VAM INSTITUTIONAL FUNDS, INC.
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made and entered into as of the 30th day of April,
1997, by and between VAM Institutional Funds, Inc., a Minnesota corporation (the
"Company"), for and on behalf of each series of the Company (each series is
referred to hereinafter as a "Fund"), and Xxxxxxxxx Xxxxxxx LLC, a Minnesota
limited liability company (the "Underwriter"). This Agreement shall apply to
each class of shares offered by the following Funds:
Xxxxxx Xxxxxx & Xxxxxx Growth and Income Fund (currently
offering Classes A, B and C shares)
VAM Financial Institutions Intermediate Duration Portfolio
(currently offering a single class of shares)
VAM Financial Institutions Core Portfolio (currently offering
a single class of shares)
WITNESSETH:
1. Underwriting Services. The Company, on behalf of each Fund, hereby
engages the Underwriter, and the Underwriter hereby agrees to act, as principal
underwriter for each Fund in the sale and distribution of the shares of each
class of such Fund to the public, either through dealers or otherwise. The
Underwriter agrees to offer such shares for sale at all times when such shares
are available for sale and may lawfully be offered for sale and sold.
2. Sale of Shares. The shares of each Fund are to be sold only on the
following terms:
(a) All subscriptions, offers, or sales shall be subject to
acceptance or rejection by the Company. Any offer for or sale of shares
shall be conclusively presumed to have been accepted by the Company if
the Company shall fail to notify the Underwriter of the rejection of
such offer or sale prior to the computation of the net asset value of
such shares next following receipt by the Company of notice of such
offer or sale.
(b) No share of a Fund shall be sold by the Underwriter (i)
for any consideration other than cash or, pursuant to any exchange
privilege provided for by the applicable currently effective Prospectus
or Statement of Additional Information (hereinafter referred to
collectively as the "Prospectus"), shares of any other investment
company for which the Underwriter acts as an underwriter, or (ii)
except in instances otherwise provided for by the applicable currently
effective Prospectus, for any amount less than the public offering
price per share, which shall be determined in accordance with the
applicable currently effective Prospectus.
(c) In connection with certain sales of shares of Xxxxxx
Xxxxxx & Xxxxxx Growth and Income Fund ("Growth and Income Fund"), a
contingent deferred sales charge will be imposed in the event of a
redemption transaction occurring within a certain period of time
following such a purchase, as described in the applicable currently
effective Prospectus and Statement of Additional Information.
(d) The front-end sales charge, if any, for any class of
shares of Growth and Income Fund may, at the discretion of the Company
and the Underwriter, be reduced or eliminated as permitted by the
Investment Company Act of 1940, and the rules and regulations
thereunder, as they may be amended from time to time (the "1940 Act"),
provided that such reduction or elimination shall be set forth in the
Prospectus for such class, and provided that the Company shall in no
event receive for any shares sold an amount less than the net asset
value thereof. In addition, any contingent deferred sales charge for
any class of shares of Growth and Income Fund may, at the discretion of
the Company and the Underwriter, be reduced or eliminated in accordance
with the terms of an exemptive order received from, or any applicable
rule or rules promulgated by, the Securities and Exchange Commission,
provided that such reduction or elimination shall be set forth in the
Prospectus for such class of shares.
(e) The Underwriter shall require any securities dealer
entering into a selected dealer agreement with the Underwriter to
disclose to prospective investors the existence of all available
classes of shares of a Fund and to determine the suitability of each
available class as an investment for each such prospective investor.
3. Registration of Shares. The Company agrees to make prompt and
reasonable efforts to effect and keep in effect, at its expense, the
registration or qualification of each Fund's shares for sale in such
jurisdictions as the Company may designate.
4. Information to be Furnished to the Underwriter. The Company agrees
that it will furnish the Underwriter with such information with respect to the
affairs and accounts of the Company (and each Fund or class thereof) as the
Underwriter may from time to time reasonably require, and further agrees that
the Underwriter, at all reasonable times, shall be permitted to inspect the
books and records of the Company.
5. Allocation of Expenses. During the period of this Agreement, the
Company shall pay or cause to be paid all expenses, costs and fees incurred by
the Company which are not assumed by the Underwriter. The Underwriter agrees to
provide, and shall pay costs which it incurs in connection with providing,
administrative or accounting services to shareholders of each Fund (such costs
are referred to as "Shareholder Servicing Costs"). Shareholder Servicing Costs
include all expenses of the Underwriter incurred in connection with providing
administrative or accounting services to shareholders of each Fund, including,
but not limited to, an allocation of the Underwriter's overhead and payments
made to persons, including employees of the Underwriter, who respond to
inquiries of shareholders regarding their ownership of Fund shares, or who
provide other administrative or accounting services not otherwise required to be
provided by the applicable Fund's investment adviser or transfer agent. The
Underwriter shall also pay all costs of distributing the shares of each Fund
("Distribution Expenses"). Distribution Expenses include, but are not limited
to, initial and ongoing sales compensation (in addition to sales loads) paid to
investment executives of the Underwriter and to other broker-dealers and
participating financial institutions; expenses incurred in the printing of
prospectuses, statements of additional information and reports used for sales
purposes; expenses of preparation and distribution of sales literature; expenses
of advertising of any type; an allocation of the Underwriter's overhead;
payments to and expenses of persons who provide support services in connection
with the distribution of Fund shares; and other distribution-related expenses.
6. Compensation to the Underwriter
(a) As compensation for all of its services provided and its costs
assumed under this Agreement, the Underwriter shall receive the following forms
and amounts of compensation in connection with sales of shares of Growth and
Income Fund:
(i) The Underwriter shall be entitled to receive or retain any
front-end sales charge imposed in connection with sales of shares of
such Fund, as set forth in the applicable current Prospectus. Up to the
entire amount of such front-end sales charge may be reallowed by the
Underwriter to broker-dealers and participating financial institutions
in connection with their sale of Fund shares. The amount of the
front-end sales charge (if any) may be retained or deducted by the
Underwriter from any sums received by it in payment for shares so sold.
If such amount is not deducted by the Underwriter from such payments,
such amount shall be paid to the Underwriter by the Company not later
than five business days after the close of any calendar quarter during
which any such sales were made by the Underwriter and payment received
by the Company.
(ii) The Underwriter shall be entitled to receive or retain
any contingent deferred sales charge imposed in connection with any
redemption of shares of such Fund, as set forth in the applicable
current Prospectus.
(iii) Pursuant to the Company's Plan of Distribution adopted
on behalf of such Fund in accordance with Rule 12b-1 under the 1940 Act
(the "Plan"):
(A) Class A of such Fund is obligated to pay the
Underwriter a total fee in connection with the servicing of
shareholder accounts of such class and in connection with
distribution-related services provided in respect of such
class, calculated and payable quarterly, at the annual rate of
.25% of the value of the average daily net assets of such
class. All or any portion of such total fee may be payable as
a Shareholder Servicing Fee, and all or any portion of such
total fee may be payable as a Distribution Fee, as determined
from time to time by the Company's Board of Directors. Until
further action by the Board of Directors, all of such fee
shall be designated and payable as a Shareholder Servicing
Fee.
(B) Class B of such Fund is obligated to pay the
Underwriter a total fee in connection with the servicing of
shareholder accounts of such class and in connection with
distribution-related services provided in respect of such
class, calculated and payable quarterly, at the annual rate of
1.00% of the value of the average daily net assets of such
class. All or any portion of such total fee may be payable as
a Shareholder Servicing Fee, and all or any portion of such
total fee may be payable as a Distribution Fee, as determined
from time to time by the Company's Board of Directors. Until
further action by the Board of Directors, a portion of such
total fee equal to .25% per annum of the average net assets of
such class shall be designated and payable as a Shareholder
Servicing Fee and the remainder of such fee shall be
designated as a Distribution Fee.
(C) Class C of such Fund is obligated to pay the
Underwriter a total fee in connection with the servicing of
shareholder accounts of such class and in connection with
distribution-related services provided in respect of such
class, calculated and payable quarterly, at the annual rate of
1.00% of the value of the average daily net assets of such
class. All or any portion of such total fee may be payable as
a Shareholder Servicing Fee, and all or any portion of such
total fee may be payable as a Distribution Fee, as determined
from time to time by the Company's Board of Directors. Until
further action by the Board of Directors, a portion of such
total fee equal to .25% per annum of the average daily net
assets of such class shall be designated and payable as a
Shareholder Servicing Fee and the remainder of such fee shall
be designated as a Distribution Fee.
(b) With respect to VAM Financial Institutions Intermediate Duration
Portfolio and VAM Financial Institutions Core Portfolio (the "VFI Funds") it is
understood and agreed by the parties hereto that the sale of Fund shares will
benefit the Underwriter, which is an affiliate of the investment sub-adviser for
such Funds, and therefore the Underwriter will receive no additional
compensation for services it performs hereunder in connection with sales of Fund
shares.
In connection with the Underwriter's ongoing servicing and/or
maintenance of VFI Funds shareholder accounts, each Fund is obligated, pursuant
to the Company's Service Plan, to pay the Underwriter a service fee, calculated
and payable monthly, at the annual rate of .05% of the value of the average
daily net assets of such Fund.
(c) Average daily net assets shall be computed in accordance with the
applicable currently effective Prospectus. Amounts payable to the Underwriter
under the Rule 12b-1 Plan may exceed or be less than the Underwriter's actual
Distribution Expenses and Shareholder Servicing Costs. Similarly, amounts
payable to the Underwriter under the Service Plan may exceed or be less than the
Underwriter's actual Shareholder Servicing Costs. In the event such costs exceed
amounts payable to the Underwriter under the Rule 12b-1 Plan or the Service
Plan, the Underwriter shall not be entitled to reimbursement by the Company.
(d) In each year during which this Agreement remains in effect, the
Underwriter will prepare and furnish to the Board of Directors of the Company,
and the Board will review, on a quarterly basis, written reports that set forth
the amounts expended under this Agreement, the Rule 12b-1 Plan and the Service
Plan, on a class by class basis as applicable, and the purposes for which those
expenditures were made.
7. Limitation of the Underwriter's Authority. The Underwriter shall be
deemed to be an independent contractor and, except as specifically provided or
authorized herein, shall have no authority to act for or represent any Fund or
the Company.
8. Subscription for Shares--Refund for Canceled Orders. The Underwriter
shall subscribe for the shares of a Fund only for the purpose of covering
purchase orders already received by it or for the purpose of investment for its
own account. In the event that an order for the purchase of shares of a Fund is
placed with the Underwriter by a customer or dealer and subsequently canceled,
the Underwriter shall forthwith cancel the subscription for such shares entered
on the books of the Fund, and, if the Underwriter has paid the Fund for such
shares, shall be entitled to receive from the Fund in refund of such payment the
lesser of:
(a) the consideration received by the Fund for said shares; or
(b) the net asset value of such shares at the time of
cancellation by the Underwriter.
9. Indemnification of the Company. The Underwriter agrees to indemnify
each Fund and the Company against any and all litigation and other legal
proceedings of any kind or nature and against any liability, judgment, cost, or
penalty imposed as a result of such litigation or proceedings in any way arising
out of or in connection with the sale or distribution of the shares of such Fund
by the Underwriter. In the event of the threat or institution of any such
litigation or legal proceedings against any Fund, the Underwriter shall defend
such action on behalf of the Fund or the Company at the Underwriter's own
expense, and shall pay any such liability, judgment, cost, or penalty resulting
therefrom, whether imposed by legal authority or agreed upon by way of
compromise and settlement; provided, however, the Underwriter shall not be
required to pay or reimburse a Fund for any liability, judgment, cost, or
penalty incurred as a result of information supplied by, or as the result of the
omission to supply information by, the Company to the Underwriter, or to the
Underwriter by a director, officer, or employee of the Company who is not an
"interested person," as defined in the provisions of the 1940 Act, of the
Underwriter, unless the information so supplied or omitted was available to the
Underwriter or the Fund's investment adviser without recourse to the Fund or the
Company or any such person referred to above.
10. Freedom to Deal With Third Parties. The Underwriter shall be free
to render to others services of a nature either similar to or different from
those rendered under this contract, except such as may impair its performance of
the services and duties to be rendered by it hereunder.
11. Effective Date, Duration and Termination of Agreement.
(a) The effective date of this Agreement is set forth in the first
paragraph of this Agreement. Unless sooner terminated as hereinafter provided,
this Agreement shall continue in effect for a period of one year after the date
of its execution, and from year to year thereafter, but only so long as such
continuance is specifically approved at least annually by a vote of the Board of
Directors of the Company, and of the directors who are not "interested persons"
(as defined in the provisions of the 0000 Xxx) of the Company and have no direct
or indirect financial interest in the operation of the Plan or in any agreement
related to the Plan (including, without limitation, this Agreement), cast in
person at a meeting called for the purpose of voting on this Agreement.
(b) This Agreement may be terminated at any time with respect to any
Fund or class thereof without the payment of any penalty, by the vote of a
majority of the members of the Board of Directors of the Company who are not
"interested persons" (as defined in the provisions of the 0000 Xxx) of the
Company and have no direct or indirect financial interest in the operation of
the Plan or in any agreement related to the Plan (including, without limitation,
this Agreement), or by the vote of a majority of the outstanding voting
securities of such Fund (or class thereof), or by the Underwriter, upon 60 days'
written notice to the other party.
(c) This Agreement shall automatically terminate in the event of its
"assignment" (as defined by the provisions of the 1940 Act).
(d) Wherever referred to in this Agreement, the vote or approval of the
holders of a majority of the outstanding voting securities of a Fund (or class
thereof) shall mean the lesser of (i) the vote of 67% or more of the voting
securities of such Fund (or class thereof) present at a regular or special
meeting of shareholders duly called, if more than 50% of the Fund's (or class's,
as applicable) outstanding voting securities are present or represented by
proxy, or (ii) the vote of more than 50% of the outstanding voting securities of
such Fund (or class thereof).
12. Amendments to Agreement. No material amendment to this Agreement
shall be effective until approved by the Underwriter and by vote of a majority
of the Board of Directors of the Company who are not interested persons of the
Underwriter.
13. Notices. Any notice under this Agreement shall be in writing,
addressed, delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate in writing for receipt of such notice.
IN WITNESS WHEREOF, the Company and the Underwriter have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
VAM INSTITUTIONAL FUNDS, INC.
By /s/ Xxxx X. Xxxx
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Its President
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XXXXXXXXX XXXXXXX LLC
By /s/ Xxxxxx X. Xxxxx
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Its President
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