EXHIBIT 99(E).1
UNDERWRITING AND DISTRIBUTION AGREEMENT
THIS AGREEMENT, made this 14th day of November 1994, by and between
Fortis Tax-Free Portfolios, Inc. (formerly AMEV Tax-Free Fund, Inc.), a
Minnesota corporation (the "Fund") for and on behalf of each class of shares
(each such class is referred to hereinafter as a "Class") of each of the Fund's
Portfolios and Fortis Investors, Inc. (formerly AMEV Investors, Inc.), a
Minnesota corporation ("Investors")
WITNESSETH:
1. UNDERWRITING SERVICES.
The Fund on behalf of each Class hereby engages Investors, and
Investors hereby agrees to act, as principal underwriter for each Class in
connection with the sale and distribution of the shares of each Class of the
Fund's Portfolios to the public, either through dealers or otherwise. Investors
agrees to offer such shares for sale at all times when such shares are available
for sale and may lawfully be offered for sale and sold.
As used herein, "Portfolios" is defined as National Portfolio,
Minnesota Portfolio, New York Portfolio and any other Portfolios which may
hereafter be created by the Board of Directors of the Fund. In addition, as used
herein, "Classes" of the Fund's Portfolios is defined as Class A, Class B, Class
C, Class E and Class H shares of each Portfolio and any other classes which may
hereinafter be created by the Fund's Board of Directors.
2. SALE OF FUND SHARES.
The shares of each Class are to be sold only on the following terms:
(a) All subscriptions, offers or sales shall be subject to
acceptance or rejection by the Fund. Any offer or sale shall be conclusively
presumed to have been accepted by the Fund if the Fund shall fail to notify
Investors of the rejection of such offer or sale prior to the computation of the
net asset value of the applicable Class's shares next following receipt by the
Fund of notice of such offer or sale.
(b) No share of a Class shall be sold by Investors (i) for any
amount less than the net asset value of such share, computed as provided in the
Bylaws of the Fund, or (ii) for any consideration other than cash, or, pursuant
to any exchange privilege provided for by such Class's currently effective
Prospectus or Statement of Additional Information, shares of the corresponding
Class of shares of any other investment company for which Investors acts as an
underwriter. In addition, except as provided below or in the Class's currently
effective Prospectus or Statement of Additional Information, all shares of the
Fund's Portfolios sold by Investors shall be sold at the applicable public
offering price, as hereinafter defined, provided that, in the case of sales of
such shares to or through bona fide dealers in securities, Investors
may allow, or sell at, a discount from said public offering price to such
dealers, which discount
shall be no greater than the "sales load" hereinafter referred to.
(c) The public offering price of the shares of the Fund's
Portfolios shall be the current net asset value thereof (computed as provided in
the Bylaws of the Fund) plus the applicable "sales load" or loading charge, if
any, which shall be such percentage of the public offering price, computed to
the nearest cent, as may be agreed upon by the Fund and Investors and
specifically approved by the Board of Directors of the Fund, provided that no
schedule of sales loads shall be effective until set forth in a prospectus of
the Fund meeting the requirements of the Securities Act of 1933. Said sales
loads may be graduated on a scale based on the dollar amount of shares sold.
(d) In connection with certain sales of shares, a contingent
deferred sales charge will be imposed in the event of a redemption transaction
occurring within a certain period of time following such a purchase, as
described in each Class's currently effective Prospectus and Statement of
Additional Information.
(e) The front-end sales charge, if any, for any Class may, at
the discretion of the Fund and Investors, be increased, reduced or eliminated as
permitted by the Investment Company Act of 1940, and the rules and regulations
thereunder, as they may be amended from time to time, or as set forth elsewhere
in this Agreement, provided that, if necessary, such increase, reduction or
elimination shall be set forth in the Prospectus for such Class, and provided
that the Fund shall in no event receive for any shares sold an amount less than
the net asset value thereof. In addition, any contingent deferred sales charge
for any Class may, at the discretion of the Fund and Investors, be increased,
reduced or eliminated in accordance with the terms of an exemptive order
received from, or any applicable rule or rules promulgated by, the Securities
and Exchange Commission by the Fund, provided such increase, reduction or
elimination shall be set forth in the Prospectus for such Class.
(f) Investors may decline to offer for sale or sell shares of
the Fund in an amount the cumulative public offering price of which is less than
$500 or such smaller amount as it may from time to time fix.
3. INVESTMENT OF DIVIDEND AND DISTRIBUTIONS.
The Fund may extend to its shareholders the right to purchase shares
issued by each Class of the Fund at the net asset value thereof with the
proceeds of any dividend or capital gain distribution paid or payable by the
Fund (or any other fund for which Investors serves as underwriter) to its
shareholders.
4. REGISTRATION OF SHARES.
The Fund agrees to make prompt and reasonable efforts to effect and
keep in effect, at its own expense, the registration or qualification of each
Class's shares for sale in such jurisdictions as the Fund may designate.
5. INFORMATION TO BE FURNISHED INVESTORS.
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The Fund agrees that it will furnish Investors with such information
with respect to the affairs and accounts of the Fund (and each Class and
Portfolio thereof) as Investors may from time to time reasonably require, and
further agrees that Investors, at all reasonable times, shall be permitted to
inspect the books and records of the Fund.
6. ALLOCATION OF EXPENSES.
During the period of this contract, the Fund shall pay or cause to be
paid all expenses, costs and fees incurred by the Fund which are not assumed by
Investors or Fortis Advisers, Inc. ("Advisers"). Investors agrees to provide,
and shall pay costs which it incurs in connection with providing personal,
continuing services to shareholders (such costs are referred to as "Shareholder
Servicing Costs"). Shareholder Servicing Costs include all expenses of Investors
incurred in connection with providing administrative or accounting services to
shareholders of each Class, including, but not limited to, an allocation of
Investor's overhead and payments made to persons, including employees of
Investors, who respond to inquiries of shareholders regarding their ownership of
Class shares, or who provide other administrative or accounting services not
otherwise required to be provided by the applicable Funds' investment adviser or
transfer agent. Notwithstanding the foregoing, if the National Association of
Securities Dealers, Inc. ("NASD") adopts a definition of "service fee" for
purposes of Section 26(d) of the NASD Rules of Fair Practice that differs from a
definition of Shareholder Servicing Costs in this paragraph, or if the NASD
adopts a related definition intended to define the same concept, the definition
of Shareholder Servicing Costs in this paragraph shall be automatically amended,
without further action of the parties, to conform to such NASD definition.
Investors shall also pay all costs of distributing the shares of each Class
("Distribution Expenses"). Distribution expenses include, but are not limited
to, initial and ongoing sales compensation (in addition to sales loads) paid to
registered representatives of Investors and to other broker-dealers and
participating financial institutions; expenses incurred in the printing of
prospectuses, statements of additional information and reports used for sales
purposes; expenses of preparation and distribution of sales literature; expenses
of advertising of any type; an allocation of Investors' overhead; payments to
and expenses of persons who provide support services in connection with the
distribution of Fund shares; and other distribution-related expenses. Advisers,
rather than Investors, may bear the expenses referred to in this paragraph, but
Investors shall be primarily liable for such expenses until paid.
7. COMPENSATION TO INVESTORS.
As compensation for all of its services provided and its costs assumed
under this contract, Investors shall receive the following forms of and amounts
of compensation:
(a) Investors shall be entitled to receive and retain the
front-end sales charge (if any) imposed in connection with sales of each Class,
as set forth in the applicable Class's current Prospectus. Up to the entire
amount of the front-end sales charge (if any) with respect to each applicable
Class may be reallowed by Investors to broker-dealers and participating
financial
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institutions in connection with their sale of Fund shares. The amount of the
front-end sales charge (if any) may be retained or deducted by Investors from
any sums received by it in payment for shares so sold. If such amount is not
deducted by Investors from such payments, such amount shall be paid to Investors
by the Fund not later than five business days after the close of any month
during which any such sales were made by Investors and payment therefor received
by the Fund.
(b) Investors shall be entitled to receive any contingent
deferred sales charge imposed in connection with any redemption of applicable
Class shares, as set forth in each applicable Class's current Prospectus.
(c) Investors shall be entitled to receive the following l2b-1
fees, payable under the Plan of Distribution adopted by each Class (except Class
E) in accordance with Rule 12b-1 under the Investment Company Act of 1940 (the
"Plan"):
(i) CLASS A SHARES: Class A shares of each of the
Portfolios are obligated to pay Investors, the principal underwriter of the
Fund's shares, a total fee in connection with distribution-related services
provided with respect to Class A and in connection with the servicing of
shareholder accounts of said Class A. This fee shall be calculated and payable
at a monthly rate of .25% of the value of the Class's average daily net assets.
All or a portion of such total fee may be payable as a Distribution Fee, and all
or any portion of such total fee may be payable as a Shareholder Servicing Fee,
as determined from time to time by the Fund's Board of Directors. Until further
action by the Board of Directors, all of such fee shall be designated and
payable as a Distribution Fee.
(ii) CLASS B, CLASS C AND CLASS H SHARES: Class B,
Class C and Class H shares of the Portfolios are each obligated to pay Investors
a total fee in connection with the distribution-related services and servicing
of shareholder accounts provided for their respective Class. The total fee paid
by each Class shall be calculated and payable monthly, at an annual rate of
1.00% of the value of the respective Class's average daily net assets. All or
any portion of such total fee may be payable as a Distribution Fee, and all or
any portion of such total fee may be payable as a Shareholder Servicing Fee, as
determined from time to time by the Fund's Board of Directors. Until further
action by the Board, 75% of such fee (.75 of 1.00%) shall be designated and
payable as a Distribution Fee and 25% of such fee (.25 of 1.00%) shall be
designated and payable as a Shareholder Servicing Fee.
(iii) FUTURE PORTFOLIOS AND/OR CLASSES: The 12b-1
fees for Class A, Class B, Class C or Class H shares of any future Portfolios
shall be as determined by the Board of Directors of the Fund upon the creation
of any such Portfolios, but in no event shall such fees exceed any then existing
limitations imposed under any applicable rule or rules promulgated by the
Securities and Exchange Commission and/or the National Association of Securities
Dealers, Inc. Upon the creation of any new classes of shares for any or all of
the Portfolios, the respective levels of sales charges and 12b-1 fees shall be
determined by the Board of Directors of the Fund, subject to any necessary
shareholder approval and only in accordance with any applicable rule or rules
promulgated by the Securities and Exchange Commission and/or the National
Association
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of Securities Dealers, Inc. All or any portion of the l2b-1 fees referred to in
this paragraph may be payable as a Distribution Fee, and all or any portion of
such l2b-1 fees may be payable as a Shareholder Servicing Fee, as determined
from time to time by the Fund's Board of Directors.
(iv) OTHER INFORMATION: Average daily net assets
shall be computed in accordance with the Prospectus of each applicable Class.
Amounts payable to Investors under the Plan may exceed or be less than
Investor's actual distribution expenses and shareholder servicing costs. In the
event such distribution expenses and/or shareholder servicing expenses exceed
amounts payable to Investors under the Plan, Investors shall not be entitled to
reimbursement from the Fund.
(d) In each year during which this contract remains in effect,
Investors will prepare and furnish to the Board of Directors of the Fund, and
the Board will review, on a quarterly basis written reports complying with the
requirements of Rule l2b-1 under the Investment Company Act of 1940 (the " 1940
Act") that set forth the amounts expended under this contract and the Plan and
the purposes for which those expenditures were made.
8. LIMITATION OF INVESTORS' AUTHORITY.
Investors shall be deemed to be an independent contractor and, except
as specifically provided or authorized herein, shall have no authority to act
for or represent the Fund. In connection with its role as underwriter of Fund
shares, Investors shall at all times be deemed an agent of the Fund and shall
sell Fund shares to purchasers thereof as agent and not as principal.
9. SUBSCRIPTION FOR SHARES; REFUND FOR CANCELED ORDERS.
Investors shall effect the subscription of Fund shares as agent for the
Fund. In the event that an order for the purchase of shares of the Fund is
placed with Investors by a customer or dealer and subsequently canceled,
Investors, on behalf of such customer or dealer, shall forthwith cancel the
subscription for such shares entered on the books of the Fund, and, if Investors
has paid the Fund for such shares, shall be entitled to receive from the Fund in
refund of such payment the lesser of:
(a) the consideration received by the Fund for said shares; or
(b) the net asset value of such shares at the time of
cancellation by Investors.
10. INDEMNIFICATION OF THE FUND.
Investors agrees to indemnify the Fund against any and all litigation
and other legal proceedings of any kind or nature and against any liability,
judgment, cost or penalty imposed as a result of such litigation or proceedings
in any way arising out of or in connection with the sale or distribution of the
shares of the Fund by Investors. In the event of the threat or institution of
any such litigation or legal proceedings against the Fund, Investors shall
defend such action on behalf of the Fund at its own expense, and shall pay any
such liability, judgment, cost or penalty
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resulting therefrom, whether imposed by legal authority or agreed upon by way of
compromise and settlement; provided, however, Investors shall not be required to
pay or reimburse the Fund for any liability, judgment, cost or penalty incurred
as a result of information supplied by, or as the result of the omission to
supply information by, the Fund to Investors, or to Investors by a director,
officer, or employee of the Fund who is not an interested person of Investors,
unless the information so supplied or omitted was available to Investors or the
Fund's investment adviser without recourse to the Fund or any such interested
person of the Fund.
11. FREEDOM TO DEAL WITH THIRD PARTIES.
Investors shall be free to render to others services of a nature either
similar to or different from those rendered under this contract, except such as
may impair its performance of the services and duties to be rendered by it
hereunder.
12. EFFECTIVE DATE, DURATION AND TERMINATION OF AGREEMENT.
(a) This Agreement shall be effective as to the National
Portfolio, Minnesota Portfolio and New York Portfolio and each Class thereof on
November 14, 1994. Unless sooner terminated as hereinafter provided, this
Agreement shall continue in effect only so long as such continuance is
specifically approved at least annually (a) by the Board of Directors of the
Fund, or with respect to a particular Class by the vote of the holders of a
majority of the outstanding voting securities of such Class, and (b) by a
majority of the directors who are not interested persons of Investors or of the
Fund, cast in person at a meeting called for the purpose of voting on such
approval; provided that, if a majority of the outstanding voting securities of
any of the Classes approves this Agreement, this Agreement shall continue in
effect with respect to such approving Class whether or not the shareholders of
any other Class of the Fund approve this Agreement.
(b) This Agreement may be terminated at any time without the
payment of any penalty by the vote of the Board of Directors of the Fund or by
Investors, upon sixty (60) days' written notice to the other party. This
Agreement may be terminated with respect to a particular Class at any time
without the payment of any penalty by the vote of the holders of a majority of
the outstanding voting securities of such Class, upon sixty (60) days' written
notice to Investors.
(c) This Agreement shall automatically terminate in the event
of its "assignment" (as defined by the provisions of the 1940 Act).
(d) Wherever referred to in this Agreement, the vote or
approval of the holders of a majority of the outstanding voting securities of a
Class or the Fund shall mean the vote of 67% or more of such securities if the
holders of more than 50% of such securities are present in person or by proxy or
the vote of more than 50% of such securities, whichever is less.
13. AMENDMENTS TO AGREEMENT.
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No material amendment to this Agreement shall be effective until
approved by a vote of the Board of Directors of the Fund, including a majority
of the Directors who are not interested persons of the Fund and who have no
direct or indirect financial interest in this Agreement, cast in person at a
meeting called for the purpose of voting on such amendment. Additionally, no
amendment to this Agreement that materially increases the distribution fee
and/or shareholder servicing fee payable by any Class hereunder shall be
effective until any necessary amendment to the applicable Rule 12b-1 Plan has
been approved by a vote of the holders of a majority of the outstanding voting
securities of the applicable Class and approved by the Fund's Board of Directors
as required under Rule 12b-1 under the Investment Company Act of 1940.
14. NOTICES.
Any notice under this Agreement shall be in writing, addressed,
delivered or mailed, postage prepaid to the other party at such address as such
other party may designate in writing for receipt of such notice.
IN WITNESS WHEREOF, the Fund and Investors have caused this Agreement
to be executed by their duly authorized officers as of the day and year first
above written.
FORTIS TAX-FREE PORTFOLIOS, INC.
By: /S/ XXXXXX X. XXXXXXX
-----------------------------
Its President
FORTIS INVESTORS, INC.
By: /S/ XXXX X. XXXXXXXX
-----------------------------
Its President
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