DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of the 21st day of September, 1999 by and
between The Saratoga Advantage Trust (the "Trust"), a Delaware business trust,
on behalf of its series listed on Schedule A, attached hereto, together with all
other series subsequently established and made subject to this Agreement in
accordance with Section 4.3 below (each a "Portfolio," collectively the
"Portfolios") and Funds Distributor, Inc., a Massachusetts corporation having a
place of business at 00 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxxxxxxx 00000
("FDI").
WHEREAS, the beneficial shares of the Trust are currently divided into
a number of separate series of shares, or funds, each corresponding to a
Portfolio, and many of which are also divided into multiple classes of shares.
For purposes of this Agreement the term "Shares" shall mean the authorized
shares of the relevant Portfolio, if any, and otherwise shall mean the Trust's
authorized shares;
WHEREAS, FDI is registered as a broker-dealer with the Securities and
Exchange Commission (the "SEC") under the Securities Exchange Act of 1934 (the
"1934 Act") and is a member of the National Association of Securities Dealers,
Inc. (the "NASD");
WHEREAS, Saratoga Capital Management ("Manager") is the registered
investment adviser to the Portfolios pursuant to a Management Agreement between
the Manager and the Trust;
WHEREAS, the Board of Trustees of the Trust wish to engage FDI to act
as the distributor for the Portfolios and FDI is willing to render such service
on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises set forth below, the parties agree as follows:
1. Services as Distributor
1.1 FDI will act as agent for the distribution of Shares covered by,
and in accordance with, the registration statement and prospectus then in effect
under the Securities Act of 1933, as amended (the "1933 Act"), and will transmit
promptly any orders received by FDI for purchase or redemption of Shares to the
Transfer and Dividend Disbursing Agent for the Portfolio of which the Portfolio
has notified FDI in writing.
1.2 FDI agrees to use its best efforts to perform its duties hereunder
in the solicitation of orders for the sale of Shares. It is contemplated that
FDI may enter into sales or servicing agreements with securities dealers,
financial institutions and other industry professionals, such as investment
advisers, accountants and estate planning firms, at the direction of the Trust
or its representatives and in so doing FDI will act only on its own behalf as
principal.
1.3 FDI shall act as distributor of Shares in compliance with all
applicable laws, rules and regulations, including, without limitations, the
Investment Company Act of 1940, as amended (the "1940 Act"), the 1933 Act, 1934
Act, the Rules of the NASD, the Trust's Agreement and Declaration of Trust and
By-Laws. FDI represents and warrants that it is a broker-dealer registered with
the SEC and that it is registered with the relevant securities regulatory
agencies in all fifty states, the District of Columbia and Puerto Rico. FDI also
represents and warrants that it is a member of the NASD.
1.4 FDI shall file Trust advertisements, sales literature and other
marketing and sales related materials with the appropriate regulatory agencies
and shall obtain such approvals for their use as may be required by the SEC, the
NASD and/or state securities administrators.
1.5 Whenever in the judgment of the Trust or Manager such action is
warranted by unusual market, economic or political conditions, or by abnormal
circumstances of any kind deemed to render sales of the Trust's Shares not in
the best interest of the Trust, the Manager may instruct FDI to decline to
accept any orders for, or make any sales of, any Shares until such time as the
Manager deems it advisable to accept such orders and to make such sales,
provided that such instruction is consistent with and does not violate any
applicable law or regulation. Notwithstanding the foregoing, however, FDI, after
notification to the Trust, shall have the right to reject orders for the
purchase of the Trust's Shares that, in its discretion, would be detrimental to
the Trust or would violate any applicable law or regulation. FDI agrees to
notify the Trust in advance and seek the Trust's approval to reject such order
which FDI deems to be detrimental to the Trust, such approval not to be
unreasonably withheld or delayed, provided that such notice, approval process,
activity or timing is consistent with and does not violate any applicable law or
regulation.
1.6 The Trust agrees to pay all costs and expenses in connection with
the registration of Shares under the 1933 Act and all expenses in connection
with maintaining facilities for the issue and transfer of Shares and for
supplying information, prices and other data to be furnished by the Trust
hereunder, and all expenses in connection with the preparation and printing of
the Trust's prospectuses and statements of additional information for regulatory
purposes and for distribution to shareholders; provided however, that the Trust
shall not pay any of the costs of advertising or promotion for the sale of
Shares, except as authorized by a plan adopted pursuant to Rule 12b-1 under the
1940 Act. FDI shall also be entitled to compensation for FDI's services as
provided in any Distribution Plan adopted as to any Portfolio and class of the
Portfolio's Shares pursuant to Rule 12b-1.
1.7 The Trust agrees to execute any and all documents and to furnish
any and all information and otherwise to take all actions which may be
reasonably necessary in the discretion of the Trust's officers in connection
with the qualification of Shares for sale in such states as FDI may designate to
the Trust and the Trust may approve, and the Trust agrees to pay all expenses
which may be incurred in connection with such qualification. FDI shall pay all
expenses connected with its own qualification as a dealer under state or Federal
laws and, except as otherwise specifically provided in this Agreement, all other
expenses incurred by FDI in connection with the sale of Shares as contemplated
in this Agreement.
1.8 The Trust shall furnish FDI from time to time, for use in
connection with the sale of Shares, such information with respect to the Trust
or any relevant Portfolio and the Shares as FDI may reasonably request, all of
which shall be signed by one or more of the Trust's duly authorized officers;
and the Trust warrants that the material statements contained in any such
information, when so signed by the Trust's officers, shall be true and correct
to the best of their knowledge. The Trust also shall furnish FDI upon request
with: (a) semi-annual reports and annual audited reports of the Trust's books
and accounts made by independent public accountants regularly retained by the
Trust, (b) a monthly itemized list of the securities in the Trust's or, if
applicable, each Portfolio's investment portfolio, (c) monthly balance sheets as
soon as practicable after the end of each month, and (d) from time to time such
additional information regarding the Trust's financial condition as FDI may
reasonably request.
1.9 The Trust represents to FDI that all registration statements and
prospectuses filed by the Trust with the SEC under the 1933 Act and under the
1940 Act with respect to the Shares have been carefully prepared in conformity
with the requirements of said Acts and rules and regulations of the SEC
thereunder. As used in this Agreement the terms "registration statement" and
"prospectus" shall mean any registration statement and prospectus, including the
statement of additional information incorporated by reference therein, filed
with the SEC and any amendments and supplements thereto which at any time shall
have been filed with said Commission. The Trust represents and warrants to FDI
that any registration statement and prospectus, when such registration statement
becomes effective, will contain all material statements required to be stated
therein in conformity with said Acts and the rules and regulations of said
Commission; that to the best of the Trust's knowledge all material 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. The Trust 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 Trust'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
reasonable written request from FDI to do so, FDI may, at its option, terminate
this Agreement or decline to make offers of the Trust's securities until such
amendments are made. The Trust shall not file any amendment to any registration
statement or supplement to any prospectus without giving FDI 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.
1.10 The Trust authorizes FDI and any dealers with whom FDI has entered
into dealer agreements to use any prospectus in the form furnished by the Trust
in connection with the sale of Shares. The Trust agrees to indemnify, defend and
hold FDI, its several officers and directors, and any person who controls FDI
within the meaning of Section 15 of the 1933 Act free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
reasonable cost of investigating or defending such claims, demands or
liabilities and any reasonable counsel fees incurred in connection therewith)
which FDI, its officers and directors, or any such controlling persons, may
incur under the 1933 Act, the 1940 Act, or common law or otherwise, arising out
of or on the basis of any untrue statement, or alleged untrue statement, of a
material fact required to be stated in either any registration statement or any
prospectus or any statement of additional information, or arising out of or
based upon any omission, or alleged omission, to state a material fact required
to be stated in any registration statement, any prospectus or any statement of
additional information or necessary to make the statements in any of them not
misleading, except that the Trust's agreement to indemnify FDI, its officers or
directors, and any such controlling person will not be deemed to cover any such
claim, demand, liability or expense to the extent that it arises out of or is
based upon any such untrue statement, alleged untrue statement, omission or
alleged omission made in any registration statement, any prospectus or any
statement of additional information in reliance upon information furnished by
FDI, its officers, directors or any such controlling person to the Trust or its
representatives for use in the preparation thereof, and except that the Trust's
agreement to indemnify FDI and the Trust's representations and warranties set
out in paragraph 1.9 of this Agreement will not be deemed to cover any liability
to the Trust or its shareholders to which FDI would otherwise be subject by
reason of willful misfeasance, bad faith or negligence in the performance of its
duties, or by reason of its reckless disregard of its obligations and duties
under this Agreement ("Disqualifying Conduct"). The Trust's agreement to
indemnify FDI, its officers and directors, and any such controlling person, as
aforesaid, is expressly conditioned upon the Trust's being notified of any
action brought against FDI, its officers or directors, or any such controlling
person, such notification to be given by letter, by facsimile or by telegram
addressed to the Trust at its address set forth on Schedule A, attached hereto,
within a reasonable period of time 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 alleged untrue, statement or omission, or alleged omission, otherwise than on
account of the Trust's indemnity agreement contained in this paragraph 1.10. The
Trust shall have the right to control 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 FDI
which approval shall not be unreasonably withheld or delayed. In the event the
Trust elects to assume the defense of any such suit and retain counsel of good
standing approved by FDI, 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, the Trust
will reimburse FDI, its officers and directors, or the controlling person or
persons named as defendant or defendants in such suit, for the reasonable fees
and expenses of any counsel approved by the Trust, such approval not to be
unreasonably withheld or delayed, and retained by FDI or them. The Trust's
indemnification agreement contained in this paragraph 1.10 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
FDI, its officers and directors, or any controlling person, and shall survive
the delivery of any Shares. This agreement of indemnity will inure exclusively
to FDI's benefit, to the benefit of FDI's several officers and directors, and
their respective estates, and to the benefit of any controlling persons and
their successors. The Trust agrees promptly to notify FDI 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 Shares.
1.11 FDI 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 1933 Act free and harmless from and against any and all
claims, demands, liabilities and expenses (including the reasonable cost of
investigating or defending such claims, demands or liabilities and any
reasonable counsel fees incurred in connection therewith) which the Trust, its
officers or Trustees, or any such controlling person, may incur under the 1933
Act, the 1940 Act, 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, (a) shall arise
out of or be based upon any unauthorized sales literature, advertisements,
information, statements or representations or any Disqualifying Conduct in
connection with the offering and sale of any Shares, or (b) 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 FDI to the Trust specifically
for use in the Trust's registration statement and used in the answers to any of
the items of the registration statement or in the corresponding statements made
in the prospectus or statement of additional information, 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 FDI to the Trust and
required to be stated in such answers or necessary to make such information not
misleading. FDI's agreement to indemnify the Trust, its officers and Trustees,
and any such controlling person, as aforesaid, is expressly conditioned upon FDI
being notified of any action brought against the Trust, its officers or
Trustees, or any such controlling person, such notification to be given by
letter, by facsimile or by telegram addressed to FDI at its address set forth
above within a reasonable period of time after the summons or other first legal
process shall have been served. FDI shall have the right to control 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 FDI'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 FDI of
any such action shall not relieve FDI from any liability which FDI may have to
the Trust, its officers or Trustees, or to such controlling person or to the
person against whom such action is brought by reason of any such untrue, or
alleged untrue, statement or omission, or alleged omission, otherwise than on
account of FDI's indemnity agreement contained in this paragraph 1.11. FDI's
indemnification agreement contained in this paragraph 1.11 and FDI'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
the Trust, its officers and Trustees, or any controlling person, and shall
survive the delivery of any Shares. This agreement of indemnity will inure
exclusively to the Trust's benefit, to the benefit of the Trust's officers and
Trustees, and their respective estates, and to the benefit of any controlling
persons and their successors. FDI agrees promptly to notify the Trust of the
commencement of any litigation or proceedings against FDI or any of its officers
or directors in connection with the issue and sale of Shares.
1.12 No Shares shall be offered by either FDI or the Trust under any of
the provisions of this Agreement and no orders for the purchase or sale of such
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 1933
Act or if and so long as a current prospectus as required by Section 10 of said
Act, as amended, is not on file with the SEC; provided, however, that nothing
contained in this paragraph 1.12 shall in any way restrict or have an
application to or bearing upon the Trust's obligation to repurchase any Shares
from any shareholder in accordance with the provisions of the Trust's prospectus
or charter documents.
1.13 The Trust agrees to advise FDI immediately in writing:
(a) of any request by the SEC for amendments to the
registration statement or prospectus then in effect or for additional
information;
(b) in the event of the issuance by the SEC of any stop order
suspending the effectiveness of the registration statement or
prospectus then in effect or the initiation of any proceeding for that
purpose;
(c) of the happening of any event which 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 actions of the SEC with respect to any amendments to
any registration statement or prospectus which may from time to time be
filed with the SEC.
2. Offering Price
Shares of any class of a Portfolio offered for sale by FDI shall be
offered at a price per share (the "Offering Price") as set forth in the
then-current prospectus. The Offering Price, if not an exact multiple of one
cent, shall be adjusted to the nearest cent. In addition, Shares of any class of
a Portfolio offered for sale by FDI may be subject to a contingent deferred
sales charge as set forth in the Trust's then-current prospectus. FDI shall be
entitled to receive any sales charge or contingent deferred sales charge in
respect of the Shares. Any payments to dealers shall be governed by a separate
agreement between FDI and such dealer, subject to the approval of the Manager,
and the Trust's then-current prospectus.
3. Term
This Agreement shall become effective with respect to the Trust as of
the date hereof and will continue for an initial two-year term and will continue
thereafter so long as such continuance is specifically approved at least
annually (i) by the Trust's Board of Trustees or (ii) by a vote of a majority of
the Shares of the Trust or the relevant Portfolio, as the case may be, provided
that in either event its continuance also is approved by a majority of the
Trustees who are not "interested persons" 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 with respect to the Trust, without
penalty, on not less than sixty days' written notice by the Board of Trustees or
by vote of a majority of the outstanding voting securities of the Trust. This
Agreement may be terminated at any time without penalty upon 120 days' written
notice by FDI. This Agreement will automatically and immediately terminate in
the event of its "assignment." (As used in this Agreement, the terms "majority
of the outstanding voting securities," "interested person" and "assignment"
shall have the same meanings as such terms have in the 1940 Act). In the event
that the succession of Saratoga Capital Management to a successor entity is
deemed to be an assignment under the 1940 Act, the parties will enter into a
separate distribution agreement on identical terms, subject to the approval of
the Trust's Board of Trustees and by a majority of the Trustees who are not
interested persons of any party to the Agreement. FDI agrees to notify the Trust
immediately upon the event of its expulsion or suspension by the NASD. This
Agreement will automatically and immediately terminate in the event of FDI's
expulsion or suspension by the NASD.
4. Miscellaneous
4.1 The Trust recognizes that, except to the extent otherwise agreed to
by the parties hereto, FDI's directors, officers and employees may from time to
time serve as directors, trustees, officers and employees of corporations and
business trusts (including other investment companies), and that FDI or FDI's
affiliates may enter into distribution or other agreements with other
corporations and trusts.
4.2 No provision of this Agreement may be changed, waived, discharged
or terminated orally, but only by an instrument in writing signed by the party
against which an enforcement of the change, waiver, discharge or termination is
sought.
4.3 This Agreement and the Schedules forming a part hereof may be
amended at any time by a writing signed by each of the parties hereto. In the
event that the Board members of any additional funds indicate by vote that such
funds are to be made parties to this Agreement, whether such funds were in
existence at the time of the effective date of this Agreement or subsequently
formed, Schedule A hereto shall be amended to reflect the addition of such new
funds and such new funds shall thereafter become parties hereto. In the event
that any of the Portfolios listed on Schedule A terminates its registration as a
management investment company, or otherwise ceases operations, Schedule A shall
be amended to reflect the deletion of such Portfolio and its various classes.
4.4 This Agreement is executed by the Trustees of the Trust, not
individually, but in their capacity as Trustees under the Declaration of Trust
made April 4, 1994. None of the Shareholders, Trustees, officers, employees, or
agents of the Trust shall be personally bound or liable under this Agreement,
nor shall resort be had to their private property for the satisfaction of any
obligation or claim hereunder but only to the property of the Trust and, if the
obligation or claim relates to the property held by the Trust for the benefit of
one or more but fewer than all Portfolios, then only to the property held for
the benefit of the affected Portfolio.
4.5 This Agreement shall be governed by the internal laws of The
Commonwealth of Massachusetts without giving effect to principles of conflicts
of laws.
4.6 If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule, or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties have executed this Agreement by a duly
authorized representative of the parties hereto.
THE SARATOGA ADVANTAGE TRUST
By: /s/ Xxxxx X. Xxxxxxxxxxx
Name: Xxxxx X. Xxxxxxxxxxx
Title: Chairman, President and CEO
FUNDS DISTRIBUTOR, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Title: Executive Vice President
SCHEDULE A
PORTFOLIOS
THE SARATOGA ADVANTAGE TRUST
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000-0000
U.S. Government Money Market Portfolio
Investment Quality Bond Portfolio
Municipal Bond Portfolio
Large Capitalization Value Portfolio
Large Capitalization Growth Portfolio
Small Capitalization Portfolio
International Equity Portfolio
