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UNDERWRITING AGREEMENT
This Agreement, dated as of January 1, 1999, is made by and between IAA
Trust Asset Allocation Fund, Inc., a Maryland corporation (the "Fund") operating
as an open-end management investment company registered under the Investment
Company Act of 1940, as amended (the "Act"), IAA Trust Company (the "Company"),
a registered investment advisor duly organized and existing as a corporation
under the laws of the state of Illinois, and First Data Distributors, Inc.
("FDDI"), a corporation duly organized and existing under the laws of the
Commonwealth of Massachusetts (collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, the Company has been appointed investment advisor to the
Fund; and
WHEREAS, FDDI is a broker-dealer registered with the U.S. Securities
and Exchange Commission (the "SEC") and a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Parties are desirous of entering into an agreement
providing for the distribution by FDDI of the shares of the Fund (the "Shares").
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, and in exchange of good and valuable consideration, the
sufficiency and receipt of which is hereby acknowledged, the Parties hereto,
intending to be legally bound, do hereby agree as follows:
1. Appointment
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The Fund hereby appoints FDDI as its principal agent for the
distribution of the Shares, and FDDI hereby accepts such appointment
under the terms of this Agreement. The Fund agrees that it will not
sell any Shares to any person except to fill orders for the Shares
received through FDDI, provided, however, that the foregoing exclusive
right shall not apply to: (a) Shares issued or sold in connection with
the merger or consolidation of any other investment company with the
Fund or the acquisition by purchase of otherwise of all or
substantially all of the assets of any investment company or
substantially all of the outstanding shares of any such company by the
Fund; (b) Shares which may be offered by the Fund to its stockholders
for reinvestment of cash distributed from capital gains or net
investment income of the Fund; or (c) Shares which may be issued to
shareholders of other funds who exercise any exchange privilege set
forth in the Fund's Prospectus. Notwithstanding any other provision
hereof, the Fund may terminate, suspend, or withdraw the offering of
the Shares whenever, in their sole discretion, they deem such action to
be desirable.
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2. Sale and Repurchase of Shares
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(a) FDDI is hereby granted the right, as agent for the Fund, to
sell Shares to the public against orders received at the
public offering price as defined in the Fund's Prospectus and
Statement of Additional Information.
(b) FDDI will also have the right to take, as agent for the Fund,
all actions which, in FDDI's judgment, and subject to the
Fund's reasonable approval, are necessary to carry into effect
the distribution of the Shares.
(c) FDDI will act as agent for the Fund in connection with the
repurchase of Shares by the Fund upon the terms set forth in
the Fund's Prospectus and Statement of Additional Information.
(d) The net asset value of the Shares shall be determined in the
manner provided in the then current Prospectus and Statement
of Additional Information relating to the Shares, and when
determined shall be applicable to all transactions as provided
in the Prospectus. The net asset value of the Shares shall be
calculated by the Fund or by another entity on behalf of the
Fund. FDDI shall have no duty to inquire into, or liability
for, the accuracy of the net asset value per Share as
calculated.
(e) On every sale, FDDI shall promptly pay to the Fund the
applicable net asset value of the Shares.
(f) Upon receipt of purchase instructions, FDDI will transmit such
instructions to the Fund or its transfer agent for
registration of the Shares purchased.
(g) Nothing in this Agreement shall prevent FDDI or any affiliated
person (as defined in the Act) of FDDI from acting as
underwriter for any other person, firm or corporation
(including other investment companies), or in any way limit or
restrict FDDI or such affiliated person from buying, selling
or trading any securities for its or their own account or for
the account of others for whom it or they may be acting,
provided, however, that FDDI expressly agrees that it will not
for its own account purchase any Shares of the Fund except for
investment purposes, and that it will not for its own account
dispose of any such Shares except by redemption of such Shares
with the Fund, and that it will not undertake in any
activities which, in its judgment, will adversely affect the
performance of its obligations to the Fund under this
Agreement.
3. Rules of Sale of Shares
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FDDI does not agree to sell any specific number of Shares and serves
only in the capacity of Statutory Underwriter. The Fund reserves the
right to terminate, suspend or withdraw the sale of its Shares for any
reason deemed adequate by it, and the Fund reserves the right to refuse
at any time or times to sell any of its Shares to any person for any
reason deemed adequate by it.
4. Rules of NASD, etc.
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(a) FDDI will conform tot he Conduct Rules of the NASD and the
securities laws of any jurisdiction in which it directly or
indirectly sells any Shares.
(b) FDDI will require each dealer with whom FDDI has a selling
agreement to conform to the applicable provisions of the
Prospectus, with respect to the public offering price of the
Shares, and FDDI shall not cause the Fund to withhold the
placing of purchase orders so as to make a profit thereby.
(c) The Fund and the Company agree to furnish FDDI sufficient
copies of any and all: agreements, plans, communications with
the public or other materials which the Fund or the Company
intend to use in connection with any sales of Shares, in
adequate time for FDDI to file and clear such materials with
the proper authorities before they are put in use. FDDI and
the Fund or the Company may agree that any such material does
not need to be filed subsequent to distribution. In addition,
the Fund and the Company agree not to use any such materials
until so filed and cleared for use, if required, by
appropriate authorities as well as by FDDI.
(d) FDDI, at its own expense, will qualify as a dealer or broker,
or otherwise, under all applicable state or federal laws
required in order that the Shares may be sold in such states
as may be mutually agreed upon by the Parties.
(e) FDDI shall remain registered with the SEC and a member of the
NASD for the term of this Agreement.
(f) FDDI shall not, in connection with any sale or solicitation of
a sale of the Shares, make or authorize any representative,
service organization, broker or dealer to make any
representations concerning the Shares, except those contained
in the Prospectus offering the Shares and in communications
with the public or sales materials approved by FDDI as
information supplemental to such Prospectus. Copies of the
Prospectus will be supplied by the Fund or the Company to FDDI
in reasonable quantities upon request.
(g) FDDI shall only be authorized to make representations in
respect of the Fund consistent with the then current
Prospectus, Statement of Additional
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Information, and other written information provided by the
Fund or its agents to be used explicitly with respect to the
sale of Shares.
5. Records to be Supplied by the Fund
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The Fund shall furnish to FDDI copies of all information, financial
statements and other papers which FDDI may reasonably request for use
in connection with the underwriting of the Shares including, but not
limited to, one certified copy of all financial statements prepared for
the Fund by its independent public accountants.
6. Expenses
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(a) The Fund will bear the following expenses:
(i) preparation, setting in type, and printing of
sufficient copies of the Prospectus and Statement of
Additional Information for distribution to
shareholders, and the cost of distribution of same to
the shareholders;
(ii) preparation, printing and distribution of reports and
other communications to shareholders;
(iii) registration of the Shares under the federal
securities laws;
(iv) qualification of the Shares for sale in the
jurisdictions as directed by the Fund;
(v) maintaining facilities for the issue and transfer of
the Shares;
(vi) supplying information, prices and other data to be
furnished by the Fund under this Agreement; and
(vii) any original issue taxes or transfer taxes applicable
to the sale or delivery of the Shares or certificates
therefor.
(b) The Company will pay all other expenses incident to the sale
and distribution of the Shares sold hereunder.
(c) FDDI agrees to pay all of its own expenses in performing its
obligations hereunder.
7. Term and Compensation
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(a) The term of this Agreement shall commence on the date on
hereinabove first written (the "Effective Date").
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(b) This Agreement shall remain in effect for one (1) year from
the Effective Date. This Agreement shall continue thereafter
for periods not exceeding one (1) year, if approved at least
annually (i) by a vote of a majority of the outstanding voting
securities of the Fund, or (ii) by a vote of a majority of the
Board Members of the Fund who are not parties to this
Agreement (other than as Board Members of the Fund) or
interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval.
(c) This Agreement (i) may be terminated at any time without the
payment of any penalty, either by a vote of the Trustees of
the Fund or by a vote of a majority of the outstanding voting
securities of the Fund with respect to the Fund, on sixty (60)
days' written notice to FDDI; and (ii) may be terminated by
FDDI on sixty (60) days' written notice to the Fund with
respect to the Fund.
(d) This Agreement shall automatically terminate in the event of
its assignment, as defined in the Act.
8. Indemnification of FDDI by the Company and the Fund
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FDDI is 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 caused by it, its agents or employees.
Notwithstanding the above, the Company and the Fund will indemnify and
hold FDDI harmless for the actions of the Company's employees
registered with the NASD as registered representatives of FDDI, and the
Company hereby undertakes to maintain compliance with all NASD and SEC
rules and regulations concerning any activities of such employees. FDDI
shall have the right, in its sole discretion, to refuse to register any
individual as its representative.
9. Liability of FDDI
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(a) FDDI, its directors, officers, employees, shareholders and
agents shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in
connection with the performance of this Agreement, except a
loss resulting from a breach of FDDI's obligations pursuant to
Section 4 of this Agreement (Rules of NASD), a breach of
fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of FDDI in the
performance of its obligations and duties or by reason of its
reckless disregard of its obligations and duties under this
Agreement. FDDI agrees to indemnify and hold harmless the Fund
and each person who has been, is, or may hereafter be a
Trustee, officer, or
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employee of the Fund against expenses reasonably incurred by
any of them in connection with any claim or in connection with
any action, suit, or proceeding to which any of them may be a
party, which arises out of or is alleged to arise out of any
misrepresentation or omission to state a material fact, on the
part of FDDI or any agent of employee of FDDI or any of the
persons for whose acts FDDI is responsible or is alleged to be
responsible unless such misrepresentation or omission was made
in reliance upon written information furnished to FDDI by the
Fund. FDDI also agrees to indemnify and hold harmless the Fund
and each such person in connection with any claim or in
connection with any action, suit, or proceeding which arises
out of or is alleged to arise out of FDDI's failure to
exercise reasonable care and diligence with respect to its
services rendered in connection with the purchase and sale of
Shares. The foregoing rights of indemnification shall be in
addition to any other rights to which the Fund or any such
person shall be entitled to as a matter of law.
(b) The Fund agrees to indemnify and hold harmless FDDI against
any and all liability, loss, damages, costs of expenses
(including reasonable counsel fees) which FDDI may incur or be
required to pay hereafter, in connection with any action, suit
or other proceeding, whether civil or criminal, before any
court or administrative or legislative body, in which FDDI may
be involved as a party or otherwise or with which FDDI may be
threatened, by reason of the offer or sale of the Fund's
Shares by persons other than FDDI or its representatives,
prior to the execution of this Agreement. If a claim is made
against FDDI as to which FDDI may seek indemnity under the
Section, FDDI shall notify the Fund promptly after any written
assertion of such claim threatening to institute an action or
proceeding with respect thereto and shall notify the Fund
promptly of any action commenced against FDDI within 10 days
time after FDDI shall have been served with a summons or other
legal process, giving information as to the nature and basis
of the claim. Failure to notify the Fund shall not, however,
relieve the Fund from any liability which it may have on
account of the indemnity under this Section 9(b) if the Fund
has not been prejudiced in any material respect by such
failure. The Fund shall have the sole right to control the
settlement of any such action, suit or proceeding subject to
FDDI approval, which shall not be unreasonably withheld. FDDI
shall have the right to participate in the defense of an
action or proceeding and to retain its own counsel, and the
reasonable fees and expenses of such counsel shall be borne by
the Fund (which shall pay such fees, costs and expenses at
least quarterly) if:
(i) FDDI has received an opinion of counsel
stating that the use of counsel chosen by
the Fund to represent FDDI would present
such counsel with a conflict of interest:
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(ii) the defendants in, or targets of, any such
action or proceeding include both FDDI and
the Fund, and legal counsel to FDDI shall
have reasonably concluded that there are
legal defenses available to it which are
different from or additional to those
available to the trust or which may be
adverse to or inconsistent with defenses
available to the Fund (in which case the
Fund shall not have the right to direct the
defense of such action on behalf of FDDI);
or
(iii) the Fund shall authorize FDDI to employ
separate counsel at the expense of the Fund.
(c) Any person, even though also a director, officer, employee,
shareholder or agent of FDDI who may be or become an officer,
director, trustee, employee or agent of the Fund, shall be
deemed, when rendering services to the Fund or acting on any
business of the Fund (other than services or business in
connection with FDDI's duties hereunder), to be rendering such
services to or acting solely for the Fund and not as a
director, officer, employee, shareholder or agent, or one
under the control or direction of FDDI even though receiving a
salary from FDDI.
(d) The Fund agrees to indemnify and hold harmless FDDI, and each
person who controls FDDI within the meaning of Section 15 of
the Securities Act of 1933, as amended (the "Securities Act"),
or Section 20 of the Securities Exchange Act of 1934, s
amended (the "Exchange Act"), against any and all losses,
claims, damages and liabilities, joint or several (including
any reasonable investigative, legal and other expenses
incurred in connection therewith) to which they, or any of
them, may become subject under the Act, the Securities Act,
the Exchange Act or other federal or state law or regulations,
at common law or otherwise insofar as such losses, claims,
damages or liabilities (or actions, suits or proceedings in
respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact
contained in a Prospectus, Statement of Additional
Information, supplement thereto, sales literature (or other
written information) prepared by the Fund and furnished by the
Fund to FDDI for FDDI's use hereunder, disseminated by the
trust or which arise out of or are based upon any omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading.
Such indemnity shall not, however, inure to the benefit of
FDDI (or any person controlling FDDI) on account of any
losses, claims, damages or liabilities (or actions, suits or
proceedings in respect thereof) arising from the sale of the
Shares of the Fund to any person by FDDI (i) if such untrue
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statement or omission or alleged untrue statement or omission
was made in the Prospectus, Statement of Additional
Information, or supplement, sales or other literature, in
reliance upon and in conformity with information furnished in
writing to the Fund by FDDI specifically for use therein or
(ii) if such losses, claims, damages or liabilities arise out
of or are based upon an untrue statement or omission or
alleged untrue statement or omission found in any Prospectus,
Statement of Additional Information, supplement, sales or
other literature, subsequently corrected, but negligently
distributed by FDDI and a copy of the corrected Prospectus was
not delivered to such person at or before the confirmation of
the sale to such person
(e) FDDI shall not be responsible for any damages, consequential
or otherwise, which the Company or the Fund may experience,
due to the disruption of the distribution of Shares caused by
any action or inaction of any registered representative or
affiliate of FDDI or of FDDI itself.
(f) Notwithstanding anything in this Agreement to the contrary, in
no event shall any party to this Agreement, its affiliates or
any of its or their directors, trustees, officers, employees,
agents or subcontractors be liable for lost profits,
exemplary, punitive, special, incidental, indirect or
consequential damages.
10. Amendments
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No provision of this Agreement may be amended or modified in any manner
whatsoever, except by a written agreement properly authorized and
executed by the Parties.
11. Section Headings
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Section and paragraph headings are for convenience only and shall not
be construed as part of this Agreement.
12. Reports
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FDDI shall prepare reports for the Board of the Fund, on a quarterly
basis, showing such information as, from time to time, shall be
reasonably requested by the Board.
13. Severability
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If any part, term or provision of this Agreement is held by any court
to be illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable and not
affected, and the rights and obligations of
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the Parties shall be construed and enforced as if the Agreement did not
contain the particular part, term or provision held to be illegal or
invalid provided that the basic agreement is not thereby substantially
impaired.
14. Governing Law
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This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts and the exclusive venue of any action arising under this
Agreement shall be the City of Boston, Commonwealth of Massachusetts.
15. Authority to Execute
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The Parties represent and warrant to each other that the execution and
delivery of this Agreement by the undersigned officer of each Party has
been duly and validly authorized; and, when duly executed, this
Agreement will constitute a valid and legally binding and enforceable
obligation of each Party.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be signed
by their duly authorized officer, of the day and year first above written.
FIRST DATA DISTRIBUTORS, INC.
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By:
Title:
IAA TRUST ASSET ALLOCATION FUND, INC.
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By: Xxxxxxx X. Xxxxxx
Title: Vice President
IAA TRUST COMPANY
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By: Xxxxx X. Xxxxxx
Title: Chief Executive Officer
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SCHEDULE A
UNDERWRITER SERVICES
1. Underwriter services include:
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A) Preparation and execution of Underwriter and 12b-1 Plan Agreements
- Monitoring accruals
- Monitoring expenses
- Disbursements for expenses and tail commissions
B) Quarterly 12b-1 Reports to Board
C) Literature review, recommendations and submission to the NASD
D) Initial NASD Licensing and Transfers of Registered Representatives
- U-4 Form and Fingerprinting Submission to NASD
- Supplying Series 6 and 63 written study material
- Registration for Exam Preparation classes
- Renewals and Termination of Representatives
E) Written supervisory procedures and manuals for Registered
Representatives
F) Ongoing compliance updates for Representatives regarding sales
practices, written correspondence and other communications with the
public.
G) NASD Continuing Education Requirement
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