EXHIBIT 6(A)
Distribution Agreement
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DISTRIBUTION AGREEMENT
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AGREEMENT made this 18th day of December, 1985, between PRINCIPAL
PRESERVATION PORTFOLIOS, INC., a Maryland corporation (the "Fund"), and X.X.
XXXXXXX AND COMPANY, a Delaware corporation (the "Distributor").
W I T N E S S E T H:
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as a diversified open-end management
investment company and it is in the interest of the Fund to offer its shares for
sale continuously;
WHEREAS, the Fund and the Distributor wish to enter into an agreement
with each other with respect to the continuous offering of the Fund's shares of
Common Stock, $.OO1 par value, which are issuable in series ("Common Stock"), to
commence after the effectiveness of its initial registration statement filed
pursuant to the Securities Act of 1933, as amended (the "1933 Act"), and the
1940 Act.
WHEREAS, two series of Common Stock, the Government Plus Portfolio and
the Blue Chip 100 plus Portfolio are currently offered by the Fund, and
additional or different series may be offered from time to time, all of which
such series are referred to as the "Portfolios".
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of the Distributor.
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The Fund hereby appoints the Distributor its exclusive agent to sell
and to arrange for the sale of the shares of Common Stock, including both issued
and treasury shares, on the terms and for the period set forth in this Agreement
and the Distributor hereby accepts such appointment and agrees to act hereunder.
It is also understood, however, that purchases of Common Stock may be made
directly through the Fund's transfer and dividend disbursing agent in the manner
set forth in the Prospectus.
Section 2. Services and Duties of the Distributor.
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(a) The Distributor agrees to sell, as agent for the Fund, from time
to time during the term of this Agreement, Common Stock (whether unissued or
treasury shares, in the Fund's sole discretion) upon the terms described in the
Prospectus. As used in this Agreement, the term "Prospectus" shall mean the
prospectus included as part of the Fund's Registration Statement, as such
prospectus may be amended or supplemented from time to time, and the term
"Registration Statement" shall mean the Registration Statement most recently
filed from time to time by the Fund with the Securities and Exchange Commission
and effective under the 1933 Act and the 1940 Act, as such Registration
Statement as amended by any amendments thereto as the time in effect.
(b) Upon commencement of the Fund's operations, the Distributor will
hold itself available to receive orders, satisfactory to the Distributor, for
the purchase of Common Stock and will accept such orders on behalf of the Fund
as of the time of receipt of such orders and will transmit such orders as are so
accepted to the Fund's transfer and dividend disbursing agent as promptly as
practicable. Purchase orders shall be deemed effective at the time in the
manner set forth in the Prospectus.
(c) The Distributor in its discretion may sell shares to such regis-
tered and qualified retail dealers as it may select. In making agreements with
such dealers, the Distributor shall act only as principal and not as agent for
the Fund.
(d) The offering price of shares of each Portfolio of Common Stock
shall be the net asset value (as defined in the Articles of Incorporation of the
Fund and determined as set forth in the Prospectus) per share of such Portfolio
of the Common Stock next determined following receipt of an order, plus the
applicable sales charge, if any, determined as set forth in the Prospectus. The
Fund shall furnish the Distributor, with all possible promptness, an advice of
each computation of net asset value.
(e) The Distributor shall not be obligated to sell any certain number
of shares of Common Stock and nothing herein contained shall prevent the
Distributor from entering into like distribution arrangements with other
investment companies so long as the performance of its obligations hereunder is
not impaired thereby.
(f) The Distributor is authorized on behalf of the Fund to purchase
shares presented to it by dealers at the price determined in accordance with,
and in the manner set forth in, the Prospectus.
Section 3. Compensation of the Distributor.
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The above-mentioned sales charge shall constitute the entire compen-
sation of the Distributor. Out of such sales charge, the Distributor may allow
such concessions or reallowances to dealers as it may from time to time
determine.
Section 4. Duties of the Fund.
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(a) The Fund agrees to sell its shares so long as it has shares
available for sale; and to deliver certificates for, or cause the Fund's
transfer and dividend disbursing agent to issue non-negotiable share deposit
receipts evidencing, such shares registered in such names and amounts as the
Distributor has requested in writing, as promptly as practicable after receipt
by the Fund of the net asset value thereof and written request of the
Distributor therefor.
(b) The Fund shall keep the Distributor fully informed with regard to
its affairs and shall furnish to the Distributor copies of all information,
financial statements and other papers which the Distributor may reasonably
request for use in connection with the distribution of shares of the Fund, and
this shall include one certified copy, upon request by the Distributor, of all
financial statements prepared for the Fund by independent accountants and such
reasonable number of copies of its most current Prospectus and annual and
interim reports as the Distributor may request and shall cooperate fully in the
efforts of the Distributor to sell and arrange for the sale of the Fund's shares
and in the performance of the Distributor under this Agreement.
(c) The Fund shall take, from time to time, all necessary action to
fix the number of authorized shares and such steps, including payment of the
related filing fee, as may be necessary to register the same under the 1933 Act
to the end that there will be available for sale such number of shares as the
Distributor may be expected to sell. The Fund agrees to file from time to time
such amendments, reports and other documents as may be necessary in order that
there may be no untrue statement of a material fact in a Registration Statement
or Prospectus, or necessary in order that there may be no omission to state a
material fact in the Registration Statement or Prospectus which omission would
make the statements therein misleading.
(d) The Fund shall use its best efforts to qualify and maintain the
qualification of an appropriate number of its shares for sale under the securi-
ties laws of such states as the Distributor and the Fund may approve, and, if
necessary or appropriate in connection therewith, to qualify and maintain the
qualification of the Fund as a broker or dealer in such states; provided that
the Fund shall not be required to amend its Articles of Incorporation or By-Laws
to comply with the laws of any state, to maintain an office in any state, to
change the terms of the offering of its Common Stock in any state from the terms
set forth in its Registration Statement and Prospectus, to qualify as a foreign
corporation in any state or to consent to service of process in any state other
than with respect to claims arising out of the offering of its Common Stock.
The Distributor shall furnish such information and other material relating to
its affairs and activities as may be required by the Fund in connection with
such qualifications.
Section 5. Expenses.
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(a) The Fund shall bear all costs and expenses of the continuous
offering of its shares in connection with: (i) fees and disbursements of its
counsel and independent accountants, (ii) the preparation, filing and printing
of any registration statements and/or prospectuses required by and under the
federal securities laws, (iii) the preparation and mailing of annual and interim
reports, prospectuses and proxy materials to shareholders and (iv) the qualifi-
cations of shares of Common Stock for sale and of the Fund as a broker or dealer
under the securities laws of such states or other jurisdictions as shall be
selected by the Fund and the Distributor pursuant to Section 4(d) hereof and the
cost and expenses payable to each such state for continuing qualification
therein.
(b) The Distributor shall bear (i) the costs and expenses of
preparing, printing and distributing any materials not prepared by the Fund and
other materials used by the Distributor in connection with its offering of
shares for sale to the public, including the additional cost of printing copies
of the Prospectus and of annual and interim reports to shareholders other than
copies thereof required for distribution to shareholders or for filing with any
federal securities authorities, (ii) any expenses of advertising incurred by the
Distributor in connection with such offering and (iii) the expenses of
registration or qualification of the Distributor as a dealer or broker under
federal or state laws and the expenses of continuing such registration or
qualification.
Section 6. Indemnification.
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The Fund agrees to indemnify, defend and hold the Distributor, its
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 expense (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,
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 untrue statement of a
material fact contained in the 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, except insofar as such claims, demands, liabilities or
expenses arise out of or are based upon any such untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with information furnished in writing by the Distributor to the Fund for use in
the Registration Statement or Prospectus; provided, however, that this indemnity
agreement, to the extent that it might require indemnity of any person who is
also an officer or director of the Fund or who controls the Fund within the
meaning of Section 15 of the 1933 Act, shall not inure to the benefit of such
officer, director or controlling person unless a court of competent jurisdiction
shall determine, or it shall have been determined by controlling precedent, that
such result would not be against public policy as expressed in the 1933 Act; and
further provided, that in no event shall anything contained herein be so
construed as to protect the Distributor against any liability to the fund or to
its security holders 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 under
this Agreement. The Fund's agreement to indemnify the Distributor, its officers
and directors and any such controlling person as aforesaid is expressly
conditioned upon the Fund's being promptly notified of any action brought
against the Distributor, its officers or directors, or any such controlling
person, such notification to be given by letter or telegram addressed to the
Fund at its principal business office. The Fund agrees promptly to notify the
Distributor of the commencement of any litigation or proceedings against it or
any of its officers or directors in connection with the issue and sale of any
shares of its capital stock.
The Distributor agrees to indemnify, defend and hold the Fund, its
officers and directors and any person who controls the Fund, if any, 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 against such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Fund, its directors or
officers or any such controlling person may incur under the 1933 Act or under
common law or otherwise, but only to the extent that such liability or expense
incurred by the Fund, its directors or officers or such controlling person
resulting from such claims or demands shall arise out of or be based upon any
alleged untrue statement of a material fact contained in information furnished
in writing by the Distributor to the Fund for use in the Registration Statement
or Prospectus or shall arise out of or be 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 or necessary to make such
information not misleading. The Distributor's agreement to indemnify the Fund,
its directors and officers, and any such controlling person as aforesaid is
expressly conditioned upon the Distributor's being promptly notified of any
action brought against the Fund, its officers or directors or any such
controlling person, such notification being given to the Distributor at its
principal business office.
Section 7. Compliance with Securities Laws.
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The Fund represents that it is registered as a diversified open-end
management investment company under the 1940 Act, and agrees that it will comply
with all of the provisions of the 1940 Act and of the rules and regulations
thereunder. The Fund and the Distributor each agree to comply with all of the
applicable terms and provisions of the 1940 Act, the 1933 Act and, subject to
the provisions of Section 4(d), all applicable state "Blue Sky" laws. The
Distributor agrees to comply with all of the applicable terms and provisions of
the Securities Exchange Act of 1934.
Section 8. Term of Agreement; Termination.
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This Agreement shall commence on the first date set forth above. This
Agreement shall continue in effect for a period more than two years from the
date hereof only so long as such continuance is specifically approved at least
annually in conformity with the requirements of the Investment Company Act of
1940.
This Agreement shall terminate automatically in the event of its
assignment (as defined by the 1940 Act). In addition, this Agreement may be
terminated by either party at any time, without penalty, on not more than sixty
days' nor less than thirty days' written notice to the other party.
Section 9. Notices.
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Any notice required to be given pursuant to this Agreement shall be
deemed duly given if delivered or mailed by registered mail, postage prepaid,
(1) to the Distributor at 000 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxx 00000,
Attention: Mutual Fund Department; or (2) to the Fund at 000 Xxxxx Xxxx Xxxxxx,
Xxxx Xxxx, Xxxxxxxxx 00000, Attention: Administration.
Section 10. Governing Law.
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This Agreement shall be governed and construed in accordance with the
laws of the State of Wisconsin.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
X.X. XXXXXXX AND COMPANY
By /s/ X.X. Xxxxxxx
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PRINCIPAL PRESERVATION PORTFOLIOS, INC.
By /s/ X.X. Xxxxxxx
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