DISTRIBUTION AGREEMENT
AGREEMENT made as of this _______ day of June, 1998 between XXXXXXX XXXXX
FUNDS FOR INSTITUTIONS SERIES, a Massachusetts business trust (the "Trust"),
with respect to XXXXXXX XXXXX RATED INSTITUTIONAL FUND, a series of the Trust
(the "Fund"), and XXXXXXX XXXXX FUNDS DISTRIBUTOR, INC., a Delaware corporation
(the "Distributor");
W I T N E S S E T H:
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "Investment Company Act"), as a diversified open-end investment
company and it is affirmatively in the interest of the Trust to offer its shares
for sale, continuously; and
WHEREAS, the Distributor is a securities firm engaged in the business of
selling shares of investment companies either directly to purchasers or through
other securities dealers; and
WHEREAS, the Trust and the Distributor wish to enter into an agreement
with each other with respect to the continuous offering of the shares of the
Fund after the effectiveness of the registration statement covering the shares
of the Fund filed under the Securities Act of 1933, as amended (the "Securities
Act").
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of the Distributor. The Trust hereby appoints the
Distributor as the principal underwriter and distributor of the Fund to sell
shares of the Fund to the public, and the Distributor hereby accept such
appointment. The Trust, during the term of this Agreement, shall sell its shares
to the Distributor upon the terms and conditions set forth below.
Section 2. Exclusive Nature of Duties. The Distributor shall be the
exclusive representative of the Trust to act as principal underwriter and
distributor, except that:
(a) The Trust may, upon written notice to the Distributor, from time to
time designate other principal underwriters and distributors of its shares with
respect to areas other than the United States as to which the Distributor may
have expressly waived in writing its right to act as such. If such designation
is deemed exclusive, the right of the Distributor under this Agreement to sell
shares in the areas so designated shall terminate, but this Agreement shall
remain otherwise in full effect until terminated in accordance with the other
provisions hereof.
(b) The exclusive right granted to the Distributor to purchase shares from
the Trust shall not apply to shares of the Trust issued in connection with the
merger or consolidation of any other investment company or personal holding
company with the Trust or the Fund or the acquisition by purchase or otherwise
of all (or substantially all) the assets or the outstanding shares of any such
company by the Trust or the Fund.
(c) Such exclusive right shall not apply to shares issued by the Trust
pursuant to reinvestment of dividends, capital gains distributions or otherwise
pursuant to its daily reinvestment program.
Section 3. Purchase of Shares from the Trust.
(a) The Distributor shall have the right to buy from the Trust the shares
needed, but not more than the shares needed (except for clerical errors in
transmission), to fill unconditional orders for shares of the Fund placed with
the Distributor by investors or securities dealers. The price which the
Distributor shall pay for the shares so purchased from the Trust shall be the
net asset value, determined as set forth in Section 3(d) hereof, used in
determining the public offering price on which such orders were based.
(b) The shares are to be resold by the Distributor to investors at the
public offering price, as set forth in Section 3(c) hereof, or to securities
dealers having agreements with the Distributor upon the terms and conditions set
forth in Section 7 hereof.
(c) The public offering price of the shares, i.e., the price per share at
which the Distributor or selected dealers may sell shares to the public, shall
be the public offering price as set forth in the currently effective prospectus
of the Fund under the Securities Act (the "Prospectus", which term for purposes
of this Agreement shall be deemed to include the Fund's Statement of Additional
Information) relating to such shares, but not to exceed the net asset value. If
the resulting public offering price does not equal an even cent, the public
offering price may be adjusted to the nearest cent. All payments to the Trust
hereunder shall be made in the manner set forth in Section 3(f).
(d) The net asset value per share of the Fund for purposes of pricing
orders for both the purchase and the redemption of Fund shares shall be
determined at the times and on the days set forth in the Prospectus of the Fund.
The net asset value shall be determined by adding the value of all securities
and other assets in the portfolio, deducting its liabilities and dividing by the
number of shares outstanding.
(e) The Trust shall have the right to suspend the sale of shares of the
Fund at times when redemption is suspended pursuant to the conditions set forth
in Section 4(b) hereof. The Trust shall also have the right to suspend the sale
of shares of the Fund if trading on the New York Stock Exchange shall have been
suspended, if a banking moratorium shall have been declared by Federal,
Massachusetts, or New York authorities, or if there shall have been some other
extraordinary event, which, in the judgment of the Trust, makes it impracticable
to sell the shares.
(f) The Trust, or any agent of the Trust, designated in writing by it,
shall be promptly advised of all purchase orders for shares received by the
Distributor. Procedures may be established whereby purchase orders are presented
directly to the Trust or its designated agent upon the condition that in such
cases it shall be deemed that the issuance of the shares to be purchased is made
pursuant to Section 3 hereof. Any order may be rejected by the Trust or the
Distributor; provided, however, that neither will arbitrarily or without
reasonable cause refuse to accept or confirm orders for the purchase of shares.
The Trust (or its agent) will confirm orders upon their receipt, and will make
appropriate book entries pursuant to the instructions of the Distributor.
Purchase orders are effective when Federal Funds become available to the Trust.
The Distributor agrees to cause such payment and such instructions to be
delivered promptly to the Trust (or its agent).
Section 4. Redemption or Repurchase of Shares by the Fund.
(a) Any of the outstanding shares may be tendered for redemption or
repurchase at any time, and the Trust shall redeem or repurchase the shares so
tendered in accordance with its obligations and rights as set forth in its
Declaration of Trust, as amended from time to time, and in accordance with the
applicable provisions set forth in the most current prospectus of the Fund. The
price to be paid to redeem or repurchase the shares shall be equal to the net
asset value calculated in accordance with the provisions of Section 3(d) hereof.
All payments by the Trust hereunder shall be made in the manner set forth below.
The Trust shall pay the total amount of the redemption price as defined in the
above paragraph pursuant to the instructions of the Distributor and in
accordance with the terms set forth in the Prospectus.
(b) The Trust reserves the right to reject any order for repurchase
through a securities dealer, but the right to redeem shares, or to receive
payment with respect to any such redemption, upon the presentation of properly
submitted redemption requests in accordance with the procedures set forth in the
Prospectus, may only be suspended for any period during which trading on the New
York Stock Exchange is restricted as determined by the Securities and Exchange
Commission or such Exchange is closed (other than customary weekend and holiday
closings), for any period during which an emergency exists as defined by the
Securities and Exchange Commission as a result of which disposal of portfolio
securities or determination of the net asset value of the Fund is not reasonably
practicable, and for such other periods as the Securities and Exchange
Commission may by order permit for the protection of shareholders of the Fund.
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Section 5. Duties of the Trust.
(a) The Trust 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 Trust with respect to the Fund by
independent public accountants. The Trust shall make available to the
Distributor such number of copies of the most current prospectus of the Fund as
the Distributor shall reasonably request.
(b) The Board of Trustees shall take, from time to time, all necessary
action to fix the number of the Fund's authorized shares and such steps as may
be necessary to register the same under the Securities Act to the extent that
there will be available for sale such number of shares as the Distributor
reasonably may be expected to sell.
(c) The Trust shall use its best efforts to qualify and maintain the
qualification of an appropriate number of the Fund's shares for sale under the
securities laws of such states as the Distributor and the Trust may approve. Any
such qualification may be withheld, terminated or withdrawn by the Trust at any
time in its discretion. As provided in Section 8(c) hereof, the expense of
qualification and maintenance of qualification shall be borne by the Trust. The
Distributor shall furnish such information and other material relating to its
affairs and activities as may be required by the Trust in connection with such
qualifications.
(d) The Trust will furnish, in reasonable quantities upon request by the
Distributor, copies of annual and interim reports of the Fund.
Section 6. Duties of the Distributor.
(a) The Distributor shall devote reasonable time and effort to effect
sales of shares of the Fund, but shall not be obligated to sell any specific
number of shares. The services of the Distributor to the Trust hereunder are not
to be deemed exclusive and nothing herein contained shall prevent the
Distributor from entering into like arrangements with other investment companies
so long as the performance of its obligations hereunder is not impaired thereby.
(b) In selling the shares of the Fund, the Distributor shall use its best
efforts in all respects duly to conform with the requirements of all federal and
state laws and regulations and the regulations of the National Association of
Securities Dealers, Inc. (the "NASD") relating to the sale of such securities.
Neither the Distributor nor any selected dealer nor any other person is
authorized by the Trust to give any information or to make any representations,
other than those contained in the registration statement or related prospectus
or any sales literature specifically approved by the Trust.
(c) The Distributor shall adopt and follow procedures, as approved by the
officers of the Trust, for the confirmation of sales to investors and selected
dealers, the collection of amounts payable by investors and selected dealers on
such sales, and the cancellation of unsettled transactions, as may be necessary
to comply with the requirements of the NASD, as such requirements may from time
to time exist.
(d) The Distributor shall receive amounts from Fund Asset Management,
L.P., the Fund's Investment Adviser, for payment to third parties for providing
support services to the Fund. These services may include providing office space,
equipment, telephone facilities and various personnel as is necessary or
beneficial to establish and maintain shareholders' accounts and records, process
purchase and redemption transactions, answer routine client inquiries regarding
the Fund, and provide such other services to the Fund as the Fund may reasonably
request.
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Section 7. Selected Dealer Agreements.
(a) The Distributor shall have the right to enter into selected dealer
agreements with securities dealers of its choice ("selected dealers") for the
sale of shares; provided that the form of selected dealer agreement shall be
approved by the Trust. Shares sold to selected dealers shall be for resale by
such dealers only in accordance with the provisions of the prospectus.
(b) Within the United States, the Distributor shall offer and sell shares
only to such selected dealers as are members in good standing of the NASD.
Section 8. Payments of Expenses.
(a) The Trust shall bear all costs and expenses of the Fund, including
fees and disbursements of its counsel and auditors, in connection with the
preparation and filing of any required registration statements and/or
prospectuses and statements of additional information under the Investment
Company Act, the Securities Act, and all amendments and supplements thereto, and
preparing and mailing annual and interim reports and proxy materials to
shareholders (including but not limited to the expense of setting in type any
such registration statements, prospectuses, statements of additional
information, annual or interim reports or proxy materials).
(b) After the prospectuses, statements of additional information, and
annual and interim reports have been prepared and set in type, the Distributor
shall bear the costs and expenses of printing and distributing any copies
thereof which are to be used in connection with the offering of shares to
selected dealers or investors. The Distributor shall bear the costs and expenses
of preparing, printing and distributing any other literature used by the
Distributor or furnished by it for use by selected dealers in connection with
the offering of the shares for sale to the public. Any expenses of advertising
incurred in connection with such offering will be the obligation of the Adviser.
(c) The Trust shall bear the cost or expenses (other than auditing
expenses) of qualification of the shares for sale, and, if necessary or
advisable in connection therewith, of qualifying the Trust as a broker or
dealer, in such states of the United States or other jurisdictions as shall be
selected by the Trust and the Distributor pursuant to Section 5(c) hereof and
the cost and expenses payable to each such state for continuing qualification
therein until the Trust decides to discontinue such qualification pursuant to
Section 5(c) hereof.
Section 9. Indemnification.
(a) The Trust shall indemnify and hold harmless the Distributor and each
person, if any, who controls the Distributor against any loss, liability, claim,
damage or expense (including the reasonable cost of investigating or defending
any alleged loss, liability, claim, damage or expense and reasonable counsel
fees incurred in connection therewith), as incurred, arising by reason of any
person acquiring any shares, which may be based upon the Securities Act, or on
any other statute or at common law, on the ground that the registration
statement or related Prospectus, as from time to time amended and supplemented,
or the annual or interim reports to shareholders of the Fund, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, unless such statement or omission was made in reliance upon, and in
conformity with, information furnished to the Trust in connection therewith by
or on behalf of the Distributor; provided, however, that in no case (i) is the
indemnity of the Trust in favor of the Distributor and any such controlling
persons to be deemed to protect such Distributor or any such controlling persons
thereof against any liability to the Trust or the Fund's security holders to
which the Distributor or any such controlling persons would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of their duties or by reason of the reckless disregard of their
obligations and duties under this Agreement, or (ii) is the Trust to be liable
under its indemnity agreement contained in this subsection (a) with respect to
any claim made against the Distributor or such controlling persons, unless the
Distributor or such controlling person, as the case may be, shall have notified
the Trust in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon the Distributor or such controlling persons (or after the
Distributor or such controlling persons shall have received
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notice of such service on any designated agent), but failure to notify the Trust
of any such claim shall not relieve it from any liability which it may have to
the person against whom such action is brought otherwise than on account of its
indemnity agreement contained in this paragraph. The Trust will be entitled to
participate at its own expense in the defense of any suit brought to enforce any
such liability, but if the Trust elects to assume the defense, such defense
shall be conducted by counsel chosen by it and satisfactory to the Distributor
or such controlling person or persons, defendant or defendants in the suit. In
the event the Trust elects to assume the defense in any such suit and retain
such counsel, the Distributor or such controlling person or persons, defendant
or defendants in the suit, shall bear the fees and expenses of any additional
counsel retained by them but, in case the Trust does not elect to assume the
defense of any such suit, it will reimburse the Distributor or such controlling
person or persons, defendant or defendants in the suit, for the reasonable fees
and expenses of any counsel retained by them. The Trust shall promptly notify
the Distributor of the commencement of any litigation or proceedings against it
or any of its officers or directors in connection with the issuance or sale of
any of the shares.
(b) The Distributor shall indemnify and hold harmless the Trust and each
of its Trustees and officers and each person, if any, who controls the Trust
against any loss, liability, claim, damage, or expense described in the
foregoing indemnity contained in subsection (a) of this Section 9, but only with
respect to statements or omissions made in reliance upon, and in conformity
with, information furnished to the Trust in writing by or on behalf of the
Distributor for use in connection with the registration statement or related
Prospectus, as from time to time amended, or the annual or interim reports to
shareholders. In case any action shall be brought against the Trust or any
person so indemnified, in respect of which indemnity may be sought against the
Distributor, the Distributor shall have the rights and duties given to the
Trust, and the Trust and each person so indemnified shall have the rights and
duties given to the Distributor by the provisions of subsection (a) of this
Section 9.
Section 10. Term of Agreement. This Agreement shall commence on the date
of its execution. Unless sooner terminated in accordance with the other
provisions hereof, this Agreement shall continue in effect from year to year
hereafter, but only so long as such continuance is specifically approved at
least annually by (i) the vote of a majority of the Board of Trustees who are
not parties to this Agreement or interested persons (within the meaning of the
Investment Company Act) of the Trust or the Distributor, cast in person at a
meeting called for the purpose of voting on such approval, and (ii) either the
Board of Trustees of the Trust or a vote of a majority (within the meaning of
the Investment Company Act) of the outstanding voting securities of the Fund.
Section 11. Termination and Assignment.
(a) This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Trustees, by vote of a majority of the outstanding
voting securities of the Fund, or by the Distributor, on sixty days' written
notice to the other party.
(b) This Agreement shall not be assignable by either party hereto and in
the event of assignment (as defined in the Investment Company Act) this
Agreement shall automatically terminate forthwith.
Section 12. Amendments of this Agreement. This Agreement may be amended by
the parties only if such amendment is specifically approved by (i) the Board of
Trustees or by the vote of a majority of outstanding voting securities of the
Fund and (ii) by the vote of a majority of those Trustees of the Trust 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 such approval.
Section 13. Notices. Any notice required or permitted to be given
hereunder by either party to the other shall be deemed sufficiently given if
sent by registered mail, postage prepaid, addressed by the party giving such
notice to the other party at the last address furnished by such other party to
the party giving notice, and unless and until changed pursuant to the foregoing
provisions hereof addressed, if to the Fund at Xxx Xxxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, and if to the Distributor at Xxx Xxxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000.
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Section 14. Governing Law. This Agreement is to the extent applicable
governed and construed in accordance with the laws of the State of New York.
Section 15. Limitation of Liability of Trustees, Shareholders, Officers,
Employees and Agents.
The Declaration of Trust establishing the Trust, dated May 7, 1987, a copy
of which, together with all amendments thereto (the "Declaration"), is on file
in the office of the Secretary of the Commonwealth of Massachusetts, provides
that the name "Xxxxxxx Xxxxx Funds For Institutions Series" refers to the
Trustees under the Declaration collectively as trustees, but not as individuals
or personally; and no Trustee, shareholder, officer, employee or agent of the
Trust may be held to any personal liability, nor may resort be had to their
private property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of said Trust but the Trust Property only shall be
liable.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
XXXXXXX XXXXX FUNDS DISTRIBUTOR, INC.
By:
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Name:
Title:
XXXXXXX XXXXX FUNDS FOR INSTITUTIONS
SERIES
By:
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Name:
Title:
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