Exhibit E(2)
XXXXX STREET FUNDS
March 31, 2002
Northwestern Mutual Investment Services, LLC
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Re: UNDERWRITING AGREEMENT
Gentlemen:
Xxxxx Street Funds, Inc. (the "Company") is a Maryland corporation
registered as an investment company under the Investment Company Act of 1940, as
amended (the "1940 Act") and has shares of capital stock (hereinafter the
"Shares") representing interests in investment portfolios of the Company
(individually the "Fund" and collectively the "Funds") which are or will be
registered under the Securities Act of 1933, as amended (the "1933 Act") and in
accordance with any applicable requirements of the securities acts of various
states and jurisdictions.
You have informed us that your company, Northwestern Mutual Investment
Services, LLC ("NMIS"), is registered as a broker-dealer under the provisions of
the Securities Exchange Act of 1934 (the "1934 Act") and that NMIS is a member
in good standing of the National Association of Securities Dealers, Inc. You
have indicated your desire to become the exclusive selling agent and principal
underwriter for the Company. We have been authorized to execute and deliver this
Agreement to you, which Agreement has been approved by a vote of a majority of
the Company's directors (the "Directors") who are not parties to such Agreement
or "interested persons" of any party thereto, cast in person at a meeting called
for the purpose of voting on the approval of this Agreement.
1. APPOINTMENT OF UNDERWRITER. Upon the execution of this Agreement and in
consideration of the agreements on your part herein expressed and upon the terms
and conditions set forth herein, we hereby appoint you as the exclusive sales
agent for distribution of the Shares (other than sales made directly by the
Company without sales charge) and agree that we will deliver to you such shares
as you may sell. You agree to use your best efforts to promote the sale of the
Shares, but you are not obligated to sell any specific number of the Shares.
2. INDEPENDENT CONTRACTOR. You will undertake and discharge your
obligations hereunder as an independent contractor and shall have no authority
or power to obligate or bind the Company by your actions, conduct, or contracts,
except that you are authorized to accept orders for the purchase or repurchase
of the Shares as our agent. You may appoint sub-agents or distribute the Shares
through registered representatives (or otherwise) as you may determine necessary
or desirable from time to time. This Agreement shall not, however, be construed
as authorizing any registered representative or other person to accept orders
for sale or repurchase on our behalf or to otherwise act as our agent for any
purpose.
3. OFFERING PRICE. Shares shall be offered for sale at a price equivalent
to their net asset value plus, as appropriate, a variable percentage of the
public offering price as a sales load, as set forth in the Company's Prospectus
for the Shares, as amended from time to time. On each business day on which the
New York Stock Exchange is open for business, we will furnish you with the net
asset value of the Shares, which shall be determined and become effective as of
the close of business of the New York Stock Exchange on that day. The net asset
value so determined shall apply to all orders for the purchase of the Shares
received by registered representatives prior to such determination, and you are
authorized in your capacity as our agent to accept orders and confirm sales at
such net asset value; PROVIDED THAT, such registered representatives notify you
of the time when they received the particular order and that the order is placed
with you prior to your close of business on the day on which the applicable net
asset value is determined. To the extent that our Shareholder Servicing and
Transfer Agent (collectively "Agent") and the custodian(s) for any pension,
profit-sharing, employer or self-employed plan receive payments on behalf of the
investors, such Agent and custodian(s) shall be required to record the time of
such receipt with respect to each payment, and the applicable net asset value
shall be that which is next determined and effective after the time of receipt
by them. In all events, you shall forthwith notify all of the registered
representatives comprising your selling group and the Agent and custodian(s) of
the effective net asset value as received from us. Should we at any time
calculate our net asset value more frequently than once each business day, you
and we will follow procedures with respect to such additional price or prices
comparable to those set forth above in this Section 3.
4. SALES COMMISSION. (a) You shall be entitled to charge a sales
commission on the sale of certain classes of Shares in the amount set forth in
the Company's Prospectus (including any supplements or amendments thereto) then
in effect under the 1933 Act and the 1940 Act. Such commission (subject to any
quantity or other discounts or eliminations of commission as set forth in our
then currently effective Prospectus) shall be equal to the difference between
the net asset value and the public offering price of the Shares.
(b) In addition to the payments of the sales commissions to you provided
for in paragraph 4(a), you may also receive reimbursement for expenses or a
maintenance or trail fee as may be required by and described in the 12b-1
Distribution
Plans adopted by the Company and the shareholder service agreements
for the classes of Shares.
(c) You may allow appointed sub-agents or registered representatives such
commissions or discounts (not exceeding the total sales commission) as you shall
deem advisable, so long as any such commissions or discounts are set forth in
the Company's then current Prospectus, to the extent required by the applicable
federal securities laws.
5. PAYMENT FOR SHARES. At or prior to the time of delivery of any of our
Shares you will pay or cause to be paid to the custodian for the relevant Fund
(the "Custodian"), for our account, an amount in cash equal to the net asset
value of such Shares. In the event that you pay for shares sold by you prior to
your receipt of payment from purchasers, you are authorized to reimburse
yourself for the net asset value of such Shares from the offering price of such
Shares when received by you.
6. REGISTRATION OF SHARES. No Shares shall be registered on our books
until (i) receipt by us of your written request therefor; (ii) receipt by the
Custodian and Agent of a certificate signed by an officer of the Company stating
the amount to be received therefor; and (iii) receipt of payment of that amount
by the Custodian. We will provide for the recording of all Shares purchased in
unissued form in "book accounts."
7. PURCHASES FOR YOUR OWN ACCOUNT. You shall not purchase Shares for your
own account for purposes of resale to the public, but you may purchase Shares
for your own investment account upon your written assurance that the purchase is
for investment purposes only and that the Shares will not be resold except
through redemption by us.
8. SALE OF SHARES TO AFFILIATES. You may sell the Shares at net asset
value, plus any sales charge as appropriate, pursuant to a uniform offer
described in the Company's current Prospectus (i) to our Directors and officers,
our investment advisor, or your company or affiliated companies thereof, (ii) to
the bona fide, full time employees or sales representatives of any of the
foregoing, (iii) to any trust, pension, profit-sharing, or other benefit plan
for such persons, or (iv) to any other person set forth in the Company's then
current Prospectus; PROVIDED THAT such sales are made in accordance with the
rules and regulations under the 1940 Act and that such sales are made upon the
written assurance of the purchaser that the purchases are made for investment
purposes only, not for the purpose of resale to the public and that the Shares
will not be resold except through redemption by us.
9. ALLOCATION OF EXPENSES. (a) We will pay the following
expenses in connection with the sales and distribution of Shares of
the Company:
(i) expenses pertaining to the preparation of our audited and
certified financial statements to be included in any amendments ("Amendments")
to our Registration Statements under the 1933 Act, including the Prospectuses
and Statements of Additional Information included therein;
(ii) expenses pertaining to the preparation (including legal fees)
and printing of all Amendments or supplements filed with the Securities and
Exchange Commission, including the copies of the Prospectuses and Statements of
Additional Information included in the Amendments and the first ten (10) copies
of the definitive Prospectuses and Statements of Additional Information or
supplements thereto, other than those necessitated by or related to your
activities where such amendments or supplements result in expenses which we
would not otherwise have incurred;
(iii) expenses pertaining to the preparation, printing, and
distribution of any reports or communications, including Prospectuses and
Statements of Additional Information, which are sent to our existing
shareholders;
(iv) filing and other fees to federal and state securities regulatory
authorities necessary to register and maintain registration of the Shares; and
(v) expenses of the Agent, including all costs and expenses in
connection with the issuance, transfer and registration of the Shares, including
but not limited to any taxes and other governmental charges in connection
therewith.
(b) Except to the extent that you are entitled to reimbursement under the
provisions of any of the Distribution Plans or shareholder service agreements
for the Company, you will pay the following expenses:
(i) expenses of printing additional copies of the Prospectuses and
Statement of Additional Information and any amendments or supplements thereto
which are necessary to continue to offer our shares to the public;
(ii) expenses pertaining to the preparation (excluding legal fees)
and printing of all amendments and supplements to our Registration Statements if
the Amendment or supplement arises from or is necessitated by or related to your
activities where those expenses would not otherwise have been incurred by us;
and
(iii) expenses pertaining to the printing of additional copies, for
use by you as sales literature, of reports or other communications which have
been prepared for distribution to our existing shareholders or incurred by you
in advertising, promoting and selling our Shares to the public.
10. FURNISHING OF INFORMATION. We will furnish to you such information
with respect to our Company and its Shares, in such form and signed by such of
our officers as you may reasonably request, and we warrant that the statements
therein contained when so signed will be true and correct. We will furnish
you at least annually with audited financial statements of our books and
accounts certified by independent public accountants, and with such additional
information regarding our financial condition, as you may reasonably request
from time to time.
11. CONDUCT OF BUSINESS. Other than currently effective Prospectuses and
Statements of Additional Information, you will not issue any sales material or
statements except literature or advertising which conforms to the applicable
requirements of federal and state securities laws and regulations and which have
been filed, where necessary, with the appropriate regulatory authorities. You
will furnish us with copies of all such material prior to their use and no such
material shall be published if we shall reasonably and promptly object.
You shall comply with the applicable federal and state laws and
regulations where our Shares are offered for sale and conduct your affairs with
us and with dealers, brokers and investors in accordance with the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.
12. REDEMPTION OR REPURCHASE WITHIN SEVEN DAYS. If Shares are tendered to
us for redemption or are repurchased by us within seven (7) business days after
your acceptance of the original purchase order for such shares, you will
immediately refund to us the full amount of any sales commission (net of
allowances to registered representatives) allowed to you on the original sale,
and will promptly, upon receipt thereof, pay-to us any refunds from registered
representatives of the balance of sales commissions reallowed by you. We shall
notify you of such tender for redemption within ten (10) days of the day on
which notice of such tender for redemption is received by us.
13. OTHER ACTIVITIES. Your services pursuant to this Agreement
shall not be deemed to be exclusive, and you may render similar
services and act as an underwriter, distributor or dealer for other
investment companies in the offering of their shares.
14. TERM OF AGREEMENT. This Agreement shall become effective on the date
of its execution and shall remain in effect for a period of one year from the
date of this Agreement. This Agreement shall continue annually thereafter for
successive one (1) year periods if approved at least annually (i) by a vote of a
majority of the outstanding voting securities of the Company or by a vote of the
Directors of the Company, and (ii) by a vote of a majority of the 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 this
Agreement.
15. TERMINATION. This Agreement: (i) may be terminated at any
time without the payment of any penalty, either by vote of the
Directors of the Company or by a vote of a majority of the
outstanding voting securities of the Company, on sixty (60) days'
written notice to you; (ii) shall terminate immediately in the event
of its assignment; and (iii) may be terminated by you on sixty (60)
days' written notice to us.
16. SUSPENSION OF SALES. We reserve the right at all times
to suspend or limit the public offering of the Shares upon written
notice to you, and to reject any order in whole or in part.
17. MISCELLANEOUS. This Agreement shall be subject to the laws of the
State of Wisconsin and shall be interpreted and construed to further and promote
the operation of the Company as an open-end investment company. As used herein,
the terms "Net Asset Value," "Offering Price," "Investment Company," "Open-End
Investment Company," "Assignment," "Principal Underwriter," "Interested Person,"
and "Majority of the Outstanding Voting Securities," shall have the meanings set
forth in the 1933 Act and the 1940 Act, as applicable, and the rules and
regulations promulgated thereunder.
18. LIABILITY. Nothing contained herein shall be deemed to protect you
against any liability to us or to our shareholders to which you would otherwise
be subject by reason of willful misfeasance, bad faith, or gross negligence in
the performance of your duties hereunder, or by reason of your reckless
disregard of your obligations and duties hereunder.
If the foregoing meets with your approval, please acknowledge your
acceptance by signing each of the enclosed counterparts hereof and returning
such counterparts to us, whereupon this shall constitute a binding agreement as
of the date first above written.
Very truly yours,
XXXXX STREET FUNDS, INC.
By: /S/XXXX X. XXXX
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Name: Xxxx X. Xxxx
Its: Vice President and Treasurer
Agreed to and Accepted:
NORTHWESTERN MUTUAL INVESTMENT SERVICES, LLC,
a Wisconsin limited liability company
By: /S/XXXXXXX X. XXXXXXXXX
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Name: Xxxxxxx X. Xxxxxxxxx
Its: Senior Vice President, Variable Annuities
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