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Exhibit 23(e)
UNDERWRITING AGREEMENT
This Agreement, dated as of the 23rd day of December, 1998, made by and
between Polynous Trust, a Delaware business trust (the "Trust") operating as an
open-end management investment company registered under the Investment Company
Act of 1940, as amended (the "Act"); Polynous Capital Management, Inc.
("Polynous"), a registered investment advisor existing as corporation duly
organized and existing under the laws of the State of California; and Polynous
Securities, LLC ("Polynous Securities"), 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 Trust Instrument 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;
WHEREAS, Polynous has been appointed investment advisor to the Trust;
WHEREAS, Polynous Securities 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 Polynous Securities 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 Polynous Securities as its exclusive agent
for the public distribution of the Shares in the fifty United States of
America, the District of Columbia and Commonwealth of Puerto Rico, and
Polynous Securities 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
Polynous Securities; 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; (c) to Shares which may be issued
to shareholders of other funds who exercise any exchange privilege set
forth in the Trust's Prospectus; or (d) to Shares sold pursuant to an
exemption. Notwithstanding any other provision hereof, the Trust may
terminate, suspend, or withdraw the offering of the Shares whenever, in
its sole discretion, it deems such action to be desirable.
2. SALE AND REPURCHASE OF SHARES.
Polynous Securities agrees to provide the services contemplated hereby,
and
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(a) Polynous Securities is hereby granted the right, as agent for the
Trust, to sell Shares to the public against orders therefor at the
public offering price (as defined in sub-paragraph 2.(c) below).
(b) Polynous Securities will also have the right to take, as agent for
the Trust, all actions which, in Polynous Securities' good faith
and reasonable judgement, and subject to the Trust's reasonable
approval, are necessary to carry into effect the distribution of
the Shares.
(c) The public offering price for Class D Shares shall be the net asset
value per Share then in effect, and the public offering price for
Class A Shares shall be the net asset value per Share plus a sales
charge, if applicable, as set forth from time to time in the
Trust's current Prospectus.
(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. Polynous Securities 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, the Distributor shall promptly pay to the Trust the
applicable net asset value of the Shares.
(f) Upon receipt of purchase instructions, Polynous Securities will
transmit such instructions to the Trust or its transfer agent for
registration of the Shares purchased.
(g) Nothing in this Agreement shall prevent Polynous Securities or any
affiliated person (as defined in the Act) of Polynous Securities
from acting as underwriter or distributor for any other person,
firm or corporation (including other investment companies), or in
any way limit or restrict Polynous Securities 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 Polynous Securities
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 sell any such Shares except by
redemption of such Shares by the Trust, and that it will not
undertake in any activities which will have a materially adverse
affect on the performance of its obligations to the Trust under
this Agreement.
(h) Polynous Securities may repurchase Shares at such prices and upon
such terms and conditions as shall be specified from time to time
in the Prospectus.
3. RULES OF SALE OF SHARES.
Polynous Securities does not agree to sell any specific number of
Shares. Polynous Securities, as Underwriter for the Trust, undertakes
to sell Shares on a best efforts basis and only against orders received
therefor. The services to be performed by Polynous Securities hereunder
shall include those set forth on Schedule A. 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 for
any reason deemed adequate by it.
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4. RULES OF NASD.
(a) Polynous Securities will conform to the Conduct Rules of the NASD
and the applicable securities laws and regulations of any
jurisdiction in which it directly or indirectly offers or sells any
Shares.
(b) Polynous Securities will require each dealer with whom Polynous
Securities has a selling agreement to conform to the applicable
provisions of the Prospectus, with respect to the public offering
price of the Shares, and Polynous Securities shall not cause the
Trust to withhold the placing of purchase orders so as to make a
profit thereby.
(c) The Trust and Polynous agree to use reasonable efforts to furnish
to Polynous Securities sufficient copies of any and all:
agreements, plans, communications with the public or other
materials which the Trust or Polynous intends to use in connection
with any sales of Shares ("Sales Materials"), in adequate time for
Polynous Securities to file and clear such Sales Materials with the
proper authorities before they are put in use, and Polynous
Securities shall be responsible for making all such required
regulatory filings in a timely manner at its own expense. Polynous
Securities and the Trust or Polynous may agree that any such Sales
Materials do not need to be filed subsequent to distribution. In
addition, the Trust and Polynous agree not to use any such Sales
Materials until so filed and cleared for use by appropriate
authorities as well as by Polynous Securities.
(d) Polynous Securities, 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) Polynous Securities shall remain registered as a broker dealer 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) Polynous Securities 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 covering the Shares and in communications with the
public or sales materials approved by Polynous Securities as
information supplemental to such Prospectus. Copies of the
Prospectus will be supplied by the Trust or Polynous to Polynous
Securities in reasonable quantities upon request.
5. RECORDS TO BE SUPPLIED BY THE TRUST.
The Trust shall furnish to Polynous Securities copies of all
information, financial statements and other papers which Polynous
Securities 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 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 Prospectuses and Statements of Additional Information
for distribution to shareholders, and the cost of distribution
of same to the shareholders;
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(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) Polynous, out of its own resources, will pay all expenses incident
to the sale and distribution of the Shares sold hereunder.
7. TERMS AND COMPENSATION.
(a) The terms of this Agreement shall commence on January 1, 1999.
(b) This Agreement shall remain in effect for twelve (12) months. 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 and expenses payable to Polynous Securities shall be paid by
Polynous out of its own resources as set forth in Schedule "B"
attached and shall be fixed for the first twelve (12) month period
of this Agreement. Thereafter, the fee schedule will be subject to
annual review and adjustment.
(d) This Agreement (i) may at any time be terminated 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 Polynous Securities; and (ii) may be
terminated by Polynous Securities 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, as
amended.
8. INDEMNIFICATION OF POLYNOUS SECURITIES BY POLYNOUS.
Polynous will indemnify and hold Polynous Securities harmless for the
actions of Polynous' employees registered with the NASD as Polynous
Securities representatives, and hereby undertakes to maintain
compliance with all rules and regulations concerning any and all sales
presentations made by such employees.
9. LIABILITIES OF POLYNOUS SECURITIES.
(a) Polynous Securities, 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 Polynous Securities' 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
negligence on the part of Polynous Securities in the performance of
its obligations and duties or by reason of its reckless disregard
of its obligations and duties
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under this Agreement, (whether with or without basis in fact or
law) which the Trust may incur or be required to pay due to
Polynous Securities' breach of this agreement, including without
limitation, a breach of the standard of care set forth above in
Section 9(a).
(b) The Trust agrees to indemnify and hold harmless Polynous Securities
against any and all liability, loss, damages, costs or expenses
(including reasonable counsel fees) which Polynous Securities 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 Polynous
Securities may be involved as a party or otherwise or with which
Polynous Securities may be threatened, by reason of the offer or
sale of the Trust Shares by persons other than Polynous Securities
or its representatives, prior to the execution of this Agreement.
If a claim is made against Polynous Securities as to which Polynous
Securities may seek indemnity under this Section, Polynous
Securities shall notify the Trust promptly of any written assertion
of such claim threatening to institute an action or proceeding with
respect thereto and shall notify the Trust promptly of any action
commenced against Polynous Securities within 10 days time after
Polynous Securities shall have been served with a summons or other
legal process, giving information as to the nature and basis of the
claim. Failure so 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 Polynous Securities' approval, which
shall not be unreasonably withheld. Polynous Securities shall have
the right to participate in the defense of any 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) Polynous Securities has received a written opinion of
counsel, on which the Trust is expressly permitted to rely,
stating that the use of counsel chosen by the Trust to
represent Polynous Securities would present such counsel with a
conflict of interest;
(ii) the defendants in, or targets of, any such action or
proceeding include both Polynous Securities and the Trust, and
legal counsel to Polynous Securities shall have reasonably
concluded in a written legal opinion, on which the Trust is
expressly permitted to rely, 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 Polynous Securities); or
(iii) the Trust shall authorize Polynous Securities to employ
separate counsel at the expense of the Trust. Notwithstanding
anything to the contrary herein, it is understood that the
Trust shall not, in connection with any action, suit or
proceeding, be liable under this Agreement for the fees and
expenses of more than one legal counsel.
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(c) Any person, even though also a director, officer, employee,
shareholder or agent of Polynous Securities, 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 Polynous Securities' 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 Polynous Securities even though
receiving salary from Polynous Securities.
(d) The Trust agrees to indemnify, defend, and hold harmless Polynous
Securities, and each person who controls Polynous Securities 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
actual and alleged 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 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 Polynous Securities for Polynous
Securities' use hereunder, disseminated by the Trust or which arise
out of or are based upon any omission or alleged omission to state
therein or necessary to make the statements therein not misleading.
Such indemnity shall not, however, inure to the benefit of Polynous
Securities (or any person controlling Polynous Securities) 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 Polynous Securities (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 Polynous Securities or any affiliate of Polynous
Securities 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 Polynous Securities 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) Polynous Securities agrees to indemnify, defend, and hold harmless
the Trust, and each person who controls the Trust within the
meaning of Section 15 of the Securities Act, or Section 20 of the
Exchange Act, against any and all actual or alleged 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 be subject under
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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 or are based upon (i)
any matter described in Subsection 9(d)(i) or (ii) above; (ii) any
material breach by Polynous Securities of any provision of this
Agreement; (iii) Polynous Securities' negligence, bad faith or
willful misconduct, or (iv) any untrue oral statement or alleged
untrue oral statement of a material fact made by Polynous
Securities or its agents, or any omission or alleged omission
orally to state a material fact by Polynous Securities or its
agents, to or with respect to any actual or potential investor in
the Trust, or any such untrue statement or omission contained in or
made with respect to any written supplemental sales or other
materials respecting the Trust prepared by Polynous Securities.
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.
Polynous Securities 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 such 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 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 State of California
and the exclusive venue of any action arising under this Agreement
shall be San Francisco County, State of California.
15. AUTHORITY TO EXECUTE.
The Parties represent and warrant 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.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement consisting of
seven 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.
Polynous Capital Management, Inc. Polynous Securities, LLC
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/s/ Xxxxx X. Xxxxx /s/ Xxxxx X. Xxxxx
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By: Xxxxx X. Xxxxx, President By: Xxxxx X. Xxxxx, Manager
Polynous Trust
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/s/ Xxxxx X. Xxxxx
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By: Xxxxx X. Xxxxx, President
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Schedule "A"
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UNDERWRITER/SPONSOR SERVICES
FOR
POLYNOUS TRUST
I. Underwriter/Sponsor services include:
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A) Preparation and execution of Underwriting, Agent, and 12b-1 Plans
- Monitoring accruals
- Monitoring expenses
- Disbursements for expenses and trail commissions
B) Quarterly 12b-1 and/or Service Fee Reports to Board of Trustees
C) Sales Materials review, recommendations and submissions to the NASD
D) Initial NASD Licensing and Transfers of Registered Representatives
- U-4 Form and Fingerprint Submissions 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 communication with the
public.
G) NASD Continuing Education Requirement
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Schedule "B"
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UNDERWRITER AND DISTRIBUTION FEE SCHEDULE
FOR
POLYNOUS TRUST
I. A) Underwriter/Sponsor Services
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The annual fee to Polynous Securities of $25,000 per year for
the initial portfolio or class of shares and $2,500 per year
for each additional portfolio or class of shares for services
is rendered for being primary Underwriter/Sponsor of the
Trust, including primary licensing/regulatory agent for Trust
personnel.
The fee for representing the Trust as primary
Underwriter/Sponsor includes the expenses and personnel
required to maintain the various regulatory books and records
of the Broker/Dealer and maintenance of shareholder files and
records for all transactions processed on behalf of the Trust.
These fees also include the regulatory requirements of all
marketing related and distribution reports including
maintenance of records regarding individual transaction
activities of the Trust's registered representatives.
B) Representative Registration and Renewals
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Polynous Securities will maintain annual NASD and state
license renewals and the monitoring required of representative
activities as follows:
Up to 10 States - $2,000 per Representative per Year
All 50 States - $4,000 per Representative per Year
C) Miscellaneous/Out-of-Pocket Expenses
------------------------------------
These expenses may include, but are not limited to:
- processing fees relating to NASD literature review
submissions
- out-of-pocket expenses related to submitting literature for
review and communications costs connected with communicating
with the NASD
- Mailing and communications expense related to communicating
with other regulatory bodies on behalf of the trust
exclusive of communication related to representative
registration and renewals
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Schedule "C"
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Identification of Series
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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:
"POLYNOUS TRUST"
1. Polynous Growth Fund - Class A Shares
2. Polynous Growth Fund - Class D Shares
This Schedule "C" may be amended from time to time by agreement of the
Parties.
