Exhibit e(2)
XXXXX XXXXXX TRUST II
DISTRIBUTION AGREEMENT
September 17, 2002
PFS Distributors, Inc.
0000 Xxxxxxxxxxxx Xxxx.
Xxxxxx, Xxxxxxx 00000
Dear Sirs:
This is to confirm that, in consideration of the agreements
hereinafter contained, Xxxxx Xxxxxx Trust II (the "Trust"), a Massachusetts
business trust, on behalf of its series Xxxxx Xxxxxx Capital Preservation Fund
II (the "Fund"), has agreed that you shall be, for the period of this
Agreement, the non-exclusive principal underwriter and co-distributor of shares
of the Fund. For purposes of this Agreement, the term "Shares" shall mean
shares of beneficial interest of the Fund.
1. Services as Principal Underwriter and Distributor
1.1 You will act as agent for the distribution of Shares covered by, and
in accordance with, the registration statement, prospectus and statement of
additional information then in effect under the Securities Act of 1933, as
amended (the "1933 Act"), and the Investment Company Act of 1940, as amended
(the "1940 Act"), and will transmit or cause to be transmitted promptly any
orders received by you or those with whom you have sales or servicing
agreements for purchase or redemption of Shares to the Transfer and Dividend
Disbursing Agent for the Fund of which the Trust has notified you in writing.
1.2 You agree to use your best efforts to solicit orders for the sale of
Shares. It is contemplated that you will enter into sales or servicing
agreements with registered securities brokers and banks and into servicing
agreements with financial institutions and other industry professionals, such
as investment advisers, accountants and estate planning firms. In entering into
such agreements, you will act only on your own behalf as principal underwriter
and distributor. You will not be responsible for making any distribution plan
or service fee payments pursuant to any plans the Trust may adopt on behalf of
the Fund or agreements it may enter into.
1.3 You shall act as the non-exclusive principal underwriter and
co-distributor of Shares in compliance with all applicable laws, rules and
regulations, including, without limitation, all rules and regulations made or
adopted from time to time by the Securities and Exchange Commission (the "SEC")
pursuant to the 1933 Act or the 1940 Act or by any securities association
registered under the Securities Exchange Act of 1934, as amended.
1.4 Whenever in their judgment such action is warranted for any reason,
including, without limitation, market, economic or political conditions, the
Trust's officers may decline to accept any orders for, or make any sales of,
any Shares until such time as those officers deem it advisable to accept such
orders and to make such sales and the Trust shall advise you promptly of such
determination.
2. Duties of the Trust
2.1 The Trust agrees to pay all costs and expenses in connection with the
registration of Shares under the 1933 Act, and all expenses in connection with
maintaining facilities for the issue and transfer of Shares and for supplying
information, prices and other data to be furnished by the Trust hereunder, and
all expenses in connection with the preparation and printing of the Fund's
prospectuses and statements of additional information for regulatory purposes
and for distribution to shareholders; provided however, that nothing contained
herein shall be deemed to require the Trust to pay any costs of advertising or
marketing the sale of Shares.
2.2 The Trust agrees to execute any and all documents and to furnish any
and all information and otherwise to take any other actions that may be
reasonably necessary in the discretion of the Trust's officers in connection
with the qualification of Shares for sale in such states and other U.S.
jurisdictions as the Fund may approve and designate to you from time to time,
and the Trust agrees to pay all expenses that may be incurred in connection
with such qualification. You shall pay all expenses connected with your own
qualification as a securities broker or dealer under state or Federal laws and,
except as otherwise specifically provided in this Agreement, all other expenses
incurred by you in connection with the sale of Shares as contemplated in this
Agreement.
2.3 The Trust shall furnish you from time to time, for use in connection
with the sale of Shares, such information reports with respect to the Fund and
the Shares as you may reasonably request, all of which shall be signed by one
or more of the Trust's duly authorized officers; and the Trust warrants that
the statements contained in any such reports, when so signed by the Trust's
officers, shall be true and correct. The Trust also shall furnish you upon
request with (a) the reports of the annual audits of the financial statements
of the Trust made by independent certified public accountants retained by the
Trust for such purpose; (b) semi-annual unaudited financial statements
pertaining to the Fund; (c) quarterly earnings statements prepared by the Trust
for the Fund; (d) a monthly itemized list of the securities in the Fund's
portfolio; (e) monthly balance sheets as soon as practicable after the end of
each month; (f) the current net asset value and offering price per share for
the Fund on each day such net asset value is computed and (g) from time to time
such additional information regarding the financial condition of the Fund as
you may reasonably request.
3. Representations and Warranties
The Trust represents to you that all registration statements, prospectuses
and statements of additional information filed by the Trust on behalf of the
Fund with the SEC under the 1933 Act and the 1940 Act with respect to the
Shares have been prepared in conformity with the requirements of said Acts and
the rules and regulations of the SEC thereunder. As used in this Agreement, the
terms "registration statement", "prospectus" and "statement of additional
information" shall mean any registration statement, prospectus and statement of
additional information filed by the Trust on behalf of the Fund with the SEC
and any amendments and supplements thereto filed by the Trust on behalf of the
Fund with the SEC. The Trust represents and warrants to you that any such
registration statement, prospectus and statement of additional information,
when such registration statement becomes effective and as such prospectus and
statement of additional information are amended and supplemented, includes at
the time of such effectiveness, amendment or supplement all statements required
to be contained therein in conformance with the 1933 Act, the 1940 Act and the
rules and regulations of the SEC; that all statements of material fact
contained in any registration statement, prospectus or statement of additional
information will be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any prospectus or
statement of additional information when such registration statement becomes
effective will include an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading to a purchaser of the Fund's Shares. The
Trust may, but shall not be obligated to, propose from time to time such
amendment or amendments to any registration statement and such supplement or
supplements to any prospectus or statement of additional information as, in the
light of future developments, may, in the opinion of the Trust, be necessary or
advisable. If the Trust shall not propose such amendment or amendments and/or
supplement or supplements within fifteen days after receipt by the Trust of a
written request from you to do so, you may, at your option, terminate this
Agreement or decline to make offers of the Trust's Shares until such amendments
are made. The Trust shall not file any amendment to any registration statement
for the Fund or supplement to any prospectus or statement of additional
information for the Fund without giving you reasonable notice thereof in
advance; provided, however, that nothing contained in this Agreement shall in
any way limit the Trust's right to file at any time such amendments to any
registration statement and/or supplements to any prospectus or statement of
additional information, of whatever character, as the Trust may deem advisable,
such right being in all respects absolute and unconditional.
4. Indemnification
4.1 The Trust authorizes you to use any prospectus or statement of
additional information furnished by the Trust from time to time, in connection
with the sale of Shares. The Trust agrees to indemnify, defend and hold you,
your several officers and directors, and any person who controls you 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 such
counsel fees incurred in connection therewith) which you, your officers and
directors, 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, or alleged untrue statement, of a material fact contained in any
registration statement for the Fund, any prospectus or any statement of
additional information for the Fund or arising out of or based upon any
omission, or alleged omission, to state a material fact required to be stated
in any such registration statement, any such prospectus or any statement of
additional information or necessary to make the statements in any of them not
misleading; provided, however, that the Trust's agreement to indemnify you,
your officers or directors, and any such controlling person shall not be deemed
to cover any claims, demands, liabilities or expenses arising out of any
statements or representations made by you or your representatives or agents
other than such statements and representations as are contained in any
prospectus or statement of additional information and in such financial and
other statements as are furnished to you pursuant to paragraph 2.3 of this
Agreement; and further provided that the Trust's agreement to indemnify you and
the Trust's representations and warranties herein before set forth in paragraph
3 of this Agreement shall not be deemed to cover any liability to the Trust or
the Fund or its shareholders to which you would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of
your duties, or by reason of your reckless disregard of your obligations and
duties under this Agreement. The Trust's agreement to indemnify you, your
officers and directors, and any such controlling person, as aforesaid, is
expressly conditioned upon the Trust's being notified of any action brought
against you, your officers or directors, or any such controlling person, such
notification to be given by letter or by telegram addressed to the Trust at its
principal office in New York, New York and sent to the Trust by the person
against whom such action is brought, within ten days after the summons or other
first legal process shall have been served. The failure so to notify the Trust
of any such action shall not relieve the Trust from any liability that the
Trust may have to the person against whom such action is brought by reason of
any such untrue, or alleged untrue, statement or omission, or alleged omission,
otherwise than on account of the Trust's indemnity agreement contained in this
paragraph 4.1. The Trust will be entitled to assume the defense of any suit
brought to enforce any such claim, demand or liability, but, in such case, such
defense shall be conducted by counsel of good standing chosen by the Trust. In
the event the Trust elects to assume the defense of any such suit and retains
counsel of good standing, the defendant or defendants in such suit shall bear
the fees and expenses of any additional counsel retained by any of them; but if
the Trust does not elect to assume the defense of any such suit, the Trust will
reimburse you, your officers and directors, or the controlling person or
persons named as defendant or defendants in such suit, for the reasonable fees
and expenses of any counsel retained by you or them. The Trust's
indemnification agreement contained in this paragraph 4.1 and the Trust's
representations and warranties in this Agreement shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
you, your officers and directors, or any controlling person, and shall survive
the delivery of any of the Trust's Shares. This agreement of indemnity will
inure exclusively to your benefit, to the benefit of your several officers and
directors, and their respective estates, and to the benefit of the controlling
persons and their successors. The Trust agrees to notify you promptly of the
commencement of any litigation or proceedings against the Trust with respect to
the Fund or any of its officers or Board members in connection with the
issuance and sale of any of the Fund's Shares.
4.2 You agree to indemnify, defend and hold the Trust, its several
officers and Board members, and any person who controls the Trust 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 costs of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) that the Trust, its officers or Board
members 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 officers or Board members, or such controlling
person resulting from such claims or demands shall arise out of or be based
upon any untrue, or alleged untrue, statement of a material fact contained in
information furnished in writing by you to the Trust and used in the answers to
any of the items of the registration statement for the Fund or in the
corresponding statements made in the prospectus or statement of additional
information for the Fund, or shall arise out of or be based upon any omission,
or alleged omission, to state a material fact in connection with such
information furnished in writing by you to the Trust and required to be stated
in such answers or necessary to make such information not misleading. Your
agreement to indemnify the Trust, its officers or Board members, and any such
controlling person, as aforesaid, is expressly conditioned upon your being
notified of any action brought against the Trust, its officers or Board
members, or any such controlling person, such notification to be given by
letter or telegram addressed to you at your principal office in Duluth, Georgia
and sent to you by the person against whom such action is brought, within ten
days after the summons or other first legal process shall have been served. You
shall have the right to control the defense of such action, with counsel of
your own choosing, satisfactory to the Trust, if such action is based solely
upon such alleged misstatement or omission on your part or with the Trust's
consent, and in any event the Trust, its officers or Board members or such
controlling person shall each have the right to participate in the defense or
preparation of the defense of any such action with counsel of its own choosing
reasonably acceptable to you but shall not have the right to settle any such
action without your consent, which will not be unreasonably withheld. The
failure to so notify you of any such action shall not relieve you from any
liability that you may have to the Trust, its officers or Board members, or to
such controlling person by reason of any such untrue, or alleged untrue,
statement or omission, or alleged omission, otherwise than on account of your
indemnity agreement contained in this paragraph 4.2. You agree to notify the
Trust promptly of the commencement of any litigation or proceedings against you
or any of your officers or directors in connection with the issuance and sale
of any of the Fund's Shares.
5. Effectiveness of Registration
No Shares shall be offered by either you or the Fund under any of the
provisions of this Agreement and no orders for the purchase or sale of such
Shares under this Agreement shall be accepted by the Fund if and so long as the
effectiveness of the registration statement for the Fund then in effect or any
necessary amendments thereto shall be suspended under any of the provisions of
the 1933 Act, or if and so long as a current prospectus for the Fund as
required by Section 5(b)(2) of the 1933 Act is not on file with the SEC;
provided, however, that nothing contained in this paragraph 5 shall in any way
restrict or have any application to or bearing upon the Fund's obligation to
repurchase its Shares from any shareholder in accordance with the provisions of
the Fund's prospectus, statement of additional information or charter
documents, as amended from time to time.
6. Offering Price
Shares of any class of any the Fund offered for sale by you shall be
offered for sale at a price per share (the "offering price") equal to (a) their
net asset value (determined in the manner set forth in the Fund's charter
documents and the then-current prospectus and statement of additional
information) plus (b) a sales charge, if applicable, which shall be the
percentage of the offering price of such Shares as set forth in the Fund's
then-current prospectus relating to such Shares. In addition to or in lieu of
any sales charge applicable at the time of sale, Shares of any class of the
Fund offered for sale by you may be subject to a contingent deferred sales
charge as set forth in the Fund's then-current prospectus and statement of
additional information. You shall be entitled to receive any sales charge
levied at the time of sale in respect of the Shares without remitting any
portion to the Fund. Any payments to a broker or dealer through whom you sell
Shares shall be governed by a separate agreement between you and such broker or
dealer and the Fund's then-current prospectus and statement of additional
information. Any payments to any provider of services to you shall be governed
by a separate agreement between you and such service provider.
7. Notice to You
The Trust agrees to advise you immediately in writing:
(a) of any request by the SEC for amendments to the registration
statement, prospectus or statement of additional information for the Fund then
in effect or for additional information;
(b) in the event of the issuance by the SEC of any stop order suspending
the effectiveness of the registration statement for the Fund, prospectus or
statement of additional information for the Fund then in effect or the
initiation of any proceeding for that purpose;
(c) of the happening of any event that makes untrue any statement of a
material fact made in the registration statement for the Fund, prospectus or
statement of additional information for the Fund then in effect or that
requires the making of a change in such registration statement, prospectus or
statement of additional information in order to make the statements therein not
misleading; and
(d) of all actions of the SEC with respect to any amendment to the
registration statement for the Fund, or any supplement to the prospectus or
statement of additional information for the Fund which may from time to time be
filed with the SEC.
8. Term of the Agreement
This Agreement shall become effective on the date hereof, shall have an
initial term of one year from the date hereof, and shall continue for
successive annual periods thereafter so long as such continuance is
specifically approved at least annually by (a) the Trust's Board or (b) by a
vote of a majority (as defined in the 0000 Xxx) of the Fund's outstanding
voting securities, provided that in either event the continuance is also
approved by a majority of the Board members of the Trust who are not interested
persons (as defined in the 0000 Xxx) of any party to this Agreement, by vote
cast in person at a meeting called for the purpose of voting on such approval.
This Agreement is terminable with or without cause, without penalty, on 60
days' notice by the Trust's Board or by vote of holders of a majority of the
Fund's outstanding voting securities, or on 90 days' notice by you. This
Agreement will also terminate automatically, in the event of its assignment (as
defined in the 1940 Act and the rules and regulations thereunder).
9. Arbitration
Any claim, controversy, dispute or deadlock arising under this Agreement
(collectively, a "Dispute") shall be settled by arbitration administered under
the rules of the American Arbitration Association ("AAA") in New York, New
York. Any arbitration and award of the arbitrators, or a majority of them,
shall be final and the judgment upon the award rendered may be entered in any
state or federal court having jurisdiction. No punitive damages are to be
awarded.
10. Miscellaneous
So long as you act as a principal underwriter and distributor of Shares,
you shall not perform any services for any entity other than investment
companies advised or administered by Citigroup Inc. or its affiliates. The
Trust recognizes that the persons employed by you to assist in the performance
of your duties under this Agreement may not devote their full time to such
service and nothing contained in this Agreement shall be deemed to limit or
restrict the persons employed by you or any of your affiliates right to engage
in and devote time and attention to other businesses or to render services of
whatever kind or nature, provided, however, that in conducting such business or
rendering such services your employees and affiliates would take reasonable
steps to assure that the other parties involved are put on notice as to the
legal entity with which they are dealing. This Agreement and the terms and
conditions set forth herein shall be governed by, and construed in accordance
with, the laws of the State of New York without giving effect to its conflict
of interest principles.
11. Limitation of Liability
The Trust and you acknowledge and agree that all obligations of the Trust
under this Agreement are binding only with respect to the Fund; that any
liability of the Trust under this Agreement, or in connection with the
transactions contemplated herein, shall be discharged only out of the assets of
the Fund; and that no other series of the Trust shall be liable with respect to
this Agreement or in connection with the transactions contemplated herein.
The obligations of the Trust shall not be binding upon any of the
Trustees, officers, or shareholders of the Trust personally, but shall bind
only assets and property of the Fund, and not any other series of the Trust.
Any reference to the Trust hereunder means and refers to the Trustees from time
to time serving under the Declaration of Trust of the Trust, a copy of which is
on file with the Secretary of the Commonwealth of Massachusetts. The execution
and delivery of this Agreement ahs been authorized by the Trustees, and this
Agreement has been signed on behalf of the Trust by an authorized officer of
the Trust, acting as such and not individually, and neither such authorization
by such Trustees nor such execution and delivery by such officer shall be
deemed to have been made by any of them individually or to impose any liability
on any of them personally, but shall bind only the assets and property of the
Trust as provided in the Declaration of Trust.
If the foregoing is in accordance with your understanding, kindly indicate
your acceptance of this Agreement by signing and returning to us the enclosed
copy, whereupon this Agreement will become binding on you.
Very truly yours,
XXXXX XXXXXX TRUST II, on behalf
of Xxxxx Xxxxxx Capital Preservation
Fund II
By: /s/ X. X. Xxxxxx
------------------------------
Authorized Officer
Accepted:
PFS DISTRIBUTORS, INC.
By: /s/ Xxxxx Xxxxxx
------------------------------
Authorized Officer
