EXHIBIT 6
FORM OF
DISTRIBUTION AGREEMENT
Distribution Agreement ("Agreement") made this ______ day of ________,
1997, by and between Monument Series Fund, Inc., a Maryland corporation (the
"Company"), on behalf of each of its Portfolios (as hereinafter defined), and
Monument Distributors, Inc., a Maryland corporation ("Distributors")
(collectively, the "Parties").
WHEREAS, the Company is registered and intends to operate as an open-end,
management investment company under the Investment Company Act of 1940 (the
"Act"), and will register shares of each series of shares listed on Schedule A
hereto, as the Parties may amend in writing from time to time (each, a
"Portfolio"; collectively, the "Portfolios"), under the Securities Act of 1933
(the "1933 Act"), to the extent required thereby; and
WHEREAS, Distributors, a broker-dealer registered under the Securities
Exchange Act of 1934 ("1934 Act") and a member of the National Association of
Securities Dealers, Inc. ("NASD"), desires to act as the exclusive principal
underwriter of the shares of each Portfolio.
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the Parties agree as follows:
1. APPOINTMENT OF UNDERWRITER.
The Company, on behalf of each Portfolio, hereby appoints Distributors as
the exclusive principal underwriter and distributor for the sale of the shares
of each Portfolio (except for sales made directly by the Company without sales
charge) and Distributors hereby accepts such appointment.
2. SALE OF PORTFOLIO SHARES.
2.1 AVAILABILITY OF SHARES. The Company, on behalf of each Portfolio,
agrees to deliver such shares as Distributors may sell, in accordance with the
terms and conditions set forth herein and the disclosure in the Company's
registration statement, as amended from time to time ("Registration
Statement").
2.2 BEST EFFORTS. Distributors agrees to use its best efforts to promote
the sale of each Portfolio's shares, but is not obligated to sell any specific
number of shares.
1
2.3 REJECTION OR SUSPENSION OF SALES; CORPORATE ACTIONS. Notwithstanding
anything herein to the contrary:
(a) Distributors may temporarily suspend its efforts to effectuate
sales of any Portfolio at any time when in its opinion no sales should be
made because of market or other economic considerations or abnormal
circumstances of any kind; and
(b) the Company's Board of Directors ("Board") may, at any time,
reject for any reason any order to purchase shares of any Portfolio. In
addition, the Board may suspend or terminate the offering of shares of
any Portfolio, if such action is required by law, judicial order, or by
regulatory authorities having jurisdiction, or if the Board, in its sole
discretion, acting in good faith and in light of its fiduciary duties
under applicable law, determines that such action is in the best
interests of the shareholders of a Portfolio. Further, the Company
reserves the right at all times to take any corporate actions, including,
but not limited to, the dissolution, merger, and sale of the assets of
each Portfolio, solely upon the authorization of its Board.
2.4 OFFERING PRICE. Distributors shall offer the shares of each
Portfolio for sale at the net asset value per share plus a sales charge, if
any, all as described in the Company's then effective prospectus and statement
of additional information, as each may be amended or supplemented from time to
time (collectively, "Prospectus"). On each business day on which the Company
is required by Rule 22c-1 under the Act to calculate the net asset value per
share of each Portfolio ("Business Day"), the Company shall furnish, or cause
to be furnished, to Distributors each Portfolio's then current net asset value
per share.
2.5 MANNER OF OFFERING. Distributors shall offer the shares of each
Portfolio for sale in the manner described in the Company's Prospectus, and
only in those jurisdictions where they have been properly registered or
qualified, or are exempt from registration.
2.6 SALES COMMISSIONS: INITIAL SALES CHARGE. Distributors shall be
entitled to a commission on the sale of the shares of each Portfolio in
accordance with Schedule A hereto, as the Parties may amend in writing from
time to time ("Schedule A").
2.7 ORDER AND PAYMENT PROCESSING. Distributors shall immediately
transmit any order to purchase shares of a Portfolio to the Company's transfer
agent ("Transfer Agent"), and shall immediately pay, or cause to be paid, to
the Company's custodian ("Custodian"), for the Company's account on behalf of
a Portfolio, an amount in cash equal to the net asset value of such shares. In
the event that Distributors pays for shares of each Portfolio sold by
Distributors prior to Distributor's receipt of payment from purchasers,
Distributors is hereby authorized to reimburse itself for the net asset value
of such shares from the offering price of such shares when received by
Distributors. Distributors shall accept orders for the purchase of shares of
each Portfolio only to the extent of purchase orders actually received and not
in excess of such orders. Distributors shall not avail itself of any
opportunity of making a profit by expediting or withholding orders.
2
2.8 PURCHASES FOR OWN ACCOUNT. Distributors shall not purchase shares
for its own account for purposes of resale to the public. Distributors may
purchase such shares for its own investment account upon its written assurance
to the Company that the purchase is for investment purposes only and that such
shares will not be resold except through redemption by the Company.
2.9 SALE OF SHARES TO AFFILIATES. Distributors may sell shares of each
Portfolio at net asset value to certain of its and the Company's affiliated
persons pursuant to the provisions of applicable law, including Rule 22d-1
under the Act, and in accordance with the disclosure in the Company's
Prospectus.
2.10 SELLING GROUP AGREEMENTS. Distributors may, from time to time,
effect offers and sales of the shares of each Portfolio through unaffiliated
broker-dealers that are registered under the 1934 Act, that are members of the
NASD, and that have entered into an appropriate selling group agreement with
Distributors, the form of which agreement shall be approved by the Company
prior to its implementation. Distributors may allow these broker-dealers such
commissions or discounts not exceeding the total sales commission set forth in
Schedule A, as it shall deem advisable, so long as any such commissions or
discounts are set forth in the Company's Prospectus to the extent required by
applicable law.
3. REDEMPTION OF PORTFOLIO SHARES.
3.1 RECEIPT OF REDEMPTION REQUESTS. Distributors shall promptly forward
any redemption request to the Company's Transfer Agent each Business Day.
3.2 CASH REDEMPTIONS. Subject to paragraph 3.3, below, the Company shall
effect any redemption request for full or fractional shares of each Portfolio
in cash at the net asset value per share next computed on each Business Day,
adjusted for a deferred sales charge, if any.
3.3 REDEMPTIONS IN KIND. Notwithstanding anything herein to the
contrary, subject to compliance with the provisions of Section 18(f) of the
Act, the Company reserves the right to effect all or a portion of a redemption
request for shares of each Portfolio by payment in kind of portfolio
securities, if the Company's Board determines that it would be detrimental to
the best interests of the shareholders of a Portfolio to make a redemption
wholly in cash.
3.4 SALES COMMISSIONS: DEFERRED SALES CHARGE. Distributors shall be
entitled to a sales commission upon the redemption of the shares of each
Portfolio in accordance with Schedule A.
3.5 DELAY IN PAYMENT OF REDEMPTION PROCEEDS; SUSPENSION OF REDEMPTION.
The Company, on behalf of each Portfolio, shall have the right to delay the
payment of redemption proceeds, and to suspend the redemption of shares of the
Portfolio, pursuant to the conditions set forth in the Prospectus.
3
4. ALLOCATION OF EXPENSES.
Except as set forth herein, each Party shall bear all expenses of
fulfilling its duties and obligations under this Agreement; provided, however,
that Distributors shall bear the expenses of any activity that may be
attributable to the Company or a Portfolio as primarily intended to result in
the sale of Portfolio shares.
5. MARKETING MATERIALS.
5.1 PREPARATION, PRINTING, AND DISTRIBUTION. Distributors shall have the
responsibility for preparing, printing, and distributing, at its sole cost,
all marketing materials to be used in connection with the offer and sale of
the shares of each Portfolio. As used herein, "marketing materials" shall mean
any "advertisement" or "sales literature," as those terms are defined in
Section 2210(a) of the NASD's Conduct Rules, as amended from time to time, and
shall include any so-called "dealer only" materials, as well as any
Prospectuses, periodic reports to shareholders ("Reports"), and other
materials sent to persons other than the then current shareholders of each
Portfolio (except that the Company shall bear the cost of preparing any
Prospectuses, Reports, and other materials specified in paragraph 6.3, below).
5.2 COMPANY APPROVAL. Distributors shall submit definitive copies of all
marketing materials to the Company for its approval, which shall not be
unreasonably withheld, at least five (5) business days prior to their first
use. The Company shall be deemed to have granted its approval of such
marketing materials unless it objects within such five (5) business day
period.
5.3 REGULATORY APPROVALS. Distributors shall, to the extent required,
file in a timely manner all marketing materials with the NASD, the Securities
and Exchange Commission ("SEC"), or any other regulatory body, as appropriate,
and shall obtain any necessary approval of these regulatory bodies of any
marketing materials.
6. NON-MARKETING MATERIALS.
6.1 SHAREHOLDER CORRESPONDENCE. Distributors shall be responsible for
preparing, printing, and distributing, at its sole cost, or causing the same
to be done, all correspondence with shareholders in its capacity as principal
underwriter, except for correspondence prepared, printed, and distributed by
Distributors at the Company's request. Distributors shall, from time to time,
make such correspondence available to the Company for review upon request.
6.2 CONFIRMATIONS. Distributors, at its sole cost, shall be responsible
for preparing, printing, and distributing in a timely manner, or causing the
same to be done, confirmations of shareholder transactions required to be
delivered to shareholders pursuant to applicable law. Notwithstanding the
foregoing, the Company may retain the services of a transfer agent, which
services may include the delivery of confirmations of shareholder
transactions.
4
6.3 PROSPECTUSES, REPORTS, ETC. The Company, at its sole cost, shall be
responsible for preparing, printing, and distributing, or causing the same to
be done, all Prospectuses, Reports, proxy materials, and other documents
required by applicable law to be provided to shareholders of each Portfolio,
and for filing such materials with the NASD, SEC or any other regulatory body,
as appropriate, and shall obtain any necessary approval of these regulatory
bodies of these materials.
6.4 DISTRIBUTORS APPROVAL. The Company shall provide Distributors with
definitive copies of all documents enumerated in paragraph 6.3 above for
Distributors' prior approval, which shall not be unreasonably withheld at
least five (5) business days prior to their first use. Distributors shall be
deemed to have granted its approval of such materials unless it objects within
such five (5) business day period.
7. CONDUCT OF BUSINESS.
7.1 GENERAL. Distributors shall be subject to the direction and control
of the Company in the sale of the shares of each Portfolio. In selling
Portfolio shares, Distributors shall comply in all respects with the
requirements of all federal and state laws and regulations and the regulations
of the NASD, relating to the sale of the shares of each Portfolio. Neither
Distributors nor any other person is authorized by the Company to give any
information or to make any representations, other than those contained in the
Company's Registration Statement or Prospectus, and any marketing materials
authorized by responsible officers of the Company.
7.2 INDEPENDENT CONTRACTOR. Distributors shall undertake and discharge
its obligations hereunder as an independent contractor and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Company or any Portfolio in any way and shall not be deemed to
be an employee of the Company.
7.3 NON-EXCLUSIVE SERVICES. Distributors' services pursuant to this
Agreement shall not be deemed to be exclusive, and Distributors may render
similar services and act as an underwriter, distributor or dealer for other
investment companies in the offering of their shares, consistent with the best
efforts obligations to each Portfolio set forth herein.
8. INDEMNIFICATION.
8.1 GENERAL. Distributors shall indemnify and hold harmless the Company
and each of its Directors and officers (or former Directors and officers) and
each person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act (collectively, "Indemnitees") against any loss, liability,
claim, damage, or expense (including the reasonable cost of investigating and
defending against the same and any counsel fees reasonably incurred in
connection therewith) incurred by any Indemnitee under the 1933 Act or under
common law or otherwise, which arise out of or are based upon:
5
(a) any untrue or alleged untrue statement of a material fact
contained in information furnished to the Company by Distributors for use
in the Company's Registration Statement, Prospectus, Reports or other
documents sent to its shareholders,
(b) any omission or alleged omission to state a material fact in
connection with information furnished to the Company by Distributors for
use in the Company's Registration Statement, Prospectus, Reports or other
documents sent to its shareholders, which fact is required to be stated
in any of such documents or necessary to make such information not
misleading,
(c) any misrepresentation or omission or alleged misrepresentation
or omission to state a material fact on the part of Distributors or any
agent or employee of Distributors or any other person for whose acts
Distributors is responsible, unless such misrepresentation or omission or
alleged misrepresentation or omission was made in reliance on written
information furnished by the Company, or
(d) the willful misconduct or failure to exercise reasonable care
and diligence on the part of Distributors or any agent or employee of
Distributors or any other person for whose acts Distributors is
responsible with respect to services rendered under this Agreement. This
indemnity provision, however, shall not operate to protect any officer or
Director of the Company from any liability to the Company or any
shareholder by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of his or her duties.
8.2 LIMITATIONS; NOTICE OF CLAIM; ASSUMPTION OF DEFENSE. In case any
action shall be brought against any Indemnitee, Distributors shall not be
liable under its indemnity agreement contained in paragraph 8.1, above, with
respect to any claim made against any Indemnitee, unless the Indemnitee shall
have notified Distributors 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 Indemnitee (or after the Indemnitee
shall have received notice of such service on any designated agent), but
failure to notify Distributors of any such claim shall not relieve it from
liability to the Indemnitees against whom such action is brought otherwise
than on account of paragraph 8.1, above. Distributors shall 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
Distributors elects to assume the defense, such defense shall be conducted by
counsel chosen by it and satisfactory to the Indemnitees that are defendants
in the suit. In the event Distributors elects to assume the defense of any
such suit and retain such counsel, the Indemnitees that are defendants in the
suit shall bear the fees and expenses of any additional counsel retained by
them, but, in case Distributors does not elect to assume the defense of any
such suit, Distributors will reimburse the Indemnitees that are defendants in
the suit for the reasonable fees and expenses of any counsel retained by them.
Distributors shall promptly notify the Company of the commencement of any
litigation or proceedings in connection with the issuance or sales of the
Company's shares.
6
9. TERM AND TERMINATION.
9.1 TERM. This Agreement shall become effective as of the date first
above written and shall remain in force until ____________, 1999, and
thereafter, but only so long as such continuance is specifically approved at
least annually by (i) the Board of Directors, or by the vote of a majority of
the outstanding voting securities of each Portfolio, 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 on such approval. Notwithstanding the
foregoing, the Board of Directors may, from time to time, establish a new
effective date for the continuance of this Agreement with respect to any
Portfolio, provided that such new effective date precedes the then current
termination date of this Agreement.
9.2 TERMINATION. This Agreement may be terminated at any time without
the payment of any penalty, by the Board of Directors, by vote of a majority
of the outstanding voting securities of a Portfolio, or by Distributors on
sixty days' written notice to the other party. This Agreement shall
automatically terminate in the event of its assignment.
10. DEFINITIONS.
As used herein the terms "net asset value," "offering price," "investment
company," "open-end management investment company," "assignment," "principal
underwriter," "interested person," "affiliated person," and "majority of the
outstanding voting securities" shall have the meanings set forth in the 1933
Act or the Act, and the rules and regulations thereunder. Nothing herein
contained shall require the Company to take any action contrary to any
provision of its Articles of Incorporation, By-Laws, or any applicable statute
or regulation.
11. NOTICES.
Any notice under this Agreement shall be in writing, addressed and
delivered, or mailed postage prepaid, to the other party at such address as
the other party may designate for the receipt of notices. Until further notice
to the other party, it is agreed that the address of both the Company and
Distributors shall be 0000 Xxxxxx Xxxx, Xxxxxx, Xxxxxxxx 00000.
12. CONFIDENTIALITY.
Distributors shall not disclose or use any records or information
obtained pursuant to this Agreement, pursuant to its relationship with the
Company, or in the course of discharging its obligations hereunder, in any
manner whatsoever except as expressly authorized by this Agreement or in a
writing by the Company, or as expressly required by applicable federal or
state regulatory authorities.
7
13. APPLICABLE LAW.
This Agreement shall be governed by the laws of the state of Maryland,
without giving effect to the conflict of laws provisions thereof, and shall be
construed to promote the operation of the Company as an open-end management
investment company.
14. PARTIES TO COOPERATE.
The Company and Distributors agree to fully cooperate with each other in
assuring compliance under this Agreement with all federal and state laws and
regulations.
---------------------------------
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
as of the date first written above.
THE MONUMENT SERIES FUND, INC.
By:___________________________________
Attest: ____________________________
MONUMENT DISTRIBUTORS, INC.
By:___________________________________
Attest: ____________________________
8
SCHEDULE A
This Schedule A is an integral part of the Agreement to which it is
attached. Capitalized terms used herein have the same meaning as given to them
in the Agreement, except as otherwise noted. This Schedule A sets out the
names of the Portfolios covered by the Agreement and the compensation of
Distributors for the services rendered with respect thereto.
NAMES OF PORTFOLIOS
-------------------
Washington Area Growth Fund
Washington Area Aggressive Growth Fund
COMPENSATION
For its services rendered pursuant to the Agreement, Distributors shall
be entitled to receive, as full compensation therefor, the following sales
commissions (subject to any scheduled variations or eliminations of commission
as set forth in the Company's Prospectus):
INITIAL SALES CHARGE (as a percentage of offering price)
o applicable to purchase payments through $50,000............................ 1.25%
o applicable to purchase payments greater than $50,000 through $100,000...... 1.00%
o applicable to purchase payments greater than $100,000 through $1 million... 0.75%
o applicable to purchase payments greater than $1 million.................... 0.50%
DEFERRED SALES CHARGE (as a percentage of offering price)
o applicable to shares held for less than 12 months......................... 1.25%
If shares of a Portfolio are tendered to the Company for redemption or
repurchase within seven (7) business days after Distributors' acceptance of
the original purchase order for such shares, Distributors shall immediately
return to the Company the full sales commission (net of any allowances to
brokers or dealers) allowed to Distributors on the original sale, and shall
promptly, upon receipt thereof, pay to the Company any reallowance from
brokers or dealers of the balance of the sales commission reallowed by
Distributors. The Company shall notify Distributors of such tender for
redemption within 10 days of the day on which the Company receives notice of
such tender for redemption.
9
