Exhibit 5(a)
CLASS I SHARES
DISTRIBUTION AGREEMENT
AGREEMENT made as of February __, 2000 between MERCURY QA EQUITY SERIES,
INC., a Maryland corporation (the "Corporation"), on behalf of each of its
series listed on Appendix A attached hereto, as such Appendix may be amended
from time to time (each, a "Fund," and collectively, the "Funds") and MERCURY
FUNDS DISTRIBUTOR, a division of PRINCETON FUNDS DISTRIBUTOR, INC., a Delaware
corporation (the "Distributor").
W I T N E S S E T H :
-------------------
WHEREAS, the Board of Directors of the Corporation (the "Directors") are
authorized to establish separate series relating to separate portfolios of
securities, each of which may offer separate classes of shares of common stock,
par value $0.0001 per share ("Common Stock"); and
WHEREAS, the Directors have established and designated each Fund as a
series of the Corporation, offering separate classes of shares of Common Stock;
and
WHEREAS, the Corporation is registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"), as an open-end investment
company, and the Directors have determined that it is affirmatively in the
interest of each Fund to offer its shares of Common Stock for sale continuously;
and
WHEREAS, the Distributor is a securities firm engaged in the business of
selling shares of capital stock of investment companies either directly to
purchasers or through other securities dealers; and
WHEREAS, the Corporation and the Distributor wish to enter into an
agreement with each other with respect to the continuous offering of Class I
shares of Common Stock (sometimes herein referred to as "Class I Shares") in
each Fund in order to promote the growth of each Fund and facilitate the
distribution of each Fund's Class I shares;
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of the Distributor. The Corporation hereby
------------------------------
appoints the Distributor as each Fund's principal underwriter and distributor to
sell the Class I Shares of each Fund to eligible investors (as defined below)
and hereby agrees during the term of this Agreement to sell the Funds' Class I
Shares to the Distributor upon the terms and conditions herein set forth.
Section 2. Exclusive Nature of Duties. The Distributor shall be each
--------------------------
Fund's exclusive representative to act as principal underwriter and distributor
of the Class I Shares, except that:
a. The Corporation may, upon written notice to the Distributor, from time
to time designate other principal underwriters and distributors of any Fund's
Class I 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 such Fund's Class I 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 Class I
Shares from each Fund shall not apply to Class I Shares of any Fund issued in
connection with the merger or consolidation of any other investment company or
personal holding company with such Fund or
2
any Fund's acquisition by purchase or otherwise of all (or substantially all)
the assets or the outstanding Class I shares of any such company.
c. Such exclusive rights also shall not apply to Class I Shares issued by
any Fund pursuant to reinvestment of dividends or capital gains distributions.
d. Such exclusive rights also shall not apply to Class I Shares issued by
any Fund pursuant to any conversion, exchange or reinstatement privilege
afforded redeeming shareholders or to any other Class I shares of a fund as
shall be agreed between the Corporation and the Distributor from time to time.
Section 3. Purchase of Class I Shares from the Corporation.
------------------------------------------------
a. Prior to the continuous offering of each Fund's Class I Shares,
commencing on a date agreed upon by the Corporation and the Distributor, it is
contemplated that the Distributor will solicit subscriptions for each Fund's
Class I Shares during a subscription period which shall last for such period as
may be agreed upon by the parties hereto. The subscriptions will be payable
within three business days after the termination of the subscription period, at
which time each Fund will commence operations.
b. After each Fund commences operations, the Fund will commence an
offering of its Class I Shares and thereafter the Distributor shall, with
respect to each Fund, have the right to buy from the Corporation the Class I
Shares of such Fund needed, but not more than the Class I Shares needed (except
for clerical errors in transmission) to fill unconditional orders for Class I
Shares of the Fund placed with the Distributor by eligible investors or
securities dealers. Investors eligible to purchase Class I Shares of a Fund
shall be those persons so identified in the currently effective prospectus and
statement of additional information of the Funds (the
3
"prospectus" and "statement of additional information," respectively) under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the Class
I Shares of the Funds ("eligible investors"). The price that the Distributor
shall pay for the Class I Shares so purchased from a Fund shall be the net asset
value, determined as set forth in Section 3(e) hereof.
c. The Class I Shares of a Fund are to be resold by the Distributor to
eligible investors (i) during the subscription period, at the public offering
price, as set forth in Section 3(d) hereof, or (ii) in the continuous offering,
at the net asset value determined as set forth in Section 3(e) hereof or to
securities dealers having agreements with the Distributor upon the terms and
conditions set forth in Section 7 hereof. All payments to a Fund hereunder
shall be made in the manner set forth in Section 3(g) hereof.
d. The public offering price(s) of the Class I Shares of a Fund, i.e., the
price per share at which the Distributor or selected dealers may sell Class I
Shares of such Fund to eligible investors during the subscription period, shall
be the public offering price as set forth in the prospectus and statement of
additional information relating to such Class I Shares, but not to exceed the
net asset value at which the Distributor is to purchase such Class I Shares,
plus a sales charge not to exceed 5.25% of the public offering price (5.54% of
the net amount invested), subject to reductions for volume purchases. Class I
Shares of a Fund may be sold to certain Directors, officers and employees of the
Corporation, directors and employees of Xxxxxxx Xxxxx & Co., Inc. and its
subsidiaries, and to certain other persons described in the prospectus and
statement of additional information, without a sales charge or at a reduced
sales charge, upon terms and conditions set forth in the prospectus and
statement of additional information. If the public offering price does not
equal an even cent, the public offering price may be adjusted to the
4
nearest cent. All payments to the Funds hereunder shall be made in the manner
set forth in Section 3(g) hereof.
e. The net asset value of the Class I Shares of a Fund shall be determined
by the Corporation or any agent of the Corporation in accordance with the method
set forth in the prospectus and statement of additional information and
guidelines established by the Directors.
f. The Corporation shall have the right to suspend the sale of Class I
Shares of any Fund at times when redemption is suspended pursuant to the
conditions set forth in Section 4(b) hereof. The Corporation shall also have
the right to suspend the sale of Class I Shares of any Fund 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 Corporation, makes it
impracticable or inadvisable to sell the Class I Shares of a Fund.
g. The Corporation, or any agent of the Corporation designated in writing
by the Corporation, shall be promptly advised of all purchase orders for Class I
Shares of a Fund received by the Distributor. Any order may be rejected by the
Corporation; provided, however, that the Corporation will not arbitrarily or
without reasonable cause refuse to accept or confirm orders for the purchase of
Class I Shares of a Fund from eligible investors. The Corporation (or its
agent) will confirm orders upon their receipt, will make appropriate book
entries and, upon receipt by the Corporation (or its agent) of payment therefor,
will deliver deposit receipts for such Class I Shares of the applicable Fund
pursuant to the instructions of the Distributor. Payment shall be made to the
Corporation in New York Clearing House funds. The Distributor
5
agrees to cause such payment and such instructions to be delivered promptly to
the Corporation (or its agent).
Section 4. Repurchase or Redemption of Class I Shares by the Corporation.
-------------------------------------------------------------
a. Any of the outstanding Class I Shares of a Fund may be tendered for
redemption at any time, and each Fund agrees to repurchase or redeem its Class I
Shares so tendered in accordance with its obligations as set forth in Article VI
of the Corporation's Articles of Incorporation, as amended from time to time,
and in accordance with the applicable provisions set forth in the prospectus and
statement of additional information. The price to be paid to redeem or
repurchase the Class I Shares of a Fund shall be equal to the net asset value
calculated in accordance with the provisions of Section 3(e) hereof, less any
contingent deferred sales charge ("CDSC"), redemption fee or other charge(s), if
any, set forth in the prospectus and statement of additional information. All
payments by a Fund hereunder shall be made in the manner set forth below. The
redemption or repurchase by any Fund of any of its Class I Shares purchased by
or through the Distributor will not affect the sales charge secured by the
Distributor or any selected dealer in the course of the original sale, except
that if any Class I Shares of such Fund 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 selected dealer that sold such Class I 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 in New York
Clearing House funds 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 a Fund's Class I Shares shall be paid by such
6
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 redeeming
shareholder, in each case in accordance with the applicable provisions of the
prospectus and statement of additional information.
b. Redemption of a Fund's Class I 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 Corporation fairly to determine the value of the
net assets of such Fund, or during any other period when the Securities and
Exchange Commission, by order, so permits.
Section 5. Duties of the Corporation.
-------------------------
a. The Corporation 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 each Fund's
Class I Shares, and this shall include, upon request by the Distributor, one
certified copy of all financial statements prepared for the Corporation by
independent public accountants. The Corporation shall make available to the
Distributor such number of copies of the prospectus and statement of additional
information as the Distributor shall reasonably request.
b. The Corporation shall take, from time to time, but subject to any
necessary approval of the applicable Fund's Class I shareholders, all necessary
action to fix the number of such Fund's authorized Class I Shares and such steps
as may be necessary to register the same under the
7
Securities Act to the end that there will be available for sale such number of
the Fund's Class I Shares as the Distributor reasonably may be expected to sell.
c. The Corporation shall use its best efforts to qualify and maintain the
qualification of an appropriate number of each Fund's Class I Shares for sale
under the securities laws of such states as the Distributor and the Corporation
may approve. Any such qualification may be withheld, terminated or withdrawn by
the Corporation 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 each Fund. The Distributor shall furnish such information and other
material relating to its affairs and activities as may be required by the
Corporation in connection with such qualification.
d. The Corporation 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 each Fund's Class I Shares but shall not be obligated to sell any specific
number of a Fund's Class I Shares. The services of the Distributor to the
Corporation 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 each Fund's Class I 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 selected dealer, as defined in Section 7 hereof,
8
nor any other person is authorized by the Corporation to give any information or
to make any representations, other than those contained in the Funds'
registration statement or related prospectus and statement of additional
information and any sales literature specifically approved by the Corporation.
c. The Distributor shall adopt and follow procedures, as approved by the
officers of the Corporation, for the confirmation of sales to eligible investors
and selected dealers (as defined below), the collection of amounts payable by
eligible investors and selected dealers 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. Selected Dealer Agreements.
--------------------------
a. The Distributor shall have the right to enter into selected dealer
agreements with securities dealers of its choice ("selected dealers") for the
sale of each Fund's Class I Shares and fix therein the portion of the sales
charge that may be allocated to the selected dealers; provided, that the
Corporation shall approve the forms of agreements with dealers and the dealer
compensation set forth therein. Each Fund's Class I Shares sold to selected
dealers shall be for resale by such dealers only (i) during the subscription
period, at the public offering price(s) set forth in the prospectus and
statement of additional information, or (ii) in the continuous offering, at the
net asset value determined as set forth in Section 3(e) hereof. The form of
agreement with selected dealers to be used during the subscription period
described in Section 3(a) is attached hereto as Exhibit A and the form of
agreement with selected dealers to be used in the continuous offering of the
Class I Shares is attached hereto as Exhibit B.
9
b. Within the United States, the Distributor shall offer and sell Class I
Shares of the Funds only to such selected dealers as are members in good
standing of the NASD.
Section 8. Payment of Expenses.
-------------------
a. Each Fund shall bear all costs and expenses of such Fund, as incurred
(including, without limitation, its allocable share of such costs and expenses
incurred by the Corporation on behalf of all 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 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 its Class I
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 selected
dealers as reimbursement for their expenses associated with payments of sales
commissions to financial consultants. 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 each
Fund's offering of Class I Shares to selected dealers 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 selected dealers in connection with
the offering of each Fund's Class I Shares for sale to eligible investors and
any expenses of advertising incurred by the Distributor in connection with such
offering.
10
c. Each Fund shall bear the cost and expenses (including, without
limitation, its allocable share of such costs and expenses incurred by the
Corporation on behalf of all funds) of qualification of its Class I Shares for
sale pursuant to this Agreement and, if necessary or advisable in connection
therewith, of qualifying the Corporation as a broker or dealer in such states of
the United States or other jurisdictions as shall be selected by the Corporation
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
Corporation, on behalf of such Fund 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 such Fund's Class I 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 such Fund's Class I 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 such Fund or the Corporation in connection
therewith by or on behalf of the Distributor; provided, however, that in no case
(i) is the indemnity of any such Fund in favor of the
11
Distributor and any such controlling persons to be deemed to protect such
Distributor or any such controlling persons thereof against any liability to
such 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 performance of their duties or by reason of
the reckless disregard of their obligations and duties under this Agreement; or
(ii) is such 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 such 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
such 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. Such 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
such 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 such 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 such 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
12
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 its Class I
Shares.
b. The Distributor shall indemnify and hold harmless the Corporation and
each of its Directors and officers, each Fund, and each person, if any, who
controls the Corporation 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 any Fund or the
Corporation 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 such Fund's Class I shareholders. In case any action shall be
brought against the Corporation 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 Corporation, and the Corporation 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 Programs Offered by the Funds' Investment Adviser or
--------------------------------------------------------------
Its Affiliates. In connection with certain fee-based programs offered by the
---------------
Funds' investment adviser or its affiliates, the Distributor and its affiliates
are authorized to offer and sell Class I Shares of each Fund, as agent for the
Corporation, to participants in such program. The terms of this Agreement shall
apply to such sales, including terms as to the offering price of each Fund's
13
Class I Shares, the proceeds to be paid to the applicable Fund, the duties of
the Distributor, the payment of expenses and indemnification obligations of such
Fund and the Distributor.
Section 11. Duration and Termination of this Agreement. This Agreement
------------------------------------------
shall become effective with respect to a Fund as of the earlier of the date such
Fund commences its subscription period or operations, and shall remain in force
with respect to such Fund for two years thereafter, and thereafter continue from
year to year, but only for so long as such continuance is specifically approved
at least annually by (i) with respect to one or more of the Funds, the Directors
or with respect to any Fund by the vote of a majority of the outstanding Class I
voting securities of such Fund and (ii) a majority of those Directors who are
not parties to this Agreement or interested persons of any such party cast in
person at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty, with respect to the Corporation on behalf of one or more of the Funds,
by the Directors or with respect to a Fund by the vote of a majority of the
outstanding Class I voting securities of such Fund, 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 only if such amendment is specifically approved (i) (a) with
respect to all Funds, by the Directors or by the vote of a majority of
outstanding Class I voting securities of each Fund, or (b)
14
with respect to any one Fund, by the Directors or the vote of a majority of
outstanding Class I voting securities of such Fund; and (ii) by a majority of
those Directors who are not parties to this Agreement or interested persons of
any such party cast in person at a meeting called for the purpose of voting 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.
Section 14. Limitation of Obligations of the Funds. The obligations of
--------------------------------------
each Fund hereunder shall be limited to the assets of that Fund, shall be
separate from the obligations of each other series of the Corporation, and no
Fund shall be liable for the obligations of any other series of the Corporation.
15
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written. This Agreement may
be executed by the parties hereto on any number of counterparts, all of which
shall constitute one and the same instrument.
MERCURY QA EQUITY SERIES, INC.
on behalf of each Fund
By _______________________________
Name:
Title:
MERCURY FUNDS DISTRIBUTOR, a division of
PRINCETON FUNDS DISTRIBUTOR, INC.
By _______________________________
Name:
Title:
16
APPENDIX A
NAME OF FUND
------------
Mercury QA Large Cap Core Fund
Mercury QA Large Cap Value Fund
Mercury QA Large Cap Growth Fund
Mercury QA Mid Cap Fund
Mercury QA Small Cap Fund
Mercury QA International Fund
17
EXHIBIT A
---------
MERCURY QA EQUITY SERIES, INC.
ON BEHALF OF EACH OF ITS SERIES'
CLASS I SHARES OF COMMON STOCK
SELECTED DEALER AGREEMENT
FOR SUBSCRIPTION PERIOD
-----------------------
Ladies and Gentlemen:
Mercury Funds Distributor, a division of Princeton Funds Distributor, Inc.
("us" or the "Distributor") has an agreement with Mercury QA Equity Series,
Inc., a Maryland corporation (the "Corporation"), on behalf of each of its
series listed on Appendix A attached hereto, as such Appendix may be amended
from time to time (each, a "Fund," and collectively, the "Funds"), pursuant to
which it acts as the distributor for the sale of Class I shares of common stock,
par value $0.0001 per share (herein referred to as "Class I Shares"), of each
Fund and as such has the right to distribute each Fund's Class I Shares for
resale. The Corporation is an open-end investment company registered under the
Investment Company Act of 1940, as amended (the "Investment Company Act"), and
the Class I Shares of each Fund are registered under the Securities Act of 1933,
as amended (the "Securities Act"). The Class I Shares of each Fund and certain
of the terms on which they are being offered are more fully described in the
enclosed Prospectus and Statement of Additional Information of the Funds. The
terms "Prospectus" and "Statement of Additional Information" as used herein
refer to the Funds' prospectus and statement of additional information,
respectively, most recently filed with the Securities and Exchange Commission
(the "Commission"). You have received a copy of the Class I Shares Distribution
Agreement (the "Distribution Agreement") between us and the Corporation and
reference is made herein to certain provisions of such Distribution Agreement.
This Agreement relates solely to the subscription period described in Section
3(a) of such Distribution Agreement. Subject to the foregoing, as principal, we
offer to sell to you, as a member of the Selected Dealers Group, Class I Shares
of each Fund for resale to investors identified in the Funds' Prospectus and
Statement of Additional Information as eligible to purchase Class I Shares
("eligible investors") upon the following terms and conditions:
1. The subscription period referred to in Section 3(a) of the
Distribution Agreement will continue through April __, 2000. The subscription
period for a Fund may be extended upon agreement between the Corporation on
behalf of such Fund and the Distributor. Subject to the provisions of such
Section and the conditions contained herein, we will sell to you on the third
business day following the termination of the subscription period, or such other
date as we may advise (the "Closing Date"), such number of a Fund's Class I
Shares as to which you have placed orders with us not later than 5:00 P.M. on
the second full business day preceding the Closing Date.
2. In all sales of these Class I Shares to eligible investors, you shall
act as dealer for your own account, and in no transaction shall you have any
authority to act as agent for the
Corporation, any Fund, for us or for any other member of the Selected Dealers
Group, except in connection with the Xxxxxxx Xxxxx Mutual Fund Adviser program
and such other special programs as we from time to time agree, in which case you
shall have authority to offer and sell Class I Shares of a Fund, as agent for
the Corporation, to participants in such program.
3. Except as provided in Paragraph 4 below, the public offering prices,
sales charges and the related Selected Dealers' concession are as follows:
Subscription Period
-------------------
Securities Dealers'
Sales Charge Concession
------------ ----------
Percentage* Percentage*
Public of Public of Public
Offering Dollar Offering Dollar Offering
Price Amount Price Amount Price
----- ------ ----- ------ -----
Less than $25,000 $10.554 $.554 5.25% $.554 5.25%
$25,000 but less than $50,000 10.499 .499 4.75 .499 4.75
$50,000 but less than $100,000 10.417 .417 4.00 .417 4.00
$100,000 but less than $250,000 10.309 .309 3.00 .309 3.00
$250,000 but less than $1,000,000 10.204 .204 2.00 .204 2.00
$1,000,000 and over** 10.000 .000 0.00 .000 0.00
__________________
* Rounded to the nearest one-hundredth percent.
** Initial sales charges may be waived for certain classes of offerees as set
forth in the Funds' Prospectus and Statement of Additional Information. Such
purchases may be subject to a contingent deferred sales charge as set forth in
the Funds' Prospectus and Statement of Additional Information.
The proceeds per Class I Share to each Fund from the sale of Class I Shares of
such Fund sold during the subscription period will be $10.00.
The term "purchase" refers to a single purchase by an individual, or to
concurrent purchases, which in the aggregate are at least equal to the
prescribed amounts, by an individual, his or her spouse and their children under
the age of 21 years purchasing any Fund's Class I Shares for his, her or their
own account and to single purchases by a trustee or other fiduciary purchasing
any Fund's Class I Shares for a single trust estate or single fiduciary account
although more than one beneficiary is involved. The term "purchase" also
includes purchases by any "company" as that term is defined in the Investment
Company Act, but does not include purchases (i) by any such company that has not
been in existence for at least six months or has no purpose other than the
purchase of Class I Shares of a Fund or Class I shares of other registered
investment companies at a discount and (ii) by any group of individuals whose
sole organizational nexus is that the participants therein are credit
cardholders of a company, policyholders of an insurance company, customers of
either a bank or broker-dealer or clients of an investment adviser.
The reduced sales charges are applicable through a right of accumulation
under which certain eligible investors are permitted to purchase any Fund's
Class I Shares at the offering price
2
applicable to the total of (a) the dollar amount then being purchased plus (b)
an amount equal to the then current net asset value or cost, whichever is
higher, of the purchaser's combined holdings of the Class I, Class A, Class B
and Class C shares of a Fund and of any other series of the Corporation (each, a
"Mercury Fund"). For any such right of accumulation to be made available, the
Distributor must be provided at the time of purchase, by the purchaser or you,
with sufficient information to permit confirmation of qualification, and
acceptance of the purchase order is subject to such confirmation.
The reduced sales charges are applicable to purchases aggregating $25,000
or more of Class I shares or of Class A shares of any other Mercury Fund made
through you within a thirteen-month period starting with the first purchase
pursuant to a Letter of Intent in the form provided in the Funds' Prospectus. A
purchase not originally made pursuant to a Letter of Intent may be included in
such purchases aggregating $25,000 under a subsequent letter executed within 90
days of such purchase if the Distributor is informed in writing of this intent
within such 90-day period. If the intended amount of shares is not purchased
within the thirteen-month period, an appropriate price adjustment will be made
pursuant to the terms of the Letter of Intent.
You agree to advise us promptly at our request as to amounts of any sales
made by you to eligible investors qualifying for reduced sales charges. Further
information as to the reduced sales charges pursuant to the right of
accumulation or a Letter of Intent is set forth in the Funds' Prospectus and
Statement of Additional Information.
4. You shall not place orders for any Fund's Class I Shares unless you
have already received purchase orders for such Fund's Class I Shares at the
applicable public offering prices and subject to the terms hereof and of the
Distribution Agreement. All orders are subject to acceptance by the Distributor
or the Corporation in the sole discretion of either. The minimum initial and
subsequent purchase requirements are as set forth in the Funds' Prospectus, as
amended from time to time. You agree that you will not offer or sell any Fund's
Class I Shares except under circumstances that will result in compliance with
the applicable Federal and state securities laws and that in connection with
sales and offers to sell Class I Shares of any Fund you will furnish to each
person to whom any such sale or offer is made a copy of the Funds' Prospectus
and, if requested, the Statement of Additional Information (in each case, as
then amended or supplemented) within three business days of receipt of request
and will not furnish to any person any information relating to any Fund's Class
I Shares that is inconsistent in any respect with the information contained in
the Funds' Prospectus and Statement of Additional Information (as then amended
or supplemented) or cause any advertisement to be published in any newspaper or
posted in any public place without our consent and the consent of the
Corporation.
5. All Class I Shares of a Fund purchased by Selected Dealers will be
delivered in the first instance at a settlement price computed on the basis of
all sales having been made in a purchase (as such term is defined above)
involving a public offering price of less than $25,000. All sales to you will be
deemed to have been made in such a transaction unless within 30 days after the
Closing Date you furnish to us, on forms supplied by us for the purpose, a
statement
3
acceptable to us setting forth sales in purchases involving a public offering
price of $25,000 or more, in which case we will compute such Selected Dealers'
concessions on the basis of the information set forth in such statement.
6. Payment for the Funds' Class I Shares purchased by you is to be made
by certified or official bank check at the office of Mercury Funds Distributor,
a division of Princeton Funds Distributor, Inc., X.X. Xxx 0000, Xxxxxxxxx, Xxx
Xxxxxx 00000-0000, on such date as we may advise, in New York Clearing House
funds payable to the order of Mercury Funds Distributor, a division of Princeton
Funds Distributor, Inc., or by federal funds wire transfer, against delivery by
us of non-negotiable share deposit receipts ("Receipts") issued by Financial
Data Services, Inc., as shareholder servicing agent, acknowledging the deposit
with it of the applicable Fund's Class I Shares so purchased by you. You agree
that as promptly as practicable after the delivery of such Class I Shares you
will issue appropriate written transfer instructions to the Corporation or to
the shareholder servicing agent as to the purchasers to whom you sold such Class
I Shares.
7. If any Fund's Class I Shares sold to you under the terms of this
Agreement are repurchased by the Corporation or by us for the account of the
Corporation or are tendered for redemption within seven business days after the
Closing Date, it is agreed that you shall forfeit your right to, and refund to
us, any discount received by you on such Class I Shares.
8. No person is authorized to make any representations concerning any
Fund's Class I Shares except those contained in the Funds' current Prospectus
and Statement of Additional Information and in such printed information
subsequently issued by us or the appropriate Fund as information supplemental to
such Prospectus and Statement of Additional Information. In purchasing any
Fund's Class I Shares through us you shall rely solely on the representations
contained in the Funds' Prospectus and Statement of Additional Information and
supplemental information above mentioned. Any printed information that we
furnish you other than the Funds' Prospectus, Statement of Additional
Information, periodic reports and proxy solicitation material is our sole
responsibility and not the responsibility of the Corporation or any Fund, and
you agree that neither the Corporation nor any Fund shall have any liability or
responsibility to you in these respects unless expressly assumed in connection
therewith.
9. You agree to deliver to each of the purchasers making purchases from
you a copy of the Funds' then current Prospectus at or prior to the time of
offering or sale and, if requested, the Statement of Additional Information
within three business days of receipt of request, and you agree thereafter to
deliver to such purchasers copies of the annual and interim reports and proxy
solicitation materials of the Funds. You further agree to endeavor to obtain
proxies from such purchasers. Additional copies of the Prospectus and Statement
of Additional Information, annual or interim reports and proxy solicitation
materials of the Funds will be supplied to you in reasonable quantities upon
request.
10. We reserve the right in our discretion, without notice, to suspend
sales or withdraw the offering of Class I Shares of any or all of the Funds
entirely or to certain persons of
4
entities in a class or classes specified by us. Each party hereto has the right
to cancel this Agreement upon notice to the other party.
11. We shall have full authority to take such action as we may deem
advisable in respect of all matters pertaining to the subscription offering. We
shall be under no liability to you except for lack of good faith and for
obligations expressly assumed by us herein. Nothing contained in this paragraph
is intended to operate as, and the provisions of this paragraph shall not in any
way whatsoever constitute, a waiver by you of compliance with any provision of
the Securities Act, or of the rules and regulations of the Securities and
Exchange Commission issued thereunder.
12. You represent that you are a member of the National Association of
Securities Dealers, Inc. and, with respect to any sales in the United States, we
both hereby agree to abide by the Conduct Rules of such Association.
13. Upon application to us, we will inform you as to the states in which
we believe each Fund's Class I Shares have been qualified for sale under, or are
exempt from the requirements of, the respective securities laws of such states,
but we assume no responsibility or obligation as to your right to sell any
Fund's Class I Shares in any jurisdiction. We will file with the Department of
State in New York a Further State Notice with respect to each Fund's Class I
Shares, if necessary.
14. All communications to us should be sent to the address below. Any
notice to you shall be duly given if mailed or telegraphed to you at the address
specified by you below.
15. You agree that you will not sell any Fund's Class I Shares to any
account over which you exercise discretionary authority.
5
16. This Agreement shall terminate at the close of business on the Closing
Date, unless earlier terminated, provided, however, this Agreement shall
continue after termination for the purpose of Section 7 hereof and for the
purpose of settlement of accounts hereunder.
MERCURY FUNDS DISTRIBUTOR, a division of
PRINCETON FUNDS DISTRIBUTOR, INC.
By
-------------------------------------
Name:
Title:
Please return one signed copy
of this Agreement to:
MERCURY FUNDS DISTRIBUTOR, a division of
PRINCETON FUNDS DISTRIBUTOR, INC.
X.X. Xxx 0000
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Accepted:
----------------------------------
(Authorized Signature)
Firm Name:
------------------------
By:
-------------------------------
Title:
----------------------------
Address:
--------------------------
----------------------------------
Date:
-----------------------------
6
APPENDIX A
NAME OF FUND
------------
Mercury QA Large Cap Core Fund
Mercury QA Large Cap Value Fund
Mercury QA Large Cap Growth Fund
Mercury QA Mid Cap Fund
Mercury QA Small Cap Fund
Mercury QA International Fund
7
EXHIBIT 5(a)
EXHIBIT B
---------
MERCURY QA EQUITY SERIES, INC.
ON BEHALF OF EACH OF ITS SERIES'
CLASS I SHARES OF COMMON STOCK
SELECTED DEALER AGREEMENT
-------------------------
Ladies and Gentlemen:
Mercury Funds Distributor, a division of Princeton Funds Distributor,
Inc. ("us," or the "Distributor") has an agreement with Mercury QA Equity
Series, Inc., a Maryland corporation (the "Corporation"), on behalf of each of
its series listed on Appendix A attached hereto, as such Appendix may be amended
from time to time (each, a "Fund," and collectively, the "Funds"), pursuant to
which it acts as the distributor for the sale of Class I shares of common stock,
par value $0.0001 per share (herein referred to as "Class I Shares"), of each
Fund, and as such has the right to distribute each Fund's Class I Shares for
resale. The Corporation is an open-end investment company registered under the
Investment Company Act of 1940, as amended (the "Investment Company Act"), and
the Class I Shares of each Fund are registered under the Securities Act of 1933,
as amended (the "Securities Act"). The Class I Shares of each Fund and certain
of the terms on which they are being offered are more fully described in the
enclosed Prospectus and Statement of Additional Information of the Funds. The
terms "Prospectus" and "Statement of Additional Information" as used herein
refer to the Funds' prospectus and statement of additional information,
respectively, most recently filed with the Securities and Exchange Commission
(the "Commission"). You have received a copy of the Class I Shares Distribution
Agreement (the "Distribution Agreement") between us and the Corporation and
reference is made herein to certain provisions of such Distribution Agreement.
We offer to sell to you, as a member of the Selected Dealers Group, Class I
Shares of each Fund for resale to investors identified in the Funds' Prospectus
and Statement of Additional Information as eligible to purchase Class I Shares
("eligible investors") upon the following terms and conditions:
1. In all sales of these Class I Shares to eligible investors, you shall
act as dealer for your own account and in no transaction shall you have any
authority to act as agent for the Corporation, any Fund, for us or for any other
member of the Selected Dealers Group, except in connection with the Xxxxxxx
Xxxxx Mutual Fund Adviser program and such other special programs as we from
time to time agree, in which case you shall have authority to offer and sell
Class I Shares of a Fund, as agent for the Corporation, to participants in such
program.
2. Orders received from you will be accepted through us only at the net
asset value applicable to each order, determined as set forth in Section 3(e) of
the Distribution Agreement. The procedure relating to the handling of orders
shall be subject to Section 5 hereof and instructions that we or the Corporation
shall forward from time to time to you. All orders are subject to acceptance or
rejection by the Distributor or the Corporation in the sole discretion of
either. The minimum initial and subsequent purchase requirements are as set
forth in the Prospectus and Statement of Additional Information of the Funds.
3. The sales charges for sales to eligible investors, computed as
percentages of the public offering price and the amount invested, and the
related discount to Selected Dealers are as follows:
Sales Charge as Discount to
Sales Charge As Percentage* of the Selected Dealers as
Percentage of the Net Amount Percentage of the
Amount of Purchase Offering Price Invested Offering Price
------------------ ----------------- -------- --------------
Less than $25,000 5.25% 5.54% 5.00%
$25,000 but less than $50,000 4.75 4.99 4.50
$50,000 but less than $100,000 4.00 4.17 3.75
$100,000 but less than $250,000 3.00 3.09 2.75
$250,000 but less than $1,000,000 2.00 2.04 1.80
$1,000,000 and over** 0.00 0.00 0.00
___________________
* Rounded to the nearest one-hundredth percent.
** Initial sales charges may be waived for certain classes of offerees as set
forth in the Funds' current Prospectus and Statement of Additional
Information. Such purchases may be subject to a contingent deferred sales
charge as set forth in the Funds' Prospectus and Statement of Additional
Information.
The term "purchase" refers to a single purchase by an individual, or to
concurrent purchases, which in the aggregate are at least equal to the
prescribed amounts, by an individual, his or her spouse and their children under
the age of 21 years purchasing any Fund's Class I Shares for his, her or their
own account and to single purchases by a trustee or other fiduciary purchasing
any Fund's Class I Shares for a single trust estate or single fiduciary account
although more than one beneficiary is involved. The term "purchase" also
includes purchases by any "company" as that term is defined in the Investment
Company Act but does not include purchases (i) by any such company that has not
been in existence for at least six months or which has no purpose other than the
purchase of Class I Shares of a Fund or Class I shares of other registered
investment companies at a discount and (ii) by any group of individuals whose
sole organizational nexus is that the participants therein are credit
cardholders of a company, policyholders of an insurance company, customers of
either a bank or broker-dealer or clients of an investment adviser.
The reduced sales charges are applicable through a right of accumulation
under which certain eligible investors are permitted to purchase any Fund's
Class I Shares at the offering price applicable to the total of (a) the dollar
amount then being purchased plus (b) an amount equal to the then current net
asset value or cost, whichever is higher, of the purchaser's combined holdings
of Class I, Class A, Class B and Class C shares of a Fund and any other series
of the Corporation (each, a "Mercury Fund"). For any such right of accumulation
to be made available, the Distributor must be provided at the time of purchase,
by the purchaser or you, with sufficient
2
information to permit confirmation of qualification, and acceptance of the
purchase order is subject to such confirmation.
The reduced sales charges are applicable to purchases aggregating $25,000
or more of Class I shares or of Class A shares of any other Mercury Fund made
through you within a thirteen-month period starting with the first purchase
pursuant to a Letter of Intent in the form provided in the Funds' Prospectus. A
purchase not originally made pursuant to a Letter of Intent may be included in
such purchases aggregating $25,000 under a subsequent letter executed within 90
days of such purchase if the Distributor is informed in writing of this intent
within such 90-day period. If the intended amount of shares is not purchased
within the thirteen-month period, an appropriate price adjustment will be made
pursuant to the terms of the Letter of Intent.
You agree to advise us promptly at our request as to amounts of any sales
made by you to eligible investors qualifying for reduced sales charges. Further
information as to the reduced sales charges pursuant to the right of
accumulation or a Letter of Intent is set forth in the Funds' Prospectus and
Statement of Additional Information.
4. You shall not place orders for any Fund's Class I Shares unless you
have already received purchase orders for such Class I Shares at the applicable
net asset value and subject to the terms hereof and of the Distribution
Agreement. All orders are subject to acceptance by the Distributor or the
Corporation in the sole discretion of either. The minimum initial and
subsequent purchase requirements are as set forth in the Funds' Prospectus, as
amended from time to time. You agree that you will not offer or sell any of the
Fund's Class I Shares except under circumstances that will result in compliance
with the applicable Federal and state securities laws and that in connection
with sales and offers to sell Class I Shares of any Fund you will furnish to
each person to whom any such sale or offer is made a copy of the Funds'
Prospectus and, if requested, the Statement of Additional Information (in each
case, as then amended or supplemented) within three business days of receipt of
request and will not furnish to any person any information relating to any
Fund's Class I Shares that is inconsistent in any respect with the information
contained in the Funds' Prospectus and Statement of Additional Information (as
then amended or supplemented) or cause any advertisement to be published in any
newspaper or posted in any public place without our consent and the consent of
the Corporation.
5. As a selected dealer, you are hereby authorized (i) to place orders
directly with the Corporation for each Fund's Class I Shares to be resold by us
to you subject to the applicable terms and conditions governing the placement of
orders by us set forth in Section 3 of the Distribution Agreement and subject to
the compensation provisions of Section 3 hereof and (ii) to tender each Fund's
Class I Shares directly to the Corporation or its agent for redemption subject
to the applicable terms and conditions set forth in Section 4 of the
Distribution Agreement.
3
6. You shall not withhold placing orders received from your customers so
as to profit yourself as a result of such withholding, e.g., by a change in the
"net asset value" from that used in determining the offering price to your
customers.
7. If any Fund's Class I Shares sold to you under the terms of this
Agreement are repurchased by the Corporation or by us for the account of the
Corporation or are tendered for redemption within seven business days after the
date of the confirmation of the original purchase by you, it is agreed that you
shall forfeit your right to, and refund to us, any discount received by you on
such Fund's Class I Shares.
8. No person is authorized to make any representations concerning any
Fund's Class I Shares except those contained in the Funds' current Prospectus
and Statement of Additional Information and in such printed information
subsequently issued by us or the appropriate Fund as information supplemental to
such Prospectus and Statement of Additional Information. In purchasing any
Fund's Class I Shares through us you shall rely solely on the representations
contained in the Funds' Prospectus and Statement of Additional Information and
supplemental information above mentioned. Any printed information that we
furnish you other than the Funds' Prospectus, Statement of Additional
Information, periodic reports and proxy solicitation material is our sole
responsibility and not the responsibility of the Corporation or any Fund, and
you agree that neither the Corporation nor any Fund shall have any liability or
responsibility to you in these respects unless expressly assumed in connection
therewith.
9. You agree to deliver to each of the purchasers making purchases from
you a copy of the Funds' then current Prospectus at or prior to the time of
offering or sale and, if requested, the Statement of Additional Information
within three business days of receipt of request, and you agree thereafter to
deliver to such purchasers copies of the annual and interim reports and proxy
solicitation materials of the Funds. You further agree to endeavor to obtain
proxies from such purchasers. Additional copies of the Prospectus and Statement
of Additional Information, annual or interim reports and proxy solicitation
materials of the Funds will be supplied to you in reasonable quantities upon
request.
10. We reserve the right in our discretion, without notice, to suspend
sales or withdraw the offering of Class I Shares of any or all of the Funds
entirely or to certain persons or entities in a class or classes specified by
us. Each party hereto has the right to cancel this Agreement upon notice to the
other party.
11. We shall have full authority to take such action as we may deem
advisable in respect of all matters pertaining to the continuous offering. We
shall be under no liability to you except for lack of good faith and for
obligations expressly assumed by us herein. Nothing contained in this paragraph
is intended to operate as, and the provisions of this paragraph shall not in any
way whatsoever constitute, a waiver by you of compliance with any provision of
the Securities Act or of the rules and regulations of the Commission issued
thereunder.
4
12. You represent that you are a member of the National Association of
Securities Dealers, Inc. and, with respect to any sales in the United States, we
both hereby agree to abide by the Conduct Rules of such Association.
13. Upon application to us, we will inform you as to the states in which
we believe each Fund's Class I Shares have been qualified for sale under, or are
exempt from the requirements of, the respective securities laws of such states,
but we assume no responsibility or obligation as to your right to sell any
Fund's Class I Shares in any jurisdiction. We will file with the Department of
State in New York a Further State Notice with respect to each Fund's Class I
Shares, if necessary.
14. All communications to us should be sent to the address below. Any
notice to you shall be duly given if mailed or telegraphed to you at the address
specified by you below.
5
15. Your first order placed pursuant to this Agreement for the purchase of
a Fund's Class I Shares will represent your acceptance of this Agreement.
MERCURY FUNDS DISTRIBUTOR, a division of
PRINCETON FUNDS DISTRIBUTOR, INC.
By
----------------------------------
Name:
Title:
Please return one signed copy
of this Agreement to:
MERCURY FUNDS DISTRIBUTOR, a division of
PRINCETON FUNDS DISTRIBUTOR, INC.
X.X. Xxx 0000
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Accepted:
---------------------------------
(Authorized Signature)
Firm Name:
-----------------------
By:
------------------------------
Title:
---------------------------
Address:
-------------------------
---------------------------------
Date:
----------------------------
6
APPENDIX A
NAME OF FUND
------------
Mercury QA Large Cap Core Fund
Mercury QA Large Cap Value Fund
Mercury QA Large Cap Growth Fund
Mercury QA Mid Cap Fund
Mercury QA Small Cap Fund
Mercury QA International Fund
7
