DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT, made this 1st day of December, 2005 by and
between Xxxxx Xxxxxx Allocation Series Inc. ("Investment Company"), a Maryland
corporation and Xxxx Xxxxx Investor Services, LLC ("Distributor").
WHEREAS, the Investment Company is registered with the Securities and
Exchange Commission ("SEC") as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"), and has
registered its shares for the series thereof listed on Appendix A ("Shares"), as
it may be amended from time to time by agreement between the Distributor and the
Investment Company (each such series thereof, a "Fund") for sale to the public
under the Securities Act of 1933, as amended (the "1933 Act") and filed
appropriate notices under various state securities laws; and
WHEREAS, the Investment Company wishes to retain the Distributor as the
principal underwriter in connection with the offering and sale of the Shares and
to furnish certain other services to the Investment Company as specified in this
Agreement; and
WHEREAS, this Agreement has been approved by separate votes of the
Investment Company's Board of Directors ("Board") and of those Board members who
are not "interested persons" of the Investment Company, as defined in the 1940
Act and who have no direct or indirect financial interest in the operation of
the plan of distribution adopted pursuant to Rule 12b-1 under the 1940 Act
("Plan") of a Fund or in any agreements related to such plan ("Independent Board
Members") in conformity with Section 15 of, and Rule 12b-1 under, the 1940 Act;
and
WHEREAS, the Distributor is willing and able to furnish such services on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1. (a) The Investment Company hereby appoints the Distributor as
non-exclusive principal underwriter and distributor in connection with the
offering and sale of Shares of the Fund to the public directly and through
registered and qualified securities dealers, banks and other intermediaries
(collectively, "Intermediaries"), and the Distributor hereby accepts such
appointment, on the terms and for the period set forth in this Agreement. The
Distributor, as agent for the Investment Company, shall, in accordance with
applicable federal and state law and the organizational documents of the
Investment Company and the registration statement most recently filed by the
Investment Company with the SEC and effective under the 1940 Act and 1933 Act,
as such Registration Statement may be amended or supplemented from time to time
("Registration Statement"): (i) promote the Fund; (ii) solicit orders for the
purchase of the Shares subject to such terms and conditions as the Investment
Company may specify; and (iii) accept orders for the purchase of the Shares on
behalf of the Investment Company (collectively, "Distribution Services"). The
Distributor shall comply with all applicable federal and state laws
and offer the Shares of the Fund on an agency or "best efforts" basis under
which the Investment Company shall issue only such Shares as are actually sold.
(b) The Distributor may pay for ongoing shareholder liaison
services, including responding to shareholder inquiries, providing shareholders
with information on their investments, and any other services now or hereafter
deemed to be appropriate subjects for the payments of "service fees" under
Conduct Rule 2830 of the National Association of Securities Dealers, Inc.
("NASD") (collectively, "Shareholder Services"), as appropriate.
2. The Distributor may also enter into dealer or similar agreements with
qualified Intermediaries it may select for the performance of Distribution
Services and Shareholder Services. The Distributor may also enter into
agreements with Intermediaries and other qualified entities to perform
recordkeeping, shareholder servicing and sub-accounting services. In making such
arrangements, the Distributor shall act only as principal and not as agent for
the Investment Company. No such Intermediary is authorized to act as agent for
the Investment Company in connection with the offering or sale of Shares to the
public or otherwise, except for the limited purpose of determining the time as
of which orders for the purchases, sales and exchanges of Shares are deemed to
have been received.
3. The public offering price of the Shares of the Fund shall be the net
asset value per share (as determined by the Investment Company) of the
outstanding Shares of the Fund (or class thereof) next determined after receipt
of an order by the Fund or its designated agent plus any applicable sales
charge, as described in the Registration Statement of the Investment Company.
4. As compensation for providing Distribution Services under this
Agreement, the Distributor shall retain the sales charge, if any, on purchases
of Shares or retain deferred sales charges upon redemption of Shares, as set
forth in the Registration Statement. The Distributor is authorized to collect
the gross proceeds derived from the sale of the Shares, remit the net asset
value thereof to the Investment Company upon receipt of the proceeds and retain
the sales charge, if any. The Distributor shall receive from each Fund fees at
the rates and under the terms and conditions of the Plan adopted by the
Investment Company with respect to each Fund, as such Plan is in effect from
time to time, and subject to any further limitations on such fees as the Board
may impose. The Distributor may reallow any or all of the sales charges that it
has received under this Agreement to such Intermediaries as it may from time to
time determine, consistent with the Registration Statement and applicable law.
The Distributor may pay any or all of the distribution fees and service fees
that it has received under this Agreement to such Intermediaries as it may from
time to time determine, consistent with the Registration Statement and
applicable law. The Distributor may securitize or borrow against amounts to be
received by the Distributor under a Plan, in which case payments of the fees
under the Plan by the Fund may be made directly to the lender, security-holder
or an agent thereof pursuant to written instructions of the Distributor;
provided, however, that no such arrangement shall be deemed to give rise to any
obligation on the part of an Investment Company or its Board to continue such
payments if the Board determines that such payments are not in the best
interests of the Fund or its shareholders, or to create any obligation of the
Fund or Investment Company to the lender.
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5. As used in this Agreement, the terms "Prospectus" and "Statement of
Additional Information" shall mean, respectively, the form of prospectus and
statement of additional information with respect to the Fund filed by the
Investment Company as part of the Registration Statement, or as they may be
amended or supplemented from time to time.
6. The Distributor shall print and distribute to prospective investors
current Prospectuses, and shall print and distribute, upon request, to
prospective investors current Statements of Additional Information, and may
print and distribute such other sales literature, reports, forms and
advertisements in connection with the sale and offers of sale of the Shares as
it deems appropriate. In connection with such sales and offers of sale, the
Distributor and any Intermediary shall give only such information and make only
such statements or representations as are contained in the Fund's Registration
Statement, or in information furnished in writing to the Distributor by the
Investment Company and intended for such use or approved in writing by
authorized representatives of the Investment Company or the Investment Company's
investment adviser, and the Investment Company shall not be responsible in any
way for any other information, statements or representations given or made by
the Distributor or any Intermediary. Except as specifically provided in this
Agreement, the Investment Company shall bear none of the expenses of the
Distributor in connection with its offer and sale of the Shares.
7. Subject to the right of the Investment Company to cease to offer Shares
as set forth in paragraph 11 hereof, the Investment Company agrees at its own
expense to register, qualify or determine the exemption for registration or
qualification of the Shares then offered with the SEC, state and other
regulatory bodies, and to prepare and file from time to time such Fund's
Registration Statement, amendments thereto, reports and other documents as may
be necessary to maintain the registration or qualification. The Distributor and
Intermediaries shall provide the Investment Company promptly with all
information required for such registration or qualification. Each Fund shall
bear all expenses related to preparing and typesetting such Prospectuses,
Statements of Additional Information, and other materials required by law and
such other expenses, including printing and mailing expenses, related to such
Fund's communications with persons who are shareholders of that Fund.
8. (a) The Distributor shall act as distributor of Shares in compliance in
all material respects with all applicable laws, rules and regulations,
including, without limitation, all rules and regulations made or adopted
pursuant to (i) the 1940 Act, (ii) the 0000 Xxx, (xxx) the Securities Exchange
Act of 1934 ("1934 Act"), (iv) any securities association registered under the
1934 Act, including without limitation the NASD Conduct Rules or rules of any
other applicable self-regulatory organization. The Distributor shall offer the
Shares, and accept purchases, redemptions and exchanges for Shares, in
compliance with the Fund's Registration Statement and applicable law.
(b) The Distributor shall be responsible for reviewing and making
such filings with the NASD, as required, of advertisements and sales literature
relating to each Fund. The Distributor shall be responsible for reviewing the
Registration Statement of each Fund, as applicable, for compliance with the
requirement of the NASD Conduct Rules that a Fund's prospectus contain
disclosure of the details of any arrangement by which special cash compensation
arrangements are made available to an NASD member distributing the Fund's
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securities, which arrangements are not made available on the same terms to all
NASD members who distribute the Fund's securities.
(c) The Distributor shall adopt and follow procedures for the
confirmation of sales to investors and Intermediaries timeliness of orders, the
collection of amounts payable by investors and Intermediaries on such sales, the
correction of errors related to distribution of Shares, the cancellation of
unsettled transactions, and assisting with the solicitation of proxies, and any
other matters governed by Rule 38a-1 under the 1940 Act (as may apply to a
principal underwriter for a registered investment company), each as may be
necessary to comply with the requirements of the NASD, any other self-regulatory
organization, and the federal and state securities laws. The Distributor shall
provide reports or other information to the Investment Company at the Investment
Company's reasonable request, including, without limitation, reports related to
the operation and implementation of the Fund's policies related to customer
privacy, safeguarding of customer information, sales and marketing practices or
other policies and procedures of the Investment Company.
9. The Distributor agrees that it has adopted and implemented an
anti-money-laundering program in compliance with the USA PATRIOT Act of 2001,
the regulations thereunder and NASD Conduct Rules, including, without
limitation, customer identification program procedures and monitoring for
suspicious activity. The Distributor additionally agrees that it has adopted and
implemented procedures to comply with applicable law and regulation related to
cash transaction reporting requirements, as well as monitoring and reporting
under FinCEN, OFAC and other government watch lists. The Distributor shall
provide reports or other information to the Investment Company at the Investment
Company's reasonable request, related to the operation and implementation of any
of the Fund's anti-money-laundering policies for which the Distributor is
responsible.
10. (a) The Investment Company agrees to indemnify, defend and hold the
Distributor, its officers, directors and employees and any person who controls
the Distributor within the meaning of Section 15 of the 1933 Act, free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the reasonable cost of investigating or defending such claims,
demands or liabilities and any counsel fees incurred in connection therewith)
which the Distributor, its officers, directors and employees or any such
controlling person may incur, under the 1933 Act or under common law or
otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in the Registration Statement or arising out of or based
upon any alleged omission to state a material fact required to be stated or
necessary to make the Registration Statement not misleading, provided that in no
event shall anything contained in this Agreement be construed so as to protect
the Distributor or such other parties against any liability to the Investment
Company or its shareholders to which the Distributor or such other parties would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of their duties, or by reason of reckless
disregard of their obligations and duties under this Agreement, and further
provided that, notwithstanding the foregoing, the Investment Company shall not
indemnify the Distributor or such other parties if such indemnification
obligations arose, directly or indirectly, as a result of conduct as set forth
in paragraph 10(b). The Distributor agrees that it shall look only to the assets
of the Fund, and not to any other series of the Investment Company, for
satisfaction of any obligation created by this paragraph or otherwise arising
under this Agreement.
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(b) The Distributor agrees to indemnify, defend and hold the
Investment Company, its several officers and Board members, and any person who
controls the Investment Company within the meaning of Section 15 of the 1933
Act, free and harmless from and against any and all claims, demands, liabilities
and expenses (including the cost of investigating or defending such claims,
demands or liabilities and any counsel fees incurred in connection therewith)
which the Investment Company, its officers or Board members, or any such
controlling person may incur, under the 1933 Act or under common law or
otherwise, on account of any act of the Distributor or its directors, officers,
employees or agents, constituting 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 or arising out of
or based upon any alleged untrue statement of a material fact contained in
information furnished in writing by the Distributor to the Investment Company
for use in the Registration Statement or arising out of or based upon any
alleged omission to state a material fact in connection with such information
required to be stated in the Registration Statement or necessary to make such
information not misleading. As used in this paragraph, the term "employee" shall
not include a corporate entity under contract to provide services to the Fund,
or any employee of such a corporate entity, unless such person is otherwise an
employee of the Investment Company.
(c) Each party agrees to promptly notify the other of the
commencement of any litigation or proceedings involving any indemnified party.
The indemnification provisions of this paragraph 10 shall survive the
termination of this Agreement.
11. The Investment Company reserves the right at any time to withdraw any
or all offerings of the Shares of a Fund, and at its discretion to recommence
offering any time thereafter, by written notice to the Distributor at its
principal office.
12. The Distributor may at its sole discretion, directly or through
Intermediaries, repurchase Shares offered for sale by the shareholders or
Intermediaries. Repurchase of Shares by the Distributor shall be at the net
asset value (less any applicable sales, redemption or other charges, as
described in the Fund's Registration Statement) next determined after a
repurchase order has been received. The Distributor will receive no commission
or other remuneration for repurchasing Shares, other than deferred sales charges
as described in the Fund's Registration Statement. At the end of each business
day, the Distributor shall notify, by means of electronic transmission (as may
be agreed-upon by the parties to this Agreement) or in writing, the Investment
Company and the Investment Company's transfer agent, of the orders for
repurchase of Shares received by the Distributor since the last such report, the
amount to be paid for such Shares, and the identity of the shareholders or
Intermediaries offering Shares for repurchase. Upon such notice, the Investment
Company shall pay the Distributor such amounts as are required by the
Distributor to pay for the repurchase of such Shares in cash or in the form of a
credit against moneys due the Investment Company from the Distributor as
proceeds from the sale of Shares. The Investment Company reserves the right to
suspend such repurchase right upon written notice to the Distributor. The
Distributor further agrees to act as agent for the Investment Company to receive
and transmit promptly to the Investment Company's transfer agent shareholder and
Intermediary requests for redemption of Shares.
13. The Distributor is an independent contractor and shall be agent for
the Investment Company only in respect to the sale, redemption and exchange of
the Shares, including for the
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limited purpose of determining the time as of which Share transactions are
deemed to have been received.
14. The services of the Distributor to the Investment Company under this
Agreement are not to be deemed exclusive, and the Distributor shall be free to
render similar services or other services to others so long as its services
hereunder are not impaired thereby.
15. The Distributor shall prepare reports for the Board on a quarterly
basis, or more frequently as reasonably requested by the Board, showing such
information concerning expenditures related to this Agreement or related to the
operation and implementation of a Fund's Plan.
16. As used in this Agreement, the terms "assignment," "interested person"
and "majority of the outstanding voting securities" shall have the meanings
given to them by Section 2(a) of the 1940 Act, subject to such exemptions as may
be granted by the SEC or its staff, as appropriate, by any rule, regulation,
order, or no-action or interpretative letter.
17. This Agreement will become effective with respect to the Fund on the
date first written above and, unless sooner terminated as provided herein, will
continue in effect for two years from the above written date. Thereafter, if not
terminated, this Agreement shall continue in effect with respect to each Fund
for successive annual periods ending on the same date of each year, provided
that such continuance is specifically approved at least annually (i) by the
Board or (ii) by a vote of a majority of the outstanding voting securities (as
defined the in 0000 Xxx) of the Fund, provided that in either event the
continuance is also approved by a majority of the Investment Company's
Independent Board Members, by vote cast in person at a meeting called for the
purpose of voting on such approval.
18. This Agreement is terminable with respect to some or all of the Funds
without penalty by the Board, by vote of a majority of the outstanding voting
securities of the Fund (as defined in the 1940 Act), or by the Distributor, on
not less than 60 days' written notice to the other party, and such notice period
may be waived upon the mutual written consent of the Distributor and the
Investment Company. This Agreement will also automatically and immediately
terminate in the event of its assignment (as defined in Section 16 of this
Agreement).
19. Shares of any Fund may have been divided into separate classes, as
described in the applicable Fund's Registration Statement, and may have sales
charges or discounts or waivers available for certain categories of investor.
20. The Fund and the Distributor agree that the information exchanged
hereunder and information about the respective customers and potential customers
of each is confidential and as such shall not be disclosed, sold or used in any
way except to carry out the terms of this Agreement. Notwithstanding the
foregoing, such confidential information may be disclosed on a "need to know"
basis as set forth in applicable privacy rules and regulations. The obligations
regarding confidentiality hereunder shall not apply to any information which is
(i) otherwise publicly available, (ii) already possessed by the entity to whom
the information was disclosed prior to disclosure hereunder, (iii) independently
developed by the entity, or (iv) disclosed
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pursuant to law, rule, regulation or court or administrative order. The
Distributor shall have the right to use any list of shareholders of the Fund or
any other list of investors which it obtains in connection with its provision of
services under this Agreement, provided that such use is consistent with
applicable law and the privacy policies of the Distributor and the Fund. The
Distributor further agrees to take commercially reasonable steps, in accordance
with applicable law, to safeguard customer information. The provisions of this
paragraph 20 will survive termination of this Agreement.
21. From time to time, each Fund may implement policies, procedures or
charges in an effort to avoid the potential adverse effects on the Funds of
short-term trading by market timers. The Distributor agrees to cooperate in good
faith with the Investment Company in the implementation of (i) any such
policies, procedures and/or charges, and (ii) the imposition and payment over to
the Fund of redemption fees specified in the Registration Statement. The
Distributor agrees, where appropriate, to make reasonable efforts to obtain the
agreement of Intermediaries to comply with the Funds' frequent trading and other
policies set forth in the Funds' Registration Statement or to take alternative
actions reasonably designed to achieve compliance with these policies.
22. No provision of this Agreement may be changed, waived, discharged or
terminated, except by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought. This
Agreement may be executed in multiple counterparts.
23. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Maryland.
24. Notices shall be provided to each party, as noted below:
To the Distributor:
Attn: Xxxxxx Xxxxx
Xxxx Xxxxx Investor Services, LLC
c/x Xxxx Xxxxx, Inc.,
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
To the Investment Company:
Xxxxx Xxxxxx Allocation Series Inc.
000 Xxxxx Xxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Secretary and Chief Legal Officer
25. The Articles of Incorporation of the Investment Company, amended from
time to time, which is on file with the Maryland State Department of Assessments
and Taxation, provides that to the fullest extent permitted by Maryland law, no
Board member or officer of the Investment Company shall be personally liable to
the Investment Company or its stockholders
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for money damages, except to the extent such exemption from liability or
limitation thereof is not permitted by the 1940 Act.
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be
executed by their officers thereunto duly authorized.
ATTEST:
By: /s/ Xxxxxx X. Xxxxxx By: /s/ R. Xxx Xxxxxx
------------------------------- -------------------------------------
Assistant Secretary
ATTEST: XXXX XXXXX INVESTOR SERVICES, LLC
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------- -------------------------------------
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Appendix A
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Fund Date Added:
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Balanced Portfolio December 1, 2005
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Conservative Portfolio December 1, 2005
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Growth Portfolio December 1, 2005
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High Growth Portfolio December 1, 2005
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Income Portfolio December 1, 2005
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Select Balanced Portfolio December 1, 2005
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Select Growth Portfolio December 1, 2005
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Select High Growth Portfolio December 1, 2005
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