EXHIBIT (E)(1)
DISTRIBUTION AGREEMENT
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AMENDED AND RESTATED
DISTRIBUTION AGREEMENT
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AMENDED AND RESTATED DISTRIBUTION AGREEMENT made this 31st day of July,
1998, between PRINCIPAL PRESERVATION PORTFOLIOS, INC., a Maryland corporation
(the "Fund"), and X.X. XXXXXXX AND COMPANY, a Delaware corporation (the
"Distributor").
WITNESSETH:
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as a diversified open-end management investment
company and it is in the interest of the Fund to offer its share for sale
continuously;
WHEREAS, the Fund and the Distributor wish to enter into an agreement
with each other with respect to the continuous offering of the Fund's shares
of Common Stock, $.001 par value, which are issuable in series ("Common
Stock"), to commence after the effectiveness of its initial registration
statement filed pursuant to the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act.
WHEREAS, two series of Common Stock, the Government Plus Portfolio and
the Blue Chip 100 Plus Portfolio are currently offered by the Fund, and
additional or different series may be offered from time to time, all of which
such series are referred to as the "Portfolios."
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of the Distributor.
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The Fund hereby appoints the Distributor its exclusive agent to sell and
to arrange for the sale of the shares of Common Stock, including both issued
and treasury 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. It is also understood, however, that purchases of Common Stock
may be made directly through the Fund's transfer and dividend disbursing agent
in the manner set forth in the Prospectus.
Section 2. Services and Duties of the Distributor.
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(a) The Distributor agrees to sell, as agent for the Fund, from
time to time during the term of this Agreement, Common Stock (whether unissued
or treasury shares, in the Fund's sole discretion) upon the terms described in
the Prospectus. As used in this Agreement, the term "Prospectus" shall mean
the prospectus included as part of the Fund's Registration Statement, as such
prospectus may be amended or supplemented from time to time, and the term
"Registration Statement" shall mean the Registration Statement most recently
filed from time to time by the Fund with the Securities and Exchange
Commission and effective under the 1933 Act and the 1940 Act, as such
Registration Statement as amended by any amendments thereto as the time in
effect.
(b) Upon commencement of the Fund's operations, the Distributor
will hold itself available to receive orders, satisfactory to the Distributor,
for the purchase of Common Stock and will accept such orders on behalf of the
Fund as of the time of receipt of such orders and will transmit such orders as
are so accepted to the Fund's transfer and dividend disbursing agent as
promptly as practicable. Purchase orders shall be deemed effective at the
time in the manner set forth in the Prospectus.
(c) The Distributor in its discretion may sell shares to such
registered and qualified retail dealers as it may select. In making
agreements with such dealers, the Distributor shall act only as principal and
not as agent for the Fund.
(d) The offering price of shares of each Portfolio of Common Stock
shall be the net asset value (as defined in the Articles of Incorporation of
the Fund and determined as set forth in the Prospectus) per share of such
Portfolio of the Common Stock next determined following receipt of an order,
plus in the case of Class A (and Class X shares) the applicable sales charge,
if any, determined as set forth in the Prospectus. The Fund shall furnish the
Distributor, with all possible promptness, an advice of each computation of
net asset value.
(e) The Distributor shall not be obligated to sell any certain
number of shares of Common Stock and nothing herein contained shall prevent
the Distributor from entering into like distribution arrangements with other
investment companies so long as the performance of its obligations hereunder
is not impaired thereby.
(f) The Distributor is authorized on behalf of the Fund to purchase
shares presented to it by dealers at the price determined in accordance with,
and in the manner set forth in, the Prospectus.
Section 3. Compensation of the Distributor.
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(a) Class A (and Class X Shares). The above-mentioned sales charge
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shall constitute the entire compensation of the Distributor. Out of such
sales charge, the Distributor may allow such concessions or reallowances to
dealers as it may from time to time determine.
(b) Class B Shares
(i) The Fund shall pay to the Distributor, or at its
direction, as compensation for acting as principal distributor in respect of
the Class B Shares of each Portfolio its "Allocable Portion" (as hereinafter
defined) of a fee (the "Distribution Fee") computed at the rate of 0.75% per
annum of such Portfolio's average daily net assets attributable to Class B
Shares, which Distribution Fee will accrue daily and be payable monthly.
(ii) The Fund shall pay to the Distributor, or at its
direction, as com pensation for providing shareholder services to the holders
of Class B Shares of each Portfolio its allocable portion of a fee (the
"Service Fee") computed at the rate of 0.25% per annum of such Portfolio's
average daily net assets attributable to Class B Shares, which Service Fee
will accrue daily and be payable monthly.
(iii) The Distributor may allow all or any portion of the
Service Fee to securities dealers in consideration of the provision by such
securities dealers of shareholder services to particular Class B Shares.
(iv) If, in lieu of allowing a portion of the Service Fee
relating to a particular Class B Share to a securities dealer in consideration
of such securities dealer providing shareholder services to such Class B Share
for the twelve month period following the issuance thereof, the Distributor
makes a payment to such securities dealer on the settlement date for the
issuance of such Class B Share in consideration of such security dealer's
commitment to provide such services for such twelve month period without
further compensation, the Distributor will be deemed to have earned the
Service Fee which accrues in respect of such Class B Share during such twelve
month period (the "Earned Service Fee") upon making such payment to such
securities dealer; and, in such case, all of the provisions of Section 3(b)
(v) through (x) hereof shall apply to such Earned Service Fee, in the same
manner as they apply to the Underwriter's Allocable Portion of the
Distribution Fee, and for this purpose references in Section 3 (b) (v) through
(x) hereof to Distribution Fees shall be deemed to include a reference to
Earned Service Fees and references in such section to the financing of
distribution services shall be deemed to include a reference to financing of
shareholder services.
(v) Notwithstanding anything to the contrary set forth in this
Distribution Agreement or (to the extent waiver thereof is permitted thereby)
applicable law, the Portfolio's obligation to pay the Distributor's Allocable
Portion of the Distribution Fees payable in respect of the Class B Shares of
any Portfolio shall not be terminated or modified in any manner (including,
without limitation, by change in the auto-conversion arrangements relating to
Class B Shares for which the "Date or Original Issuance" (as defined below)
occurs prior to such action) for any reason (including a termination of this
Distribution Agreement as it relates to Class B Shares), except to the extent
required by a change in the Investment Company Act of 1940 (the "Act") or the
Conduct Rules of the National Association of Securities Dealers, Inc., in
either case enacted or promulgated after the date of this Amended and Restated
Distribution Agreement (i.e., July 31, 1998), or in connection with a
"Complete Termination" (as hereinafter defined) of the Plan.
(vi) The Fund or the Portfolio will not take any action to
waive or change in any manner (including, without limitation, by change in the
auto-conversion arrangements relating to Class B Shares for which the "Date or
Original Issuance" (as defined below) occurs prior to such action) any CDSC in
respect of any Class B Shares of any Portfolio for which the Date of Original
Issuance occurs prior to such action, except as provided in the Portfolio's
prospectus or statement of additional information as in effect as of the date
of this Distribution Agreement, without the consent of the Distributor and its
Transferees (as hereinafter defined) of all or any portion of its right to its
Allocable Portion of the CDSCs.
(vii) Notwithstanding anything to the contrary set forth in
this Distribution Agreement, neither the termination of the Distributor's role
as principal distributor of the Class B Shares of a Portfolio, nor the
termination of this Distribution Agreement nor the termination of the Plan
will terminate such Distributor's right to its Allocable Portion of the CDSCs
in respect of the Class B Shares of any Portfolio.
(viii) Notwithstanding anything to the contrary in this
Distribution Agreement, the Distributor may assign, sell or pledge
(collectively, a "Transfer") its rights to its Allocable Portion of the
Distribution Fees and CDSCs earned by it (but not its obligations to the Fund
or the Portfolio under this Distribution Agreement) in respect of the Class B
Shares to raise funds to make the expenditures related to the distribution of
Class B Shares and in connection therewith upon receipt of notice of such
Transfer, the Fund on behalf of each Portfolio shall pay, or cause to be paid
to the assignee, purchaser or pledgee (collectively with their subsequent
transferees, "Transferees") such portion of the Distributor's Allocable
Portion of the Distribution Fees and CDSCs in respect of the Class B Shares of
such Portfolio so transferred. Except as provided in Section 3(v) above and
notwithstanding anything to the contrary set forth elsewhere in this
Distribution Agreement, to the extent the Distributor has made a Transfer of
its rights thereto to raise funds as aforesaid, the Fund's obligation to pay
the Distributor's Allocable Portion of the Distribution Fees and CDSCs payable
in respect of the Class B Shares shall be absolute and unconditional and shall
not be subject to dispute, offset, counterclaim or any defense whatsoever, at
law or equity, including without limitation, any of the foregoing based on the
insolvency or bankruptcy of the Distributor (it being understood that such
provision is not a waiver of the Fund's or the Portfolio's right to pursue
such Distributor and enforce such claims against the assets of the Distributor
other than the Distributor's right to the Distribution Fees and CDSCs, in
respect of the Class B Shares of the Portfolio or any other company,
portfolio, fund or trust, Distribution Fees and CDSCs in respect of the Class
B Shares of which have been so transferred in connection with such Transfer).
The Fund agrees, on behalf of each Portfolio, that each such Transferee is a
third party beneficiary of the provisions of this clause (viii) but only
insofar as those provisions relate to Distribution Fees and CDSCs transferred
to such Transferee.
(ix) For purposes of this Distribution Agreement, the term
Allocable Portion of Distribution Fees and CDSCs payable in respect of the
Class B Shares of any Portfolio shall mean the portion of such Distribution
Fees and CDSCs allocated to such Distributor in accordance with the Allocation
Schedule attached hereto as Schedule A and the term "Date of Original
Issuance" shall have the meaning defined in such Allocation Schedule.
(x) For purposes of this Distribution Agreement, the term
"Complete Termination" of the Plan in respect of any Portfolio means a
termination of the Plan involving the complete cessation of the payment of
Distribution Fees in respect of all Class B Shares of the Portfolio, and the
termination of the distribution plans and the complete cessation of the
payment of distribution fees pursuant to every other Distribution Plan
pursuant to Rule 12b-1 of the Act in respect of the Class B Shares of the
Portfolio, any other Portfolio and any successor company, portfolio, fund or
trust, or any company, portfolio, fund or trust acquiring a substantial
portion of the assets of the Portfolio or any other Portfolio and for every
future class of shares of the Portfolio or any other such company, portfolio,
fund or trust which has substantially similar characteristics to the Class B
Shares of the Portfolio including the manner of payment and amount of sales
charge, contingent deferred sales charge or other similar charges borne
directly or indirectly by the holders of such shares.
Section 4. Duties of the Fund.
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(a) The Fund agrees to sell its shares so long as it has shares
available for sale; and to deliver certificates for, or cause the Fund's
transfer and dividend disbursing agent to issue non-negotiable share deposit
receipts evidencing, such shares registered in such names and amounts as the
Distributor has requested in writing, as promptly as practicable after receipt
by the Fund of the net asset value thereof and written request of the
Distributor therefor.
(b) The Fund shall keep the Distributor fully informed with regard
to its affairs and 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 of the Fund, and
this shall include one certified copy, upon request by the Distributor, of all
financial statements prepared for the Fund by independent accountants and such
reasonable number of copies of its most current Prospectus 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 Fund's
shares and in the performance of the Distributor under this Agreement.
(c) The Fund shall take, from time to time, all necessary action to
fix the number of authorized shares and such steps, including payment of the
related filing fee, as may be necessary to register the same under the 1933
Act to the end that there will be available for sale such number of shares as
the Distributor may be expected to sell. 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.
(d) The Fund shall use its best efforts to qualify and maintain the
qualification of an appropriate number of its 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 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 its Common Stock
in any state from the terms set forth in its Registration Statement and
Prospectus, to qualify as a foreign corporation in any state or to consent to
service of process in any state other than with respect to claims arising out
of the offering of its Common Stock. The Distributor shall furnish such
information and other material relating to its affairs and activities as may
be required by the Fund in connection with such qualifications.
Section 5. Expenses.
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(a) The Fund shall bear all costs and expenses of the continuous
offering of its shares in connection with: (i) fees and disbursements of its
counsel and independent accountants, (ii) the preparation, filing and printing
of any registration statements and/or prospectuses required by and under the
federal securities laws, (iii) the preparation and mailing of annual and
interim reports, prospectuses and proxy materials to shareholders and (iv) the
qualifications of shares of Common Stock for sale and of the Fund as a broker
or dealer under the securities laws of such states or other jurisdictions as
shall be selected by the Fund and the Distributor pursuant to Section 4(d)
hereof and the cost and expenses payable to each such state for continuing
qualification therein.
(b) The Distributor shall bear (i) the costs and expenses of
preparing, printing and distributing any materials not prepared by the Fund
and other materials used by the Distributor in connection with its offering of
shares for sale to the public, including the additional cost of printing
copies of the Prospectus and of annual and interim reports to shareholders
other than copies thereof required for distribution to shareholders or for
filing with any federal securities authorities, (ii) any expenses of
advertising incurred by the Distributor in connection with such offering and
(iii) the expenses of the registration or qualification of the Distributor as
a dealer or broker under federal or state laws and the expenses of continuing
such registration or qualification.
Section 6. Indemnification.
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The Fund agrees to indemnify, defend and hold the Distributor, its
officers and directors 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 expense (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which the Distributor, its officers,
directors or any such controlling person may incur under the 1933 Act, or
under common law or otherwise, arising out of or based upon any untrue
statement of a material fact contained in the Registration Statement or
Prospectus or arising out of or based upon any alleged omission to state a
material fact required to be stated in either thereof or necessary to make the
statements in either thereof not misleading, except insofar as such claims,
demands, liabilities or expenses arise out of or are based upon any such
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information furnished in writing by the
Distributor to the Fund for use in the Registration Statement or Prospectus;
provided, however, that this indemnity agreement, to the extent that it might
require indemnity of any person who is also an officer or director of the Fund
or who controls the Fund within the meaning of Section 15 of the 1933 Act,
shall not inure to the benefit of such officer, director or controlling person
unless a court competent jurisdiction shall determine, or it shall have been
determined by controlling precedent, that such result would not be against
public policy as expressed in the 1933 Act; and further provided, that in no
event shall anything contained herein be so construed as to protect the
Distributor against any liability to the Fund or to its security holders to
which the Distributor would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of its duties,
or by reason of its reckless disregard of its obligations under this
Agreement. The Fund's agreement to indemnify the Distributor, its officers
and directors and any such controlling person as aforesaid is expressly
conditioned upon the Fund's being promptly notified of any action brought
against the Distributor, its officers or directors, or any such controlling
person, such notification to be given by letter or telegram addressed to the
Fund at its principal business office. The Fund agrees promptly to notify the
Distributor of the commencement of any litigation or proceedings against it or
any of its officers or directors in connection with the issue and sale of any
shares of its capital stock.
The Distributor agrees to indemnify, defend and hold the Fund, its
officers and directors and any person who controls the Fund, if any, 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 against such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Fund, its directors
or officers, or any such controlling person may incur under the 1933 Act or
under common law or otherwise, but only to the extent that such liability or
expense incurred by the Fund, its directors or officers or such controlling
person resulting from such claims or demands shall arise out of or be based
upon any alleged untrue statement of a material fact contained in information
furnished in writing by the Distributor to the Fund for use in the
Registration Statement or Prospectus or shall arise out of or be based upon
any alleged omission to state a material fact in connection with such
information required to be stated in the Registration Statement or Prospectus
or necessary to make such information not misleading. The Distributor's
agreement to indemnify the Fund, its directors and officers, and any such
controlling person as aforesaid is expressly conditioned upon the Distributors
being promptly notified of any action brought against the Fund, its officers
or directors or any such controlling person, such notification being given to
the Distributor at its principal business office.
Section 7. Compliance with Securities Laws.
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The Fund represents that it is registered as a diversified open-end
management investment company under the 1940 Act, and agrees that it will
comply with all of 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 state "Blue
Sky" laws. The Distributor agrees to comply with all of the applicable terms
and provisions of the Securities Exchange Act of 1934.
Section 8. Term of Agreement; Termination.
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This Agreement shall commence on the first date set forth above. This
Agreement shall continue in effect for a period more than two years from the
date hereof only so long as such continuance is specifically approved at least
annually in conformity with requirements of the Investment Company Act of
1940.
This Agreement shall terminate automatically in the event of its
assignment (as defined by the 1940 Act). In addition, this Agreement may be
terminated by either party at any time, without penalty, on not more than
sixty days' nor less than thirty days' written notice to the other party.
Section 9. Notices.
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Any notice required to be given pursuant to this Agreement shall be
deemed duly given if delivered or mailed by registered mail, postage prepaid,
(1) to the Distributor at 000 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxx 00000,
Attention: Mutual Fund Department; or (2) to the Fund at 000 Xxxxx Xxxx
Xxxxxx, Xxxx Xxxx, Xxxxxxxxx 00000, Attention: Administration.
Section 10. Governing Law.
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This Agreement shall be governed and construed in accordance with the
laws of the State of Wisconsin.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
X.X. XXXXXXX AND COMPANY
/s/ Xxxxxx X. Xxxxxxxxx
By: ------------------------------------------
Xxxxxx X. Xxxxxxxxx, Senior Vice President
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
/s/ Xxxxxx X. Xxxxxxxxx
By: ------------------------------------------
Xxxxxx X. Xxxxxxxxx, President
SCHEDULE A
TO THE DISTRIBUTION AGREEMENT FOR
S&P 100 PLUS PORTFOLIO
DIVIDEND ACHIEVERS PORTFOLIO
SELECT VALUE PORTFOLIO
PSE TECH 100 INDEX PORTFOLIO
MANAGED GROWTH PORTFOLIO
(TOGETHER THE "PORTFOLIOS")
ALLOCATION PROCEDURES
The Distributor's Allocable Portion of Distribution Fees, Contingent
Deferred Sales Charges and Shareholder Servicing Fees in respect of Shares of
each Portfolio shall be 100% until such time as the Distributor shall cease to
serve as exclusive distributor of Shares of such Portfolio; thereafter
collections which constitute Contingent Deferred Sales Charges, Asset Based
Sales Charges and Shareholder Servicing Fees related to Shares of each
Portfolio shall be allocated among the Distributor and any successor
distributor ("Successor Distributor") in accordance with this Schedule A.
Defined terms used in this Schedule A and not otherwise defined herein
shall have the meaning assigned to them in the above referenced Distribution
Agreement. As used herein the following terms shall have the meanings
indicated:
"Commission Share" means in respect of any Portfolio, each Share of such
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Portfolio, which is issued under circumstances which would normally give rise
to an obligation of the holder of such Share to pay a Contingent Deferred
Sales Charge upon redemption of such Share (including, without limitation, any
Share of such Portfolio issued in connection with a permitted free exchange)
and any such Share shall continue to be a Commission Share of such Portfolio
prior to the redemption (including a redemption in connection with a permitted
free exchange) or conversion of such Share, even though the obligation to pay
the Contingent Deferred Sales Charge may have expired or conditions for
waivers thereof may exist.
"Date of Original Issuance" means in respect of any Commission Share, the
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date with reference to which the amount of the Contingent Deferred Sales
Charge payable on redemption thereof, if any, is computed.
"Free Share" means, in respect of any Portfolio, each Share of such
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Portfolio, other than a Commission Share or Omnibus Share (including, without
limitation, any Share issued in connection with the reinvestment of dividends
or capital gains).
"Inception Date" means in respect of any Portfolio, the first date on
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which such Portfolio issued Shares.
"Net Asset Value" means, (i) with respect to any Portfolio, as of the
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date any determination thereof is made, the net asset value of such Portfolio
computed in the manner such value is required to be computed by such Portfolio
in its reports to its shareholders, and (ii) with respect to any Share of such
Portfolio as of any date, the quotient obtained by dividing: (A) the net
asset value of such Portfolio (as computed in accordance with clause (i)
above) allocated to Shares of such Portfolio (in accordance with the
constituent documents for such Portfolio) as of such date, by (B) the number
of Shares of such Portfolio outstanding on such date.
"Omnibus Share" means, in respect of any Portfolio, a commission share
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sold by one of the Selling Agents listed on Exhibit I or related free share
issued in connection with the reinvestment of dividends or capital gains for
such share. If, subsequent to closing of the Program, the Distributor and its
Transferees reasonably determine that the Transfer Agent is able provide
information to track all commission shares sold by any of the Selling Agents
listed on Exhibit I (and related free shares in the same manner as Commission
Shares and Free Shares are currently tracked in respect of Selling Agents not
listed on Exhibit I, then Exhibit I shall be amended to delete such Selling
Agent from Exhibit I so that commission shares sold by such Selling Agent (and
related free shares) will no longer be treated as Omnibus Shares.
PART I: ATTRIBUTION OF SHARES
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Shares of each Portfolio, which are outstanding from time to time, shall
be attributed to the Distributor and each Successor Distributor in accordance
with the following rules;
(1) Commission Shares:
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(a) Commission Shares which are not Omnibus Shares attributed to
the Distributor shall be Commission Shares which are not Omnibus Shares the
Date of Original Issuance of which occurred on or after the Inception Date of
such Portfolio and on or prior to the date the Distributor ceased to be the
exclusive distributor of Shares of such Portfolio.
(b) Commission Shares which are not Omnibus Shares attributable to
each successor Distributor shall be Commission Shares which are not Omnibus
Shares, the Date of Original Issuance of which occurs after the date such
Successor Distributor became the exclusive distributor of Shares of such
Portfolio and on or prior to the date such Successor Distributor ceased to be
the exclusive Distributor of Shares of the Fund.
(c) A Commission Share which is not an Omnibus Share of a
particular Portfolio (the "Issuing Portfolio") issued in consideration of the
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investment of proceeds of the redemption of a Commission Share which is not an
Omnibus Share of another Portfolio (the "Redeeming Portfolio") in connection
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with a permitted free exchange, is deemed to have a Date of Original Issuance
identical to the Date of Original Issuance of the Commission Share of the
Redeeming Portfolio and any such Commission Share will be attributed to the
Distributor or Successor Distributor based upon such Date of Original Issuance
in accordance with rules (a) and (b) above.
(d) A Commission Share which is not an Omnibus Share redeemed
(other than in connection with a permitted free exchange) or converted to a
Class A share is attributable to the Distributor or Successor Distributor
based upon the Date of Original Issuance in accordance with rule (a), (b) and
(c) above.
(2) Free Shares:
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Free Shares which are not Omnibus Shares of a Portfolio outstanding on
any date shall be attributed to the Distributor or Successor Distributor, as
the case may be, in the same proportion that the Commission Shares which are
not Omnibus Shares of such Portfolio outstanding on such date are attributed
to each on such date; provided that if the Distributor and its Transferees
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reasonably determine that the Transfer Agent is able to produce monthly
reports which track the Date of Original Issuance for such Free Shares, then
such Free Shares shall be allocated pursuant to clause 1(a), (b) and (c)
above.
(3) Omnibus Shares:
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Omnibus Shares of a Portfolio outstanding on any date shall be
attributed to the Distributor or Successor Distributor, as the case may be, in
the same proportion that the Commission Shares which are not Omnibus Shares of
such Portfolio outstanding on such date are attributed to each on such date;
provided that if the Distributor and its Transferees reasonably determine that
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the Transfer Agent is able to produce monthly reports which track the Date of
Original Issuance for the Omnibus Shares, then the Omnibus Shares shall be
allocated pursuant to clause 1(a), (b) and (c) above.
PART II: ALLOCATION OF CONTINGENT DEFERRED SALES CHARGES ("CDSCS")
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(1) CDSCs Related to the Redemption of Commission Shares which are not
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Omnibus Shares:
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CDSCs in respect of the redemption of Commission Shares which are not
Omnibus Shares shall be allocated to the Distributor or a Successor
Distributor depending upon whether the related redeemed Commission Share is
attributable to the Distributor or such Successor Distributor, as the case may
be, in accordance with Part I above.
(2) CDSCs Related to the Redemption of Omnibus Shares:
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CDSCs in respect of the redemption of Omnibus Shares shall be allocated
to the Distributor or a Successor Distributor in the same proportion that the
CDSCs related to the redemption of Commission Shares are allocated to each
thereof; provided that if the Distributor and its Transferees reasonably
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determine that the Transfer Agent is able to produce monthly reports which
track the Date of Original Issuance for the Omnibus Shares, then the CDSCs in
respect of the redemption of Omnibus Shares shall be allocated among the
Distributor and any Successor Distributors depending on whether the related
redeemed Omnibus Share is attributable to the Distributor or a Successor
Distributor, as the case may be, in accordance with Part I above.
PART III: ALLOCATION OF ASSET BASED SALES CHARGES
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Assuming that the Asset Based Sales Charge remains constant over time and
among Portfolios so that Part V hereof does not become operative:
(1) The portion of the aggregate Asset Based Sales Charges accrued in
respect of all Shares of all Portfolios during any calendar month allocable to
the Distributor or a Successor Distributor is determined by multiplying the
total of such Asset Based Sales Charges by the following fraction:
(A+C)/2
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(B+D)/2
where:
A = The aggregate Net Asset Value of all Shares of all Portfolios
attributed to the Distributor or such Successor Distributor, as
the case may be, and outstanding at the beginning of such
calendar month
B = The aggregate Net Asset Value of all Shares of all Portfolios
at the beginning of such calendar month
C = The aggregate Net Asset Value of all Shares of all Portfolios
attributed to the Distributor or such Successor Distributor, as
the case may be, and outstanding at the end of such calendar
month
D = The aggregate Net Asset Value of all Shares of all Portfolios
at the end of such calendar month
(2) If the Distributor and its Transferees reasonably determine
that the Transfer Agent is able to produce automated monthly reports which
allocate the average Net Asset Value of the Commission Shares (or all Shares
if available) of all Portfolios among the Distributor and any Successor
Distributors in a manner consistent with the methodology detailed in Part I
and Part III(1) above, the portion of the Asset Based Sales Charges accrued in
respect of all such Shares of all Portfolios during a particular calendar
month will be allocated to the Distributor or a Successor Distributor by
multiplying the total of such Asset Based Sales Charges by the following
fraction:
(A)/(B)
where:
A = Average Net Asset Value of all such Shares of all Portfolios
for such calendar month attributed to the Distributor or a
Successor Distributor, as the case may be
B = Total average Net Asset Value of all such Shares of all
Portfolios for such calendar month
PART IV: ALLOCATION OF SHAREHOLDER SERVICING FEES
--------------------------------------------------
Assuming that the Shareholder Servicing Fee for all Shares remains
constant over time and among Portfolios so that Part V hereof does not become
operative:
(1) Unless clause (2) below is applicable, the portion of the
aggregate Shareholder Servicing Fees which are accrued by or in respect of all
Portfolios during any calendar month allocated to the Distributor or a
Successor Distributor shall be determined by multiplying the total amount of
Shareholder Servicing Fees accruing during such calendar month by the
following fraction:
(A+C)/2
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(B+D)/2
where:
A = The aggregate Net Asset Value of all Commission Shares (or all
Shares if available) of all Portfolios, which are attributed to
the Distributor or such Successor Distributor and outstanding
at the beginning of such calendar month
B = The aggregate Net Asset Value of all Commission Shares (or all
Shares if available) of all Portfolios which are outstanding at
the beginning of such calendar month
C = The aggregate Net Asset Value of all Commission Shares (or all
Shares if available) of all Portfolios, which are attributed to
the Distributor or such Successor Distributor and outstanding
at the end of such calendar month
D = The aggregate Net Asset Value of all Commission Shares (or all
Shares if available) of all Portfolios, which are outstanding
at the end of such calendar month
(2) If the Distributor and its Transferees reasonably determine
that the Transfer Agent is able to produce automated monthly reports which
allocate the average Net Asset Value of the Shares of all Portfolios among the
Distributor and any Successor Distributor in a manner consistent with the
methodology detailed in Part I and Part III(1) above, the portion of the
Shareholder Servicing Fees accrued during a particular calendar month
allocated to the Distributor or a Successor Distributor shall be determined by
multiplying the total amount of Shareholder Servicing Fees accruing during
such calendar month by the following fraction:
(A)/(B)
where:
A = Average Net Asset Value of all Commission Shares (or all Shares
if available) of all Portfolios for such calendar month
attributed to the Distributor or a Successor Distributor, as
the case may be
B = Total average Net Asset Value of all Commission Shares (or all
Shares if available) of all Portfolios for such calendar month
PART V: ADJUSTMENT OF THE DISTRIBUTOR'S ALLOCABLE PORTION AND EACH SUCCESSOR
------------------------------------------------------------------------------
DISTRIBUTOR'S ALLOCABLE PORTION
-------------------------------
The Parties to the Distribution Agreement recognize that, if the terms of
any distributor's contract, any distribution plan, any prospectus, the conduct
rules or any other applicable law change, which change disproportionately
reduces, in a manner inconsistent with the intent of this Distribution
Agreement, the amount of the Distributor's Allocable Portion or each Successor
Distributor's Allocable Portion had no such change occurred, the definitions
of the Distributor's Allocable Portion and/or the Successor Distributor's
Allocable Portion in respect of the Shares relating to such Portfolio shall be
adjusted by agreement among the Distributor, its Transferees, each Successor
Distributor and the Company; provided, however, if the Distributor, its
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Transferees, each Successor Distributor and the Company cannot agree within
thirty (30) days after the date of any such change in applicable laws or in
any distributor's contract, distribution plan, prospectus or the conduct
rules, they shall submit the question to arbitration in accordance with the
commercial arbitration rules of the American Arbitration Association and the
decision reached by the arbitrator shall be final and binding on each of them.
Exhibit I to
Schedule A
to the
Distribution Agreement
