Exhibit 5
DISTRIBUTION AGREEMENT
AGREEMENT, made this ____ day of _________, 2004, between XXXXXXX XXXXX
SERIES FUND, INC., a corporation organized under the laws of Maryland (the
"Company") on behalf of each of its series listed on Exhibit A as such Schedule
may be amended from time to time (the "Portfolios"), and FAM DISTRIBUTORS, INC.,
a Delaware corporation ("FAMD");
WITNESSETH:
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended to date (the "Investment Company Act"), as an open-end
investment company and it is affirmatively in the interest of the Company to
offer its shares for sale continuously to the separate accounts (the "Separate
Accounts") of insurance companies (the "Participating Insurance Companies") that
issue variable annuity or variable life contracts (the "Contracts") pursuant to
a currently effective prospectus (the "Prospectus") under the Securities Act of
1933 (the "Securities Act"); and
WHEREAS, the Directors of the Company (the "Directors") are authorized to
establish separate series relating to separate portfolios of securities, and the
Directors have established and designated the Portfolios as series of the
Company; and
WHEREAS, each of the Portfolios may offer one or more separate classes of
shares of common stock, par value $.10 per share; and
WHEREAS, FAMD is a securities firm engaged in the business of selling
shares of investment companies either directly to purchasers or through other
securities dealers; and
WHEREAS, the Company and FAMD wish to enter into an agreement with each
other with respect to the continuous offering to the Participating Insurance
Companies for their Separate Accounts of the Class I shares, Class II shares and
Class III shares of the Portfolios (the
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"Shares") in order to promote the growth of the Portfolios and facilitate the
distribution of their Shares.
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of FAMD. The Company hereby appoints FAMD as the
principal underwriter and distributor of the Portfolios to sell their Shares to
the Participating Insurance Companies for their Separate Accounts and FAMD
hereby accepts such appointment. The Company, during the term of this Agreement,
shall sell the Shares of the Portfolios to FAMD upon the terms and conditions
set forth below.
Section 2. Exclusive Nature of Duties. FAMD shall be the exclusive
representative of the Company to act as principal underwriter and distributor of
the Shares.
Section 3. Purchase of Shares from the Company.
(a) The Company will offer its Shares and FAMD shall have the right to buy
from the Company the Shares needed, but not more than the Shares needed (except
for clerical errors in transmission) to fill unconditional orders for the Shares
placed with FAMD by the Participating Insurance Companies for their Separate
Accounts. The price which FAMD shall pay for the Shares so purchased from the
Company shall be the net asset value per share, determined as set forth in
Section 3(c) hereof.
(b) The Shares are to be resold by FAMD to the Participating Insurance
Companies for their Separate Accounts at the net asset value per share as set
forth in Section 3(c) hereof.
(c) The net asset value of the Shares shall be determined by the Company
or any agent of the Company, in accordance with the method set forth in the
Prospectus and Statement of Additional Information of the Company and guidelines
established by the Directors.
(d) The Company shall have the right to suspend the sale of the Shares at
times when redemption of any Shares is suspended pursuant to the condition set
forth in Section 4(b) hereof. The Company shall also have the right to suspend
the sale of the Shares if trading on the New York Stock Exchange shall have been
suspended, if a banking moratorium shall have been
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declared by Federal or New York authorities, or if there shall have been some
other extraordinary event which, in the judgment of the Company, makes it
impracticable to sell Shares.
(e) The Company, or any agent of the Company designated in writing by the
Company, shall be promptly advised of all purchase orders for the Shares
received by FAMD. Any order may be rejected by the Company; provided, however,
that the Company will not arbitrarily or without reasonable cause refuse to
accept or confirm orders for the purchase of Shares. The Company (or its agent)
will confirm orders upon their receipt, will make appropriate book entries and,
upon receipt by the Company (or its agent) of payment therefor, will deliver
deposit receipts or certificates for such Shares pursuant to the instructions of
FAMD. Payment shall be made to the Company in New York Clearing House funds.
FAMD agrees to cause such payment and such instructions to be delivered promptly
to the Company (or its agent).
Section 4. Repurchase or Redemption of Shares by the Company.
(a) Any of the outstanding Shares may be tendered for redemption at any
time, and the Company agrees to repurchase or redeem any such Shares so tendered
in accordance with its obligations as set forth in Article VII of its 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 of the Company. The price to be paid to redeem or repurchase Shares
shall be equal to the net asset value per share calculated in accordance with
the provisions of Section 3(c) hereof, less any other charge(s) if any, set
forth in the current Prospectus and Statement of Additional Information relating
to the Company. All payments by the Company hereunder shall be made in the
manner set forth below.
The Company shall pay the total amount of the redemption price as defined
in the above paragraph pursuant to the instructions of FAMD 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.
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(b) Redemption of Shares of a Portfolio or payment therefor may be
suspended for any period during which trading on the New York Stock Exchange is
restricted as determined by the Securities and Exchange Commission or such
Exchange is closed (other than customary weekend and holiday closings), for any
period during which an emergency exists as defined by the Securities and
Exchange Commission as a result of which disposal of securities or determination
of the net asset value of such Portfolio is not reasonably practicable, and for
such other periods as the Securities and Exchange Commission may by order permit
for the protection of shareholders of the Portfolio.
Section 5. Duties of the Company.
(a) The Company shall furnish to FAMD copies of all information, financial
statements and other papers which FAMD may reasonably request for use in
connection with the distribution of Shares of the Company, and this shall
include one certified copy, upon request by FAMD, of all financial statements
prepared for the Company by independent public accountants. The Company shall
make available to FAMD such number of copies of its Prospectus and Statement of
Additional Information as FAMD shall reasonably request.
(b) The Company shall take, from time to time, but subject to the
necessary approval of its shareholders, all necessary action to fix the number
of its authorized Shares and to register Shares under the Securities Act, to the
end that there will be available for sale such number of Shares as investors may
reasonably be expected to purchase.
(c) The Company shall use its best efforts to qualify and maintain the
qualification of an appropriate number of the Shares for sale under the
securities laws of such states as the Directors and the Company may approve, if
such qualification is required by such securities laws. Any such qualification
may be withheld, terminated or withdrawn by the Company at any time in its
discretion. As provided in Section 7(b) hereof, the expense of qualification and
maintenance of qualification of the Shares shall be borne by the Company for the
account of each Portfolio. FAMD shall furnish such information and other
material relating to its affairs and activities as may be required by the
Company in connection with such qualification.
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(d) The Company will furnish, in reasonable quantities upon request by
FAMD, copies of annual and interim reports of the Company with respect to the
Portfolios.
Section 6. Duties of FAMD.
(a) FAMD shall devote reasonable time and effort to effect sales of Shares
of the Portfolios, but shall not be obligated to sell any specific number of
Shares. The services of FAMD hereunder are not to be deemed exclusive and
nothing herein contained shall prevent FAMD from entering into distribution
arrangements with other investment companies so long as the performance of its
obligations hereunder is not impaired thereby.
(b) In selling the Shares of the Portfolios, FAMD shall use its best
efforts in all respects duly to conform with the requirements of all federal and
state laws and regulations and the regulations of the National Association of
Securities Dealers, Inc. (the "NASD"), relating to the sale of such securities.
Neither FAMD nor any Participating Insurance Company nor any other person is
authorized by the Company to give any information or to make any
representations, other than those contained in the registration statement or
related Prospectus and Statement of Additional Information and any sales
literature specifically approved by the Company.
(c) FAMD shall require each Participating Insurance Company to which it
sells, and which purchases, Class II shares or Class III shares of the
Portfolios to enter into a Sub-Agreement with the Company substantially in the
form attached to the Distribution Plan for the Class II shares or Class III
shares, as applicable, agreed to by FAMD in accordance with Rule 12b-1 under the
Investment Company Act, which authorizes the payment of a distribution fee to
such Participating Insurance Company.
Section 7. Payment of Expenses.
(a) The Company shall bear all costs and expenses of the Company relating
to the Portfolios, including fees and disbursements of its counsel and auditors,
in connection with the preparation and filing of any required registration
statements and prospectuses under the Investment Company Act, the Securities
Act, and all amendments and supplements thereto, and
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the expense of preparing, printing, mailing and otherwise, distributing
prospectuses, annual or interim reports to shareholders and proxy materials.
(b) The Company shall bear, for the account of the Portfolios, the costs
and expenses of qualification of the Shares for sale, and, if necessary or
advisable in connection therewith, the Company shall bear the cost and expense
of qualifying the Company as a broker or dealer, in such states of the United
States or other jurisdictions as shall be selected by the Company and FAMD
pursuant to Section 5(c) hereof and the cost and expenses payable to each such
state for continuing qualification therein until the Company decides to
discontinue such qualification pursuant to Section 5(c) hereof.
Section 8. Indemnification.
(a) The Company shall, for the account of the Portfolios, indemnify and
hold harmless FAMD and each person, if any, who controls FAMD against any loss,
liability, claim, damage or expense (including the reasonable costs of
investigating or defending any alleged loss, liability, claim, damage or expense
and reasonable counsel fees incurred in connection therewith) arising by reason
of any person acquiring any 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 the annual or interim reports to
shareholders of the Company relating to the Portfolios, 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 the Company in connection therewith by
or on behalf of FAMD; provided, however, that in no case (i) is the indemnity of
the Company in favor of FAMD and any such controlling persons to be deemed to
protect FAMD or any such controlling persons thereof against any liability to
the Company or its security holders to which FAMD or any such controlling
persons would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of its duties or by reason of reckless
disregard of its obligations and duties under this Agreement; or (ii) is the
Company to be liable under its indemnity agreement contained in this paragraph
with respect to any claim made against FAMD
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or any such controlling persons, unless FAMD or such controlling persons, as the
case may be, shall have notified the Company in writing within a reasonable time
after the summons or other first legal process giving information or the nature
of the claim shall have been served upon FAMD or such controlling persons (or
after FAMD or such controlling persons shall have received notice of such
service on any designated agent), but failure to notify the Company of any such
claim shall not relieve it from any liability which it may have to the person
against whom such action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. The Company 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 the
Company elects to assume the defense, such defense shall be conducted by counsel
chosen by it and satisfactory to FAMD or such controlling person or persons,
defendant or defendants in the suit. In the event the Company elects to assume
the defense of any such suit and retain such counsel, FAMD or such controlling
person or persons, defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them, but, in case the Company
does not elect to assume the defense of any such suit, it will reimburse FAMD or
such controlling person or persons, defendant or defendants in the suit, for the
reasonable fees and expenses of any counsel retained by them. The Company shall
promptly notify FAMD 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 the Shares.
(b) FAMD shall indemnify and hold harmless the Company and each of its
directors and officers, the applicable Portfolio, and each person, if any, who
controls the Company against any loss, liability, claims, damage or expense
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 the Company with respect to the
Portfolios in writing by or on behalf of FAMD 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
shareholders. In case any action shall be brought against the Company or any
persons so indemnified, in respect of which indemnity may be sought against
FAMD, FAMD shall have the rights and duties given to the Company, and the
Company and each person so indemnified shall have the rights and duties given to
FAMD by the provisions of subsection (a) of this Section 8.
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Section 9. Duration and Termination of this Agreement. This Agreement
shall become effective as of the date first above written and shall remain in
force as to each Portfolio until the second anniversary and thereafter, but only
so long as such continuance is specifically approved at least annually by (i)
the Board of Directors of the Company, or by the vote of a majority of the
outstanding voting securities of the Portfolio, cast in person or by proxy, 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 upon such approval.
This Agreement may be terminated at any time as to a Portfolio, without
the payment of any penalty, by the Board of Directors of the Company or by vote
of a majority of the outstanding voting securities of the Portfolio, or by the
Adviser, 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 10. Amendments of this Agreement. This Agreement may be amended by
the parties with respect to a Portfolio only if such amendment is specifically
approved by (i) the Board of Directors of the Company, or by the vote of a
majority of outstanding voting securities of the Portfolios affected by the
amendment, and (ii) a majority of those directors of the Company 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 11. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of New York and the applicable provisions of the
Investment Company Act. To the extent the applicable law of the State of New
York, or any of the provisions herein, conflicts with the applicable provisions
of the Investment Company Act, the latter shall control.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date and year first above written in New York, New York.
XXXXXXX XXXXX SERIES FUND, INC.
By: ________________________________
Name:
Title:
FAM DISTRIBUTORS, INC.
By: ________________________________
Name:
Title:
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Exhibit A
Mercury Low Duration Portfolio
Mercury Global SmallCap Portfolio
Mercury Equity Dividend Portfolio
Mercury Mid Cap Value Opportunities Portfolio
Mercury Small Cap Index Portfolio
Mercury International Index Portfolio
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