Underwriting Agreement between Xxxxx Xxxxxxx Series Fund, Xxxxx
Xxxxxxx Associates, Inc. and FPS Broker Services, Inc.
Underwriting Agreement
This Agreement, dated as of the 1st day of August, 1997,
made by and between Xxxxx Xxxxxxx Series Fund a Massachusetts
business trust (the "Trust") operating as an open-end management
investment company registered under the Investment Company Act of
1940, as amended (the "Act"); Xxxxx Xxxxxxx Associates, Inc.
(Xxxxx Xxxxxxx), a registered investment advisor duly organized
and existing as a corporation under the laws of the state of
Kansas; and FPS Broker Services, Inc. ("FPSB"), a corporation
duly organized and existing under the laws of the State of
Delaware (collectively, the "Parties").
Witnesseth That:
WHEREAS, the Trust is authorized by its Declaration of Trust
to issue separate series of shares representing interests in
separate investment portfolios (the "Series"), which Series are
identified on Schedule "C" attached hereto, and which Schedule
"C" may be amended from time to time by mutual agreement among
the Parties; and
WHEREAS, Xxxxx Xxxxxxx has been appointed investment adviser
to the Trust; and
WHEREAS, FPSB is a broker-dealer registered with the U.S.
Securities and Exchange Commission and a member in good standing
of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, the Parties are desirous of entering into an
agreement providing for the distribution by FPSB of the shares of
the Trust (the "Shares").
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein, and in exchange of good and valuable
consideration, the sufficiency and receipt of which is hereby
acknowledged, the Parties hereto, intending to be legally bound,
do hereby agree as follows:
1. Appointment.
The Trust hereby appoints FPSB as its principal agent for
the distribution of the Shares in the fifty United States of
America, the District of Columbia and Commonwealth of Puerto
Rico, and FPS hereby accepts such appointment under the
terms of this Agreement. The Trust agrees that it will not
sell any shares to any person except to fill orders for the
shares received through FPSB; provided, however, that the
foregoing exclusive right shall not apply: (a) to shares
issued or sold in connection with the merger or
consolidation of any other investment company with the Trust
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 Trust; (b) to shares which may be offered by
the Trust to its stockholders for reinvestment of cash
distributed from capital gains or net investment income of
the Trust; or (c) to shares which may be issued to
shareholders of other funds who exercise any exchange
1
privilege set forth in the Trust=s Prospectus.
Notwithstanding any other provision hereof, the Trust may
terminate, suspend, or withdraw the offering of the Shares
whenever, in their sole discretion, they deem such action to
be desirable.
2. Sale and Repurchase of Shares.
(a) FPSB is hereby granted the right, as agent for the
Trust, to sell Shares to the public against orders
received at the public offering price as defined in the
Trust=s Prospectus and Statement of Additional
Information.
(b) FPSB will also have the right to take, as agent
for the Trust, all actions which, in FPSB's
judgement, and subject to the Trust's reasonable
approval, are necessary to carry into effect the
distribution of the Shares.
(c) FPSB will act as agent for the Trust in connection with
the repurchase of Shares by the Trust upon the terms
set forth in the Trust=s Prospectus and Statement of
Additional Information.
(d) 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, and when
determined shall be applicable to all transactions
as provided in the Prospectus. The net asset
value of the Shares shall be calculated by the
Trust or by another entity on behalf of the Trust.
FPSB shall have no duty to inquire into, or
liability for, the accuracy of the net asset value
per Share as calculated.
(e) On every sale, FPSB shall promptly pay to the
Trust the applicable net asset value of the
Shares.
(f) Upon receipt of purchase instructions, FPSB will
transmit such instructions to the Trust or its
transfer agent for registration of the Shares
purchased.
(g) Nothing in this Agreement shall prevent FPSB or any
affiliated person (as defined in the Act) of FPSB from acting as
underwriter for any other person, firm or corporation (including
other investment companies), or in any way limit or restrict FPSB
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
FPSB expressly agrees that it will not for its own account
purchase any Shares of the Trust except for investment purposes,
and that it will not for its own account dispose of any such
Shares except by redemption of such Shares with the Trust, and
that it will not undertake in any activities which, in its
judgement, will adversely affect the performance of its
obligations to the Trust under this Agreement.
3. Rules of Sale of Shares.
FPSB does not agree to sell any specific number of Shares
and serves only in the capacity of Statutory Underwriter.
The Trust reserves the right to terminate, suspend or
withdraw the sale of its Shares for any reason deemed
adequate by it, and the Trust reserves the right to refuse
at any time or times to sell any of its Shares to any person
2
for any reason deemed adequate by it.
4. Rules of NASD, etc.
(a) FPSB will conform to the Conduct Rules of the NASD and
the securities laws of any jurisdiction in which it
directly or indirectly sells any Shares.
(b) FPSB will require each dealer with whom FPSB has a selling
agreement to conform to the applicable provisions of the
Prospectus, with respect to the public offering price of the
Shares, and FPSB shall not cause the Trust to withhold the
placing of purchase orders so as to make a profit thereby.
(c) The Trust and Xxxxx Xxxxxxx agree to furnish to FPSB
sufficient copies of any and all: agreements, plans,
communications with the public or other materials which the Trust
or Xxxxx Xxxxxxx intend to use in connection with any sales of
Shares, in adequate time for FPSB to file and clear such
materials with the proper authorities before they are put in use.
FPSB and the Trust or Xxxxx Xxxxxxx may agree that any such
material does not need to be filed subsequent to distribution.
In addition, the Trust and Xxxxx Xxxxxxx agree not to use any
such materials until so filed and cleared for use, if required,
by appropriate authorities as well as by FPSB.
(d) FPSB, at its own expense, will qualify as a dealer or
broker, or otherwise, under all applicable state or
federal laws required in order that the Shares may be
sold in such states as may be mutually agreed upon by
the Parties.
(e) FPSB shall remain registered with the U.S. Securities
and Exchange Commission and a member of the National
Association of Securities Dealers for the term of this
Agreement.
(f) FPSB shall 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 representations concerning the
Shares, except those contained in the Prospectus
offering the Shares and in communications with the
public or sales materials approved by FPSB as
information supplemental to such Prospectus. Copies of
the Prospectus will be supplied by the Trust or Xxxxx
Xxxxxxx to FPSB in reasonable quantities upon request.
(g) FPSB shall only be authorized to make representations in
respect of the Trust consistent with the then current Prospectus,
Statement of Additional Information, and other written
information provided by the Trust or its agents to be used
explicitly with respect to the sale of Shares.
5. Records to be Supplied by the Trust.
The Trust shall furnish to FPSB copies of all information,
financial statements and other papers which FPSB may
reasonably request for use in connection with the
underwriting of the Shares including, but not limited to,
one certified copy of all financial statements prepared for
the Trust by its independent public accountants.
6. Expenses.
(a) The Trust will bear the following expenses:
(i) preparation, setting in type, and printing of
sufficient copies of the Prospectus and Statement
3
of Additional Information for distribution to
shareholders, and the cost of distribution of
same to the shareholders;
(ii) preparation, printing and distribution of reports
and other communications to shareholders;
(iii)registration of the Shares under the federal
securities laws;
(iv) qualification of the Shares for sale in the
jurisdictions as directed by the Trust;
(v) maintaining facilities for the issue and transfer
of the Shares;
(vi) supplying information, prices and other data to
be furnished by the Trust under this Agreement;
and
(vii)any original issue taxes or transfer taxes
applicable to the sale or delivery of the Shares
or certificates therefor.
(b) Xxxxx Xxxxxxx will pay all other expenses incident to
the sale and distribution of the Shares sold hereunder.
(d) FPSB agrees to pay all of its own expenses in performing its
obligations hereunder.
7. Term and Compensation.
(a) The term of this Agreement shall commence on the date
on hereinabove first written (the "Effective Date").
(b) This Agreement shall remain in effect for one (1) year
from the Effective Date. This Agreement shall continue
thereafter for periods not exceeding one (1) year, if
approved at least annually (i) by a vote of a majority
of the outstanding voting securities of each Series; or
(ii) by a vote of a majority of the Trustees of the
Trust who are not parties to this Agreement (other than
as Trustees of the Trust) or interested persons of any
such party, cast in person at a meeting called for the
purpose of voting on such approval.
(c) Fees payable to FPSB shall be paid by Xxxxx Xxxxxxx as
set forth in Schedule "B" attached and shall be fixed
for the one (1) year period commencing on the Effective
Date of this Agreement. Thereafter, the fee schedule
will be subject to annual review and adjustment.
(d) This Agreement (i) may be terminated at any time
without the payment of any penalty, either by a vote of
the Trustees of the Trust or by a vote of a majority of
the outstanding voting securities of each Series with
respect to such Series, on sixty (60) days' written
notice to FPSB; and (ii) may be terminated by FPSB on
sixty (60) days' written notice to the Trust with
respect to any Series.
(e) This Agreement shall automatically terminate in the event of
its assignment, as defined in the Investment Company Act of 1940.
8. Indemnification of FPSB by Xxxxx Xxxxxxx and the Trust.
FPSB is responsible for its own conduct and the employment,
control, and conduct of its agents and employees and for
injury to such agents or employees or to others caused by
it, its agents or employees. Notwithstanding the above.
Xxxxx Xxxxxxx and the Trust will indemnify and hold FPSB
harmless for the actions of Xxxxx Xxxxxxx'x employees
registered with the NASD as registered representatives of
4
FPSB, and Xxxxx Xxxxxxx hereby undertakes to maintain
compliance with all NASD and U.S. Securities and Exchange
Commission rules and regulations concerning any activities
of such employees.
9. Liability of FPSB.
(a) FPSB, its directors, officers, employees, shareholders
and agents shall not be liable for any error of
judgement or mistake of law or for any loss suffered by
the Trust in connection with the performance of this
Agreement, except a loss resulting from a breach of
FPSB's obligations pursuant to Section 4 of this
Agreement (Rules of NASD), a breach of fiduciary duty
with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of FPSB in
the performance of its obligations and duties or by
reason of its reckless disregard of its obligations and
duties under this Agreement. FPSB agrees to indemnify
and hold harmless the Trust and each person who has
been, is, or may hereafter be a Trustee, officer, or
employee of the Trust against expenses reasonably
incurred by any of them in connection with any claim or
in connection with any action, suit, or proceeding to
which any of them may be a party, which arises out of
or is alleged to arise out of any misrepresentation or
omission to state a material fact, or out of any
alleged misrepresentation or omission to state a
material fact, on the part of FPSB or any agent or
employee of FPSB or any other person for whose acts
FPSB is responsible or is alleged to be responsible
unless such misrepresentation or omission was made in
reliance upon written information furnished to FPSB by
the Trust. FPSB also agrees to indemnify and hold
harmless the Trust and each such person in connection
with any claim or in connection with any action, suit,
or proceeding which arises out of or is alleged to
arise out of FPSB=s failure to exercise reasonable care
and diligence with respect to its services rendered in
connection with the purchase and sale of Shares. The
foregoing rights of indemnification shall be in
addition to any other rights to which the Trust or any
such person shall be entitled to as a matter of law.
(b) The Trust agrees to indemnify and hold harmless FPSB
against any and all liability, loss, damages, costs or
expenses (including reasonable counsel fees) which FPSB
may incur or be required to pay hereafter, in
connection with any action, suit or other proceeding,
whether civil or criminal, before any court or
administrative or legislative body, in which FPSB may
be involved as a party or otherwise or with which FPSB
may be threatened, by reason of the offer or sale of
the Trust=s Shares by persons other than FPSB or its
representatives, prior to the execution of this
Agreement. If a claim is made against FPSB as to which
FPSB may seek indemnity under this Section, FPSB shall
notify the Trust promptly after any written assertion
of such claim threatening to institute an action or
proceeding with respect thereto and shall notify the
5
Trust promptly of any action commenced against FPSB
within 10 days time after FPSB shall have been served
with a summons or other legal process, giving
information as to the nature and basis of the claim.
Failure to notify the Trust shall not, however, relieve
the Trust from any liability which it may have on
account of the indemnity under this Section 9(b) if the
Trust has not been prejudiced in any material respect
by such failure. The Trust shall have the sole right
to control the settlement of any such action, suit or
proceeding subject to FPSB's approval, which shall not
be unreasonably withheld. FPSB shall have the right to
participate in the defense of an action or proceeding
and to retain its own counsel, and the reasonable fees
and expenses of such counsel shall be borne by the
Trust (which shall pay such fees, costs and expenses at
least quarterly) if:
(i) FPSB has received an opinion of counsel
stating that the use of counsel chosen by the
Trust to represent FPSB would present such
counsel with a conflict of interest;
(ii) the defendants in, or targets of, any
such action or proceeding include both FPSB
and the Trust, and legal counsel to FPSB
shall have reasonably concluded that there
are legal defenses available to it which are
different from or additional to those
available to the Trust or which may be
adverse to or inconsistent with defenses
available to the Trust (in which case the
Trust shall not have the right to direct the
defense of such action on behalf of FPSB); or
(iii) the Trust shall authorize FPSB to employ
separate counsel at the expense of the Trust.
(c) Any person, even though also a director, officer,
employee, shareholder or agent of FPSB, who may be or
become an officer, director, Trustee, employee or agent
of the Trust, shall be deemed, when rendering services
to the Trust or acting on any business of the Trust
(other than services or business in connection with
FPSB's duties hereunder), to be rendering such services
to or acting solely for the Trust and not as a
director, officer, employee, shareholder or agent, or
one under the control or direction of FPSB even though
receiving a salary from FPSB.
(d) The Trust agrees to indemnify and hold harmless FPSB,
and each person who controls FPSB within the meaning of
Section 15 of the Securities Act of 1933, as amended
(the "Securities Act"), or Section 20 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),
against any and all losses, claims, damages and
liabilities, joint or several (including any reasonable
investigative, legal and other expenses incurred in
connection therewith) to which they, or any of them,
may become subject under the Act, the Securities Act,
the Exchange Act or other federal or state law or
regulation, at common law or otherwise insofar as such
losses, claims, damages or liabilities (or actions,
suits or proceedings in respect thereof) arise out of
6
or are based upon any untrue statement or alleged
untrue statement of a material fact contained in a
Prospectus, Statement of Additional Information,
supplement thereto, sales literature (or other written
information) prepared by the Trust and furnished by the
Trust to FPSB for FPSB's use hereunder, disseminated by
the Trust or which arise out of or are based upon any
omission or alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statements therein not
misleading.
Such indemnity shall not, however, inure to the benefit
of FPSB (or any person controlling FPSB) on account of
any losses, claims, damages or liabilities (or actions,
suits or proceedings in respect thereof) arising from
the sale of the Shares of the Trust to any person by
FPSB (i) if such untrue statement or omission or
alleged untrue statement or omission was made in the
Prospectus, Statement of Additional Information, or
supplement, sales or other literature, in reliance upon
and in conformity with information furnished in writing
to the Trust by FPSB specifically for use therein or
(ii) if such losses, claims, damages or liabilities
arise out of or are based upon an untrue statement or
omission or alleged untrue statement or omission found
in any Prospectus, Statement of Additional Information,
supplement, sales or other literature, subsequently
corrected, but negligently distributed by FPSB and a
copy of the corrected Prospectus was not delivered to
such person at or before the confirmation of the sale
to such person.
(e) FPSB shall not be responsible for any damages,
consequential or otherwise, which Xxxxx Xxxxxxx or the
Trust may experience, due to the disruption of the
distribution of Shares caused by any action or inaction
of any registered representative or affiliate of FPSB
or of FPSB itself.
10. Amendments.
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.
11. Section Headings.
Section and paragraph headings are for convenience only and
shall not be construed as part of this Agreement.
12. Reports.
FPSB shall prepare reports for the Board of Trustees of the
Trust, on a quarterly basis, showing such information as,
from time to time, shall be reasonably requested by the
Board.
13. Severability.
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 and enforced
7
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.
14. Governing Law.
This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania and the exclusive venue of any
action arising under this Agreement shall be Xxxxxxxxxx
County, Commonwealth of Pennsylvania.
15. Authority to Execute
The Parties represent and warrant to each other that the
execution and delivery of this Agreement by the undersigned
officer of each Party has been duly and validly authorized;
and, when duly executed, this Agreement will constitute a
valid and legally binding and enforceable obligation of each
Party.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
consisting of ten type written pages, together with Schedule "A",
Schedule "B", and Schedule "C", to be signed by their duly
authorized officers, as of the day and year first above written.
Xxxxx Xxxxxxx Associates, Inc. FPS Broker Services,
Inc.
By: Xxxxxxxxx X. Xxxxxxx By: Xxxxxxx X. Xxxxx
Chief Financial Officer President
Xxxxx Xxxxxxx Series Fund
By: Xxxxxxxxx X. Xxxxxxx
Vice President
8
Schedule "A"
Underwriter/Sponsor Services
for
Xxxxx Xxxxxxx Series Fund
I. Underwriter/Sponsor services include:
A) Preparation and execution of Underwriter and 12b-1 Plan
Agreements
! Monitoring accruals
! Monitoring expenses
! Disbursements for expenses and trail commissions
B) Quarterly 12b-1 Reports to Board of Trustees
C) Literature review, recommendations and submission to
the NASD
D) Initial NASD Licensing and Transfers of Registered
Representatives
! U-4 Form and Fingerprint Submission to NASD
! Supplying Series 6 and 63 written study material
! Registration for Exam Preparation classes
! Renewals and Terminations of Representatives
E) Written supervisory procedures and manuals for
Registered Representatives
F) Ongoing compliance updates for Representatives
regarding sales practices, written correspondence and
other communications with the public.
G)NASD Continuing Education Requirement
9
Schedule "B"
Statutory Underwriter Schedule
for
Xxxxx Xxxxxxx Series fund
This Fee Schedule is fixed for a period of one (1) year from the
Effective Date as that term is defined in the Agreement.
I. Statutory Underwriter Services
A) The Trust agrees to pay FPS Broker Services, Inc. (FPSB)
$15,000 for the services performed under this Agreement.
B) FPSB agrees register certain employees of Xxxxx Xxxxxxx
Associates, Inc., as its representatives follows:
Up to 10 States: $2,000 per Representative per Year
All 50 States: $4,000 per Representative per Year
Schedule "C"
Identification of Series
Below are listed the Series and Classes of Shares to which
services under this Agreement are to be performed as of the
Effective Date of this Agreement:
ASmith Xxxxxxx Series Fund@
1. Xxxxx Xxxxxxx Short Duration U.S. Government Fund
2. Xxxxx Xxxxxxx Intermediate Duration U.S. Government Fund
This Schedule "C" may be amended from time to time by agreement
of the Parties.
10
