Exhibit e(1)
NVEST EQUITY INCOME FUND
Distribution Agreement
AGREEMENT made this 30/th/ day of October, 2000 by and between NVEST
FUNDS TRUST III, a Massachusetts business trust (the "Trust"), and NVEST FUNDS
DISTRIBUTOR, L.P., a Delaware limited partnership (the "Distributor").
W I T N E S S E T H:
WHEREAS, this Agreement has been approved by the Trustees of the Trust
in contemplation of the transfer by the Distributor of its rights to receive the
Class B Distribution Fee (as defined in the Class B Distribution and Service
Plan attached hereto as Exhibit A) and/or contingent deferred sales charges to a
financing party in order to raise funds to cover distribution expenditures;
WHEREAS, the Trustees of the Trust recognize the importance to the Trust
of the Distributor being able to obtain financing with which to pay commissions
on Class B shares at the time of sale;
WHEREAS, the Trustees of the Trust acknowledge that by providing
financing to the Distributor the financing party enables the Distributor to
provide valuable services to the Series (as defined below); and
WHEREAS, the Trustees of the Trust, in the context of considering the
best interests of the Series and its shareholders at the time of and in
preparation for any vote, consent or other action that the Trustees of the Trust
may from time to time take relating to the continued receipt by the Distributor
(and/or the financing party) of the Distribution Fee, intend to consider the
effect on the Distributor and any financing party of any such vote, consent or
action.
NOW, THEREFORE, in consideration of the premises and covenants
hereinafter contained, the Trust and the Distributor agree as follows:
1. Distributor. The Trust hereby appoints the Distributor as general
-----------
distributor of shares of beneficial interest ("Series shares") of the
Trust's Nvest Equity Income Fund series (the "Series") during the term
of this Agreement. The Trust reserves the right, however, to refuse at
any time or times to sell any Series shares hereunder for any reason
deemed adequate by the Board of Trustees of the Trust.
2. Sale and Payment. Under this agreement, the following provisions shall
----------------
apply with respect to the sale of and payment for Series shares:
(a) The Distributor shall have the right, as principal, to purchase
Series shares from the Trust at their net asset value and to sell
such shares to the public against orders therefor at the
applicable public offering price, as defined in Section 4 hereof.
The Distributor shall also have the right, as principal, to sell
shares to dealers against orders therefor at the public offering
price less a concession determined by the Distributor.
(b) Prior to the time of delivery of any shares by the Trust to, or
on the order of, the Distributor, the Distributor shall pay or
cause to be paid to the Trust or to its order an amount in Boston
or New York clearing house funds equal to the applicable net
asset value of such shares. The Distributor shall retain so much
of any sales charge or underwriting discount as is not allowed by
it as a concession to dealers.
3. Fees. For its services as general distributor of the Class B Series
----
shares, the Trust shall cause the Series to pay to the Distributor (or
its designee or transferee) in addition to the sales charge, if any,
referred to in Section 4 below, the Class B Distribution Fee at the rate
and upon the terms and conditions set forth in the Class B Distribution
and Service Plan attached as Exhibit A hereto, and as amended from time
to time,
and the Distributor shall also be entitled to receive any contingent
deferred sales charges that may be payable upon redemption or repurchase
of Class B Series shares. The Class B Distribution Fee shall be accrued
daily and paid monthly to the Distributor (or, at its direction, to its
designee or transferee) as soon as practicable after the end of the
calendar month in which it accrues, but in any event within five
business days following the last day of the month. So long as this
agreement and the Class B Distribution and Service Plan have not been
terminated in accordance with their respective terms, the Series'
obligation to pay the Class B 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 the Trust or the
Series 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 the Class B Distribution Fee and to be paid
contingent deferred sales charges with respect to Class B Series shares)
of the Distributor).
4. Public Offering Price. The public offering price shall be the net
---------------------
asset value of Series shares, plus any applicable sales charge, all as
set forth in the current prospectus and statement of additional
information ("prospectus") of the Trust relating to the Series shares.
In no event shall the public offering price exceed 1000/935 of such net
asset value, and in no event shall any applicable sales charge or
underwriting discount exceed 6.5% of the public offering price. The net
asset value of Series shares shall be determined in accordance with the
provisions of the agreement and declaration of trust and by-laws of the
Trust and the current prospectus of the Trust relating to the Series
shares.
5. Trust Issuance of Series Shares. The delivery of Series shares shall
-------------------------------
be made promptly by a credit to a shareholder's open account for the
Series or by delivery of a share certificate. The Trust reserves the
right (a) to issue Series shares at any time directly to the
shareholders of the Series as a stock dividend or stock split, (b) to
issue to such shareholders shares of the Series, or rights to subscribe
to shares of the Series, as all or part of any dividend that may be
distributed to shareholders of the Series or as all or part of any
optional or alternative dividend that may be distributed to shareholders
of the Series, and (c) to sell Series shares in accordance with the
current applicable prospectus of the Trust relating to the Series
shares.
6. Redemption or Repurchase. The Distributor shall act as agent for the
------------------------
Trust in connection with the redemption or repurchase of Series shares
by the Trust to the extent and upon the terms and conditions set forth
in the current applicable prospectus of the Trust relating to the Series
shares, and the Trust agrees to reimburse the Distributor, from time to
time upon demand, for any reasonable expenses incurred in connection
with such redemptions or repurchases. The Trust will remit to the
Distributor any contingent deferred sales charges imposed on redemptions
or repurchases of Series shares (other than Class B shares) upon the
terms and conditions set forth in the then current prospectus of the
Trust. The Trust will also remit to the Distributor (or its designee or
transferee), in addition to the Class B Distribution Fee, any contingent
deferred sales charges imposed on redemptions or repurchases of Class B
shares, in accordance with the Remittance Agreement attached hereto as
Exhibit B.
7. Undertaking Regarding Sales. The Distributor shall use reasonable
---------------------------
efforts to sell Series shares but does not agree hereby to sell any
specific number of Series shares and shall be free to act as distributor
of the shares of other investment companies. Series shares will be sold
by the Distributor only against orders therefor. The Distributor shall
not purchase Series shares from anyone except in accordance with
Sections 2 and 6 and shall not take "long" or "short" positions in
Series shares contrary to the agreement and declaration of trust or
by-laws of the Trust.
8. Compliance. The Distributor shall conform to the Conduct Rules of the
----------
National Association of Securities Dealers, Inc. ("NASD") and the sale
of securities laws of any jurisdiction in which it sells, directly or
indirectly, any Series shares. The Distributor agrees to make timely
filings, with the Securities and Exchange Commission in Washington, D.C.
(the "SEC"), the NASD and such other regulatory authorities as may be
required, of any sales literature relating to the Series and intended
for distribution to prospective investors. The Distributor also agrees
to furnish to the Trust sufficient copies of any agreements or plans it
intends to use in connection with any sales of Series shares in adequate
time for the Trust to file and clear them with the proper authorities
before they are put in use (which the Trust agrees
-2-
to use its best efforts to do as expeditiously as reasonably possible),
and not to use them until so filed and cleared.
9. Registration and Qualification of Series Shares. The Trust agrees to
-----------------------------------------------
execute such papers and to do such acts and things as shall from time to
time be reasonably requested by the Distributor for the purpose of
qualifying and maintaining qualification of the Series shares for sale
under the so-called Blue Sky Laws of any state or for maintaining the
registration of the Trust and of the Series shares under the federal
Securities Act of 1933 and the federal Investment Company Act of 1940
(the "1940 Act"), to the end that there will be available for sale from
time to time such number of Series shares as the Distributor may
reasonably be expected to sell. The Trust shall advise the Distributor
promptly of (a) any action of the SEC or any authorities of any state or
territory, of which it may be advised, affecting registration or
qualification of the Trust or the Series shares, or rights to offer
Series shares for sale, and (b) the happening of any event which makes
untrue any statement or which requires the making of any change in the
Trust's registration statement or its prospectus relating to the Series
shares in order to make the statements therein not misleading.
10. Distributor Independent Contractor. The Distributor shall be an
----------------------------------
independent contractor and neither the Distributor nor any of its
officers or employees as such is or shall be an employee of the Trust.
The Distributor 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 through its agents or employees. The
Distributor assumes full responsibility for its agents and employees
under applicable statutes and agrees to pay all employer taxes
thereunder.
11. Expenses Paid by Distributor. While the Distributor continues to act as
----------------------------
agent of the Trust to obtain subscriptions for and to sell Series
shares, the Distributor shall pay the following:
(a) all expenses of printing (exclusive of typesetting) and
distributing any prospectus for use in offering Series shares for
sale, and all other copies of any such prospectus used by the
Distributor, and
(b) all other expenses of advertising and of preparing, printing and
distributing all other literature or material for use in
connection with offering Series shares for sale.
12. Interests in and of Distributor. It is understood that any of the
-------------------------------
shareholders, trustees, officers, employees and agents of the Trust may
be a shareholder, director, officer, employee or agent of, or be
otherwise interested in, the Distributor, any affiliated person of the
Distributor, any organization in which the Distributor may have an
interest or any organization which may have an interest in the
Distributor; that the Distributor, any such affiliated person or any
such organization may have an interest in the Trust; and that the
existence of any such dual interest shall not affect the validity hereof
or of any transaction hereunder except as otherwise provided in the
agreement and declaration of trust or by-laws of the Trust, in the
limited partnership agreement of the Distributor or by specific
provision of applicable law.
13. Effective Date and Termination. This Agreement shall become effective
------------------------------
as of the date of its execution, and
(a) Unless otherwise terminated, this Agreement shall continue in
effect with respect to the shares of the Series so long as such
continuation is specifically approved at least annually (i) by
the Board of Trustees of the Trust or by the vote of a majority
of the votes which may be cast by shareholders of the Series and
(ii) by a vote of a majority of the Board of Trustees of the
Trust who are not interested persons of the Distributor or the
Trust, cast in person at a meeting called for the purpose of
voting on such approval.
(b) This Agreement may at any time be terminated on sixty days'
notice to the Distributor either by vote of a majority of the
Trust's Board of Trustees then in office or by the vote of a
majority of the votes which may be cast by shareholders of the
Series.
-3-
(c) This Agreement shall automatically terminate in the event of its
assignment (excluding for this purpose any assignment of rights
to payment described in the recitals and in Section 18 of the
Agreement which are hereby ratified and approved).
(d) This Agreement may be terminated by the Distributor on ninety
days' written notice to the Trust.
Termination of this Agreement pursuant to this section shall be without payment
of any penalty.
14. Definitions. For purposes of this Agreement, the following definitions
-----------
shall apply:
(a) The "vote of a majority of the votes which may be cast by
shareholders of the Series" means (1) 67% or more of the votes of
the Series present (in person or by proxy) and entitled to vote
at such meeting, if the holders of more than 50% of the
outstanding shares of the Series entitled to vote at such meeting
are present; or (2) the vote of the holders of more than 50% of
the outstanding shares of the Series entitled to vote at such
meeting, whichever is less.
(b) The terms "affiliated person," "interested person" and
"assignment" shall have their respective meanings as defined in
the 1940 Act subject, however, to such exemptions as may be
granted by the SEC under the 1940 Act.
15. Amendment. This Agreement may be amended at any time by mutual consent
---------
of the parties, provided that such consent on the part of the Series
shall be approved (i) by the Board of Trustees of the Trust or by vote
of a majority of the votes which may be cast by shareholders of the
Series and (ii) by a vote of a majority of the Board of Trustees of the
Trust who are not interested persons of the Distributor or the Trust
cast in person at a meeting called for the purpose of voting on such
approval.
16. Applicable Law and Liabilities. This Agreement shall be governed by and
------------------------------
construed in accordance with the laws of The Commonwealth of
Massachusetts. All sales hereunder are to be made, and title to the
Series shares shall pass, in Boston, Massachusetts.
17. Limited Recourse. The Distributor hereby acknowledges that the Trust's
----------------
obligations hereunder with respect to the shares of the Series are
binding only on the assets and property belonging to the Series.
18. Payments to Distributor's Transferees. The Distributor may transfer its
-------------------------------------
rights to payments hereunder with respect to Class B shares (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 Trust. In connection with the
foregoing, the Series 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.
19. Liquidation etc. As long as the Class B Distribution and Service Plan
---------------
is in effect, the Series shall not change the manner in which the
Distribution Fee is computed (except as may be required by a change in
applicable law after the date hereof) or adopt a plan of liquidation
without the consent of the Distributor (or any designee or transferee of
the Distributor's rights to receive payment hereunder in respect of
Class B shares) except in circumstances where a surviving entity or
transferee of the Series' assets adopts the Class B Distribution and
Service Plan and assumes the obligations of the Series to make payments
to the Distributor (or its transferee) hereunder in respect of Class B
shares.
20. "Distributor's Shares" etc. The Trust, on behalf of the Series, agrees
---------------------------
that it will not pay any portion of the Class B Distribution Fee which
is calculated by reference to the "Distributor's Shares" (nor shall it
pay a Distribution Fee calculated by reference to Class B shares ("Other
Class B Shares") other than the Distributor's Shares at a rate exceeding
0.75% per annum of the net assets attributable to Other Class B Shares)
to any person other than the Distributor (or its designee or transferee)
without the written consent of the Distributor. "Distributor's Shares"
shall mean (i) Class B shares of the Series that were sold by the
-4-
Distributor, plus (ii) Class B shares of the Series issued in connection
with the exchange, for Class B shares of the Series, of Class B shares
of another fund in the Nvest fund group that were sold by the
Distributor, plus (iii) Class B shares of the Series issued in
connection with the exchange, for Class B shares of the Series, of Class
B shares of another fund in the Nvest fund group issued in respect of
the automatic reinvestment of dividends or capital gain distributions in
respect of Class B shares of such other fund that were sold by the
Distributor, plus (iv) Class B shares of the Series issued in respect of
the automatic reinvestment of dividends or capital gain distributions in
respect of Class B shares of the Series described in clauses (i), (ii)
and (iii). To the extent permitted under the 1940 Act, the terms of this
Section 20 shall survive the termination of this Agreement.
21. Limitation on Reduction of Class B Distribution Fee. The Trust, on
----------------------------------------------------
behalf of the Series, agrees that it will not reduce the Distribution
Fee in respect of Series' assets attributable to Class B shares below
the annual rate of 0.75% unless it has ceased (and not resumed) paying
all "service fees" (within the meaning of Section 2830(b)(9) of the
Conduct Rules of the NASD or any successor provision thereto) to the
Distributor, to any affiliate of the Distributor and to any other person
in circumstances where substantially all of the services and functions
relating to the distribution of Class B Series shares have been
delegated to, or are being performed by, the Distributor or an affiliate
of the Distributor. To the extent permitted under the 1940 Act, the
terms of this Section 21 shall survive the termination of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
NVEST FUNDS TRUST III,
on behalf of its Nvest Equity Income Fund series
By: /s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: President
NVEST FUNDS DISTRIBUTOR, L.P.
By: Nvest Distribution Corp., its general partner
By: /s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: President
-5-
A copy of the Agreement and Declaration of Trust establishing Nvest Funds
Trust III (the "Trust") is on file with the Secretary of The Commonwealth of
Massachusetts, and notice is hereby given that this Agreement is executed with
respect to the Trust's Nvest Equity Income Fund series (the "Series") on behalf
of the Trust by officers of the Trust as officers and not individually and that
the obligations of or arising out of this Agreement are not binding upon any of
the trustees, officers or shareholders of the Trust individually but are binding
only upon the assets and property of the Series.
-6-
