Exhibit e(2)
DISTRIBUTION AGREEMENT
CLASS R SHARES
DISTRIBUTION AGREEMENT, dated as of November 28, 2003, by and between
DOMINI SOCIAL INVESTMENT TRUST, a Massachusetts business trust (the "Trust"),
and DSIL INVESTMENT SERVICES LLC, a New York limited liability company and a
subsidiary of Domini Social Investments LLC (the "Distributor").
W I T N E S S E T H:
WHEREAS, the Trust is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940 (collectively with
the rules and regulations promulgated thereunder, the "1940 Act") and consists
of one or more series;
WHEREAS, the Trust desires to enter into this Distribution Agreement
with respect to the shares designated Class R Shares for each of its current and
future series; and
WHEREAS, the Trust wishes to engage the Distributor to provide certain
services with respect the distribution of Class R Shares of each series of the
Trust, and the Distributor is willing to provide such services to each series of
the Trust on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. The Trust grants to the Distributor the right, as agent of the
Trust, to sell its shares of beneficial interest designated Class R Shares
("Shares") of each series of the Trust upon the terms hereinbelow set forth
during the term of this Agreement. While this Agreement is in force, the
Distributor agrees to use its best efforts to find purchasers for Shares of each
series of the Trust.
The Distributor shall have the right, as agent of the Trust, to order
from the Trust the Shares needed, but not more than the Shares needed (except
for clerical errors and errors transmission), to fill unconditional orders for
Shares placed with the Distributor, all such orders to be made in the manner set
forth in the Trust's then-current prospectus (the "Prospectus") and then-current
statement of additional information (the "Statement of Additional Information").
The price which shall be paid to the Trust for the Shares so purchased shall be
the net asset value per Share as determined in accordance with the provisions of
the Declaration of Trust and the By-Laws, as each may from time to time be
amended (collectively, the "Governing Instruments"). The Distributor shall
notify the Custodian of the Trust (currently Investors Bank & Trust Company), at
the end of each business day, or as soon thereafter as the orders placed with
the Distributor have been compiled, of the number of Shares and the prices
thereof which have been ordered through the Distributor since the end of the
previous business day.
The right granted to the Distributor to place orders for Shares with
the Trust shall be exclusive, except that this exclusive right shall not apply
to Shares issued in the event
-2-
that an investment company (whether a regulated or private investment company or
a personal holding company) is merged with and into or consolidated with the
Trust or in the event that the Trust acquires, by purchase or otherwise, all (or
substantially all) the assets or the outstanding shares of any such company; nor
shall it apply to Shares issued by the Trust as a dividend or stock split. The
exclusive right to place orders for Shares granted to the Distributor may be
waived by the Distributor by notice to the Trust in writing, either
unconditionally or subject to such conditions and limitations as may be set
forth in such notice to the Trust. The Trust hereby acknowledges that the
Distributor may render distribution and other services to other parties,
including other investment companies. In connection with its duties hereunder,
the Distributor shall also arrange for computation of performance statistics
with respect to the Trust and arrange for publication of current price
information in newspapers and other publications.
2. The Shares may be sold by the Distributor on behalf of the Trust, to
any investor or to or through any dealer having a sales agreement with the
Distributor, upon the following terms and conditions:
The public offering price of Shares of the Trust, i.e., the price per
Share at which the Distributor or any dealer purchasing Shares through the
Distributor may sell shares to the public, shall be the net asset value of such
Shares.
The net asset value of Shares of the Trust shall be determined by the
Trust, or by an agent of the Trust, as of the close of regular trading on the
New York Stock Exchange on each day on which the New York Stock Exchange is open
for trading (and on such other days as the Trustees deem necessary in order to
comply with Rule 22c-1 under the 1940 Act), in accordance with the method
established pursuant to the Governing Instruments. The Trust shall have the
right to suspend the sale of Shares if, because of some extraordinary condition,
the New York Stock Exchange shall be closed, or if conditions existing during
the hours when the Exchange is open render such action advisable or for any
other reason deemed adequate by the Trust.
3. The Trust agrees that it will, from time to time, but subject to the
necessary approval, if any, of its shareholders, take all necessary action to
register such number of Shares under the Securities Act of 1933, as amended (the
"1933 Act"), as the Distributor may reasonably be expected to sell.
The Distributor shall be an independent contractor and neither the
Distributor nor any of its managers, officers or employees as such, is or shall
be an employee of the Trust. It is understood that Trustees, officers and
shareholders of the Trust are or may become interested in the Distributor, as
managers, officers, employees, or otherwise and that managers, officers and
employees of the Distributor are or may become similarly interested in the Trust
and that the Distributor may be or become interested in the Trust as a
shareholder or otherwise. The Distributor is responsible for its own conduct and
the employment, control and conduct (but only with respect to the duties and
obligations of the Distributor hereunder) of its agents and employees and for
any injury to any person through its agents or employees. The Distributor
assumes full responsibility for its agents and employees under applicable
statutes and agrees to pay all employer taxes thereunder.
-3-
4. The Distributor covenants and agrees that, in selling Shares, it
will use its best efforts in all respects duly to conform with the requirements
of all state and federal laws and the Conduct Rules of the NASD, Inc. relating
to the sale of Shares, and will indemnify and hold harmless the Trust and each
of its Trustees and officers and each person, if any, who controls the Trust
within the meaning of Section 15 of the Act (the "Indemnified Parties") against
all losses, liabilities, damages, claims or expenses (including the reasonable
cost of investigating or defending any alleged loss, liability, damages, claim
or expense and reasonable counsel fees incurred in connection therewith) arising
from any claim, demand, action or suit (collectively, "Claims"), arising by
reason of any person's acquiring any of the Shares through the Distributor,
which may be based upon the 1933 Act or any other statute or common law, on
account of any wrongful act of the Distributor or any of its employees
(including any failure to conform with any requirement of any state or federal
law or the Conduct Rules of the NASD, Inc. relating to the sale of Shares) or on
the ground that the registration statement under the 1933 Act, including all
amendments thereto (the "Registration Statement"), or Prospectus or previous
prospectus or Statement of Additional Information or previous statement of
additional information, with respect to such Shares, includes or included an
untrue statement of a material fact or omits or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, if and only if any such act, statement or omission was
made in reliance upon information furnished by the Distributor to the Trust;
provided, however, that in no case (i) is the indemnity of the Distributor in
favor of any Indemnified Party to be deemed to protect any such Indemnified
Party against liability to which such Indemnified Party would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of its or his duties or by reason of its or his reckless disregard
of its or his obligations and duties under this Agreement, or (ii) is the
Distributor to be liable under its indemnity agreement contained in this Section
4 with respect to any Claim made against any Indemnified Party unless such
Indemnified Party shall have notified the Distributor 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 such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Distributor of
any such Claim shall not relieve it from any liability which it may have to any
Indemnified Party otherwise than on account of its indemnity agreement contained
in this Section 4. The Distributor shall 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 Claim, and, if the Distributor elects to assume the
defense, such defense shall be conducted by counsel chosen by it and
satisfactory to each Indemnified Party. In the event that the Distributor elects
to assume the defense of any such suit and retain such counsel, each Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it
but, in case the Distributor does not elect to assume the defense of any such
suit, it shall reimburse the Indemnified Parties for the reasonable fees and
expenses of any counsel retained by them. Except with the prior written consent
of the Distributor, no Indemnified Party shall confess any Claim or make any
compromise in any case in which the Distributor will be asked to indemnify such
Indemnified Party. The Distributor agrees promptly to notify the Trust of the
commencement of any litigation or proceeding against it in connection with the
issuance and sale of any of the Shares.
-4-
Neither the Distributor nor any dealer nor any other person is
authorized to give any information or to make any representation on behalf of
the Trust in connection with the sale of Shares, other than those contained in
the Registration Statement or Prospectus or Statement of Additional Information.
The Trust covenants and agrees that it will indemnify and hold harmless
the Distributor, its managers and officers and each person, if any, who controls
the Distributor within the meaning of Section 15 of the Act against all losses,
liabilities, damages, claims or expenses (including the reasonable cost of
investigating or defending any alleged loss, liabilities, damages, claims or
expenses and reasonable counsel fees incurred in connection therewith) arising
from any Claims, (i) arising by reason of any person's acquiring any of the
Shares through the Distributor, which may be based upon the 1933 Act or any
other statute or common law, on account that the Registration Statement or
Prospectus or previous prospectus or Statement of Additional Information or
previous statement of additional information, with respect to such Shares,
includes or included an untrue statement of a material fact or omits or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading, except insofar as such act,
statement or omission was made in reliance upon information furnished by the
Distributor to the Trust for use in the Registration Statement or Prospectus or
(ii) arising by reason of any agreement of the Distributor to indemnify or hold
harmless any dealer having a sales agreement with the Distributor as provided in
Section 2; provided, however, that in no case (A) shall anything contained
herein be so construed as to protect the Distributor against any liability to
the Trust or to its shareholders to which the Distributor would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of its reckless disregard of its
obligations under this Agreement, or (B) is the Trust to be liable under its
indemnity agreement contained in this Section 4 with respect to any Claim made
against the Distributor unless it shall have notified the Trust 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 it (or after
the Distributor shall have received notice of such service on any designated
agent), but failure to notify the Trust of any such Claim shall not relieve it
from any liability which it may have to the Distributor otherwise than on
account of its indemnity agreement contained in this Section 4. The Trust shall
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 Claim,
and, if the Trust elects to assume the defense, such defense shall be conducted
by counsel chosen by it and satisfactory to the Distributor. In the event that
the Trust elects to assume the defense of any such suit and retain such counsel,
the Distributor shall bear the fees and expenses of any additional counsel
retained by it but, in case the Trust does not elect to assume the defense of
any such suit, it shall reimburse the Distributor for the reasonable fees and
expenses of any counsel retained by them. Except with the prior written consent
of the Trust, the Distributor shall not confess any Claim or make any compromise
in any case in which the Trust will be asked to indemnify it. The Trust agrees
promptly to notify the Distributor of the commencement of any litigation in
connection with the issuance and sale of any of the Shares.
5. The Trust will pay, or cause to be paid: (i) all costs and expenses
of the Trust, including fees and disbursements of its counsel, in connection
with the preparation and filing of the Registration Statement, Prospectus and
Statement of Additional Information,
-5-
and preparing, printing, reproducing and mailing to shareholders, Prospectuses,
Statements of Additional Information, statements and confirmations and periodic
reports (including the expense of setting in type the Registration Statement,
Prospectus and Statement of Additional Information or any periodic report); (ii)
the cost of preparing temporary or permanent certificates for Shares; (iii) the
cost and expenses of delivering to the Distributor all Shares purchased through
it as agent hereunder (iv) all fees and disbursements of the Trust's transfer
agent and custodian; and (v) a fee to the manager or sponsor of the Trust or any
series thereof. The Distributor shall receive no compensation for its services
to the Trust hereunder.
6. If, at any time during the term of this Agreement, the Trust shall
deem it necessary or advisable in the best interests of the Trust that any
amendment of this Agreement be made in order to comply with any recommendation
or requirement of the Securities and Exchange Commission or other governmental
authority or to obtain any advantage under Massachusetts or federal tax laws, it
shall notify the Distributor of the form of amendment which it deems necessary
or advisable and the reasons therefor. If the Distributor declines to assent to
such amendment (after a reasonable time), the Trust may terminate this Agreement
forthwith by written notice to the Distributor without payment of any penalty.
If, at any time during the term of this Agreement, the Distributor requests the
Trust to make any change in its Governing Instruments or in its methods of doing
business which are necessary in order to comply with any requirement of federal
law or regulations of the Securities and Exchange Commission or of a national
securities association of which the Distributor is or may become a member,
relating to the sale of Shares, and the Trust fails (after a reasonable time) to
make any such change as requested, the Distributor may terminate this Agreement
forthwith by written notice to the Trust without payment of any penalty.
7. The Distributor agrees that it will not take any long or short
position in the Shares of the Trust and that, so far as it can control the
situation, it will prevent any of its managers or officers from taking any long
or short position in the Shares of the Trust, except as permitted by the
Governing Instruments.
8. This Agreement shall become effective upon its execution and shall
continue in force indefinitely as to each series of the Trust, provided that
such continuance is "specifically approved at least annually" with respect to
the applicable series by the vote of a majority of the Trustees of the Trust who
are not "interested persons" of the Trust or of the Distributor at a meeting
specifically called for the purpose of voting on such approval, and by the Board
of Trustees of the Trust. The aforesaid requirement that continuance of this
Agreement be "specifically approved at least annually" shall be construed in a
manner consistent with the 1940 Act. If such annual approval is not obtained,
this Agreement shall terminate on the date which is 15 months after the date of
the last approval. This Agreement may be terminated with respect to any series
of the Trust at any time by (i) the Trust, (a) by a vote of a majority of the
Trustees of the Trust who are not "interested persons" of the Trust or the
Distributor, (b) by a vote of the Board of Trustees of the Trust, or (c) by a
"vote of a majority of the outstanding voting securities" of the Shares of the
applicable series of the Trust, or (ii) by the Distributor, in any case without
payment of any penalty on not more than 60 days' nor less than 30 days' written
notice to the other party. This Agreement shall automatically terminate in the
event of its assignment.
-6-
9. The terms "vote of a majority of the outstanding voting securities",
"interested person", "assignment" and "specifically approved at least annually"
shall have the respective meanings specified in, and shall be construed in a
manner consistent with, the 1940 Act, subject, however, to such exemptions as
may be granted by the Securities and Exchange Commission thereunder.
[Signature page follows.]
-7-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names on their behalf by the undersigned,
thereunto duly authorized, and their respective seals to be hereto affixed, all
as of the day and year first above written. The obligations of this Agreement
are not binding upon any of the Trustees or shareholders of the Trust
individually, but bind only the Trust estate. The obligations of a particular
series of the Trust shall be paid only from the assets of that series and shall
not be enforceable against any other series.
DOMINI SOCIAL INVESTMENT TRUST
By: /s/ Xxx X. Xxxxxx
--------------------------------------------------
Title: Chief Executive Officer
DSIL INVESTMENT SERVICES LLC
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------------------
Title: President
