Exhibit 5(b)
DISTRIBUTION AGREEMENT
AGREEMENT made this 29th day of September 2006 between BLACKROCK VARIABLE
SERIES FUNDS, INC., a corporation organized under the laws of Maryland (the
"Company"), and FAM DISTRIBUTORS, INC., a Delaware corporation ("FAMD").
W I T N E S S E T H:
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended to date (the "Investment Company Act"), as a diversified
open-end investment company and it is affirmatively in the interest of the
Company to offer its shares for sale continuously to the separate accounts (the
"Separate Accounts") of insurance companies (the "Insurance Companies") pursuant
to a currently effective prospectus (the "Prospectus") under the Securities Act
of 1933 (the "Securities Act"); and
WHEREAS, the Company comprises sixteen separate funds (the "Funds"), each
of which pursues its own investment objective through separate investment
policies, and may in the future comprise one or more additional funds; and
WHEREAS, each of the Funds may offer one or more separate classes of
shares of common stock, par value $.10 per share; and
WHEREAS, FAMD 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 Company and FAMD wish to enter into an agreement with each
other with respect to the continuous offering to the Insurance Companies for
their Separate Accounts of the Class I shares, Class II shares and Class III
shares of the Funds (the "Shares") in order to promote the growth of the Funds
and facilitate the distribution of their Shares.
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of FAMD. The Company hereby appoints FAMD as the
principal underwriter and distributor of the Funds to sell their Shares to the
Insurance Companies for their Separate Accounts and FAMD hereby accepts such
appointment. The Company, during the term of this Agreement, shall sell its
Shares to FAMD upon the terms and conditions set forth below.
Section 2. Exclusive Nature of Duties. FAMD shall be the exclusive
representative of the Company to act as principal underwriter and distributor of
the Shares, except that:
(a) BlackRock Distributors, Inc. may also act as principal underwriter and
distributor of the Shares.
Section 3. Purchase of Shares from the Company.
(a) The Company will offer its Shares and FAMD shall have the right to buy
from the Company the Shares needed, but not more than the Shares needed (except
for clerical errors in transmission) to fill unconditional orders for the Shares
placed with FAMD by the Insurance Companies for their Separate Accounts. The
price which FAMD shall pay for the Shares so purchased from the Company shall be
the net asset value per share, determined as set forth in Section 3(c) hereof.
(b) The Shares are to be resold by FAMD to the Insurance Companies for
their Separate Accounts at the net asset value per share.
(c) The net asset value of the Shares shall be determined as of fifteen
minutes following the close of trading on each day the New York Stock Exchange
is open for business, in accordance with the method set forth in the Prospectus
of the Company and guidelines established by the Board of Directors of the
Company. The Company may also cause the net asset value of the Shares to be
determined in substantially the same manner or estimated in such manner and as
of such other hour or hours as may from time to time be agreed upon in writing
by the Company and FAMD. All payments to the Company hereunder shall be made in
the manner set forth in Section 3(e).
(d) The Company shall have the right to suspend the sale of the Shares at
times when redemption of any Shares is suspended pursuant to the condition set
forth in Section 4(b) hereof. The Company shall also have the right to suspend
the sale of the 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 extraordinary event
which, in the judgment of the Company, makes it impracticable to sell Shares.
(e) The Company, or any agent of the Company designated in writing by the
Company, shall be promptly advised of all purchase orders for the Shares
received by FAMD. The Company (or its agent) will confirm orders upon their
receipt, will make appropriate book entries and, upon receipt by the Company (or
its agent) of payment therefor, will deliver deposit receipts or certificates
for such Shares pursuant to the instructions of FAMD. Payment shall be made to
the Company in New York Clearing House funds. FAMD agrees to cause such payment
and such instructions to be delivered promptly to the Company (or its agent).
Section 4. Repurchase or Redemption of Shares by the Company.
(a) Any of the outstanding Shares may be tendered for redemption at any
time, and the Company agrees to repurchase or redeem any such Shares so tendered
in accordance with its obligations as set forth in Article VII of its Articles
of Incorporation, as amended from time to time, and in accordance with the
applicable provisions set forth in the Prospectus of the Company. The price to
be paid to redeem or repurchase Shares shall be equal to the net asset value per
share calculated in accordance with the provisions of Section 3(c) hereof. All
payments by the Company hereunder shall be made in the manner set forth below.
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The Company shall pay the total amount of the redemption price as defined
in the above paragraph pursuant to the instructions of FAMD in New York Clearing
House funds on or before the third business day subsequent to its having
received the notice of redemption in proper form.
(b) Redemption of Shares of a Fund or payment therefor may 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 securities or determination of the
net asset value of such 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.
Section 5. Duties of the Company.
(a) The Company shall furnish to FAMD copies of all information, financial
statements and other papers which FAMD may reasonably request for use in
connection with the distribution of Shares of the Company, and this shall
include one certified copy, upon request by FAMD, of all financial statements
prepared for the Company by independent public accountants. The Company shall
make available to FAMD such number of copies of its Prospectus as FAMD shall
reasonably request.
(b) The Company shall take, from time to time, but subject to the
necessary approval of its shareholders, all necessary action to fix the number
of its authorized Shares and to register Shares under the Securities Act, to the
end that there will be available for sale such number of Shares as investors may
reasonably be expected to purchase.
(c) The Company shall use its best efforts to qualify and maintain the
qualification of an appropriate number of the Shares for sale under the
securities laws of such states as FAMD and the Company may approve, if such
qualification is required by such securities laws. Any such qualification may be
withheld, terminated or withdrawn by the Company at any time in its discretion.
As provided in Section 7(b) hereof, the expense of qualification and maintenance
of qualification of the Shares shall be borne by the Company for the account of
each Fund. FAMD shall furnish such information and other material relating to
its affairs and activities as may be required by the Company in connection with
such qualification.
(d) The Company will furnish, in reasonable quantities upon request by
FAMD, copies of annual and interim reports of the Company.
Section 6. Duties of FAMD.
(a) FAMD shall devote reasonable time and effort to effect sales of Shares
of the Company, but shall not be obligated to sell any specific number of
Shares. The services of FAMD hereunder are not to be deemed exclusive and
nothing herein contained shall prevent FAMD from entering into distribution
arrangements with other investment companies so long as the performance of its
obligations hereunder is not impaired thereby.
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(b) In selling the Shares of the Company, FAMD 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 FAMD nor any Insurance Company nor any other person is authorized by the
Company to give any information or to make any representations, other than those
contained in the registration statement or related Prospectus and any sales
literature specifically approved by the Company.
(c) FAMD shall require each Insurance Company to which it sells, and which
purchases, Shares to enter into a Sub-Agreement with the Company substantially
in the form attached to the Distribution Plan agreed to by FAMD in accordance
with Rule 12b-1 under the Investment Company Act, which authorizes the payment
of a distribution fee to such Insurance Company.
Section 7. Payment of Expenses.
(a) The Company shall bear all costs and expenses of the Company relating
to the Funds, including fees and disbursements of its counsel and auditors, in
connection with the preparation and filing of any required registration
statements and prospectuses under the Investment Company Act, the Securities
Act, and all amendments and supplements thereto, and the expense of preparing,
printing, mailing and otherwise, distributing prospectuses, annual or interim
reports to shareholders and proxy materials.
(b) The Company shall bear, for the account of the Funds, the costs and
expenses of qualification of the Shares for sale, and, if necessary or advisable
in connection therewith, the Company shall bear the cost and expense of
qualifying the Company as a broker or dealer, in such states of the United
States or other jurisdictions as shall be selected by the Company and FAMD
pursuant to Section 5(c) hereof and the cost and expenses payable to each such
state for continuing qualification therein until the Company decides to
discontinue such qualification pursuant to Section 5(c) hereof.
Section 8. Indemnification.
(a) The Company shall, for the account of the Funds, indemnify and hold
harmless FAMD and each person, if any, who controls FAMD 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, as from time to time amended and supplemented,
or the annual or interim reports to shareholders of the Company relating to the
Funds, 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 Company in
connection therewith by or on behalf of FAMD; provided, however that in no case
(i) is the indemnity of the Company in favor of FAMD and any such controlling
persons to be deemed to protect FAMD or any such
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controlling persons thereof against any liability to the Company or its security
holders to which FAMD or any such controlling persons would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of its obligations
and duties under this Agreement; or (ii) is the Company to be liable under its
indemnity agreement contained in this paragraph with respect to any claim made
against FAMD or any such controlling persons, unless FAMD or such controlling
persons, as the case may be, shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information or the nature of the claim shall have been served upon FAMD or such
controlling persons (or after FAMD or such controlling persons shall have
received notice of such service on any designated agent), but failure to notify
the Company 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 Company 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 Company elects to assume the defense, such defense shall be conducted
by counsel chosen by it and satisfactory to FAMD or such controlling person or
persons, defendant or defendants in the suit. In the event the Company elects to
assume the defense of any such suit and retain such counsel, FAMD 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 Company does not elect to assume the defense of any such suit, it will
reimburse FAMD 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 Company shall promptly notify FAMD 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 the Shares.
(b) FAMD shall indemnify and hold harmless the Company and each of its
directors and officers and each person, if any, who controls the Company 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 conformity with,
information furnished to the Company with respect to the Funds in writing by or
on behalf of FAMD 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 Company
or any person so indemnified, in respect of which indemnity may be sought
against FAMD, FAMD shall have the rights and duties given to the Company, and
the Company and each person so indemnified shall have the rights and duties
given to FAMD by the provisions of subsection (a) of this Section 8.
Section 9. Duration and Termination of this Agreement. This Agreement
shall become effective as of the date first above written and shall remain in
force as to each Fund until the second anniversary and thereafter, but only so
long as such continuance is specifically approved at least annually by (i) the
Board of Directors of the Company, or by the vote of a majority of the
outstanding voting securities of the Fund, cast in person or by proxy, and (ii)
a majority of those directors 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 upon such approval.
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This Agreement may be terminated at any time as to a Fund, without the
payment of any penalty, by the Board of Directors of the Company or by vote of a
majority of the outstanding voting securities of the Fund, or by the Adviser, 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 10. Amendments of this Agreement. This Agreement may be amended by
the parties only if such amendment is specifically approved by (i) the Board of
Directors of the Company, or by the vote of a majority of outstanding voting
securities of the Funds affected by the amendment, and (ii) a majority of those
directors of the Company 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 11. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of New York and the applicable provisions of the
Investment Company Act. To the extent the applicable law of the State of New
York, or any of the provisions herein, conflicts with the applicable provisions
of the Investment Company Act, the latter shall control.
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IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers, all as of the day
and the year first above written.
BLACKROCK VARIABLE SERIES FUNDS, INC.
By:
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Name: Xxxxxx X. Xxxxx
Title: Vice President & Treasurer
FAM DISTRIBUTORS, INC.
By:
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Name:
Title:
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