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EXHIBIT (6)(a)
DISTRIBUTION AGREEMENT
March 29, 1994
Xxxxxxx Xxxxxx & Co., Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned, SCHWAB ANNUITY PORTFOLIOS (the "Trust"), a
Massachusetts business trust, has agreed that XXXXXXX XXXXXX & CO., INC. (the
"Distributor") shall be, for the period of this Agreement, the distributor of
the units of beneficial interest of the investment portfolios of the Trust
identified on Schedule A hereto (each a "Fund," and collectively, the "Funds").
Such units of beneficial interest are hereinafter called "Shares."
1. Services as Distributor.
1.1. Distributor will act as agent for the distribution of the Shares
covered by the registration statement and prospectus of the Trust in effect
under the Securities Act of 1933, as amended.
1.2. Distributor agrees to use appropriate efforts to solicit orders
for the sale of the Shares and will undertake such advertising and promotion as
it believes reasonable in connection with such solicitation. The Trust
understands that Distributor may, in the future, be the distributor of the
shares of several investment companies or series (together, "Companies"),
including Companies having investment objectives similar to those of the Trust.
The Trust further understands that investors and potential investors in the
Trust may invest in shares of such other Companies. The Trust agrees that
Distributor's duties to such Companies shall not be deemed to be in conflict
with its duties to the Trust under this paragraph 1.2.
Distributor shall, at its own expense, finance appropriate activities
which it deems reasonable which are primarily intended to result in the sale of
the Shares, including, but not limited to, advertising, compensation of
underwriters, dealers and sales personnel, the printing and mailing of
prospectuses to other than current Shareholders, and the printing and mailing of
sales literature.
1.3. All activities by Distributor and its partners, agents, and
employees as distributor of the Shares shall
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comply with all applicable laws, rules and regulations, including, without
limitation, all rules and regulations made or adopted pursuant to the Investment
Company Act of 1940 by the Securities and Exchange Commission or any securities
association registered under the Securities Exchange Act of 1934.
1.4. Distributor will provide one or more persons, during normal
business hours, to respond to telephone questions with respect to the Trust.
1.5. Distributor will transmit any orders received by it for purchase
or redemption of the Shares to the transfer agent and custodian for the Funds.
1.6. Whenever in their judgment such action is warranted by unusual
market, economic or political conditions, or by abnormal circumstances of any
kind, the Trust's officers may decline to accept any orders for, or make any
sales of the Shares until such time as those officers deem it advisable to
accept such orders and to make such sales.
1.7. Distributor will act only on its own behalf as principal if it
chooses to enter into selling agreements with selected dealers or others.
1.8. The Trust agrees at its own expense to execute any and all
documents and to furnish any and all information and otherwise to take all
actions that may be reasonably necessary in connection with the qualification of
the Shares for sale in such states as Distributor may designate.
1.9. The Trust shall furnish from time to time, for use in connection
with the sale of the Shares, such information with respect to the Funds and the
Shares as Distributor may reasonably request; and the Trust warrants that the
statements contained in any such information shall fairly show or represent what
they purport to show or represent. The Trust shall also furnish Distributor upon
request with: (a) unaudited semi-annual statements of the Funds' books and
accounts prepared by the Trust, (b) quarterly earnings statements prepared by
the Trust, (c) a monthly itemized list of the securities in the Funds, (d)
monthly balance sheets as soon as practicable after the end of each month, and
(e) from time to time such additional information regarding the financial
condition of the Funds as Distributor may reasonably request.
1.10. The Trust represents to Distributor that all registration
statements and prospectuses filed by the Trust with the Securities and Exchange
Commission under the
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Securities Act of 1933, as amended, with respect to the Shares have been
carefully prepared in conformity with the requirements of said Act and rules and
regulations of the Securities and Exchange Commission thereunder. As used in
this agreement the terms "registration statement" and "prospectus" shall mean
any registration statement and any prospectus and Statement of Additional
Information relating to the Funds filed with the Securities and Exchange
Commission and any amendments and supplements thereto which at any time shall
have been filed with the same Commission. The Trust represents and warrants to
Distributor that any registration statement and prospectus, when such
registration statement becomes effective, will contain all statements required
to be stated therein in conformity with said Act and the rules and regulations
of said Commission; that all statements of fact contained in any such
registration statement and prospectus will be true and correct when such
registration statement becomes effective; and that neither any registration
statement nor any prospectus when such registration statement becomes effective
will include an 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 to a purchaser of the Shares. The Distributor may but shall not
be obligated to propose from time to time such amendment or amendments to any
registration statement and such supplement or supplements to any prospectus as,
in the light of future developments, may, in the opinion of the Distributor's
counsel, be necessary or advisable. If the Trust shall not propose such
amendment or amendments and/or supplement or supplements within fifteen days
after receipt by the Trust of a written request from Distributor to do so,
Distributor may, at its option, terminate this agreement. The Trust shall not
file any amendment to any registration statement or supplement to any prospectus
without giving Distributor reasonable notice thereof in advance; provided,
however, that nothing contained in this agreement shall in any way limit the
Trust's right to file at any time such amendments to any registration statement
and/or supplements to any prospectus, of whatever character, as the Trust may
deem advisable, such right being in all respects absolute and unconditional.
1.11. The Trust authorizes Distributor and dealers to use any
prospectus in the form furnished from time to time in connection with the sale
of the Shares. The Trust agrees to indemnify, defend and hold Distributor, its
directors, officers and employees, and any person who controls Distributor
within the meaning of Section 15 of the Securities Act of 1933, as amended, 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
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incurred in connection therewith) which Distributor, its partners and employees,
or any such controlling person, may incur under the Securities Act of 1933, as
amended, or under common law or otherwise, arising out of or based upon any
untrue statement, or alleged untrue statement, of a material fact contained in
any registration statement or any prospectus or arising out of or based upon any
omission, or alleged omission, to state a material fact required to be stated in
either any registration statement or any prospectus or necessary to make the
statements in either thereof not misleading; provided, however, that the Trust's
agreement to indemnify Distributor, its directors, officers or employees, and
any such controlling person shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of any statements or representations as are
contained in any prospectus and in such financial and other statements as are
furnished in writing to the Trust by Distributor and used in the answers to the
registration statement or in the corresponding statements made in the
prospectus, or arising out of or based upon any omission or alleged omission to
state a material fact in connection with the giving of such information required
to be stated in such answers or necessary to make the answers not misleading;
and further provided that the Trust's agreement to indemnify Distributor and the
Trust's representations and warranties hereinbefore set forth in paragraph 1.10
shall not be deemed to cover any liability to the Trust or its Shareholders to
which 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
Distributor's reckless disregard of its obligations and duties under this
agreement. The Trust's agreement to indemnify Distributor, its partners and
employees, and any such controlling person, as aforesaid, is expressly
conditioned upon the Trust's being notified of any action brought against
Distributor, its directors, officers or employees, or any such controlling
person, such notification to be given by letter or by telegram addressed to the
Trust at its principal office in San Francisco, California and sent to the Trust
by the person against whom such action is brought, within 10 days after the
summons or other first legal process shall have been served. The failure to so
notify the Trust of any such action shall not relieve the Trust from any
liability which the Trust may have to the person against whom such action is
brought by reason of any such untrue, or allegedly untrue, statement or
omission, or alleged omission, otherwise than on account of the Trust's
indemnity agreement contained in this paragraph 1.11. The Trust will be entitled
to assume the defense of any suit brought to enforce any such claim, demand or
liability, but, in such case, such defense shall be conducted by counsel of good
standing chosen by the Trust and approved by Distributor, which approval shall
not be unreasonably
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withheld. In the event the Trust elects to assume the defense of any such suit
and retain counsel of good standing approved by Distributor, the defendant or
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Trust does not elect to assume
the defense of any such suit, or in case Distributor reasonably does not approve
of counsel chosen by the Trust, the Trust will reimburse Distributor, its
directors, officers and employees, or the controlling person or persons named as
defendant or defendants in such suit, for the fees and expenses of any counsel
retained by Distributor or them. The Trust's indemnification agreement contained
in this paragraph 1.11 and the Trust's representations and warranties in this
agreement shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of Distributor, its partners and employees,
or any controlling person, and shall survive the delivery of any Shares. This
agreement of indemnity will inure exclusively to Distributor's benefit, to the
benefit of its several partners and employees, and their respective estates, and
to the benefit of the controlling persons and their successors. The Trust agrees
promptly to notify Distributor of the commencement of any litigation or
proceedings against the Trust or any of its officers or Trustees in connection
with the issue and sale of any Shares.
1.12. Distributor agrees to indemnify, defend and hold the Trust, its
several officers and Trustees and any person who controls the Trust within the
meaning of Section 15 of the Securities Act of 1933, as amended, free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the costs of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which the
Trust, its officers or Trustees or any such controlling person, may incur under
the Securities Act of 1933, as amended, or under common law or otherwise, but
only to the extent that such liability or expense incurred by the Trust, its
officers or Trustees or such controlling person resulting from such claims or
demands, shall arise out of or be based upon any untrue, or alleged untrue,
statement of a material fact contained in information furnished in writing by
Distributor to the Trust and used in the answers to any of the items of the
registration statement or in the corresponding statements made in the
prospectus, or shall arise out of or be based upon any omission, or alleged
omission, to state a material fact in connection with such information furnished
in writing by Distributor to the Trust required to be stated in such answers or
necessary to make such information not misleading. Distributor's agreement to
indemnify the Trust, its officers and Trustees, and any such controlling person,
as aforesaid, is expressly conditioned upon Distributor's being notified of
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any action brought against the Trust, its officers or Trustees, or any such
controlling person, such notification to be given by letter or telegram
addressed to Distributor at its principal office in San Francisco, California
and sent to Distributor by the person against whom such action is brought,
within 10 days after the summons or other first legal process shall have been
served. Distributor shall have the right of first control of the defense of such
action, with counsel of its own choosing, satisfactory to the Trust, if such
action is based solely upon such alleged misstatement or omission on
Distributor's part, and in any other event the Trust, its officers or Trustees
or such controlling person shall each have the right to participate in the
defense or preparation of the defense of any such action. The failure to so
notify Distributor of any such action shall not relieve Distributor from any
liability which Distributor may have to the Trust, its officers or Trustees, or
to such controlling person by reason of any such untrue or alleged untrue
statement, or omission or alleged omission, otherwise than on account of
Distributor's indemnity agreement contained in this paragraph 1.12.
1.13. No Shares shall be offered by either Distributor or the Trust
under any of the provisions of this agreement and no orders for the purchase or
sale of Shares hereunder shall be accepted by the Trust if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
Securities Act of 1933, as amended, or if and so long as a current prospectus as
required by Section 10(b)(2) of said Act, as amended, is not on file with the
Securities and Exchange Commission; provided, however, that nothing contained in
this paragraph 1.13 shall in any way restrict or have an application to or
bearing upon the Trust's obligation to repurchase Shares from any Shareholder in
accordance with the provisions of the Trust's prospectus, Declaration of Trust,
or By-laws.
1.14. The Trust agrees to advise Distributor as soon as reasonably
practical by a notice in writing delivered to Distributor or its counsel:
(a) of any request by the Securities and Exchange Commission for
amendments to the registration statement or prospectus then in effect or for
additional information;
(b) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of the registration
statement or prospectus then in effect or the initiation by service of process
on the Trust of any proceeding for that purpose;
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(c) of the happening of any event that makes untrue any statement of a
material fact made in the registration statement or prospectus then in effect or
which requires the making of a change in such registration statement or
prospectus in order to make the statements therein not misleading; and
(d) of all action of the Securities and Exchange Commission with
respect to any amendment to any registration statement or prospectus which may
from time to time be filed with the Securities and Exchange Commission.
For purposes of this section, informal requests by or acts of the Staff
of the Securities and Exchange Commission shall not be deemed actions of or
requests by the Securities and Exchange Commission.
1.15. Distributor agrees on behalf of itself and its directors,
officers and employees to treat confidentially and as proprietary information of
the Trust all records and other information relative to the Trust and its prior,
present or potential Shareholders, and not to use such records and information
for any purpose other than performance of its responsibilities and duties
hereunder, except after prior notification to and approval in writing by the
Trust, which approval shall not be unreasonably withheld and may not be withheld
where Distributor may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
1.16. This agreement shall be governed by the laws of the Commonwealth
of Massachusetts.
2. Issuance of Shares.
The Trust reserves the right to issue, transfer or sell Shares of the
Funds at net asset value (a) in connection with the merger or consolidation of
the Trust or the Funds with any other investment company or the acquisition by
the Trust or the Funds of all or substantially all of the assets or of the
outstanding Shares of any other investment company; (b) in connection with a pro
rata distribution directly to the holders of Shares of a Fund in the nature of a
stock dividend or split; (c) upon the exercise of subscription rights granted to
the holders of Shares of a Fund on a pro rata basis; (d) in connection with the
issuance of Shares of a Fund pursuant to any exchange and reinvestment
privileges described in any then-current prospectus of a Fund; and (e) otherwise
in accordance with any then-current prospectus of the Funds.
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3. Term and Matters Relating to the Trust as a Massachusetts Business
Trust.
This agreement shall become effective as to the Trust on March 29, 1994
and, unless sooner terminated as provided herein, shall continue until two
years, and thereafter shall continue automatically for successive one-year
periods; provided, however, that such continuance is specifically approved at
least annually by (i) the Trust's Board of Trustees or (ii) by "vote of a
majority of the outstanding Shares" (as defined below) of the Trust, and
provided further, that in either event the continuance is also approved at least
annually by the majority of the Trust's Trustees who are not parties to the
agreement or interested persons (as defined in the 0000 Xxx) of any party to
this agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This agreement is terminable on not less than sixty
days' notice by the Trust's Board of Trustees, by "vote of a majority of the
outstanding Shares" (as defined below) of the Trust or by Distributor. This
agreement will also terminate automatically in the event of its assignment (as
defined in the 1940 Act). For purposes of this Agreement, the term "vote of a
majority of the outstanding Shares" shall mean the approval, at a meeting of
Shareholders duly called, of the lesser of (i) the holders of 67% or more of the
votes present at any such meeting, if the holders of more than 50% of the
outstanding votes are present or represented by proxy thereat; or (ii) the
holders of more than 50% of the outstanding votes.
The names "Schwab Annuity Portfolios" and "Trustees of Schwab Annuity
Portfolios" refer respectively to the Trust created and the Trustees, as
trustees but not individually or personally, acting from time to time under a
Declaration of Trust dated as of January 21, 1994 to which reference is hereby
made and a copy of which is on file at the office of the Secretary of State of
The Commonwealth of Massachusetts and elsewhere as required by law, and to any
and all amendments thereto so filed or hereafter filed. The obligations of
"Schwab Annuity Portfolios" entered into in the name or on behalf thereof by any
of the Trustees, representatives or agents are made not individually, but in
such capacities, and are not binding upon any of the Trustees, Shareholders or
representatives of the Trust personally, but bind only the assets of the Trust,
and all persons dealing with any series of Shares of the Trust must look solely
to the assets of the Trust belonging to such series for the enforcement of any
claims against the Trust.
4. Severability
If any provision of this Agreement is found by a court
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or agency of competent jurisdiction to be in violation of any state or federal
law, rule or regulation, then the invalidity of such provision shall not affect
the enforceability or validity of the remaining provisions.
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Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place below indicated,
whereupon it shall become a binding agreement between us.
Yours very truly,
SCHWAB ANNUITY PORTFOLIOS
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
Accepted:
XXXXXXX XXXXXX & CO., INC.
By: /s/ Xxx X. Xxxx
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Name: Xxx X. Xxxx
Title: Executive Vice President
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