1
EXHIBIT 99.B6
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 1st day of February, 1998 between HOTCHKIS AND
WILEY VARIABLE TRUST, a Massachusetts business 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 Fund is registered under the Investment Company Act of
1940, as amended to date (the "Investment Company Act"), as an open-end
investment company and it is affirmatively in the interest of the Fund to offer
its shares for sale continuously; and
WHEREAS, the Fund currently is comprised of four separate portfolios,
namely, the Equity Income VIP Portfolio, the International VIP Portfolio, the
Total Return Bond VIP Portfolio and the Low Duration VIP Portfolio (each a
"Series"), each of which pursues its own investment objective through separate
investment policies; 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 Fund and the Distributor wish to enter into an agreement
with each other with respect to the continuous offering of shares of each Series
(collectively, the "Shares") in order to promote the growth of the Series and
facilitate the distribution of Shares.
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of the Distributor. The Fund hereby appoints the
Distributor as the principal underwriter and distributor of the Fund to sell
Shares to the public and hereby agrees during the term of this Agreement to sell
Shares of the Fund to the Distributor upon the terms and conditions herein set
forth.
2
Section 2. Exclusive Nature of Duties. The Distributor shall be the
exclusive representative of the Fund to act as principal underwriter and
distributor of its Shares, except that:
(a) The exclusive rights granted to the Distributor to purchase
Shares from the Fund shall not apply to shares of the Fund issued in connection
with the merger or consolidation of any other investment company or personal
holding company with 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 Fund.
(b) Such exclusive rights also shall not apply to Shares issued
by the Fund pursuant to reinvestment of dividends or capital gains
distributions.
(c) Such exclusive rights also shall not apply to Shares issued
by the Fund pursuant to any exchange or reinstatement privilege afforded
redeeming shareholders or to any other Shares as shall be agreed between the
Fund and the Distributor from time to time.
Section 3. Purchase of Shares from the Fund.
(a) The Distributor shall have the rights to buy from the Fund
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. Investors
eligible to purchase Shares shall be those persons so identified in the
currently effective prospectus and statement of additional information of the
Fund under the Securities Act of 1933, as amended (the "Securities Act"),
relating to the Shares. The price which the Distributor shall pay for Shares so
purchased from the Fund shall be the net asset value, determined as set forth in
Section 3(c) hereof.
2
3
(b) The Shares are to be resold by the Distributor to investors
at net asset value, 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 net asset value of Shares of a Series shall be determined
by the Fund or any agent of the Fund in accordance with the method set forth in
the prospectus and/or statement of additional information of the Fund and
guidelines established by the Board of Trustees.
(d) The Fund shall have the right to suspend the sale of its
Shares at times when redemption is suspended pursuant to the conditions set
forth in Section 4(b) hereof. The Fund shall also have the right to suspend the
sale of its Shares if trading on the New York Stock Exchange shall have been
suspended, if a banking moratorium shall have been declared by federal or New
York authorities, or if there shall have been some other event, which, in the
judgment of the Fund, makes it impracticable or inadvisable to sell the Shares.
(e) The Fund, or any agent of the Fund designated in writing by
the Fund, shall be promptly advised of all purchase orders for Shares received
by the Distributor. Any order may be rejected by the Fund; provided, however,
that the Fund will not arbitrarily or without reasonable cause refuse to accept
or confirm orders for the purchase of Shares. The Fund (or its agent) will
confirm orders upon their receipt, will make appropriate book entries and, upon
receipt by the Fund (or its agent) of payment therefor, will deliver deposit
receipts or certificates for such Shares pursuant to the instructions of the
Distributor. Payment shall be made to the Fund in New York Clearing House funds.
The Distributor agrees to cause such payment and such instructions to be
delivered promptly to the Fund (or its agent).
3
4
Section 4. Repurchase or Redemption of Shares by the Fund.
(a) Any of the outstanding Shares may be tendered for redemption
at any time, and the Fund agrees to repurchase or redeem the Shares so tendered
in accordance with its obligations as set forth in Article FOURTH, paragraph 6
of its Restated Declaration of Trust, as amended from time to time, and in
accordance with the applicable provisions set forth in the prospectus and
statement of additional information of the Fund. The price to be paid to redeem
or repurchase the Shares shall be equal to the net asset value for that Series
calculated in accordance with the provisions of Section 3(c) hereof. All
payments by the Fund hereunder shall be made in the manner set forth below.
The Fund shall pay the total amount of the redemption price as defined
in the above paragraph pursuant to the instructions of the Distributor on or
before the seventh business day subsequent to its having received the notice of
redemption in proper form. The proceeds of any redemption of Shares shall be
paid by the Fund to or for the account of the shareholder, in each case in
accordance with the applicable provisions of the prospectus and statement of
additional information.
(b) Redemption of Shares or payment may be suspended at times
when the New York Stock Exchange is closed, when trading on said exchange is
closed, when trading on said Exchange is restricted, when an emergency exists as
a result of which disposal by the Fund of securities owned by it is not
reasonably practicable or it is not reasonably practicable for the Fund fairly
to determine the value of its net assets, or during any other period when the
Securities and Exchange Commission, by order, so permits.
4
5
Section 5. Duties of the Fund.
(a) The Fund 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, upon request by the Distributor, one certified
copy of all financial statements prepared for the Fund by independent public
accountants. The Fund shall make available to the Distributor such number of
copies of its prospectus and statement of additional information as the
Distributor shall reasonably request.
(b) The Fund shall such steps as may be necessary to register the
Shares under the Securities Act to the end that there will be available for sale
such number of Shares as the Distributor reasonably may be expected to sell.
(c) The Fund shall use its best efforts to file notices and
maintain the notification regarding an appropriate number of its Shares for sale
under the securities laws of such states as the Distributor and the Fund may
approve. Any such notification may be withheld, terminated or withdrawn by the
Fund at any time in its discretion. As provided in Section 8(c) hereof, the
expense of notices and maintenance of notification shall be borne by the Fund.
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 notification.
(d) The Fund 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 Fund hereunder
are not to be deemed exclusive and nothing herein
5
6
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 relating to the sale of such securities. Neither the
Distributor nor any selected dealer nor any other person is authorized by the
Fund to give any information or to make any representations, other than those
contained in the registration statement or related prospectus and statement of
additional information and any sales literature specifically approved by the
Fund.
(c) The Distributor shall adopt and follow procedures, as
approved by the officers of the Fund, 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 National Association
of Securities Dealers, Inc. (the "NASD"), as such requirements may from time to
time exist.
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 Fund shall approve the forms of agreements
with dealers. Shares sold to selected dealers shall be for resale by such
dealers only at net asset value determined as set forth in Section 3(c) hereof.
The form of agreement with selected dealers to be used in the offering of the
Shares is attached hereto as Exhibit A.
(b) The Distributor shall offer and sell Shares only to such
selected dealers as are members in good standing of the NASD.
6
7
Section 8. Payment of Expenses.
(a) The Fund 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) The Distributor shall be responsible for any payments which
it agrees to make to selected dealers as reimbursement for their expenses
associated with payments of sales commissions to financial consultants or other
persons directly involved in selling Shares. In addition, 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
pursuant to this Agreement. 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 and any expenses of
advertising incurred by the Distributor in connection with such offering.
(c) Each Series shall bear the cost and expenses of filing
notices relating to the Shares of such Series for sale pursuant to this
Agreement, and, if necessary or advisable in connection therewith, of qualifying
the Fund as a broker or dealer, in such states of the United States or other
jurisdictions as shall be selected by the Fund and the Distributor pursuant to
7
8
Section 5(c) hereof and the cost and expenses payable to each such state for
continuing notification or qualification therein until the Fund decides to
discontinue such notification or qualification pursuant to Section 5(c) hereof.
Section 9. Indemnification.
(a) The Fund 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) 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 and statement of additional information, as from
time to time amended and supplemented, or an annual or interim report 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 Fund in connection therewith by or on behalf of the
Distributor; provided, however, that in no case (i) is the indemnity of the Fund
in favor of the Distributor and any such controlling persons to be deemed to
protect the Distributor or any such controlling persons thereof against any
liability to the Fund or its 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 Fund to be liable under its indemnity agreement
contained in this paragraph with respect to any claim made against the
Distributor or any such controlling
8
9
persons, unless the Distributor or such controlling persons, as the case may be,
shall have notified the Fund 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 notice
of such service on any designated agent), but failure to notify the Fund 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 Fund will be entitled to
participate at its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce any such liability, but if the Fund
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. If the Fund elects to assume the defense of
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 Fund 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 Fund shall promptly notify the Distributor of the commencement of any
litigation or proceedings against it or any of its officers or Trustees in
connection with the issuance or sale of any of the Shares.
(b) The Distributor shall indemnify and hold harmless the Fund
and each of its Trustees and officers and each person, if any, who controls the
Fund against any loss, liability, claim, damage or expense described in the
foregoing indemnity contained in subsection (a) of this Section, but only with
respect to statements or omissions made in reliance upon, and in
9
10
conformity with, information furnished to the Fund in writing by or on behalf of
the Distributor for use in connection with the registration statement or related
prospectus and statement of additional information, as from time to time
amended, or the annual or interim reports to shareholders. In case any action
shall be brought against the Fund 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 Fund, and the Fund 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. Duration and Termination of this Agreement. This Agreement
shall become effective as of the date first above written and shall remain in
force until February 1, 2000 and thereafter as to any Series, but only so long
as such continuance is specifically approved at least annually by (i) the
Trustees, or by the vote of a majority of the outstanding voting securities of
the Series, and (ii) by the vote of a majority of those Trustees 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.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Trustees or 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. This Agreement shall automatically terminate in the event of
its assignment.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person" and "interested person," when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act.
Section 11. Amendments of this Agreement. This Agreement may be amended
as to any Series by the parties only if such amendment is specifically approved
by (i) the Trustees, or by
10
11
the vote of a majority of outstanding voting securities of that Series, and (ii)
by the vote of a majority of those Trustees of the Fund 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 12. Governing Law. The provisions of this Agreement shall be
construed and interpreted in accordance with the laws of the State of New York
as at the time in effect and the applicable provisions of the Investment Company
Act. To the extent that the applicable law of the State of New York, or any of
the provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
Section 13. Agreement Binding Only on Fund Property. The Distributor
understands that the obligations of this Agreement are not binding upon any
shareholder of the Fund personally, but bind only the Fund's property; the
Distributor represents that it has notice of the provisions of the Fund's
Restated Declaration of Trust disclaiming shareholder liability for acts or
obligations of the Fund.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
HOTCHKIS AND WILEY VARIABLE TRUST
By____________________________________________
XXXXXXX XXXXX FUNDS DISTRIBUTOR, INC.
By____________________________________________
11
12
EXHIBIT A
HOTCHKIS AND WILEY VARIABLE TRUST
SELECTED DEALER AGREEMENT
Gentlemen:
Xxxxxxx Xxxxx Funds Distributor, Inc. (the "Distributor") has an
agreement with Hotchkis and Wiley Variable Trust, a Massachusetts business trust
(the "Fund"), pursuant to which it acts as the distributor for the sale of
shares of the Fund (collectively, the "Shares"), and as such has the right to
distribute Shares of the Fund for resale. The Fund is an open-end investment
company registered under the Investment Company Act of 1940, as amended, and its
Shares being offered to the public are registered under the Securities Act of
1933, as amended. You have received a copy of the Distribution Agreement between
ourself and the Fund and reference is made herein to certain provisions of such
Distribution Agreement. The terms "Prospectus" and "Statement of Additional
Information" as used herein refer to the prospectus and statement of additional
information, respectively, on file with the Securities and Exchange Commission
which is part of the most recent effective registration statement pursuant to
the Securities Act of 1933, as amended. As principal, we offer to sell to you,
as a member of the Selected Dealers Group, Shares of the Fund upon the following
terms and conditions:
1. In all sales of these Shares to the public you shall act as dealer
for your own account, and in no transaction shall you have any authority to act
as agent for the Fund, for us or for any other member of the Selected Dealers
Group.
2. Orders received from you will be accepted through us only at the
public offering price applicable to each order, as set forth in the current
Prospectus and Statement of Additional Information of the Fund. The procedure
relating to the handling of orders shall be subject to Section 4 hereof and
instructions which we or the Fund shall forward from time to time to you. All
orders are subject to acceptance or rejection by the Distributor or the Fund in
the sole discretion of either. The minimum initial and subsequent purchase
requirements are as set forth in the current Prospectus and Statement of
Additional Information of the Fund.
3. You shall not place orders for any of the Shares unless you have
already received purchase orders for such Shares at the applicable public
offering prices and subject to the terms hereof and of the Distribution
Agreement. You agree that you will not offer or sell any of the Shares except
under circumstances that will result in compliance with the applicable federal
and state securities laws and that in connection with the sales and offers to
sell Shares you will furnish to each person to whom any such sale or offer is
made a copy of the Prospectus and, if requested, the Statement of Additional
Information (as then amended or supplemented) and will not furnish to any person
any information relating to the Shares of the Fund which is inconsistent in any
respect with the information contained in the Prospectus and Statement of
Additional Information (as then amended or supplemented) or cause any
advertisement to be published in any newspaper or posted in any public place
without our consent and the consent of the Fund.
13
4. As a selected dealer, you are hereby authorized (i) to place orders
directly with the Fund for Shares of the Fund to be resold by us to you subject
to the applicable terms and conditions governing the placement of orders by us
set forth in Section 3 of the Distribution Agreement, and (ii) to tender Shares
directly to the Fund or its agent for redemption subject to the applicable terms
and conditions set forth in Section 4 of the Distribution Agreement.
5. You shall not withhold placing orders received from your customers so
as to profit yourself as a result of such withholding: e.g., by a change in the
"net asset value" from that used in determining the offering price to your
customers.
6. No person is authorized to make any representations concerning Shares
of the Fund except those contained in the current Prospectus and Statement of
Additional Information of the Fund and in such printed information subsequently
issued by us or the Fund as information supplemental to such Prospectus and
Statement of Additional Information. In purchasing Shares through us you shall
rely solely on the representations contained in the Prospectus and Statement of
Additional Information and supplemental information above mentioned. Any printed
information which we furnish you other than the Fund's Prospectus, Statement of
Additional Information, periodic reports and proxy solicitation material are our
sole responsibility and not the responsibility of the Fund, and you agree that
the Fund shall have no liability or responsibility to you in these respects
unless expressly assumed in connection therewith.
7. You agree to deliver to each of the purchasers making purchases from
you a copy of the then current Prospectus and, if requested, the Statement of
Additional Information at or prior to the time of offering or sale and you agree
thereafter to deliver to such purchasers copies of the annual and interim
reports and proxy solicitation materials of the Fund. You further agree to
endeavor to obtain proxies from such purchasers. Additional copies of the
Prospectus and Statement of Additional Information, annual or interim reports
and proxy solicitation materials of the Fund will be supplied to you in
reasonable quantities upon request.
8. We reserve the right in our discretion, without notice, to suspend
sales or withdraw the offering of Shares entirely. Each party hereto has the
right to cancel this Agreement upon notice to the other party.
9. We shall have full authority to take such action as we may deem
advisable in respect of all matters pertaining to the continuous offering. We
shall be under no liability to you except for lack of good faith and for
obligations expressly assumed by us herein. Nothing contained in this paragraph
is intended to operate as, and the provisions of this paragraph shall not in any
way whatsoever constitute, a waiver by you of compliance with any provision of
the Securities Act of 1933, as amended, or of the rules and regulations of the
Securities and Exchange Commission issued thereunder.
10. You represent that you are a member of the National Association of
Securities Dealers, Inc. and we both hereby agree to abide by the Conduct Rules
of such Association.
2
14
11. Upon application to us, we will inform you as to the states in which
we believe notifications of the intention to sell the Shares have been duly
filed, or where no such notification is required, but we assume no
responsibility or obligation as to your right to sell Shares in any
jurisdiction. We will file with the Department of State in New York a Further
State Notice with respect to the Shares, if necessary.
12. All communications to us should be sent to the address below. Any
notice to you shall be duly given if mailed or telegraphed to you at the address
specified by you below.
13. Your first order placed pursuant to this Agreement for the purchase
of Shares of the Fund will represent your acceptance of this Agreement.
XXXXXXX XXXXX FUNDS DISTRIBUTOR, INC.
By________________________________________
(Authorized Signature)
Please return one signed copy of this Agreement to:
XXXXXXX XXXXX FUNDS DISTRIBUTOR, INC.
Xxx 0000
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Accepted:
Firm Name:
------------------------------------------
By:
-------------------------------------------------
Address:
--------------------------------------------
-----------------------------------------------------
Date:
-----------------------------------------------
3
