THE AMERICAN FUNDS TAX-EXEMPT SERIES I
AMENDED AND RESTATED PRINCIPAL UNDERWRITING AGREEMENT
THIS PRINCIPAL UNDERWRITING AGREEMENT, is between THE AMERICAN
FUNDS TAX-EXEMPT SERIES I, a Massachusetts business trust (the "Trust"), and
AMERICAN FUNDS DISTRIBUTORS, INC., a California corporation (the "Distributor").
W I T N E S S E T H:
WHEREAS, the Trust is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as an open-end diversified investment
company which offers two series each with five classes of shares of beneficial
interest, designated as Class A shares, Class B shares, Class C shares, Class F
shares, and Class R-5 shares, and it is a part of the business of the Trust, and
affirmatively in the interest of the Trust, to offer shares of the Trust either
from time to time or continuously as determined by the Trust's officers subject
to authorization by its Board of Trustees; and
WHEREAS, the Distributor is engaged in the business of
promoting the distribution of shares of investment companies through securities
broker-dealers; and
WHEREAS, the Trust and the Distributor wish to enter into an
agreement with each other to promote the distribution of the shares of the Trust
and of all series or classes of the Trust which may be established in the
future;
NOW, THEREFORE, the parties agree as follows:
1. (a) The Distributor shall be the exclusive principal underwriter for the
sale of the shares of the Trust and of each series or class of the Trust which
may be established in the future, except as otherwise provided pursuant to the
following subsection (b). The terms "shares of Trust" or "shares" as used herein
shall mean shares of common stock of the Trust and each series or class which
may be established in the future and become covered by this Agreement in
accordance with Section 30 of this Agreement.
(b) The Trust may, upon 60 days' written notice to the Distributor, from
time to time designate other principal underwriters of its shares with respect
to areas other than the North American continent, Hawaii, Puerto Rico, and such
countries or other jurisdictions as to which the Trust may have expressly waived
in writing its right to make such designation. In the event of such designation,
the right of the Distributor under this Agreement to sell shares in the areas so
designated shall terminate, but this Agreement shall remain otherwise in full
force and effect until terminated in accordance with the other provisions
hereof.
2. In the sale of shares of the Trust, the Distributor shall act as agent
of the Trust except in any transaction in which the Distributor sells such
shares as a dealer to the public, in which event the Distributor shall act as
principal for its own account.
3. The Trust shall sell shares only through the Distributor, except that
the Trust may, to the extent permitted by the 1940 Act and the rules and
regulations promulgated thereunder or pursuant thereto, at any time:
(a) issue shares to any corporation, association, trust, partnership
or other organization, or its, or their, security holders, beneficiaries or
members, in connection with a merger, consolidation or reorganization to
which the Trust is a party, or in connection with the acquisition of all or
substantially all the property and assets of such corporation, association,
trust, partnership or other organization;
(b) issue shares at net asset value to the holders of shares of
capital stock or beneficial interest of other investment companies served
as investment adviser by any affiliated company or companies of The Capital
Group Companies, Inc., to the extent of all or any portion of amounts
received by such shareholders upon redemption or repurchase of their shares
by the other investment companies;
(c) issue shares at net asset value to its shareholders in connection
with the reinvestment of dividends paid and other distributions made by the
Trust;
(d) issue shares at net asset value to persons entitled to purchase
shares at net asset value without sales charge or contingent deferred sales
charge as described in the Trust's current Registration Statement in effect
under the Securities Act of 1933, as amended, for each series issued by the
Trust at the time of such offer or sale.
4. The Distributor shall devote its best efforts to the sale of shares of
the Trust and shares of any other mutual funds served as investment adviser by
affiliated companies of The Capital Group Companies, Inc., and insurance
contracts funded by shares of such mutual funds, for which the Distributor has
been authorized to act as a principal underwriter for the sale of shares. The
Distributor shall maintain a sales organization suited to the sale of shares of
the Trust and shall use its best efforts to effect such sales in jurisdictions
as to which the Trust shall have expressly waived in writing its right to
designate another principal underwriter pursuant to subsection 1(b) hereof, and
shall effect and maintain appropriate qualification to do so in all those
jurisdictions in which it sells or offers shares for sale and in which
qualification is required.
5. Within the United States of America, all dealers to whom the Distributor
shall offer and sell shares must be duly licensed and qualified to sell shares
of the Trust. Shares sold to dealers shall be for resale by such dealers only at
the public offering price set forth in the current Prospectus of the Trust's
Registration Statement in effect under the Securities Act of 1933, as amended
("Prospectus"). The Distributor shall not, without the consent of the Trust,
sell or offer for sale any shares of a series or class issued by the Trust other
than as principal underwriter pursuant to this Agreement.
6. In its sales to dealers, it shall be the responsibility of the
Distributor to insure that such dealers are appropriately qualified to transact
business in the shares under applicable laws, rules and regulations promulgated
by such national, state, local or other governmental or quasi-governmental
authorities as may in a particular instance have jurisdiction.
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7. The applicable public offering price of shares shall be the price which
is equal to the net asset value per share, as shall be determined by the Trust
in the manner and at the time or times set forth in and subject to the
provisions of the Prospectus of the Trust.
8. All orders for shares received by the Distributor shall, unless rejected
by the Distributor or the Trust, be accepted by the Distributor immediately upon
receipt and confirmed at an offering price determined in accordance with the
provisions of the Prospectus and the 1940 Act, and applicable rules in effect
thereunder. The Distributor shall not hold orders subject to acceptance nor
otherwise delay their execution. The provisions of this Section shall not be
construed to restrict the right of the Trust to withhold shares from sale under
Section 20 hereof.
9. The Trust or its transfer agent shall be promptly advised of all orders
received, and shall cause shares to be issued upon payment therefor in New York
or Los Angeles Clearing House Funds.
10. The Distributor shall adopt and follow procedures as approved by the
officers of the Trust for the confirmation of sales to dealers, the collection
of amounts payable by dealers on such sales, and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the
Securities and Exchange Commission or the National Association of Securities
Dealers, Inc. ("NASD"), as such requirements may from time to time exist.
11. The Distributor, as a principal underwriter under this Agreement for
Class A shares, shall receive (i) that part of the sales charge which is
retained by the Distributor after allowance of discounts to dealers, unless
waived by the Distributor for certain qualified fee-based programs, as set forth
in the Prospectus of the Trust, and (ii) amounts payable to the Distributor
pursuant to the Trust's Plan of Distribution under Rule 12b-1 under the 1940 Act
relating to its Class A shares.
12. The Distributor, as principal underwriter under this agreement for
Class B shares shall receive (i) distribution fees as commissions for the sale
of Class B shares and contingent deferred sales charges ("CDSC") (as defined
below), as set forth in the Trust's Prospectus, and (ii) shareholder service
fees at the rate of 0.25% per annum of the average net asset value of Class B
shares pursuant to the Trust's Plans of Distribution under Rule 12b-1 under the
1940 Act relating to its Class B shares (the " Class B Plans").
(a) In accordance with the Class B Plans, and subject to the limit on
asset-based sales charges set forth in NASD Conduct Rule 2830 (and any
successor provision thereto), the Trust shall pay to the Distributor or, at
the Distributor's direction, to a third-party, monthly in arrears on or
prior to the 10th business day of the following calendar month, the
Distributor's Allocable Portion (as defined below) of a fee (the
"Distribution Fee") which shall accrue daily in an amount equal to the
product of (A) the daily equivalent of 0.75% per annum multiplied by (B)
the net asset value of the Class B shares of the Trust outstanding on such
day. The Trust agrees to withhold from redemption proceeds of the Class B
shares, the Distributor's Allocable Portion of any CDSCs payable with
respect to the Class B shares, as provided in the Trust's Prospectus, and
to pay the same over to the Distributor or, at the Distributor's direction
to a third-party, at the time the redemption proceeds are payable to the
3
holder of such shares redeemed. Payment of these CDSC amounts to the
Distributor is not contingent upon the adoption or continuation of any
Class B Plans.
(b) For purposes of this Agreement, the term "Allocable Portion" of
Distribution Fees and CDSCs payable with respect to Class B shares shall
mean the portion of such Distribution Fees and CDSC allocated to the
Distributor in accordance with the Allocation Schedule attached hereto as
Schedule A.
(c) The Distributor shall be considered to have completely earned the
right to the payment of its Allocable Portion of the Distribution Fees and
the right to payment of its Allocable Portion of the CDSCs with respect to
each "Commission Share" (as defined in the Allocation Schedule attached
hereto as Schedule A) upon the settlement date of such Commission Share
taken into account in determining the Distributor's Allocable Portion of
Distribution Fees.
(d) The provisions set forth in Section 1 of the Class B Plans (in
effect on the date hereof) relating to Class B shares, together with the
related definitions are hereby incorporated into this Section 12 by
reference with the same force and effect as if set forth herein in their
entirety.
13. The Distributor, as principal underwriter under this agreement for
Class C shares shall receive (i) distribution fees as commissions for the sale
of Class C shares and CDSCs, as set forth in the Trust's Prospectus, and (ii)
shareholder service fees at the rate of 0.25% per annum of the average net asset
value of Class C shares pursuant to the Trust's Plans of Distribution under Rule
12b-1 under the 1940 Act relating to its Class C shares (the "Class C Plans").
(a) In accordance with the Class C Plans, and subject to the limit on
asset-based sales charges set forth in NASD Conduct Rule 2830 (and any
successor provision thereto), the Trust shall pay to the Distributor, no
more frequently than monthly in arrears within 30 days of receipt of an
invoice for payment, the Distributor's Allocable Portion (as defined below)
of a fee (the "Distribution Fee") which shall accrue daily in an amount
equal to the daily equivalent of 0.75% per annum of the net asset value of
the Class C shares outstanding on such day. The Trust agrees to withhold
from redemption proceeds of the Class C shares, the Distributor's Allocable
Portion of any CDSCs payable with respect to the Class C shares, as
provided in the Trust's Prospectus and to pay the same over to the
Distributor, or, at the Distributor's direction to a third party, at the
time the redemption proceeds are payable to the holder of such shares
redeemed. Payment of these CDSC amounts to the Distributor is not
contingent upon the adoption or continuation of any Class C Plans.
(b) For purposes of this Agreement, the term "Allocable Portion" of
Distribution Fees and CDSCs payable with respect to Class C shares shall
mean the portion of such Distribution Fees and CDSC allocated to the
Distributor in accordance with the Allocation Schedule attached hereto as
Schedule B.
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(c) The Distributor shall be considered to have completely earned the
right to the payment of its Allocable Portion of the Distribution Fees and
the right to payment of its Allocable Portion of the CDSCs with respect to
each "Commission Share" (as defined in the Allocation Schedule attached
hereto as Schedule B) upon the settlement date of such Commission Share
taken into account in determining the Distributor's Allocable Portion of
Distribution Fees.
(d) The provisions set forth in Section 1 of the Class C Plans (in
effect on the date hereof) relating to Class C shares, together with the
related definitions are hereby incorporated into this Section 13 by
reference with the same force and effect as if set forth herein in their
entirety.
14. The Distributor, as principal underwriter under this agreement for
Class F shares, shall receive shareholder service fees at the rate of 0.25% per
annum of the average net asset value of Class F shares pursuant to the Trust's
Plans of Distribution under Rule 12b-1 under the 1940 Act relating to its Class
F shares (the "Class F Plans").
15. The Distributor, as principal underwriter under this agreement for
Class R-5 shares shall receive no compensation for the sale of Class R-5 shares.
16. The Trust agrees to use its best efforts to maintain its
registration as a diversified open-end management investment company under the
0000 Xxx.
17. The Trust agrees to use its best efforts to maintain an effective
Prospectus under the Securities Act of 1933, as amended, and warrants that such
Prospectus will contain all statements required by and will conform with the
requirements of such Securities Act of 1933 and the rules and regulations
thereunder, and that no part of any such Prospectus, at the time the
Registration Statement of which it is a part becomes effective, will contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein not misleading
(excluding any information provided by the Distributor in writing for inclusion
in the Prospectus). The Distributor agrees and warrants that it will not in the
sale of shares use any Prospectus, advertising or sales literature not approved
by the Trust or its officers nor make any untrue statement of a material fact
nor omit the stating of a material fact necessary in order to make the
statements made, in the light of the circumstances under which they are made,
not misleading. The Distributor agrees to indemnify and hold the Trust harmless
from any and all loss, expense, damage and liability resulting from a breach of
the agreements and warranties contained in this Section, or from the use of any
sales literature, information, statistics or other aid or device employed in
connection with the sale of shares.
18. The expense of each printing of each Prospectus and each revision
thereof or addition thereto deemed necessary by the Trust's officers to meet the
requirements of applicable laws shall be divided between the Trust, the
Distributor and any other principal underwriter of the shares of the Trust as
follows:
(a) the Trust shall pay the typesetting and make-ready charges;
5
(b) the printing charges shall be prorated between the Trust, the
Distributor, and any other principal underwriter(s) in accordance with the
number of copies each receives; and
(c) expenses incurred in connection with the foregoing, other than to
meet the requirements of the Securities Act of 1933, as amended, or other
applicable laws, shall be borne by the Distributor, except in the event
such incremental expenses are incurred at the request of any other
principal underwriter(s), in which case such incremental expenses shall be
borne by the principal underwriter(s) making the request.
19. The Trust agrees to use its best efforts to qualify and maintain the
qualification of an appropriate number of the shares of each series or class it
offers for sale under the securities laws of such states as the Distributor and
the Trust may approve. Any such qualification for any series or class may be
withheld, terminated or withdrawn by the Trust at any time in its discretion.
The expense of qualification and maintenance of qualification shall be borne by
the Trust, but the Distributor shall furnish such information and other material
relating to its affairs and activities as may be required by the Trust or its
counsel in connection with such qualifications.
20. The Trust may withhold shares of any series or class from sale to any
person or persons or in any jurisdiction temporarily or permanently if, in the
opinion of its counsel, such offer or sale would be contrary to law or if the
Trustees or the President or any Vice President of the Trust determines that
such offer or sale is not in the best interest of the Trust. The Trust will give
prompt notice to the Distributor of any withholding and will indemnify it
against any loss suffered by the Distributor as a result of such withholding by
reason of nondelivery of shares of any series or class after a good faith
confirmation by the Distributor of sales thereof prior to receipt of notice of
such withholding.
21. (a) This Agreement may be terminated at any time, without payment
of any penalty, as to the Trust or any series on sixty (60) days' written
notice by the Distributor to the Trust.
(b) This Agreement may be terminated as to the Trust or any series or
class by either party upon five (5) days' written notice to the other party
in the event that the Securities and Exchange Commission has issued an
order or obtained an injunction or other court order suspending
effectiveness of the Registration Statement covering the shares of the
Trust or such series or class.
(c) This Agreement may be terminated as to the Trust or any series or
class by the Trust upon five (5) days' written notice to the Distributor
provided either of the following events has occurred:
(i) the NASD has expelled the Distributor or suspended its
membership in that organization; or
(ii) the qualification, registration, license or right of the
Distributor to sell shares of any series in a particular state has
been suspended or canceled by the State of California or any other
state in which sales of the shares of the Trust or
6
such series during the most recent 12-month period exceeded 10% of all
shares of such series sold by the Distributor during such period.
(d) This Agreement may be terminated as to the Trust or any
series or class at any time on sixty (60) days' written notice to the
Distributor without the payment of any penalty, by vote of a majority
of the Independent Trustees or by vote of a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of the
Trust or such series or class.
22. This Agreement shall not be assignable by either party hereto and in
the event of assignment shall automatically terminate forthwith. The term
"assignment" shall have the meaning set forth in the 1940 Act. Notwithstanding
this Section, this Agreement, with respect to the Trust's Class B and Class
529-B shares, has been approved in accordance with Section 25 in anticipation of
the Distributor's transfer of its Allocable Portion of Distribution Fees and
CDSCs (but not its obligations under this Agreement) to a third-party pursuant
to a "Purchase and Sale Agreement" in order to raise funds to cover distribution
expenditures, and such transfer will not cause a termination of this Agreement.
If Distributor determines to transfer its Allocable Portion of Distribution Fees
and CDSCs in respect of Class C or Class 529-C shares to a third party, such
transfer shall not cause a termination of this Agreement.
23. No provision of this Agreement shall protect or purport to protect the
Distributor against any liability to the Trust or holders of its shares for
which the Distributor would otherwise be liable by reason of willful
misfeasance, bad faith, or gross negligence.
24. This Agreement shall become effective on July 15, 2002. Unless sooner
terminated in accordance with the other provisions hereof, this Agreement shall
continue in effect until July 31, 2003, and shall continue in effect from year
to year thereafter but only so long as such continuance is specifically approved
at least annually by (i) the vote of a majority of the Independent Trustees of
the Trust cast in person at a meeting called for the purpose of voting on such
approval, and (ii) the vote of either a majority of the entire Board of Trustees
of the Trust or a majority (within the meaning of the 0000 Xxx) of the
outstanding voting securities of the Trust.
25. If the Trust shall at any time issue shares in more than one series or
class, this Agreement shall take effect with respect to such series or class of
the Trust which may be established in the future at such time as it has been
approved as to such series or class by vote of the Board of Trustees and the
Independent Trustees in accordance with Section 24. The Agreement as approved
with respect to any series or class shall specify the compensation payable to
the Distributor pursuant to Sections 11 through 15, as well as any provisions
which may differ from those herein with respect to such series, subject to
approval in writing by the Distributor.
This Agreement may be approved, amended, continued or renewed with respect
to a series or class as provided herein notwithstanding such approval,
amendment, continuance or renewal has not been effected with respect to any one
or more other series or class of the Trust.
This Agreement shall be construed under and shall be governed by the laws
of the State of California, and the parties hereto agree that proper venue of
any action with respect hereto shall be Los Angeles County, California.
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IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed in duplicate original by their officers thereunto duly
authorized, as of March 21, 2002.
AMERICAN FUNDS DISTRIBUTORS, INC. THE AMERICAN FUNDS TAX-EXEMPT SERIES I
By: By:
------------------------------ ---------------------------------
Xxxxx X. Xxxxxxxx Xxxxx X. Xxxxx, Xx.
President Chairman of the Board
By: By:
------------------------------ --------------------------------
Xxxxxxx X. Xxxxxx Xxxxxx X. Xxxxxxxxxx
Secretary Secretary
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SCHEDULE A
to the
Amended and Restated Principal Underwriting Agreement
ALLOCATION SCHEDULE
The following relates solely to Class B shares.
The Distributor's Allocable Portion of Distribution Fees and CDSCs in
respect of Class B shares shall be 100% until such time as the Distributor shall
cease to serve as exclusive distributor of Class B shares; thereafter,
collections that constitute CDSCs and Distribution Fees relating to Class B
shares shall be allocated among the Distributor and any successor distributor
("Successor Distributor") in accordance with this Schedule.
Defined terms used in this Schedule and not otherwise defined herein shall
have the meanings assigned to them in the Amended and Restated Principal
Underwriting Agreement (the "Distribution Agreement"), of which this Schedule is
a part. As used herein the following terms shall have the meanings indicated:
"Commission Share" means each B share issued under circumstances which
would normally give rise to an obligation of the holder of such share to
pay a CDSC upon redemption of such share (including, without limitation,
any B share issued in connection with a permitted free exchange), and any
such share shall continue to be a Commission Share of the applicable Fund
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 CDSC may have expired or conditions for waivers
thereof may exist.
"Date of Original Issuance" means in respect of any Commission Share,
the date with reference to which the amount of the CDSC payable on
redemption thereof, if any, is computed.
"Free Share" means, in respect of a Fund, each B share of the Fund,
other than a Commission Share (including, without limitation, any B share
issued in connection with the reinvestment of dividends or capital gains).
"Inception Date" means in respect of a Fund, the first date on which
the Fund issued shares.
"Net Asset Value" means the net asset value determined as set forth in
the Prospectus of each Fund.
"Omnibus Share" means, in respect of a Fund, a Commission Share or
Free Share sold by one of the selling agents maintaining shares in an
omnibus account. If, subsequent to the Successor Distributor becoming
exclusive distributor of the Class B shares, the Distributor reasonably
determines that the transfer agent is able to track all Commission Shares
and Free Shares sold by any of the selling agents listed on Exhibit I in
the same manner as Commission Shares and
A-1
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 and Free Shares sold by such
selling agent will no longer be treated as Omnibus Shares.
PART I: ATTRIBUTION OF CLASS B SHARES
Class B shares that 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 other than Omnibus Shares:
(a) Commission Shares that are not Omnibus Shares ("Non-Omnibus
Commission Shares") attributed to the Distributor shall be those
Non-Omnibus Commission Shares the Date of Original Issuance of which
occurred on or after the Inception Date of the applicable Fund and on
or prior to the date the Distributor ceased to be exclusive
distributor of Class B shares of the Fund.
(b) Non-Omnibus Commission Shares attributable to each Successor
Distributor shall be those Non-Omnibus Commission Shares the Date of
Original Issuance of which occurs after the date such Successor
Distributor became the exclusive distributor of Class B shares of the
Fund and on or prior to the date such Successor Distributor ceased to
be the exclusive distributor of Class B shares of the Fund.
(c) A Non-Omnibus Commission Share of a Fund issued in
consideration of the investment of proceeds of the redemption of a
Non-Omnibus Commission Share of another fund (the "Redeeming Fund") in
connection with a permitted free exchange, is deemed to have a Date of
Original Issuance identical to the Date of Original Issuance of the
Non-Omnibus Commission Share of the Redeeming Fund, 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.
(2) Free Shares:
Free Shares that are not Omnibus Shares ("Non-Omnibus Free Shares") of
a Fund outstanding on any date shall be attributed to the Distributor or a
Successor Distributor, as the case may be, in the same proportion that the
Non-Omnibus Commission Shares of a Fund outstanding on such date are
attributed to each on such date; provided that if the Distributor and its
transferees reasonably determines that the transfer agent is able to
produce monthly reports that track the Date of Original Issuance for such
Non-Omnibus Free Shares, then such Free Shares shall be allocated pursuant
to clause 1(a), (b) and (c) above.
(3) Omnibus Shares:
Omnibus Shares of a Fund outstanding on any date shall be attributed
to the Distributor or a Successor Distributor, as the case may be, in the
same proportion that the Non- Omnibus Commission Shares of the applicable
Fund outstanding on such date are attributed to it on
A-2
such date; provided that if the Distributor reasonably determines that the
transfer agent is able to produce monthly reports that 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 CDSCs
(1) CDSCs Related to the Redemption of Non-Omnibus Commission Shares:
CDSCs in respect of the redemption of Non-Omnibus Commission 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:
CDSCs in respect of the redemption of Omnibus Shares shall be
allocated to the Distributor or a Successor Distributor in the same
proportion that CDSCs related to the redemption of Non-Omnibus Commission
Shares are allocated to each thereof; provided, that if the Distributor
reasonably determines 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 Distributor 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 DISTRIBUTION FEE
Assuming that the Distribution Fee remains constant over time so that
Part IV hereof does not become operative:
(1) The portion of the aggregate Distribution Fee accrued in respect
of all Class B shares of a Fund during any calendar month allocable to the
Distributor or a Successor Distributor is determined by multiplying the
total of such Distribution Fee by the following fraction:
(A + C)/2
-----------------
(B + D)/2
where:
A= The aggregate Net Asset Value of all Class B shares of a Fund
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 Class B shares of a Fund at the
beginning of such calendar month
C= The aggregate Net Asset Value of all Class B shares of a Fund
attributed to the Distributor or such Successor Distributor, as the
case may be, and outstanding at the end of such calendar month
A-3
D= The aggregate Net Asset Value of all Class B shares of a Fund at the
end of such calendar month
(2) If the Distributor reasonably determines that the transfer agent is
able to produce automated monthly reports that allocate the average Net Asset
Value of the Commission Shares (or all Class B shares if available) of a Fund
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
Distribution Fee accrued in respect of all such Class B shares of a Fund during
a particular calendar month will be allocated to the Distributor or a Successor
Distributor by multiplying the total of such Distribution Fee by the following
fraction:
(A)/(B)
where:
A= Average Net Asset Value of all such Class B shares of a Fund 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 Class B shares of a Fund for such
calendar month
PART IV: 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 so as to disproportionately reduce, in
a manner inconsistent with the intent of this Distribution Agreement, the amount
of the Distributor's Allocable Portion or any 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 Class B shares relating to a Fund shall be adjusted by agreement
among the relevant parties; provided, however, if the Distributor, the Successor
Distributor and the Fund 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.
A-4
SCHEDULE B
to the
Amended and Restated Principal Underwriting Agreement
ALLOCATION SCHEDULE
The following relates solely to Class C shares.
The Distributor's Allocable Portion of Distribution Fees and CDSCs in
respect of Class C shares shall be 100% until such time as the Distributor shall
cease to serve as exclusive distributor of Class C shares; thereafter,
collections that constitute CDSCs and Distribution Fees relating to Class C
shares shall be allocated among the Distributor and any successor distributor
("Successor Distributor") in accordance with this Schedule. At such time as the
Distributor's Allocable Portion of the Distribution Fees equals zero, the
Successor Distributor shall become the Distributor for purposes of this
Allocation Schedule.
Defined terms used in this Schedule and not otherwise defined herein shall
have the meanings assigned to them in the Amended and Restated Principal
Underwriting Agreement (the "Distribution Agreement"), of which this Schedule is
a part. As used herein the following terms shall have the meanings indicated:
"Commission Share" means each C share issued under circumstances which
would normally give rise to an obligation of the holder of such share to
pay a CDSC upon redemption of such share (including, without limitation,
any C share issued in connection with a permitted free exchange), and any
such share shall continue to be a Commission Share of the applicable Fund
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 CDSC may have expired or conditions for waivers
thereof may exist.
"Date of Original Issuance" means in respect of any Commission Share,
the date with reference to which the amount of the CDSC payable on
redemption thereof, if any, is computed.
"Free Share" means, in respect of a Fund, each C share of the Fund,
other than a Commission Share (including, without limitation, any C share
issued in connection with the reinvestment of dividends or capital gains).
"Inception Date" means in respect of a Fund, the first date on which
the Fund issued shares.
"Net Asset Value" means the net asset value determined as set forth in
the Prospectus of each Fund.
"Omnibus Share" means, in respect of a Fund, a Commission Share or
Free Share sold by one of the selling agents maintaining shares in an
omnibus account ("Omnibus Selling Agents").
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If, subsequent to the Successor Distributor becoming exclusive distributor of
the Class C shares, the Distributor reasonably determines that the transfer
agent is able to track all Commission Shares and Free Shares sold by any of the
Omnibus Selling Agents in the same manner as Non-Omnibus Commission Shares and
Free Shares (defined below) are currently tracked, then Omnibus Shares of such
Omnibus Selling Agent shall be treated as Commission Shares and Free Shares.
PART I: ATTRIBUTION OF CLASS C SHARES
Class C shares that 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 other than Omnibus Shares:
(a) Commission Shares that are not Omnibus Shares ("Non-Omnibus
Commission Shares") attributed to the Distributor shall be those
Non-Omnibus Commission Shares (i) the Date of Original Issuance of
which occurred on or after the Inception Date of the applicable Fund
and on or prior to the date the Distributor ceased to be exclusive
distributor of Class C shares of the Fund and (ii) that are subject to
a CDSC (without regard to any conditions for waivers thereof).
(b) Non-Omnibus Commission Shares attributable to each Successor
Distributor shall be those Non-Omnibus Commission Shares (i) the Date
of Original Issuance of which occurs after the date such Successor
Distributor became the exclusive distributor of Class C shares of the
Fund and on or prior to the date such Successor Distributor ceased to
be the exclusive distributor of Class C shares of the Fund and (ii)
that are subject to a CDSC (without regard to any conditions for
waivers thereof).
(c) A Non-Omnibus Commission Share of a Fund issued in
consideration of the investment of proceeds of the redemption of a
Non-Omnibus Commission Share of another fund (the "Redeeming Fund") in
connection with a permitted free exchange, is deemed to have a Date of
Original Issuance identical to the Date of Original Issuance of the
Non-Omnibus Commission Share of the Redeeming Fund, 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.
(2) Free Shares:
Free Shares that are not Omnibus Shares ("Non-Omnibus Free Shares") of
a Fund outstanding on any date shall be attributed to the Distributor or a
Successor Distributor, as the case may be, in the same proportion that the
Non-Omnibus Commission Shares of a Fund outstanding on such date are
attributed to each on such date; provided that if the Distributor and its
transferees reasonably determines that the transfer agent is able to
produce monthly reports that track the Date of Original Issuance for such
Non-Omnibus Free Shares, then such Free Shares shall be allocated pursuant
to clause 1(a), (b) and (c) above.
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(3) Omnibus Shares:
Omnibus Shares of a Fund outstanding on any date shall be attributed
to the Distributor or a Successor Distributor, as the case may be, in the
same proportion that the Non- Omnibus Commission Shares of the applicable
Fund outstanding on such date are attributed to it on such date; provided
that if the Distributor reasonably determines that the transfer agent is
able to produce monthly reports that 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 CDSCs
(1) CDSCs Related to the Redemption of Non-Omnibus Commission Shares:
CDSCs in respect of the redemption of Non-Omnibus Commission 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:
CDSCs in respect of the redemption of Omnibus Shares shall be
allocated to the Distributor or a Successor Distributor in the same
proportion that CDSCs related to the redemption of Non-Omnibus Commission
Shares are allocated to each thereof; provided, that if the Distributor
reasonably determines 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 Distributor 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 DISTRIBUTION FEE
Assuming that the Distribution Fee remains constant over time so that Part
IV hereof does not become operative:
(1) The portion of the aggregate Distribution Fee accrued in respect
of all Class C shares of a Fund during any calendar month allocable to the
Distributor or a Successor Distributor is determined by multiplying the
total of such Distribution Fee by the following fraction:
(A + C)/2
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(B + D)/2
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where:
A= The aggregate Net Asset Value of all Class C shares of a Fund 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 Class C shares of a Fund at the
beginning of such calendar month
C= The aggregate Net Asset Value of all Class C shares of a Fund 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 Class C shares of a Fund at the end of
such calendar month
(2) If the Distributor reasonably determines that the transfer
agent is able to produce automated monthly reports that allocate the average Net
Asset Value of the Commission Shares (or all Class C shares if available) of a
Fund 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 Distribution Fee accrued in respect of all such Class C shares of a Fund
during a particular calendar month will be allocated to the Distributor or a
Successor Distributor by multiplying the total of such Distribution Fee by the
following fraction:
(A)/(B)
where:
A= Average Net Asset Value of all such Class C shares of a Fund 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 Class C shares of a Fund for such
calendar month
PART IV: 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 so as to disproportionately reduce, in
a manner inconsistent with the intent of this Distribution Agreement, the amount
of the Distributor's Allocable Portion or any 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 Class C shares relating to a Fund shall be adjusted by agreement
among the relevant parties; provided, however, if the Distributor, the Successor
Distributor and the Fund 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
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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.
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