DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT, dated as of February __, 1998 by and
between EACH XXXXXXX FUND LISTED IN THE SCHEDULE OF FUNDS ATTACHED HERETO AS
SCHEDULE I (each a "Fund" and together the "Funds"), as such schedule may,
from time to time be amended, and XXXXXXX DISTRIBUTORS, INC., a Delaware
corporation (the "Distributor").
WHEREAS, each Fund is registered as an open-end investment company
under the Investment Company Act of 1940 (the "1940 Act") and has registered
its shares, including shares of its series portfolios (the "Series"), for sale
to the public under the Securities Act of 1933 (the "1933 Act") and various
state securities laws;
WHEREAS, each Fund wishes to retain the Distributor as the principal
underwriter in connection with the offer and sale of shares of the Series (the
"Shares") and to furnish certain other services to the Series as specified in
this Agreement;
WHEREAS, this contract has been approved by the Trustees/Directors of
each Fund in anticipation of the Distributor's transfer of its rights to
receive the Class B Distribution Fees ( as defined in the Distribution Plan
for Class B and C Shares (the "Distribution Plan")) and/or Class B contingent
deferred sales charges to a financing party in order to raise funds to cover
distribution expenditures; and
WHEREAS, the Distributor is willing to act as principal underwriter
and to furnish such services on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
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1. Each Fund hereby appoints the Distributor as principal
underwriter in connection with the offer and sale of its Shares. The
Distributor shall, as agent for each Fund, subject to applicable federal and
state law and the Declaration of Trust or Articles of Incorporation, and
By-laws of the applicable Fund and in accordance with the representations in
the applicable Fund's Registration Statement and Prospectus, as such documents
may be amended from time to time: (a) promote the Series; (b) enter into
appropriate dealer agreements with other registered broker-dealers to further
distribution of the Shares; (c) solicit orders for the purchase of the Shares
subject to such terms and conditions as the applicable Fund may specify; (d)
transmit promptly orders and payments for the purchase of Shares and orders
for redemption of Shares to the applicable Fund's transfer agent; and (e)
provide services agreed upon by the applicable Fund to Series shareholders;
provided, however, that the Distributor may sell no Shares pursuant to this
Agreement until the Distributor is notified that a Fund's Registration
Statement under the 1933 Act, authorizing the sale of such Shares through the
Distributor, has become effective. The Distributor shall comply with all
applicable federal and state laws and offer the Shares on an agency or "best
efforts" basis under which a Fund shall only issue such Shares as are actually
sold.
2. The public offering price of the Shares shall be the net
asset value ("NAV") per share (as determined by the applicable Fund) of the
outstanding Shares of the Series, plus the applicable sales charge, if any, as
set forth in the Fund's then current Prospectus. Each Fund shall furnish the
Distributor with a statement of each computation of NAV and of the details
entering into such computation.
3. Compensation.
a. Distribution Fee.
i. Class A. In consideration of the Distributor's services as
distributor for the Class A Shares of a Fund, each Fund may pay to the
Distributor the Distribution Fee as set forth in Schedule II to this Agreement
that is payable pursuant to the Fund's Distribution Plan.
ii. Class B. In consideration of the Distributor's services as
distributor for the Class B Shares of a Fund, each Fund shall pay to the
Distributor (or its designee or transferee) the Distributor's Allocable
Portion of the Distribution Fee; (as set forth in Schedule II to this
Agreement) that is payable pursuant to the Fund's Distribution Plan in respect
of the Class B Shares of a Fund. For purposes of this Agreement, the
Distributor's "Allocable Portion" of the Distribution Fee shall be 100% of
such Distribution Fee unless or until the Fund uses a principal underwriter
other than the Distributor and thereafter the Allocable Portion shall be the
portion of the Distribution Fee attributable to (i) Class B Shares of a Fund
sold by the Distributor ("Commission Shares"), (ii) Class B Shares of the Fund
issued in connection with the exchange of Commission Shares of another Fund,
and (iii) Class B Shares of the Fund issued in connection with the
reinvestment of dividends and capital gains.
The Distributor's Allocable Portion of the Distribution Fee and the
contingent deferred sales charges arising in respect of Class B Shares taken
into account in computing the Distributor's Allocable Portion shall be limited
under Rule 2830 of the Conduct Rules or other applicable regulations of the
NASD as if the Class B Shares taken into account in computing the
Distributor's Allocable Portion themselves constituted a separate class of
shares of a Fund.
The services rendered by the Distributor for which the Distributor is
entitled to receive the Distributor's Allocable Portion of the Distribution
Fee shall be deemed to have been completed at the time of the initial purchase
of the Commission Shares (whether of the Fund or another Fund in the Xxxxxxx
Group of Funds) taken into account in computing the Distributor's Allocable
Portion. Notwithstanding anything to the contrary in this Agreement, the
Distributor shall be paid its Allocable Portion of the Distribution Fee
notwithstanding the Distributor's termination as principal underwriter of the
Class B Shares of a Fund, or any termination of this Agreement other than in
connection with a Complete Termination (as defined in the Distribution Plan)
of the Class B Distribution Plan as in effect on the date of this Agreement.
Except as provided in the preceding sentence, a Fund's obligation to pay the
Distribution Fee to the Distributor shall be absolute and unconditional and
shall not be subject to any dispute, offset, counterclaim or defense
whatsoever, (it being understood that nothing in this sentence shall be deemed
a waiver by a Fund of its right separately to pursue any claims it may have
against the Distributor and to enforce such claims against any assets (other
than its rights to be paid its Allocable Portion of the Distribution Fee and
to be paid the contingent deferred sales charges) of the Distributor.
iii. Class C. In consideration of the Distributor's services as
distributor for the Class C Shares of a Fund, each Fund shall pay to the
Distributor the Distribution Fee as set forth in Schedule II to this Agreement
that is payable pursuant to the Fund's Distribution Plan.
b. Service Fee. As additional compensation, for Class A, Class
B and Class C Shares of each Series, applicable Funds shall pay the
Distributor a service fee (as that term is defined by the National Association
of Securities Dealers, Inc. ("NASD")) as set forth in Schedule III to this
Agreement that is payable pursuant to the Fund's Distribution Plan.
c. Front-end Sales Charges. As additional compensation for the
services performed and the expenses assumed by the Distributor under this
Agreement, the Distributor may, in conformity with the terms and conditions
set forth in the then current Prospectus of each Fund, impose and retain for
its own account the amount of the front-end sales charge, if any, and may
reallow a portion of any front-end sales charge to other broker-dealers, all
in accordance with NASD rules.
d. Contingent Deferred Sales Charge. Each Fund will pay to the
Distributor (or its designee or transferee) in addition to the fees set forth
in Section 3 hereof any contingent deferred sales charge imposed on
redemptions of that Fund's Class B and Class C Shares upon the terms and
conditions set forth in the then current Prospectus of that Fund.
Notwithstanding anything to the contrary in this Agreement, the Distributor
shall be paid such contingent deferred sales charges in respect of Class B
Shares taken into account in computing the Distributor's Allocable Portion of
the Distribution Fee notwithstanding the Distributor's termination as
principal underwriter of the Class B shares of a Fund or any termination of
this Agreement other than in connection with a Complete Termination of the
Class B Distribution Plan as in effect on the date of this Agreement. Except
as provided in the preceding sentence, a Fund's obligation to remit such
contingent deferred sales charges to the Distributor shall not be subject to
any dispute, offset, counterclaim or defense whatsoever, it being understood
that nothing in this sentence shall be deemed a waiver by a Fund of its right
separately to pursue any claims it may have against the Distributor and to
enforce such claims against any assets (other than the Distributor's right to
be paid its Allocable Portion of the Distribution Fee and to be paid the
contingent deferred sales charges) of the Distributor. No Fund will waive any
contingent deferred sales charge except under the circumstances set forth in
the Fund's current Prospectus without the consent of the Distributor (or, if
rights to payment have been transferred, the transferee), which consent shall
not be unreasonably withheld.
4. Payments to Distributor's Transferees. The Distributor may
transfer the right to payments hereunder (but not its obligations hereunder)
in order to raise funds to cover distribution expenditures, and any such
transfer shall be effective upon written notice from the Distributor to the
Fund. In connection with the foregoing, the Fund is authorized to pay all or
a part of the Distribution Fee and/or contingent deferred sales charges in
respect of Class B Shares directly to such transferee as directed by the
Distributor.
5. Changes in Computation of Fee, etc. As long as the Class B
Distribution Plan is in effect, a Fund shall not change the manner in which
the Class B Distribution Fee is computed (except as may be required by a
change in applicable law or a change in accounting policy adopted by the
Investment Companies Committee of the AICPA and approved by FASB that results
in a determination by a Fund's independent accountants that any of the sales
charges in respect of such Fund, which are not contingent deferred sales
charges and which are not yet due and payable, must be accounted for by such
Fund as a liability in accordance with GAAP).
6. As used in this Agreement, the term "Registration Statement"
shall mean the registration statement most recently filed by a Fund with the
Securities and Exchange Commission and effective under the 1933 Act, as such
Registration Statement is amended by any amendments thereto at the time in
effect, and the term "Prospectus" shall mean the form of prospectus filed by a
Fund as part of the Registration Statement.
7. The Distributor shall print and distribute to prospective
investors Prospectuses, and may print and distribute such other sales
literature, reports, forms, and advertisements in connection with the sale of
the Shares as comply with the applicable provisions of federal and state law.
In connection with such sales and offers of sale, the Distributor shall give
only such information and make only such statements or representations, and
require broker-dealers with whom it enters into dealer agreements to give only
such information and make only such statements or representations, as are
contained in the Prospectus or in information furnished in writing to the
Distributor by a Fund. The Funds shall not be responsible in any way for any
other information, statements or representations given or made by the
Distributor, other broker-dealers, or the representatives or agents of the
Distributor or such broker-dealers. Except as specifically permitted under
the Distribution Plan under Rule 12b-1 under the 1940 Act, as provided in
paragraph 3 of this Agreement, the Funds shall bear none of the expenses of
the Distributor in connection with its offer and sale of the Shares.
8. Each Fund agrees at its own expense to register the Shares
with the Securities and Exchange Commission, state and other regulatory
bodies, and to prepare and file from time to time such Prospectuses,
amendments, reports and other documents as may be necessary to maintain the
Registration Statement. Each Fund shall bear all expenses related to
preparing and typesetting its Prospectus(es) and other materials required by
law and such other expenses, including printing and mailing expenses related
to the Fund's communications with persons who are shareholders of such Fund.
9. Each Fund agrees to indemnify, defend and hold the
Distributor, its several officers and directors, and any person who controls
the Distributor within the meaning of Section 15 of the 1933 Act, free and
harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims,
demands or liabilities and any counsel fees incurred in connection therewith)
which the Distributor, its officers or directors, or any such controlling
person may incur, under the 1933 Act or under common law or otherwise, arising
out of or based upon any alleged untrue statement of a material fact contained
in its Registration Statement or Prospectus or arising out of or based upon
any alleged omission to state a material fact required to be stated in either
thereof or necessary to make the statements in either thereof not misleading,
provided that in no event shall anything contained in this Agreement be
construed so as to protect the Distributor against any liability to a Fund or
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 and
duties under this Agreement.
10. The Distributor agrees to indemnify, defend and hold each
Fund, their several officers and directors, and any person who controls a Fund
within the meaning of Section 15 of the 1933 Act, free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which a Fund, its officers or
directors, or any such controlling person may incur, under the 1933 Act or
under common law or otherwise, arising out of or based upon any alleged untrue
statement or a material fact contained in information furnished in writing by
the Distributor to the Funds for use in the Registration Statement or
Prospectus(es) or arising out of or based upon any alleged omission to state a
material fact in connection with such information required to be stated in the
Registration Statement or Prospectus(es) or necessary to make such information
not misleading.
11. Each Fund reserves the right at any time to withdraw all
offerings of the Shares by written notice to the Distributor at its principal
office.
12. The Distributor is an independent contractor and shall be
agent for a Fund only in respect to the offer, sale and redemption of that
Fund's Shares.
13. The services of the Distributor to a Fund under this
Agreement are not to be deemed exclusive, and the Distributor shall be free to
render similar services or other services to others so long as its services
hereunder are not impaired thereby.
14. The Distributor acknowledges that it has received notice of
and accepts the limitations upon the liability of any Fund organized as a
business trust set forth in such Fund's Declaration of Trust. The Distributor
agrees that the obligations of such Funds hereunder in any case shall be
limited to such Funds and to their assets and that the Distributor shall not
seek satisfaction of any such obligation from the shareholders of such a Fund
nor from any Trustee, officer, employee or agent of such Fund.
15. The Funds shall not use the name of the Distributor in any
Prospectus, sales literature or other material relating to the Funds in any
manner not approved prior thereto by the Distributor; provided, however, that
the Distributor shall approve all uses of its name which merely refer in
accurate terms to its appointment hereunder or which are required by the
Securities and Exchange Commission or a State Securities Commission; and,
provided further, that in no event shall such approval be unreasonably
withheld. The Distributor shall not use the name of any Fund in any material
relating to the Distributor in any manner not approved prior thereto by the
Fund; provided, however that the Funds shall approve all uses of their names
which merely refer in accurate terms to the appointment of the Distributor
hereunder or which are required by the Securities and Exchange Commission or
a State Securities Commission; and, provided further, that in no event shall
such approval be unreasonably withheld.
16. The Distributor shall prepare written reports for the Board
of Trustees/Directors of each Fund on a quarterly basis showing information
concerning services provided and expenses incurred which are related to this
Agreement and such other information as from time to time shall be reasonably
requested by a Fund's Board of Trustees/Directors.
17. As used in this Agreement, the terms "assignment,"
"interested person," and "majority of the outstanding voting securities" shall
have the meaning given to them by Section 2(a) of the 1940 Act, subject to
such exemptions as may be granted by the Securities and Exchange Commission by
any rule, regulation or order; provided, however that, in order to obtain
financing, the Distributor may assign to a lending institution the payments
due to the Distributor under this Agreement without it constituting an
assignment of the Agreement.
18. Subject to the provisions of sections 19 and 20 below, this
Agreement will remain in effect for two years from the date of is execution
and from year to year thereafter, provided that the Distributor does not
notify a Fund in writing at least sixty (60) days prior to the expiration date
in any year that it does not wish continuance of the Agreement as to such Fund
for an additional year.
19. Termination. As to any particular Fund (or Series thereof),
this Agreement shall automatically terminate in the event of its assignment
and may be terminated at any time without the payment of any penalty by a Fund
or by the Distributor on sixty (60) days' written notice to the other party.
A Fund may effect such termination by a vote of (i) a majority of the Board of
Trustees/Directors of the Fund, (ii) a majority of the Trustees/Directors who
are not interested persons of the Fund, who are not parties to this Agreement
or interested persons of such parties, and who have no direct or indirect
financial interest in the operation of the Distribution Plan, in this
Agreement or in any agreement related to such Fund's Distribution Plan (the
"Rule 12b-1 Trustees/Directors"), or (iii) a majority of the outstanding
voting securities of the relevant Series.
20. This Agreement shall be submitted for renewal to the Board
of Trustees/Directors of each Fund at least annually and shall continue in
effect only so long as specifically approved at least annually (i) by a
majority vote of the Fund's Board of Trustees/Directors, and (ii) by the vote
of the majority of the Rule 12b-1 Trustees/Directors of the Fund, cast in
person at a meeting called for the purpose of voting on such approval.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on the date first above written by their officers thereunto duly
authorized.
Attest: EACH FUND LISTED IN THE
ATTACHED SCHEDULE I
By:_________________________ By:__________________________
Attest: XXXXXXX DISTRIBUTORS, INC.
By:__________________________By:__________________________
SCHEDULE I
The Xxxxxxx Fund
Xxxxxxx Tax-Free Reserves
Xxxxxxx Municipal Fund
Xxxxxxx Social Investment Fund
Xxxxxxx World Values Fund
Xxxxxxx New World Fund
First Variable Rate Fund
SCHEDULE II
Fees are expressed as a percentage of average annual daily net assets, and are
payable monthly.
Distribution Fee
Class A* Class B Class C Class I
The Xxxxxxx Fund
New Vision Small Cap Fund N/A 0.75 0.75 N/A
Xxxxxxx Income Fund 0.25 0.75 0.75 N/A
Xxxxxxx Tax-Free Reserves
Money Market Portfolio N/A N/A N/A N/A
Limited-Term Portfolio N/A N/A N/A N/A
Long-Term Portfolio 0.10 0.75 0.75 N/A
California Money Market Port. N/A N/A N/A N/A
Vermont Municipal N/A 0.75 0.75 N/A
Xxxxxxx Municipal Fund
National Intermediate Fund N/A 0.75 N/A N/A
California Intermediate Fund N/A 0.75 N/A N/A
Maryland Intermediate Fund N/A 0.75 N/A N/A
Virginia Intermediate Fund N/A 0.75 N/A N/A
Xxxxxxx Social Investment Fund
Managed Growth Portfolio 0.10 0.75 0.75 N/A
Equity Portfolio 0.10 0.75 0.75 N/A
Bond Portfolio 0.10 0.75 0.75 N/A
Managed Index Portfolio N/A 0.75 0.75 N/A
Money Market Portfolio N/A N/A N/A N/A
Xxxxxxx World Values Fund
Capital Accumulation Fund 0.10 0.75 0.75 N/A
International Equity Fund N/A 0.75 0.75 N/A
Xxxxxxx New World Fund
Xxxxxxx New Africa Fund N/A 0.75 0.75 N/A
First Variable Rate Fund
Xxxxxxx First Government
Money Market N/A 0.75 N/A N/A
* Distribution reserves the right to waive all or a portion of the
distribution fee from time to time.
DATED: February 1998
SCHEDULE III
Fees are expressed as a percentage of average annual daily net assets and are
payable monthly.
Service Fee
Class A* Class B Class C Class I
The Xxxxxxx Fund
New Vision Small Cap Fund 0.25 0.25 0.25 N/A
Xxxxxxx Income Fund 0.25 0.25 0.25 N/A
Xxxxxxx Tax-Free Reserves
Money Market Portfolio N/A N/A N/A N/A
Limited-Term Portfolio N/A N/A N/A N/A
Long-Term Portfolio 0.25 0.25 0.25 N/A
California Money Market Port. N/A N/A N/A N/A
Vermont Municipal N/A 0.25 0.25 N/A
Xxxxxxx Municipal Fund
National Intermediate Fund 0.25 0.25 N/A N/A
California Intermediate Fund 0.25 0.25 N/A N/A
Maryland Intermediate Fund 0.25 0.25 N/A N/A
Virginia Intermediate Fund 0.25 0.25 N/A N/A
Xxxxxxx Social Investment Fund
Managed Growth Portfolio 0.25 0.25 0.25 N/A
Equity Portfolio 0.25 0.25 0.25 N/A
Bond Portfolio 0.25 0.25 0.25 N/A
Managed Index Portfolio 0.25 0.25 0.25 N/A
Money Market Portfolio 0.25 N/A N/A N/A
Xxxxxxx World Values Fund
Capital Accumulation Fund 0.25 0.25 0.25 N/A
International Equity Fund 0.25 0.25 0.25 N/A
Xxxxxxx New World Fund
Xxxxxxx New Africa Fund 0.25 0.25 0.25 N/A
First Variable Rate Fund
Xxxxxxx First Government
Money Market N/A 0.25 N/A N/A
DATED: February 1998
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* Distributor reserves the right to waive all or a portion of the service
fees from time to time. For money market portfolios, Class A shall refer to
Class O, or if the portfolio does not have multiple classes, then to the
portfolio itself.
