EXHIBIT E(5)
DISTRIBUTION AGREEMENT
This Agreement made as of the 1st day of October, 2001 by and
among FFTW FUNDS, INC., a Maryland corporation (the "Fund"), INVESTORS BANK &
TRUST COMPANY, a Massachusetts Trust Company (the "Bank") and QUASAR
DISTRIBUTORS, LLC, a Delaware limited liability company (the "Distributor").
WITNESSETH:
WHEREAS, the Fund is registered as an open-end management
investment company under the Investment Company Act of 1940 (the "1940 Act");
and it is in the interest of the Fund to offer its shares for sale continuously;
WHEREAS, the Fund offers 21 series of shares of common stock
and may offer additional series in the future (each, a "series" and
collectively, the "series"), which will have been registered under the
Securities Act of 1933 (the "1933 Act");
WHEREAS, the Bank serves as Administrator to the Fund;
WHEREAS, the Distributor is registered as a broker-dealer
under the Securities Exchange Act of 1934 (the "1934 Act") and is a member in
good standing of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, the Fund, the Bank and the Distributor wish to enter
into an agreement with each other with respect to the continuous offering of the
shares of each existing and future series (the "Shares") of the Fund;
NOW, THEREFORE, the parties agree as follows:
1. Appointment of Distributor. The Fund hereby appoints the
Distributor as exclusive agent to sell and to arrange for the sale of the
Shares, on the terms and for the period set forth in this Agreement, and the
Distributor hereby accepts such appointment and agrees to act hereunder directly
and/or through the Fund's transfer agent in the manner set forth in the
Prospectuses (as defined below). This appointment applies to each existing
series of Shares as well as any future series, provided that (i) the Fund does
not object to the Distributor in writing on any basis and (ii) the Distributor
does not object to the Fund and the Bank in writing on the basis of the
capabilities of the Distributor. In return for the services to be performed by
the Distributor hereunder, the Distributor shall be paid in the manner agreed to
by the parties hereto. It is understood and agreed that the services of the
Distributor hereunder are not exclusive, and the Distributor may act as
principal underwriter for the shares of any other registered investment company.
2. Services and Duties of the Distributor.
(a) The Distributor agrees to sell the Shares, as
agent for the Fund, from time to time during the term of this Agreement upon
the terms described in a Prospectus. As used in this Agreement, the term
"Prospectus" shall mean a prospectus and statement of additional information
included as part of the Fund's Registration Statement, as such prospectus and
statement of additional information may be amended or supplemented from time
to time, and the term "Registration Statement" shall mean the Registration
Statement filed from time to time by the Fund with the Securities and Exchange
Commission ("SEC") and currently effective under the 1933 Act and the 1940
Act, as such Registration Statement is amended by any amendments thereto at
the time in effect. The Distributor shall not be obligated to sell any certain
number of Shares.
(b) Upon commencement of operations of any series,
the Distributor will hold itself available to receive orders, satisfactory to
the Distributor, for the purchase of the Shares and will accept such orders
and will transmit such orders and funds received by it in payment for such
Shares as are so accepted to the Fund's transfer agent or custodian, as
appropriate, as promptly as practicable. Purchase orders shall be deemed
accepted and shall be effective at the time and in the manner set forth in the
series' Prospectuses. The Distributor shall not make any short sales of
Shares.
(c) The offering price of the Shares shall be the
net asset value per share of the Shares, plus the sales charge, if any,
(determined as set forth in the Prospectuses). The Fund shall furnish the
Distributor, with all possible promptness, an advice of each computation of
net asset value and offering price.
(d) The Distributor shall have the right to enter
into selected dealer agreements with securities dealers of its choice
("selected dealers") for the sale of Shares. Shares sold to selected dealers
shall be for resale by such dealers only at the offering price of the Shares
as set forth in the Prospectuses. The Distributor shall offer and sell Shares
only to such selected dealers as are members in good standing of the NASD,
unless such dealers are not eligible for membership in the NASD.
3. Representations and Warranties of the Distributor.
(a) The Distributor is a corporation duly
organized, validly existing and in good standing under the laws of the state
of Delaware and has full power and authority, corporate and otherwise, to
consummate the transactions contemplated by this Agreement. The Distributor is
duly qualified to carry out its business, and is in good standing, in any
state where such qualification is required for the Distributor to carry out
its duties under this Agreement.
(b) Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
violate any provision of the Certificate of Incorporation or By-Laws of the
Distributor.
(c) The Distributor is registered as a broker-
dealer under the 1934 Act and is a member of the NASD.
4. Duties of the Fund.
(a) Maintenance of Federal Registration. The Fund
shall, at its expense, take, from time to time, all necessary action and such
steps, including payment of the related filing fees, as may be necessary to
register and maintain registration of a sufficient number of Shares under the
0000 Xxx. The Fund agrees to file from time to time such amendments, reports
and other documents as may be necessary in order that there may be no untrue
statement of a material fact in a Registration Statement or Prospectus, or
necessary in order that there may be no omission to state a material fact in
the Registration Statement or Prospectus which omission would make the
statements therein misleading.
(b) Maintenance of "Blue Sky" Qualifications. The
Fund shall, at its expense, use its best efforts to qualify and maintain the
qualification of an appropriate number of Shares for sale under the securities
laws of such states as the Distributor and the Fund may approve, and, if
necessary or appropriate in connection therewith, to qualify and maintain the
qualification of the Fund or the series as a broker or dealer in such states;
provided that the Fund shall not be required to amend its Articles of
Incorporation or By-Laws to comply with the laws of any state, to maintain an
office in any state, to change the terms of the offering of the Shares in any
state from the terms set forth in the Prospectuses, to qualify as a foreign
Fund in any state or to consent to service of process in any state other than
with respect to claims arising out of the offering and sale of the Shares. The
Distributor shall furnish such information and other material relating to its
affairs and activities as may be reasonably required by the Fund or its series
in connection with such qualifications.
(c) Copies of Reports and Prospectuses. The Fund
shall, at its expense, keep the Distributor fully informed with regard to its
affairs and in connection therewith shall furnish to the Distributor copies of
all information, financial statements and other papers which the Distributor
may reasonably request for use in connection with the distribution of Shares,
including such reasonable number of copies of Prospectuses and annual and
interim reports as the Distributor may request and shall cooperate fully in
the efforts of the Distributor to sell and arrange for the sale of the Shares
and in the performance of the Distributor under this Agreement.
5. Expenses. Expenses connected with the Fund shall be
allocable between the Fund and the Distributor as follows:
(a) The Distributor shall furnish, at its expense
and without cost to the Fund, the services of personnel to the extent that
such services are required to carry out its obligations under this Agreement.
(b) The Fund assumes and shall pay or cause to be
paid all other expenses of the Fund, including, without limitation: the fees
of the Fund's investment adviser; the charges and expenses of any registrar,
any custodian or depository appointed by the Fund for the safekeeping of its
cash, portfolio securities and other property, and any stock transfer,
dividend or accounting agent or agents appointed by the Fund; the fees of any
Fund administrator; brokers' commissions chargeable to the Fund in connection
with portfolio securities transactions to which the Fund is a party; any fee
paid pursuant to any distribution plan, if and when adopted by the Fund
pursuant to Rule 12b-1 under the 1940 Act; all taxes, including securities
issuance and initial transfer taxes, and corporate fees payable by the Fund to
federal, state or other governmental
agencies; all costs and expenses in connection with the organization of the
Fund and the series and the registration of the Shares with the SEC and under
state securities laws and in connection with maintenance of registration of
the Fund, series and the Shares with the SEC and various states and other
jurisdictions (including filing fees and legal fees and disbursements of
counsel); the expenses of printing, including printing setup charges, and
distributing Prospectuses of the Fund and supplements thereto to the Fund's
shareholders; all expenses of shareholders' and Directors' meetings and of
preparing, printing and mailing of proxy statements and reports to
shareholders; fees and travel expenses of Directors who are not interested
persons (as such term is defined in the 0000 Xxx) of the Fund ("Non-Interested
Directors") or members of any advisory board or committee established by the
Non-Interested Directors; all expenses incident to the payment of any
dividend, distribution, withdrawal or redemption, whether in Shares or in
cash; charges and expenses of any outside service used for pricing of the
Fund's Shares; charges and expenses of legal counsel to the Fund and to the
Non-Interested Directors, and of independent accountants to the Fund, in
connection with any matter relating to the Fund; membership dues paid by the
Fund to industry associations; interest payable on Fund borrowings; postage;
insurance premiums on property or personnel (including officers and directors)
of the Fund which inure to its benefit; extraordinary expenses of the Fund
(including, but not limited to, legal claims and liabilities and litigation
costs and any indemnification related thereto); and all other charges and
costs of the Fund's operation unless otherwise.
6. Conformity with Applicable Law and Rules. The Distributor
agrees that in selling Shares hereunder it shall conform in all respects with
the laws of the United States and of any state in which Shares may be offered,
and with applicable rules and regulations of the NASD.
7. Independent Contractor. In performing its duties hereunder,
the Distributor shall be an independent contractor and neither the Distributor,
nor any of its officers, directors, employees, or representatives is or shall be
an employee of the Fund in the performance of the Distributor's duties
hereunder. The Distributor 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 or employees. The
Distributor assumes full responsibility for its agents and employees under
applicable statutes and agrees to pay all employee taxes thereunder.
8. Indemnification.
(a) Indemnification of Fund. The Distributor agrees
to indemnify and hold harmless the Fund and each of its present or former
Directors, officers, employees, representatives and each person, if any, who
controls or previously controlled the Fund within the meaning of Section 15 of
the 1933 Act against any and all losses, liabilities, damages, claims or
expenses (including the reasonable costs of investigating or defending any
alleged loss, liability, damage, claims or expense and reasonable legal
counsel fees incurred in connection therewith) to which the Fund or any such
person may 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 the Distributor or any
of the Distributor's directors, officers, employees or representatives
(including, without limiting the foregoing, any wrongful or unauthorized sales
activities of the Distributor or any of its registered representatives, as
defined under the By-Laws of the NASD, including any failure to conform with
any requirement of any state or federal law relating to the sale of Shares),
or (ii) may be based upon any untrue statement
or alleged untrue statement of a material fact contained in a Registration
Statement, Prospectus, shareholder report or other information covering Shares
filed or made public by the Fund 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 and in
conformity with information furnished to the Fund by the Distributor. The
Distributor shall also indemnify and hold harmless the Fund, its officers and
directors and control persons from any liability to the Fund or to the holders
of Shares by reason of the Distributor's willful misfeasance, bad faith or
gross negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement. In no case (i)
is the Distributor's indemnity in favor of the Fund, or any person indemnified
to be deemed to protect the Fund or such indemnified person against any
liability to which the Fund or such person would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the
performance of the Fund's or such person's duties or by reason of reckless
disregard of the Fund's or such person's obligations and duties under this
Agreement or (ii) is the Distributor to be liable under its indemnity
agreement contained in this Paragraph with respect to any claim made against
the Fund or any person indemnified unless the Fund or such person, as the case
may be, shall have notified the Distributor 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 shall have been served upon the Fund or
upon such person (or after the Fund or such person shall have received notice
of such service on any designated agent). However, failure to notify the
Distributor of any such claim shall not relieve the Distributor from any
liability which the Distributor may have to the Fund or any person against
whom such action is brought otherwise than on account of the Distributor's
indemnity agreement contained in this Paragraph.
The Distributor shall be entitled to participate,
at its own expense, in the defense, or, if the Distributor so elects, to
assume the defense of any suit brought to enforce any such claim, but, if the
Distributor elects to assume the defense, such defense shall be conducted by
legal counsel chosen by the Distributor and satisfactory to the Fund, and to
the persons indemnified as defendant or defendants, in the suit. In the event
that the Distributor elects to assume the defense of any such suit and retain
such legal counsel, the Fund, and the persons indemnified as defendant or
defendants in the suit, shall bear the fees and expenses of any additional
legal counsel retained by them. If the Distributor does not elect to assume
the defense of any such suit, the Distributor will reimburse the Fund and the
persons indemnified defendant or defendants in such suit for the reasonable
fees and expenses of any legal counsel retained by them and will provide
advances for payment of the reasonable expenses incurred by them in connection
with the matters as to which it or they are seeking indemnification in the
matter and to the fullest extent permissible by law. The Distributor agrees to
promptly notify the Fund of the commencement of any litigation of proceedings
against it or any of its officers, employees or representatives in connection
with the issue or sale of any Shares.
(b) Indemnification of the Distributor. The Fund
agrees to indemnify and hold harmless the Distributor and each of its present
or former directors, officers, employees, representatives and each person, if
any, who controls or previously controlled the Distributor within the meaning
of Section 15 of the 1933 Act against any and all losses, liabilities,
damages, claims or 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 the
Distributor or any such person may 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 the Fund or any of the Fund's Directors, officers, employees
or representatives (including, without limiting the foregoing, any wrongful or
unauthorized sales activities of the Fund, as defined under the By-Laws of the
NASD, including any failure to conform with any requirement of any state or
federal law relating to the sale of Shares), or (ii) may be based upon any
untrue statement or alleged untrue statement of a material fact contained in a
Registration Statement, Prospectus, shareholder report or other information
covering Shares filed or made public by the Fund 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 and in conformity with information furnished to the Fund by
the Distributor. The Fund shall also indemnify and hold harmless the
Distributor, its officers and directors and control persons from any liability
to the Fund or to the holders of Shares by reason of the Fund's willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and duties under this
Agreement. In no case (i) is the Fund's indemnity in favor of the Distributor,
or any person indemnified to be deemed to protect the Distributor or such
indemnified person against any liability to which the Distributor or such
person would otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of such person's duties or by reason of
reckless disregard of such person's obligations and duties under this
Agreement or (ii) is the Fund to be liable under their indemnity agreement
contained in this Paragraph with respect to any claim made against
Distributor, or person indemnified unless the Distributor, or such person, as
the case may be, shall have notified the Fund 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 shall have been served upon the
Distributor or upon such person (or after the Distributor or such person shall
have received notice of such service on any designated agent). However,
failure to notify the Fund of any such claim shall not relieve the Fund from
any liability which the Fund may have to the Distributor or any person against
whom such action is brought otherwise than on account of the Fund's indemnity
agreement contained in this Paragraph.
The Fund shall be entitled to participate, at its
own expense, in the defense, or, if the Fund so elects, to assume the defense
of any suit brought to enforce any such claim, but if the Fund elects to
assume the defense, such defense shall be conducted by legal counsel chosen by
the Fund and satisfactory to the Distributor and to the persons indemnified as
defendant or defendants, in the suit. In the event that the Fund elects to
assume the defense of any such suit and retain such legal counsel, the
Distributor, the persons indemnified as defendant or defendants in the suit,
shall bear the fees and expenses of any additional legal counsel retained by
them. If the Fund does not elect to assume the defense of any such suit, the
Fund will reimburse the Distributor and the persons indemnified as defendant
or defendants in such suit for the reasonable fees and expenses of any legal
counsel retained by them and will provide advances for payment of the
reasonable expenses incurred by them in connection with the matters as to
which it or they are seeking indemnification in the matter and to the fullest
extent permissible by law. The Fund agrees to promptly notify the Distributor
of the commencement of any litigation or proceedings against it or any of its
Directors, officers, employees or representatives in connection with the issue
or sale of any Shares.
9. Authorized Representations. The Distributor is not
authorized by the Fund to give on behalf of the Fund any information or to
make any representations in connection with the sale of Shares other than the
information and representations contained in a Registration Statement or
Prospectus filed with the SEC under the 1933 Act and/or the 1940 Act, covering
Shares, as such Registration Statement and 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 the Fund for the
Distributor's use. This shall not be construed to prevent the Distributor from
preparing and distributing tombstone ads and sales literature or other
material as it may deem appropriate. No person other than the Distributor is
authorized to act as principal underwriter (as such term is defined in the
0000 Xxx) for the Fund.
10. Term of Agreement. The term of this Agreement shall
begin on the date first above written, and unless sooner terminated as
hereinafter provided, this Agreement shall remain in effect for a period of
two years from the date first above written. Thereafter, this Agreement shall
continue in effect from year to year, subject to the termination provisions
and all other terms and conditions thereof, so long as such continuation shall
be specifically approved at least annually by (i) the Board of Directors of
the Fund or by vote of a majority of the outstanding voting securities of each
series of the Fund and, (ii) by the vote, cast in person at a meeting called
for the purpose of voting on such approval, of a majority of the Directors of
the Fund who are not parties to this Agreement or interested persons of any
such party. The Distributor shall furnish to the Fund, promptly upon its
request, such information as may reasonably be necessary to evaluate the terms
of this Agreement or any extension, renewal or amendment hereof.
11. Amendment or Assignment of Agreement. This Agreement may
not be amended or assigned except as permitted by the 1940 Act, and this
Agreement shall automatically and immediately terminate in the event of its
assignment.
12. Termination of Agreement. This Agreement may be
terminated by the Fund, the Bank or the Distributor, without the payment of
any penalty, on not more than 60 days' nor less than 30 days' prior notice in
writing to the other parties; provided, that in the case of termination by the
Fund such action shall have been authorized by resolution of a majority of the
Directors of the Fund who are not parties to this Agreement or interested
persons of any such party, or by vote of a majority of the outstanding voting
securities of each series of the Fund.
13. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way define or delineate
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.
Nothing herein contained shall be deemed to require the Fund
to take any action contrary to its Articles of Incorporation or By-Laws, or
any applicable statutory or regulatory requirement to which it is subject or
by which it is bound, or to relieve or deprive the Board of Directors of the
Fund of responsibility for and control of the conduct of the affairs of the
Fund.
14. Definition of Terms. Any question of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by
reference to such term or provision of the 1940 Act and to interpretation
thereof, if any, by the United States courts or, in the absence of any
controlling decision of any such court, by rules, regulations or orders of the
SEC validly issued pursuant to the 1940 Act. Specifically, the terms "vote of
a majority of the outstanding voting securities", "interested persons,"
"assignment," and "affiliated person," as used in Paragraphs 10, 11 and 12
hereof, shall have the meanings assigned to them by Section 2(a) of the 1940
Act. In addition, where the effect of a requirement of the 1940 Act reflected
in any provision of this Agreement is relaxed by a rule, regulation or order
of the SEC, whether of special or of general application, such provision shall
be deemed to incorporate the effect of such rule, regulation or order.
15. Compliance with Securities Laws. The Fund represents
that it is registered as an open-end management investment company under the
1940 Act, and agrees that it will materially comply with all the provisions of
the 1940 Act and of the rules and regulations thereunder. The Fund and the
Distributor each agree to comply with all of the applicable terms and
provisions of the 1940 Act, the 1933 Act and, subject to the provisions of
Section 4(d), all applicable "Blue Sky" laws. The Distributor agrees to comply
with all of the applicable terms and provisions of the 1934 Act.
16. Confidentiality. The Distributor agrees on behalf of
itself and its directors, officers and employees to treat confidentially and
as proprietary information of the Fund all records and other information
relative to the Fund and its prior, present or potential shareholders, and not
to use such records and information for any purpose other than performance of
its responsibilities hereunder, except after prior notification to and
approval in writing by the Fund, which approval shall not be unreasonably
withheld when requested to divulge such information by duly constituted
authorities and may not be withheld when the Distributor would be exposed to
civil or criminal contempt proceedings for failure to comply, and the
Distributor shall disclose all such records and information to the Fund's
investment adviser and other service providers upon request.
17. Notices. Any notice required to be given pursuant to
this Agreement shall be deemed duly given if delivered or mailed by registered
mail, postage prepaid, to the Distributor at 000 Xxxx Xxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxx 00000, Attn: Xxxxx Xxxxxxxxx, President; to the Bank at
000 Xxxxxxxxx Xxxxxx, Xxxxxx, XX 00000, Attn: Xxxxx X. Xxxxxx, Director,
Mutual Fund Administration, with a copy to Xxxxxx Xxxxx, Assistant General
Counsel; or to the Fund at Investors Capital Services, Inc., 00 Xxxxxx Xxxx,
0xx xxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxxxx X. Xxxxxxxxx.
18. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York, without regard
to its conflict of laws provisions.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated below on the date first
written above.
FFTW FUNDS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Treasurer
INVESTORS BANK & TRUST COMPANY, solely
for purposes of Sections 12 and 17 hereof
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
QUASAR DISTRIBUTORS, LLC
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
FEE SCHEDULE
TO
DISTRIBUTION AGREEMENT
AMONG
FFTW FUNDS, INC., INVESTORS BANK & TRUST COMPANY
AND
QUASAR DISTRIBUTORS, LLC
DATED OCTOBER 1, 2001
(THE "AGREEMENT")
QUASAR DISTRIBUTORS, LLC (the "Distributor"), as distributor to FFTW Funds, Inc.
(the "Fund"), shall be entitled to compensation for its services under the
Agreement from Investors Bank & Trust Company (the "Bank"), as administrator to
the Fund, as follows:
The Distributor shall receive compensation in the amount of $25,000 per annum,
to be paid no less frequently than monthly, payable in arrears by the Bank. In
addition, the Distributor will be entitled to reimbursement of reasonable
out-of-pocket expenses incurred (including but not limited to NASD filing fees
incurred pursuant to this Agreement) within 10 days of delivery of a valid
invoice.
FFTW FUNDS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Treasurer
INVESTORS BANK & TRUST COMPANY, solely
for purposes of Sections 12 and 17 hereof
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
QUASAR DISTRIBUTORS, LLC
By: /s/ Xxxxx X. Xxxxxxxxx
-----------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
