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UNDERWRITING AND SERVICE AGREEMENT
OF
FFP NEW HORIZONS FUND, INC.
THIS AGREEMENT is made and entered into by and between FFP Securities, Inc.,
a Missouri corporation and FFP New Horizons Fund, Inc., a Maryland
corporation, on behalf of each of the Portfolios listed below, effective as
of the 16th day of December, 1998.
W I T N E S S E T H
WHEREAS, FFP New Horizons Fund, Inc. is an open-end, diversified, management
investment company authorized to issue securities in series or portfolios;
and
WHEREAS, FFP New Horizons Fund, Inc. has authorized the issuance of shares of
stock in the six portfolios listed below, each of which has its own distinct
investment objectives and policies; and
WHEREAS, FFP New Horizons Fund, Inc. is registering with the Securities and
Exchange Commission as an investment company under the Investment Company Act
of 1940 and is registering interests in each of its portfolios with the
Commission under the Securities Act of 1933; and
WHEREAS, The portfolios offer their shares only as investments under variable
annuity contracts or variable life insurance policies; and
WHEREAS, FFP New Horizons Fund, Inc. has adopted a Distribution Plan and a
Contract Holder Services Plan in compliance with the provisions of Section
12b and Rule 12b-1 of the Investment Company Act of 1940; and
WHEREAS, FFP Securities, Inc. is registered as a broker-dealer with the
Securities and Exchange Commission and with the applicable states and is a
member in good standing of the National Association of Securities Dealers,
Inc.; and
WHEREAS, FFP New Horizons Fund, Inc. desires to appoint FFP Securities, Inc.
as the underwriter for the sale of the shares in each of its portfolios and
authorize it to provide shareholder and distribution services as authorized
by its Distribution and Contract Holder Services Plans; and
WHEREAS, FFP Securities, Inc. desires to serve as the underwriter for each of
the portfolios of FFP New Horizons Fund, Inc. and to provide shareholder and
distribution services for the portfolios;
NOW THEREFORE, in consideration of the mutual agreements and promises
contained in this Agreement and other valuable consideration, FFP Securities,
Inc. and FFP New Horizons Fund, Inc. agree as follows:
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I. APPOINTMENT AS UNDERWRITER
A. APPOINTMENT
FFP New Horizons Fund, Inc. (Fund) hereby appoints FFP Securities, Inc.
(FFP Securities) as the underwriter to serve as the agent of the Fund
to sell and to accept redemptions of shares of the capital stock of
each of the following portfolios of the Fund (Portfolios):
FFP Odyssey Venus Portfolio
FFP Century Venus Portfolio
FFP Discovery Venus Portfolio
FFP Millennium Mercury Portfolio
FFP Discovery Mercury Portfolio
FFP Millennium Venus Portfolio
FFP Securities agrees that it shall act as underwriter for the shares
of the Portfolios as provided in this Agreement and as described in the
registration statement for the Fund and its Portfolios when it becomes
effective and as it may be amended thereafter (Registration Statement).
FFP Securities agrees that, except as required to carry out its duties
under this Agreement or otherwise expressly authorized, it is acting as
an independent contractor and not as an agent of the Fund or the
Portfolios and has no authority to act for or represent the Fund or the
Portfolios in any way.
B. DUTIES
FFP Securities shall solicit orders for the purchase of shares of the
Portfolios on behalf of the Fund and its Portfolios and it shall
receive and transmit to the Fund shares properly tendered to FFP
Securities by shareholders of the Portfolios for redemption. FFP
Securities agrees that it will solicit orders for shares and accept
shares for redemption on the terms and conditions and as described in
the Registration Statement and as required by rules and regulations of
the Securities and Exchange Commission. It is understood that the
shares are offered only through variable annuity contracts and variable
life policies issued by life insurance companies.
II. APPOINTMENT AS SERVICE AGENT
A. APPOINTMENT
The Fund hereby appoints FFP Securities to provide shareholder and
distribution services for the Portfolios, their shareholders and the
owners or prospective owners of variable annuity contracts or variable
life insurance policies who may invest in the Portfolios through those
contracts and policies. FFP Securities agrees that it will provide
those services as described in and subject to the terms of this
Agreement and the Distribution Plan and Contract Holder Services Plan
(Plans) adopted by the Fund on behalf of the Portfolios and subject to
the rules and regulations of the Securities and Exchange Commission.
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B. DUTIES
During the time when the Distribution and Contract Holder Services
Plans adopted by the Fund and this Agreement are in effect, FFP
Securities shall provide services to (i) persons who own variable
annuity contracts or variable life insurance policies who have
investments in the Portfolios through those contracts and policies,
(ii) persons who are considering allocating assets to the Portfolios
through their variable annuity contracts or variable life insurance
policies, and/or (iii) persons who are considering purchasing variable
annuity contracts or variable life insurance policies which include the
Portfolios as investment options. In addition, FFP Securities may
provide services designed to increase the sale of shares in the
Portfolios through variable annuity contracts or variable life
insurance policies. The services shall be subject to the terms of, and
as described in, the Plans. The services shall include, but not be
limited to:
1. advice about the allocation of purchase payments among the
Portfolios under the variable annuity contracts or variable life
insurance policies;
2. discussion of the risks involved in the various Portfolios used
as investment options under the variable annuity contracts or
variable life insurance policies;
3. asset allocation advice and advice about the balancing
investments among different classes of assets;
4. obtaining information and providing explanations about the
investment objectives, policies and strategies of each Portfolio;
5. holding seminars to educate contract and policy owners about
asset allocation of their purchase payments and the management of
the Portfolios;
6. providing ongoing customer service to owners of the variable
annuity contracts or variable life insurance policies, including
providing information about the management and performance of
each Portfolio and the individual accounts of each owner in each
Portfolio; and
7. responding to questions about shareholder reports, proxy
statements or other information provided to contract and policy
owners by the Fund;
8. printing and mailing prospectuses, statements of additional
information, supplements and shareholder reports;
9. developing, preparing, printing and mailing advertisements, sales
literature and other promotional materials describing and/or
relating to the Portfolios;
10. holding seminars and sales meetings designed to promote the
Portfolios as investment options under the variable annuity
contracts or variable life insurance policies; and
11. educating sales personnel and prospective customers about the
Portfolios and their performance and the management styles of the
investment advisers of the Portfolios.
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C. REPORTS
While FFP Securities is providing services under the Distribution and
Shareholder Services Plans, it shall provide to the Fund and its
Board, at least quarterly, reports in such form and containing such
information as the Board may reasonably request. These reports shall
include information necessary for the Board to make an informed
determination concerning whether the Plans should be continued. Such
information shall include a written report of the aggregate amounts
received by FFP Securities under this Agreement for the services
described in this Section II and the amounts spent by FFP Securities in
providing those services.
III. REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF FFP SECURITIES
FFP Securities hereby represents and warrants to the Fund and each
Portfolio as follows:
1. DUE INCORPORATION AND ORGANIZATION. FFP Securities is duly
organized and is in good standing under the laws of the State of
Missouri and is fully authorized to enter into this Agreement and
carry out its duties and obligations hereunder.
2. REGISTRATION. FFP Securities is registered as a broker-dealer
with the Securities and Exchange Commission and with all the
states in which its activities require it to be so registered and
FFP Securities shall maintain such registrations in effect at all
times during the term of this Agreement.
3. CODE OF ETHICS. FFP Securities represents that it has adopted a
Code of Ethics under the provisions of Rule 17j-1 of the 1940
Act, a copy of which has been delivered to the Fund and FFP
Securities agrees that, during the term of this Agreement, it
shall maintain such Code in force and that it shall notify the
Board in advance in the event it proposes to amend or replace
such Code of Ethics. FFP Securities further certifies that it
has adopted such procedures as are reasonably necessary to
prevent access persons from violating such code of ethics.
4. BEST EFFORTS. FFP Securities at all times shall provide its best
judgment and effort to each Portfolio in carrying out its
obligations hereunder and shall act in compliance with all the
provisions of the Plan and the Registration Statement.
B. REPRESENTATIONS AND WARRANTIES OF EACH PORTFOLIO AND THE FUND
The Fund, on behalf of each Portfolio, hereby represents and warrants
to FFP Securities as follows:
1. DUE INCORPORATION AND ORGANIZATION. The Fund has been duly
incorporated under the laws of the state of Maryland and is
authorized to enter into this Agreement and carry out its
obligations hereunder.
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2. REGISTRATION. The Fund is or will be registered as an investment
company with the Securities and Exchange Commission under the
1940 Act and shares of each Portfolio are or will be registered
or qualified for offer and sale to the public under the
Securities Act of 1933, as amended (1933 Act) and under the
securities laws of all states where such registration is
required. Such registrations or qualifications will be kept in
effect during the term of this Agreement.
IV. COMPLIANCE WITH APPLICABLE REQUIREMENTS
In carrying out its obligations under this Agreement, FFP Securities
shall at all times comply with:
1. all applicable provisions of the 1940 Act, the 1933 Act, the
Securities Exchange Act of 1934 and any applicable rules and
regulations of the Securities and Exchange Commission;
2. all applicable rules and regulations of the National Association
of Securities Dealers Inc. and the statutes and rules of the
applicable state securities regulators;
3. all policies and procedures of the Fund as adopted by the Board
and/or as described in the Registration Statement;
4. the provisions of the Articles of Incorporation for the Fund, as
they may be amended from time to time;
5. the provisions of the Bylaws of the Fund, as they may be amended
from time to time; and
6. any other applicable provisions of state or federal law.
V. COMPENSATION
A. FOR ITS DUTIES AS UNDERWRITER
FFP Securities shall receive no compensation for providing services as
an underwriter under Section I of this Agreement. It is understood,
however, that FFP Securities may participate in the offer and sale of
the variable annuity contracts or variable life insurance policies that
use the Portfolios as investment options and FFP Securities may receive
compensation from the life insurance companies for such services as
authorized by the registration statements and distribution agreements
for the variable annuity contracts or variable life insurance policies.
In addition, FFP Securities may receive compensation for providing
shareholder and distribution services for the Portfolios as provided in
Subsection B, below.
B. FOR ITS DUTIES IN PROVIDING SHAREHOLDER AND DISTRIBUTION SERVICES.
Each Portfolio shall pay to FFP Securities a fee equal to an annual
rate of .75% of the average daily net assets of each Portfolio for the
services provided by FFP Securities under
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Section II of this Agreement. Compensation under this Agreement shall be
calculated and shall accrue daily at the rate of 1/365 of .75% of the
daily net assets of each Portfolio determined at the end of each day. If
this Agreement becomes effective subsequent to the first day of a month
or terminates before the last day of a month, compensation shall only
accrue and be paid for that part of the month during which this Agreement
is in effect. The fee shall be payable quarterly upon review by the
Board of the reports provided to the Board under Section II.C of this
Agreement. Each fee accrues for each Portfolio separately and in no
event shall any one Portfolio be responsible for the fee payable by any
other Portfolio.
VI. EXPENSES
The expenses in connection with the management of each Portfolio shall be
allocated between each Portfolio and FFP Securities as follows:
A. EXPENSES OF FFP SECURITIES
FFP Securities shall be responsible for the payment of all fees and
expenses it incurs in distributing the shares and in providing the
services described in Section II of this agreement. Those expenses
include, but are not limited to:
1. costs of printing and mailing prospectuses, statements of
additional information, supplements and shareholder reports that
are used to solicit new investments in the Portfolios;
2. developing, preparing, printing and mailing advertisements, sales
literature and other promotional materials describing and/or
relating to the Portfolios;
3. fees paid to registered representatives in connection with
providing the services described in Section II; and
4. costs of communicating with shareholders, contract owners and
policy holders about their interests in the Portfolios.
B. EXPENSES OF EACH PORTFOLIO
Each Portfolio shall pay:
1. the fees payable by the Portfolio to FFP Securities under this
Agreement;
2. its proportionate share of the expenses payable by the Fund for
preparing, printing and distributing proxies, proxy statements,
prospectuses, registration statements and reports to existing
shareholders of the Portfolios and of holding shareholders'
meetings; and
3. fees payable by each Portfolio to the Securities and Exchange
Commission or to any state securities regulator or other
regulatory authority for the registration of shares of the
Portfolio.
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VII. STATUS OF UNDERWRITER AND OTHER PERSONS.
FFP Securities is an independent contractor and shall be agent for the Fund
only for the sale and redemption of the shares. Any person who serves both
as an officer, director, employee or agent of FFP Securities and of the Fund
shall be deemed to be providing services only to the Fund when acting on any
business of the Fund, and shall not be deemed to be acting as an officer,
director, employee or agent, or under the control or direction, of FFP
Securities even though such person is receiving compensation from FFP
Securities.
VIII. NONEXCLUSIVITY
The services of FFP Securities to each Portfolio are not to be deemed to be
exclusive, and FFP Securities shall be free to act as an underwriter or
distributor of other securities and to provide shareholder and distribution
services to other parties, including other investment companies, and to
engage in other activities, so long as its services under this Agreement are
not impaired. It is understood and agreed that officers and directors of FFP
Securities may serve as officers or directors of the Fund, and that officers
or directors of the Fund may serve as officers or directors of FFP Securities
or affiliated entities to the extent permitted by law and the rules and
regulations of the Securities and Exchange Commission and the National
Association of Securities Dealers, Inc. It is further understood that the
officers and directors of FFP Securities are not prohibited from engaging in
any other business activity or from providing services to any other person,
or from serving as partners, officers, directors or trustees of any other
firm or trust, including other investment companies to the full extent
allowed by law.
IX. TERM
This Agreement shall become effective on the date approved by the Board,
including a majority of the members of the Board who are not interested
persons of the Fund as defined by the 1940 Act and who have no direct or
indirect financial interest in this Agreement or in the operation of the
Distribution and Contract Holder Services Plans of the Fund or in any
agreements related to the Plans (disinterested directors). This Agreement
shall remain in force and effect through December 31, 1999, unless earlier
terminated under the provisions of Section XI.
X. RENEWAL
Following the expiration of its initial term, this Agreement shall continue
in force and effect from year to year, provided that the continuation for
each Portfolio is specifically approved at least annually by the Board and by
a majority of the disinterested directors. The approval must be done in
person at a meeting specifically called for the purpose of continuing the
Agreement.
XI. TERMINATION
This Agreement may be terminated at any time, for any Portfolio,
without the payment of any penalty, on sixty (60) days' written notice
to the other party, by:
1. the vote of a majority of the Board; or
2. the vote of a majority of the disinterested directors; or
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3. the vote of persons holding a majority of the outstanding voting
securities of the Portfolio as determined by rules and
regulations of the Securities and Exchange Commission.
This Agreement shall automatically terminate in the event of its
"assignment," as that term is defined in the 1940 Act. The termination
of this Agreement with respect to any one Portfolio shall not affect
the continuation of this Agreement with respect to other Portfolios.
The termination of the appointment of FFP Securities as the provider of
shareholder and distribution services for any Portfolio under the
provisions of Section II of this Agreement shall not affect the
appointment and duties of FFP Securities as an underwriter for the
Portfolios under Section I of this Agreement.
XII. AMENDMENT
This Agreement may be amended by a writing approved by the Board. All
material amendments must be approved by a majority of the disinterested
directors of the Fund.
XIII. LIABILITY
FFP Securities shall be liable to each Portfolio and shall indemnify each
Portfolio for any losses incurred by the Portfolio to the extent that such
losses resulted from an act or omission on the part of FFP Securities or its
officers, directors or employees, that is found to involve willful
misfeasance, bad faith or negligence, or reckless disregard by FFP Securities
of its duties, or in connection with the services rendered by FFP Securities,
under this Agreement.
XIV. NOTICES
Any notices under this Agreement shall be in writing, addressed and
delivered, mailed postage paid, or sent by other delivery service, or by
facsimile transmission or e-mail to each party at such address as each party
may designate for the receipt of notice. Until further notice, such
addresses shall be:
THE FUND: THE PORTFOLIOS: FFP SECURITIES:
FFP New Horizons Fund, Inc. c/o FFP New Horizons Fund, Inc. FFP Securities, Inc.
00000 Xxxxxx Xxxx 00000 Xxxxxx Xxxx 00000 Xxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000 Xxxxxxxxxxxx, XX 00000 Xxxxxxxxxxxx, XX 00000
000-000-0000 000-000-0000 000-000-0000
Fax: 000-000-0000 Fax: 000-000-0000 Fax: 000-000-0000
XV. INTERPRETATION
This Agreement shall be governed by the laws of the State of Missouri. Any
term or provision of this Agreement which is the same as or derived from a
term or provision included in the 1940 Act shall be interpreted by referring
to the 1940 Act and to interpretations of such Act by the United States
Courts or by rules, regulations or orders of the Securities and Exchange
Commission. In addition, any provision of this Agreement that is included
based on or as a result of a requirement of the 1940 Act, shall be deemed
amended or deleted to the extent that
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the requirement on which the provision is based is amended or rescinded in the
future by rule, regulation or order of the Securities and Exchange Commission.
XVI. SERVICE XXXX
The service xxxx of the Fund and each Portfolio and the name "FFP" have been
adopted by the Fund with the permission of First Financial Planners, Inc. and
their continued use is subject to the right of First Financial Planners, Inc.
to withdraw this permission in the event FFP Securities or another subsidiary
or affiliated corporation of First Financial Planners, Inc. is not the
underwriter of any Portfolio.
IN WITNESS WHEREOF, the undersigned hereby execute this Agreement as of the
date written in the first paragraph of this Agreement.
FFP SECURITIES, INC.
By: /s/ XXX X. XXXXX
----------------
Xxx X. Xxxxx, President
ATTEST: /s/ XXXXXX X. XXXXXXXXX, XX.
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Xxxxxx X. Xxxxxxxxx, Xx., Secretary (SEAL)
FFP NEW HORIZONS FUND, INC. ON BEHALF OF ITS PORTFOLIOS:
FFP Odyssey Venus Portfolio
FFP Century Venus Portfolio
FFP Discovery Venus Portfolio
FFP Millennium Mercury Portfolio
FFP Discovery Mercury Portfolio
FFP Millennium Venus Portfolio
By: /s/ XXX X. XXXXX
----------------
Xxx X. Xxxxx, President
ATTEST: /s/ XXXXX X. XXXXXXXXX
----------------------
Xxxxx X. Xxxxxxxxx, Secretary (SEAL)
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