms and provisions of the 1934 Act.
6
14. NOTICES. Any notice required to be given pursuant to this
Agreement shall be deemed duly given if delivered or mailed by registered mail,
postage prepaid, to the Distributor at 0000 X. Xxxxxxxxx Xxxx, Xxxxx 000X,
Xxxxxxx, Xxxxxxx 00000 or to the Trust at [trust address].
15. GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Arizona.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their officers designated below on the date
first written above.
Allegiance Investment Trust
By:________________________________________
Name:
Title:
FIRST FUND DISTRIBUTORS, INC.
By:________________________________________
Name:
Title:
7
