Exhibit 6
DISTRIBUTION AGREEMENT
BETWEEN
ACORN INVESTMENT TRUST
AND
WAM BROKERAGE SERVICES, L.L.C.
THIS DISTRIBUTION AGREEMENT (the "Agreement") is made as of this 1st day of
January, 1998 by and between ACORN INVESTMENT TRUST, a business trust organized
and existing under the laws of the Commonwealth of Massachusetts ("Acorn"), and
WAM BROKERAGE SERVICES, L.L.C., a limited liability company organized and
existing under the laws of the State of Illinois ("WAM BD").
RECITALS:
WHEREAS, Acorn is engaged in business as an open-end management investment
company registered under the Investment Company Act of 1940, as amended ("1940
Act");
WHEREAS, WAM BD is registered as a broker-dealer under the Securities
Exchange Act of 1934, as amended ("1934 Act"), and the laws of each state
(including the District of Columbia and Puerto Rico) in which it engages in
business to the extent such law requires, and is a member of the National
Association of Securities Dealers ("NASD") (such registrations and membership
are referred to collectively as the "Registrations");
WHEREAS, Acorn desires WAM BD to act as the distributor in the public
offering of its shares of beneficial interest (hereinafter called "Shares")
which currently are divided into three series, Acorn Fund, Acorn International
and Acorn USA, and including shares of any additional series which may from time
to time be offered for sale to the public (hereinafter called, collectively, the
"Funds" and, individually, the "Fund");
WHEREAS, Acorn has entered into an investment advisory agreement with
Xxxxxx Asset Management, L.P. ("WAM"), an affiliate of WAM BD, pursuant to which
WAM has agreed to pay all expenses incurred in the sale and promotion of shares
of Acorn;
NOW, THEREFORE, the parties hereto agree as follows:
1. Appointment. Acorn appoints WAM BD to act as principal underwriter
(as such term is defined in Section 2(a)(29) of the 1940 Act of its Shares.
2. Delivery of Acorn Documents. Acorn has furnished WAM BD with properly
certified or authenticated copies of each of the following in effect on the date
hereof and shall furnish WAM BD from time to time properly certified or
authenticated copies of all amendments or supplements thereto:
(a) Agreement and Declaration of Trust;
(b) By-Laws;
(c) Resolutions of its Board of Trustees (hereinafter referred to as
the "Board") selecting WAM BD as distributor and approving this
form of agreement and authorizing its execution.
Acorn shall furnish WAM BD promptly with copies of any registration
statements filed by it with the Securities and Exchange Commission ("SEC") under
the Securities Act of 1933 (the "1933 Act") or the 1940 Act, together with any
financial statements and exhibits included therein, and all amendments or
supplements thereto hereafter filed.
Acorn also shall furnish WAM BD such other certificates or documents which
WAM BD may from time to time, in its discretion, reasonably deem necessary or
appropriate in the proper performance of its duties.
3. Solicitation of Orders for Purchase of Shares.
---------------------------------------------
(a) Subject to the provisions of Paragraphs 5, 6 and 8 hereof, and to such
minimum purchase requirements as may from time to time be indicated in Acorn's
Prospectus, WAM BD is authorized to solicit, as agent on behalf of Acorn,
unconditional orders for purchases of Acorn's Shares authorized for issuance and
registered under the 1933 Act, provided that:
(1) WAM BD shall act solely as a disclosed agent on behalf of and for
the account of Acorn;
(2) Acorn's transfer agent shall receive directly from investors all
payments for the purchase of Acorn's Shares and also shall pay
directly to shareholders amounts due to them for the redemption
or repurchase of all Acorn's Shares, with WAM BD having no rights
or duties to accept such payment or to effect such redemptions or
repurchases; if a payment for the purchase of Acorn's Shares be
delivered to WAM BD, such payment shall not be negotiated by WAM
BD but shall be delivered as soon as reasonably practicable to
Acorn's transfer agent;
(3) WAM BD shall confirm all orders received for purchase of Acorn's
Shares which confirmation shall clearly state (i) that WAM BD is
acting as agent of Acorn in the transaction, (ii) that all
certificates for redemption, remittances and registration
instructions should be sent directly to Acorn and (iii) Acorn's
mailing address;
(4) WAM BD shall have no liability for payment for purchases of
Acorn's Shares it sells as agent; and
2
(5) Each order to purchase Shares of Acorn received by WAM BD shall
be subject to acceptance by an officer of Acorn in Chicago and
entry of the order on Acorn's records or shareholder accounts and
is not binding until so accepted and entered.
The purchase price to the public of Acorn's Shares shall be the public
offering price as defined in Paragraph 7 hereof.
(b) In consideration of the rights granted to WAM BD under this Agreement,
WAM BD will use its best efforts (but only in states in which WAM BD may
lawfully do so) to solicit from investors unconditional orders to purchase
Shares of Acorn. Acorn shall make available to WAM BD, at WAM BD's cost, such
number of copies of Acorn's currently effective Prospectus and Statement of
Additional Information and copies of all information, financial statements and
other papers which WAM BD may reasonably request for use in connection with the
distribution of Shares.
4. Selling Agreements. WAM BD is authorized, as agent on behalf of Acorn,
to enter into agreements with other broker-dealers providing for the
solicitation of unconditional orders for purchases of Acorn's Shares authorized
for issuance and registered under the 1933 Act. All such agreements shall be
either in the form of agreement attached hereto or in such other form as may be
approved by the officers of Acorn ("Selling Agreement"). All solicitations made
by other broker-dealers pursuant to a Selling Agreement shall be subject to the
same terms as are applied by this Agreement to solicitations made by WAM BD.
5. Solicitation of Orders to Purchase Shares by Acorn. The rights granted
to WAM BD shall be non-exclusive in that Acorn reserves the right to solicit
purchases from, and sell its Shares to, investors. Further, Acorn reserves the
right to issue Shares in connection with the merger or consolidation of any
other investment company, trust or personal holding company with Acorn, or
Acorn's acquisition, by the purchase or otherwise, of all or substantially all
of the assets of an investment company, trust or personal holding company, or
substantially all of the outstanding shares or interests of any such entity. Any
right granted to WAM BD to solicit purchases of Shares will not apply to Shares
that may be offered by Acorn to shareholders by virtue of their being
shareholders of Acorn.
6. Shares Covered by this Agreement. This Agreement relates to the
solicitation of orders to purchase Shares that are duly authorized and
registered and available for sale by Acorn, including redeemed or repurchased
Shares if and to the extent that they may be legally sold and if, but only if,
Acorn authorizes WAM BD to sell them. If Acorn establishes one or more series
in addition to Acorn Fund, Acorn International and Acorn USA and wishes to
appoint WAM BD as principal underwriter of the shares of beneficial interest of
such series, Acorn shall so notify WAM BD in writing, and if WAM BD agrees in
writing to provide such services and WAM acknowledges that agreement by WAM BD,
the shares of beneficial interest of such series shall become Shares under the
Agreement.
7. Public Offering Price. All solicitations by WAM BD pursuant to this
Agreement shall be for orders to purchase Shares of Acorn at the public offering
price. The public offering
3
price for each accepted subscription for Acorn's Shares will be the net asset
value per share of the particular Fund subscribed for next determined by Acorn
after such subscription is accepted by Acorn or by a person authorized by Acorn
to accept such subscriptions. The net asset value per share shall be determined
in the manner provided in Acorn's Agreement and Declaration of Trust as now in
effect or as they may be amended, and as reflected in Acorn's then current
Prospectus and Statement of Additional Information.
8. Suspension of Sales. If and whenever the determination of a Fund's net
asset value is suspended and until such suspension is terminated, no further
orders for Shares of such Fund shall be accepted by Acorn except such
unconditional orders placed with Acorn and accepted by it before the suspension.
In addition, Acorn reserves the right to suspend sales of Shares if, in the
judgment of the Board of Acorn, it is in the best interest of Acorn to do so,
such suspension to continue for such period as may be determined by Acorn's
Board; and in that event, (i) at the direction of Acorn, WAM BD shall suspend
its solicitation of orders to purchase Shares of Acorn until otherwise
instructed by Acorn and (ii) no orders to purchase Shares shall be accepted by
Acorn while such suspension remains in effect unless otherwise directed by its
Board.
9. Authorized Representations. Acorn is not authorized by WAM BD to give
on behalf of WAM BD any information or to make any representations other than
the information and representations contained in Acorn's registration statement
filed with the SEC under the 1933 Act and/or the 1940 Act as it may be amended
from time to time.
WAM BD is not authorized by Acorn to give on behalf of Acorn or any Fund
any information or to make any representations in connection with the sale of
Shares other than the information and representations contained in Acorn's
registration statement filed with the SEC under the 1933 Act and/or the 1940
Act, covering Shares, as such registration statement or Acorn's prospectus may
be amended or supplemented from time to time, or contained in shareholder
reports or other material that may be prepared by or on behalf of Acorn or
approved by Acorn for WAM BD's use. No person other than WAM BD is authorized to
act as principal underwriter (as such term is defined in the 1940 Act, as
amended) for Acorn.
10. Registration of Additional Shares. Acorn hereby agrees to register an
indefinite number of Shares pursuant to Rule 24f-2 under the 1940 Act, as
amended. Acorn will, in cooperation with WAM BD, take such action as may be
necessary from time to time to permit such Shares (so registered or otherwise
qualified for sale under the 0000 Xxx) to be sold in any state mutually
agreeable to WAM BD and Acorn, and to maintain such qualification; provided,
however, that nothing herein shall be deemed to prevent Acorn from taking
action, without approval of WAM BD, to permit its Shares to be sold in any state
it deems appropriate.
11. Conformity With Law. WAM BD agrees that in soliciting orders to
purchase Shares it shall duly conform in all respects with applicable federal
and state laws and the rules and regulations of the NASD. WAM BD will use its
best efforts to maintain its Registrations in good standing during the term of
this Agreement and will promptly notify Acorn and WAM, in the event of the
suspension or termination of any of the Registrations.
4
12. Independent Contractor. WAM BD shall be an independent contractor and
neither WAM BD, nor any of its members, managers, officers, directors, employees
or representatives is or shall be an employee of Acorn in the performance of WAM
BD's duties hereunder. WAM BD shall be responsible for its own conduct and the
employment, control and conduct of its agents and employees and for injury to
such agents or employees or to others through its agents and employees and
agrees to pay all employee taxes thereunder.
13. Indemnification. WAM BD agrees to indemnify and hold harmless Acorn
and each of the members of its Board and its officers, employees and
representatives and each person, if any, who controls Acorn within the meaning
of Section 15 of the 1933 Act against any and all losses, liabilities, damages,
claims and expenses (including the reasonable costs of investigating or
defending any alleged loss, liability, damage, claim or expense and reasonable
legal counsel fees incurred in connection therewith) to which Acorn or such of
the members of its Board and of its officers, employees, representatives, or
controlling person or persons may become subject under the 1933 Act, under any
other statute, at common law, or otherwise, arising out of the acquisition or
sale of any Shares of Acorn by any person which (i) may be based upon any
wrongful act by WAM BD or any of WAM BD's members, managers, directors,
officers, employees or representatives, or (ii) may be based upon any untrue
statement or alleged untrue statement of a material fact contained in a
registration statement, Prospectus, Statement of Additional Information,
shareholder report or other information covering Shares of Acorn filed or made
public by Acorn or any amendment thereof or supplement thereto or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading if such
statement or omission was made in reliance upon information furnished to Acorn
by WAM BD in writing. In no case (i) is WAM BD's indemnity in favor of Acorn, or
any person indemnified, to be deemed to protect Acorn or such indemnified person
against any liability to which Acorn or such person would otherwise be subject
by reason of willful misfeasance, bad faith or negligence in the performance of
its or his duties or by reason of its or his reckless disregard of its or his
obligations and duties under this Agreement, or (ii) is WAM BD to be liable
under its indemnity agreement contained in this paragraph with respect to any
claim made against Acorn or any person indemnified unless Acorn or such person,
as the case may be, shall have notified WAM BD in writing of the claim within a
reasonable time after the summons, or other first written notification, giving
information of the nature of the claim served upon Acorn or upon such person (or
after Acorn or such person shall have received notice of such service on any
designated agent). However, failure to notify WAM BD of any such claim shall not
relieve WAM BD from any liability which WAM BD may have to Acorn or any person
against whom such action is brought otherwise than on account of WAM BD's
indemnity agreement contained in this Paragraph.
WAM BD shall be entitled to participate, at its own expense, in the
defense, or, if WAM BD so elects, to assume the defense of any suit brought to
enforce any such claim but, if WAM BD elects to assume that defense, such
defense shall be conducted by legal counsel chosen by WAM BD and satisfactory to
the persons indemnified who are defendants in the suit. In the event that WAM BD
elects to assume the defense of any such suit and retain such legal counsel,
persons indemnified who are defendants in the suit shall bear the fees and
expenses of any additional legal counsel retained by them. If WAM BD does not
elect to assume the defense of
5
any such suit, WAM BD will reimburse persons indemnified who are defendants in
such suit for the reasonable fees of any legal counsel retained by them in such
litigation.
Acorn agrees to indemnify and hold harmless WAM BD and each of its members,
managers, directors, officers, employees, and representatives and each person,
if any, who controls WAM BD within the meaning of Section 15 of the 1933 Act
against any and all losses, liabilities, damages, claims or expenses (including
the damage, claim or expense and reasonable legal counsel fees incurred in
connection therewith) to which WAM BD or such of its members, managers,
directors, officers, employees, representatives or controlling person or persons
may otherwise become subject under the 1933 Act, under any other statute, at
common law, or otherwise arising out of the acquisition of any Shares by any
person which (i) may be based upon any wrongful act by Acorn or any of the
members of Acorn's Board, or Acorn's officers, employees or representatives
other than WAM BD, or (ii) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in a registration statement,
Prospectus, Statement of Additional Information, shareholder report or other
information covering Shares filed or made public by Acorn or any amendment
thereof or supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading unless such statement or omission was made in
reliance upon information furnished by WAM BD to Acorn. In no case (i) is
Acorn's indemnity in favor of WAM BD or any person indemnified to be deemed to
protect WAM BD or such indemnified person against any liability to which WAM BD
or such indemnified person would otherwise be subject by reason of willful
misfeasance, bad faith, or negligence in the performance of its or his duties or
by reason of its or his reckless disregard of its or his obligations and duties
under this Agreement, or (ii) is Acorn to be liable under its indemnity
agreement contained in this Paragraph with respect to any claim made against WAM
BD or any person indemnified unless WAM BD, or such person, as the case may be,
shall have notified Acorn in writing of the claim within a reasonable time after
the summons, or other first written notification, giving information of the
nature of the claim served upon WAM BD or upon such person (or after WAM BD or
such person shall have received notice of such service on any designated agent).
However, failure to notify Acorn of any such claim shall not relieve Acorn from
any liability which Acorn may have to WAM BD or any person against whom such
action is brought otherwise than on account of Acorn's indemnity agreement
contained in this Paragraph.
Acorn shall be entitled to participate, at its own expense, in the defense
or, if Acorn so elects, to assume the defense of any suit brought to enforce
such claim but, if Acorn elects to assume the defense, such defense shall be
conducted by legal counsel chosen by Acorn and satisfactory to the persons
indemnified who are defendants in the suit. In the event that Acorn elects to
assume the defense of any such suit and retain such legal counsel, the persons
indemnified who are defendants in the suit shall bear the fees and expenses of
any additional legal counsel retained by them. If Acorn does not elect to assume
the defense of any such suit, Acorn will reimburse the persons indemnified who
are defendants in such suit for the reasonable fees and expenses of any legal
counsel retained by them in such litigation.
6
14. Duration and Termination of this Agreement. This Agreement shall
become effective upon its execution ("Effective Date") and unless terminated as
provided herein, shall remain in effect through December 31, 1999, and from year
to year thereafter, but only so long as such continuance is specifically
approved at least annually by (a) a vote of majority of the members of the Board
of Acorn who are not interested persons of WAM BD or Acorn, voting in person at
a meeting called for the purpose of voting on such approval, and (b) the vote of
either the Board of Acorn or a majority of the outstanding Shares of Acorn. This
Agreement may be terminated at any time, without the payment or any penalty (a)
on 60 days' written notice, by the Board of Acorn or by or by a vote of a
majority of the outstanding Shares of Acorn, or by WAM BD, or (b) immediately,
on written notice by the Board of Acorn, in the event of termination or
suspension of any of the Registrations. This Agreement will automatically
terminate in the event of its assignment. In interpreting the provisions of this
Paragraph 14, the definitions contained in Section 2(a) of the 1940 Act
(particularly the definitions of "interested person," "assignment" and "majority
of the outstanding shares") shall be applied.
15. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by each party against which enforcement of the change, waiver,
discharge or termination is sought. If Acorn should at any time deem it
necessary or advisable in the best interests of Acorn that any amendment of this
Agreement be made in order to comply with the recommendations or requirements of
the SEC or any other governmental authority or to obtain any advantage under
state or federal tax laws and notifies WAM BD of the form of such amendment and
the reasons therefore, and if WAM BD should decline to assent to such amendment,
Acorn may terminate this Agreement forthwith. If WAM BD should at any time
request that a change be made in Acorn's Agreement and Declaration of Trust, By-
Laws or its methods of doing business, in order to comply with any requirements
of Federal law or regulations of the SEC, or of a national securities
association of which WAM BD is or may be a member, relating to the sale of
Shares, and Acorn should not make such necessary changes within a reasonable
time, WAM BD may terminate this Agreement forthwith.
16. Liability. It is understood and expressly stipulated that neither the
shareholders of Acorn nor the members of the Board of Acorn shall be personally
liable hereunder. The obligations of Acorn are not personally binding upon, nor
shall resort to the private property of, any of the members of the Board of
Acorn nor of the shareholders, officers, employees or agents of Acorn, but only
Acorn's property shall be bound.
17. Miscellaneous. The captions in this Agreement are included for
convenience or reference only, and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
18. Notice. Any notice required or permitted to be given by a party to
this Agreement or to any other party hereunder shall be deemed sufficient if
delivered in person or sent by registered or certified mail, postage prepaid,
addressed by the party giving notice to each such
7
other party at the address provided below or to the last address furnished by
each such other party to the party giving notice.
If to Acorn: 000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxx
If to WAM BD: 000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxxxx X. Xxxxxx
If to WAM: 000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxx
WAM BROKERAGE SERVICES, L.L.C.
By: /s/ Xxxxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxxxx X. Xxxxxx, Vice President
ACORN INVESTMENT TRUST
By: /s/ Xxxxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxxxx X. Xxxxxx, Senior Vice
President and Secretary
ACKNOWLEDGED:
XXXXXX ASSET MANAGEMENT, L.P.
By: /s/ Xxxxxx X. Xxxx
--------------------------
Xxxxxx X. Xxxx, Principal
8
