Part C Exhibit 24.6.a
UNDERWRITING AGREEMENT
UNDERWRITING AGREEMENT, dated as of February 28, 1997 (this "Agreement"),
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by and between THE GOVETT FUNDS, INC. (the "Corporation"), a corporation duly
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organized and existing under the laws of the State of Maryland and operating as
an investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), and FPS BROKER SERVICES, INC. ("FPS"), a corporation
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duly organized and existing under the laws of the Commonwealth of Pennsylvania
(collectively, the "Parties").
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WITNESSETH THAT:
WHEREAS, the Corporation is authorized by its Articles of Amendment and
Restatement, as amended, to issue separate series of shares representing
interests in separate investment portfolios (each, a "Fund"), which Funds are
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identified on Schedule A attached hereto;
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WHEREAS, FPS is a broker-dealer registered with the United States
Securities and Exchange Commission (the "SEC") and a member in good standing of
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the National Association of Securities Dealers, Inc. (the "NASD"); and
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WHEREAS, the Parties are desirous of entering into an agreement whereby FPS
shall serve as the non-exclusive statutory underwriter of the shares of the
Corporation's common stock, including all Funds and outstanding classes thereof
(the "Shares");
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NOW, THEREFORE, in consideration of the promises and agreements of the
Parties contained herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Parties agree as
follows:
1. Appointment.
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(a) The Corporation hereby appoints FPS as its non-exclusive statutory
underwriter of the Shares in each state of the United States of America, the
District of Columbia and Puerto Rico, and FPS hereby accepts such appointment,
under the terms of this Agreement. In connection with its performance of
services hereunder, FPS may engage other members in good standing of the NASD
and may enter into selling agreements with selected dealers and others for the
sale of Shares. FPS will act only on its behalf as principal in entering into
such selling agreements.
(b) Pursuant to this appointment, the Corporation grants to FPS the right
to sell Shares of all Funds of the Corporation now or hereafter created on
behalf of the Corporation during the term of this Agreement and subject to the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and any registration or notification requirement of the laws
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governing the sale of securities in various states (the "Blue Sky Laws"),
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provided, that FPS (i) shall have the right to sell, as agent of the
Corporation, only Shares authorized for
issuance and registered under the Securities Act and, to the extent necessary,
the Blue Sky Laws, and (ii) shall sell shares only in compliance with the terms
set forth in the Corporation's currently effective registration statement, each
of the Class A Distribution and Service Plan Pursuant to Rule 12b-1, Class B
Distribution Plan of the Corporation and Class C Distribution Plan of the
Corporation, as amended from time to time (collectively, the "12b-1 Plans"),
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this Agreement and any further limitation the Board of Directors of the
Corporation may impose in its sole discretion.
(c) The right granted to FPS to sell Shares shall be non-exclusive in that
the Corporation reserves the right to appoint one or more underwriters and the
right to sell Shares to investors on applications received and accepted by the
Corporation or such additional underwriters. In addition, the Corporation
reserves the right to issue Shares in connection with (i) a merger or
consolidation of any other investment company with the Corporation or the
acquisition by purchase or otherwise of all or substantially all of the assets
of any investment company or substantially all of the outstanding shares of any
such company by the Corporation, (ii) any offer and sale by the Corporation to
its stockholders for reinvestment of cash distributed from capital gains or net
investment income of the Corporation, (iii) the exercise by shareholders of
other funds of any exchange privilege set forth in any Fund's then-current
prospectus and statement of additional information, or (iv) any offer and sale
by the Corporation to the directors, officers or employees of the Corporation,
any "affiliated person" (as defined in the 0000 Xxx) of the Corporation or any
trust, pension, profit-sharing or other benefit plan for any of the aforesaid
persons and permitted by Rule 22d-1 under the 1940 Act or any exemption thereto.
(d) Notwithstanding any other provision hereof, (i) if and whenever the
determination of net asset value is suspended and until such suspension is
terminated, no further orders for Shares shall be processed by FPS except such
unconditional orders placed with FPS before it knew or should have known of such
suspension, (ii) the Corporation may terminate, suspend or withdraw the offering
of the Shares whenever, in its sole discretion, it deems such action to be
desirable, with any such period of suspension to continue for such period as may
be determined by the Corporation, and (iii) all orders through FPS shall be
subject to acceptance and confirmation by the Corporation and the Corporation
may reject any purchase order.
2. Sale and Repurchase of Shares.
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FPS agrees to provide the services set forth in Schedule B attached hereto.
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In addition, FPS will offer to sell and sell and repurchase and offer to
repurchase the shares in the following manner:
(a) FPS shall offer to sell and sell Shares to the public against orders
therefor at the price as set forth in each Fund's then-current prospectus and
statement of additional information (the "Public Offering Price").
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(b) On every sale, the Corporation shall receive from FPS the applicable
net asset value of the Shares within three (3) business days. The net asset
value of the Shares shall be determined in the manner provided in the then-
current prospectus and statement of additional information relating to the
Shares; provided, however, that the net asset value of the Shares shall
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be calculated by the Corporation or by another entity on behalf of the
Corporation and FPS shall have no duty to inquire into or incur any liability
for the accuracy of the net asset value.
(c) Upon receipt of purchase instructions, FPS will transmit such
instructions to the Corporation or its transfer agent for registration of the
Shares purchased.
(d) FPS will repurchase and offer to repurchase Shares at such prices and
upon such terms and conditions as shall be specified in the then-current
prospectus and statement of additional information for the Shares.
Nothing in this Agreement shall prevent FPS or any "affiliated person" (as
defined in the 0000 Xxx) of FPS from acting as underwriter for any other person,
firm or corporation (including other investment companies) or in any way limit
or restrict FPS or such affiliated person from buying, selling or trading any
securities for its or their own account or for the accounts of others for whom
it or they may be acting; provided, however, that FPS expressly agrees that it
will not for its own account purchase any Shares except for investment purposes
and that it will not for its own account sell any Shares except by redemption of
such shares by the Corporation, and that it will not undertake any activities
which, in its judgment, will adversely affect the performance of its obligations
to the Corporation under this Agreement.
3. FPS's Best Efforts.
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FPS shall not be required to sell any specific numbers of Shares. FPS, as
underwriter for the Corporation, undertakes to sell Shares on a best efforts
basis and only against orders received therefor.
4. Covenants of the Parties.
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(a) FPS covenants to the Corporation that it will:
(i) Conform to the Rules of Fair Practice of the NASD and the
securities laws of any jurisdiction in which it directly or indirectly
sells any Shares;
(ii) Require each dealer with whom it has a selling agreement to
conform to the applicable provisions of each Fund's then-current prospectus
and statement of additional information, including to sell the Shares at
the Public Offering Price;
(iii) Not cause the Corporation to withhold the placing of purchase
orders so as to make a profit thereby;
(iv) Register and remain registered, at its own expense, as a broker-
dealer with the SEC as required by Section 15(a) of the Securities Exchange
Act of 1934, as amended, a broker-dealer or in any similar capacity
pursuant to all applicable Blue Sky Laws and a member of the NASD, and in
each case for the term of this Agreement;
(v) Keep confidential all books and records and other information
relative to
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the Corporation and its shareholders, and treat such information as the
proprietary information of the Corporation; and
(vi) (x) Not, in connection with any sale or solicitation of a sale
of the Shares, make, or authorize any representative, service organization,
broker or dealer to make, any representation concerning the Shares except
those representations contained in the then-current prospectus and
statement of additional information covering the Shares and in
communications with the public or sales materials approved by the
Corporation as information supplemental to such prospectus and statement of
additional information, and (y) take all appropriate action to cease using
such sales materials or other communications to which the Corporation
reasonably objects as promptly as practicable after receipt of objection.
(b) The Corporation covenants that it will:
(i) Furnish to FPS sufficient copies of any and all agreements, plans
and communications with the public or other materials which it intends to
use in connection with any sale of Shares in adequate time for FPS to file
and clear such materials with the proper authorities before they are put in
use; provided, however, that FPS and the Corporation may agree that any
such material does not need to be filed subsequent to distribution;
(ii) Not to use any such material until so filed and cleared for use
by all appropriate authorities;
(iii) Furnish for distribution of the Shares a sufficient number of
copies of the then-current prospectus and statement of additional
information for the Shares upon any reasonable request by FPS; and
(iv) Furnish copies of all other information or financial statements
and other papers which FPS may reasonably request for use in connection
with the distribution of the Shares, including, but not limited to, one
certified copy of all financial statements prepared for the Corporation by
its independent public accountants.
5. Expenses and Compensation.
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(a) Allocation of Expenses. FPS will bear all expenses in connection with
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performing its obligations under this Agreement, except that the Corporation
will bear the expenses associated with the following activities:
(i) Preparation, setting in type, and printing sufficient copies of
the prospectuses and statements of additional information for distribution
to existing shareholders, and the distribution of the same to existing
shareholders;
(ii) Preparation, printing and distribution of reports and other
communications to existing shareholders;
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(iii) Registration of the Shares under the Federal securities laws;
(iv) Qualification of the Shares for sale in such jurisdictions as
directed by the Corporation;
(v) Supplying information, prices and other data to be furnished by
the Corporation under this Agreement;
(vi) Any original issue tax or transfer tax applicable to the sale or
delivery of the Shares or certificates therefor; and
(vii) Maintaining shareholder accounts and furnishing or causing to
be furnished to each shareholder a statement of his account.
FPS agrees that, after the prospectus, statement of additional information
and periodic reports relating to the Funds have been set in type, it will bear
the expense of printing and distributing any copies thereof which are to be used
in connection with the offering of shares to prospective investors. FPS further
agrees that it will bear the expenses of preparing, printing and distributing
any other literature used by FPS or furnished by it for use in connection with
the offering of the Shares for sale to the public, and any expenses of
advertising in connection with such offering. FPS also agrees to pay the
compensation of any service organizations, within the meaning of the 12b-1
Plans, who have entered into service agreements with FPS. FPS also agrees to
pay sales commissions and service compensation or "trailer payments" to broker-
dealers who have entered into selling agreements with FPS. It is understood and
agreed that so long as the 12b-1 Plans continue in effect, any expenses incurred
by FPS pursuant to this Agreement, any agreements with service organizations and
any agreements with selected dealers, including the payment of sales commissions
and service compensation to broker-dealers, may be paid from amounts received by
FPS from the Funds under the 12b-1 Plans.
(b) Compensation. Subject to any limitation of the NASD or any state
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securities regulator, commencing on the Term Date, as defined below, for
performing its services under this Agreement and in Schedule B hereto, FPS shall
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be entitled to the following:
(i) FPS shall be entitled to receive any applicable dealer
reallowances and applicable contingent deferred sales charges on
redemptions of Shares, as described in the applicable then-current
prospectus and statement of additional information of the Funds.
(ii) Pursuant to the 12b-1 Plans, FPS shall receive periodic payments
from each Fund during such periods as the applicable 12b-1 Plan shall be in
effect with respect to it. FPS shall use such 12b-1 payments to promote
and xxxxxx sales of the Shares of the Funds in such manner as it shall
determine consistent with the applicable 12b-1 Plan and then-current
prospectus and statement of additional information of the
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Funds.
6. Term.
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(a) The term of this Agreement shall commence on April 1, 1997 (the "Term
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Date").
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(b) This Agreement shall remain in effect for two (2) years from the Term
Date. This Agreement shall continue thereafter for periods not exceeding one
(1) year if approved at least annually as required by the 1940 Act or any
exemption therefrom.
(c) This Agreement (i) may at any time be terminated without the payment of
any penalty, either by a vote of the Board of Directors of the Corporation or by
a vote of a majority of the outstanding voting securities of each Fund with
respect to such Fund, on one hundred twenty (120) days' written notice to FPS;
and (ii) may be terminated by FPS on one hundred twenty (120) days' written
notice to the Corporation with respect to any Fund.
(d) This Agreement may not be assigned by FPS and shall automatically
terminate in the event of its assignment as defined in the 1940 Act.
7. Indemnification/Limits of Liability.
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(a) The Corporation will indemnify, defend and hold FPS free and harmless
from and against any and all claims, liabilities and expenses which FPS may
incur under the Securities 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 or any prospectus or statement of
additional information or arising out of or based upon any omission, or alleged
omission, to state a material fact required to be stated in either any
registration statement or any prospectus or statement of additional information
or necessary to make the statements in either thereof not misleading; provided,
however, that the Corporation's agreement to indemnify FPS shall not be deemed
to cover any claims, demands, liabilities or expenses arising out of any
statements or representations as are contained in any prospectus or statement of
additional information and in such financial and other statements as are
furnished in writing to the Corporation by FPS and used in the registration
statement or in the corresponding statements made in the prospectus or statement
of additional information, or arising out of or based upon any omission or
alleged omissions to state a material fact in connection with the giving of such
information required to be stated in such registration statement or necessary to
make such registration statement not misleading; and further provided that the
Corporation's agreement to indemnify FPS and the Corporation's representations
and warranties will not be deemed to cover any liability to FPS, or construed to
protect FPS against any liability to the Corporation or its shareholders, to
which FPS would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of its duties, or by reason of FPS's
reckless disregard of its obligations and duties under this Agreement. The
Corporation agrees to assign to FPS any indemnification right it has by reason
of law, contract or otherwise concerning the registration of its shares in any
jurisdiction in which FPS acts as underwriter.
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(b) FPS will indemnify, defend and hold the Corporation free and harmless
from and against any and all claims, demands, liabilities and any expenses which
the Corporation may incur under the Securities Act or under common law or
otherwise, but only to the extent that such liability or expense incurred by the
Corporation 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 FPS to the Corporation and used in the
registration statement or in the corresponding statements made in the prospectus
or statement of additional information, 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 FPS to the Corporation required to be
stated in such registration statement or necessary to make such information not
misleading, or by reason of FPS's willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of FPS' reckless
disregard of its obligations and duties under this Agreement.
(c) If a claim is made against FPS as to which FPS may seek indemnity under
this Section 7, FPS shall notify the Corporation promptly after any assertion of
such claim threatening to institute an action or proceeding with respect thereto
and shall notify the Corporation promptly of any action commenced against FPS
within five (5) days after FPS shall have been served with a summons or other
legal process, giving information as to the nature and basis of the claim.
Failure to so notify the Corporation shall not, however, relieve the Corporation
from any liability which it may have on account of the indemnity under this
Section 7 if the Corporation has not been prejudiced in any material respect by
such failure.
(d) The Corporation shall control, and FPS shall cooperate fully in the
defense of, any action, suit or proceeding in which FPS is involved and for
which indemnity is being provided by the Corporation to FPS. The Corporation
may negotiate the settlement of any action, suit or proceeding; provided,
however, if any such settlement requires a monetary payment by FPS to extinguish
any such action, suit or proceeding, such settlement shall be subject to the
approval of FPS, which shall not be unreasonably withheld.
(e) FPS shall have the right, but not the obligation, to participate in the
defense or settlement of a claim or action, with its own counsel, but any costs
or expenses incurred by FPS in connection with, or as a result of, such
participation will be borne solely by FPS unless: (1) FPS has received an
opinion of counsel stating that counsel chosen by the Corporation has or would
have a conflict of interest with the Corporation and FPS; (2) the defendants in,
or targets of, any such action or proceeding include both FPS and the
Corporation, and legal counsel to FPS shall have reasonably concluded that there
are legal defenses available to it which are different from or additional to
those defenses available to the Corporation or which may be adverse to or
inconsistent with defenses available to the Corporation (in which case the
Corporation shall not have the right to direct the defense of such action on
behalf of FPS); or (3) the Corporation shall authorize FPS to employ separate
counsel at the expense of the Corporation.
(f) Notwithstanding anything to the contrary herein, it is understood that
the
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Corporation shall not, in connection with any action, suit or proceeding or
related action, suite or proceeding, be liable under this Agreement for the fees
and expenses of more than one firm.
(g) The terms of this Section 7 shall survive the termination of this
Agreement.
8. Future Financing.
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To the extent that financing is necessary in connection with the payment of
any commission with respect to sales of the Corporation's Class B or Class C
shares, FPS will cooperate in connection with such financing and any consent by
FPS to such financing will not be unreasonably withheld.
9. Amendments.
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No provision of this Agreement may be amended or modified in any manner
whatsoever except by a written agreement properly authorized and executed by the
Parties or as otherwise provided herein; provided, however, that Schedule A to
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this Agreement may be amended by the Corporation, in its sole discretion, by
notice to FPS.
10. Section Headings.
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Section and Paragraph headings are for convenience only and shall not be
construed as part of this Agreement.
11. Reports.
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FPS shall prepare reports for the Board of Directors of the Corporation on
a quarterly basis showing such information as from time to time shall be
reasonably requested by such Board, including without limitation, reports
showing the manner in which any distribution fee paid by the Corporation to FPS
pursuant to the 12b-1 Plans in accordance with Section 5(b)(ii) hereof has been
spent by FPS for the preceding quarter.
12. Severability.
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If any part, term or provision of this Agreement is held by any court to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not affected, and the rights and
obligations of the parties shall be construed an enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid, provided that the basic agreement is not thereby substantially
impaired.
13. Governing Law.
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This Agreement shall be governed by the laws of the State of California and
the venue of any action arising under this Agreement shall be Xxxxxxxxxx County,
Commonwealth of
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Pennsylvania.
14. Authority to Execute.
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The Parties represent and warrant that the execution and delivery of this
Agreement by the undersigned officers of the Parties has been duly and validly
authorized by resolution of the respective Board of Directors of each of the
Parties.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
signed by their duly authorized officers, as of the day and year first above
written.
THE GOVETT FUNDS, INC. FPS BROKER SERVICES, INC.
By: By:
Xxxxx X. Kreidewolf Xxxxxxx X. Xxxxx
Vice President/Treasurer President
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SCHEDULE A
Identification of Funds
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Identified below are the separate Funds of Shares of the Corporation, each
representing interests in separate investment portfolios, and classes of such
Fund:
Fund Classes
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Govett International Equity Fund X,X,X
Xxxxxx Xxxxxxxx Xxxxxxx Xxxx X,X,X
Govett Smaller Companies Xxxx X,X,X
Govett Pacific Strategy Fund X,X,X
Xxxxxx Xxxxx Xxxxxxx Xxxx X,X,X
Govett Global Income Fund X,X,X
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XXXXXXXX X
Underwriter/Sponsor Services
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The services that FPS will perform under this Agreement including the
following:
I. General Underwriter/Sponsor services include:
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A. Administer 12b-1 Plans
. Monitoring accruals
. Monitoring expenses
. Disbursements for expenses and trail commissions
B. Prepare quarterly 12b-1 Reports to Board of Directors
C. Review sales and marketing literature, make recommendations and submit
literature to the NASD
D. Administer Initial NASD Licensing and Transfers of Registered
Representatives
. U-4 Form and Fingerprint submission to NASD
. Supply Series 6 and Series 63 written study material
. Registration for exam preparation classes
. Renewals and terminations of representatives' licenses.
E. Provide written supervisory procedures and manuals for Registered
Representatives.
F. Provide ongoing compliance updates for Representatives regarding sales
practices, written correspondence and other communications with the
public.
G. Administer NASD Continuing Education requirement.
II. Inbound Telemarketing and Literature Fulfillment Services
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A. Answer the Funds' 800 telephone lines as representatives of the Funds
using the name "The Govett Funds" in the greeting.
B. Track the number of inbound calls on the Funds' 800 lines, so that the
Funds can determine information such as the number of calls, the type
of call (e.g., request for literature, request for information about
any Fund's performance, investment objectives, portfolio holdings,
etc.).
C. Respond to inquiries concerning the Funds, including:
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1. Fulfilling requests for marketing literature, shareholder reports and
prospectuses and statements of additional information, including
preparation and mailing of standard fulfillment packets and customized
requests.
2. Using materials provided and/or approved by the Corporation and/or Xxxx
Xxxxxx, provide information about
a) Yields and distribution rates
b) Fund performance
c) Adviser/portfolio manager experience
d) Dividends
e) Portfolio holdings
f) Account attributes
D. Reporting
1. Input marketing inquiries on a confidential database and general reports at
least monthly for the Corporation and Xxxx Xxxxxx, and more frequently as
may be agreed between FPS and the Corporation.
2. Prepare written call reports at least monthly for The Corporation, and more
frequently as may be agreed between FPS and the Corporation, which include
the following information:
a) Total number of requests for prospectus and statement of additional
information
b) Fulfillment Analysis Report, typically sorted by source of referral
c) List of requests from states in which a Fund is not registered, if
any.
E. Assist with special projects, including direct mail programs or other
marketing campaigns, as agreed between FPS and the Corporation).
366731.c1
3/10/97
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