EXHIBIT 6(a)(ii)
DISTRIBUTION CONTRACT
AND
DISTRIBUTION PLAN
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THIS DISTRIBUTION CONTRACT AND DISTRIBUTION PLAN (this "Agreement"), dated this
______ day of ____________, 1997, between The Composite Funds, a Massachusetts
business trust (the "Trust"), on behalf of each of its series which are listed
on the signature page of this Agreement (each a "Fund"), and Composite Funds
Distributor, Inc., a Washington corporation doing business at Seattle,
Washington, herein sometimes referred to as the "Distributor."
RECITALS
WHEREAS, the Trust is registered as an open-end, series management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act")
and the Funds are separate series of the Trust;
WHEREAS, each Fund and the Distributor desire to enter into an agreement that
sets forth standard terms and conditions for distribution services for certain
classes of shares of each Fund (specifically, Class A, Class B and Class S), in
accordance with the schedule of fees attached as Exhibit A;
WHEREAS, certain payments to the Distributor provided herein (other than front-
end loads and contingent deferred sales charges) may be considered the financing
of activities intended to result in the sale of the Class A, Class B and Class S
shares of each Fund;
WHEREAS, this Agreement, therefore, is intended to include in Section 6, among
other things, a separate and severable "written plan" of the compensation type
for each of the Class A, Class B and Class S shares of each Fund as contemplated
by Rule 12b-1 promulgated pursuant to the provisions of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration the receipt where of is hereby
acknowledged, the parties hereto agree as follows:
APPOINTMENT. The Trust hereby affirms the appointment of Composite Funds
Distributor, Inc., as the distributor for each Fund and grants Distributor
the right to sell Class A, Class B and Class S shares on behalf of the Fund
and on terms set forth in this Agreement. The Distributor accepts such
appointment and agrees to render the services herein set forth, for the
payments herein provided (including reimbursement of expenses).
DELIVERY OF DOCUMENTS. The Trust and/or each Fund has furnished the
Distributor with copies of:
Agreement and Declaration of Trust and all amendments thereto for the
Trust (as amended from time to time, the "Declaration of Trust");
Bylaws and all amendments thereto for the Trust (as amended from time
to time, the "Bylaws"); and
Each Fund's most recent prospectus and recent registration statement
(as amended or supplemented from time to time, the "Prospectuses and
"Registration Statements").
From time to time, each Fund will furnish the Distributor with current
copies of all amendments or supplements to the foregoing, if any, and all
documents, notices and reports filed with the Securities and Exchange
Commission (the "SEC") and will make available, upon request, evidence of
payment of registration fees imposed from time to time by the State in
which securities of each Fund are sold by the Distributor.
DUTIES OF THE DISTRIBUTOR. The Distributor shall provide each Fund with
the benefit of its best judgment, efforts and facilities in rendering its
services as Distributor. The Distributor will act as the exclusive
Distributor of the Class A, Class B and Class S shares of each Fund,
subject to the supervision of the Trust's board of trustees and the
following understandings: (i) the Trust's board of trustees shall be
responsible for and control the conduct of each Fund's affairs; (ii) in all
matters relating to the performance of this Agreement, the Distributor will
act in conformity with the Declaration of Trust and Bylaws of the Trust and
the Prospectus and Registration Statement of each Fund and with the
instructions and directions of the Trust's board of trustees; (iii) the
Distributor will conform to and comply with applicable requirements of the
1940 Act, the Securities Act of 1933 ("1933 Act") and all other applicable
federal or state laws and regulations. In carrying out its obligations
hereunder, the Distributor shall:
provide to the Trust's board of trustees, at least quarterly, a
written report of the amounts expended in connection with all
distribution services rendered pursuant to this Agreement, including
an explanation of the purposes for which such expenditures were made;
and
take, on behalf of each Fund, all actions which appear to be necessary
to carry into effect the distribution of each Fund's shares as
provided in paragraph 4.
DISTRIBUTION OF SHARES. It is mutually understood and agreed that the
Distributor does not undertake to sell all or any specific portion of the
Class A, Class B or Class S shares of any Fund. Distributor shall have the
right to enter into sales agreements with dealers of its choice for the
sale of the Class A, Class B or Class S shares of each Fund to the public
at the public offering price. Distributor shall set forth in such
agreements the portion of the sales charge which may be retained by such
dealers. If any Fund determines that it is necessary to file the form of
dealer
agreement and amendments thereto as an exhibit to its currently effective
Registration Statement under the 1933 Act, then the Distributor shall
provide the Fund with currently effective documents. A Fund shall not sell
any of its Class A, Class B or Class S shares except through the
Distributor. Notwithstanding the provisions of the foregoing sentence:
A Fund may issue its Class A, Class B or Class S shares at their net
asset value to any shareholder of the Fund purchasing such shares with
dividends or other cash distributions received from the Fund pursuant
to any special or continuing offer made to shareholders;
The Distributor may, and when requested by a Fund, shall, suspend its
efforts to effectuate sales of the Class A, Class B or Class S shares
of a Fund at any time when in the opinion of the Distributor or of the
Fund no sales should be made because of a need to revise a prospectus
or registration statement, market or other economic considerations or
abnormal circumstances of any kind and either party in its sole
discretion may reject orders for the purchase of such shares;
A Fund may withdraw the offering of its Class A, Class B or Class S
shares (i) at any time with the consent of the Distributor or (ii)
without such consent when so required by the provisions of any statute
or of any order, rule or regulation of any governmental body having
jurisdiction;
The price at which the Class A, Class B or Class S shares will be sold
to investors (the "offering price") shall be the net asset value per
share, determined in accordance with the Fund's current Prospectus
and/or Statement of Additional Information (as amended or supplemented
from time to time, "SAI") plus a sales charge determined in the amount
and manner established from time to time by the Distributor and set
forth in a Fund's current Prospectus and/or SAI. The Fund shall
receive the net asset value per share for the sale of its Class A,
Class B or Class S shares;
If a sales charge is in effect, the Distributor shall have the right,
subject to such rules or regulations of the Securities and Exchange
Commission as may then be in effect pursuant to Section 22 of the 1940
Act, to pay a portion of the sales charge to dealers who have sold
Class A, Class B or Class S shares of the Fund in accordance with
provisions of dealer agreements; and
The Distributor is not authorized by any Fund to provide any
information or to make any representations other than those contained
in the appropriate Registration Statements, Prospectuses and SAI's
filed with the Securities and Exchange Commission under the 1933 Act,
or contained in shareholder reports or other material that may be
prepared by or on behalf of a Fund for Distributor's use. This shall
not be construed to prevent the Distributor from
preparing and distributing sales literature or other material as it
may deem appropriate.
COMPENSATION FOR SERVICING SHAREHOLDER ACCOUNTS. As compensation for its
services hereunder, the Distributor shall be entitled to receive all front-
end loads and all contingent deferred sales charges described from time to
time in the Prospectus and/or SAI, as well as the service fees set forth in
the schedule of fees attached as Exhibit A, calculated and paid as an
annual percentage of the average daily net assets attributable to the
relevant classes of each Fund. Composite acknowledges that the Distributor
and its dealers may compensate their investment representatives for opening
accounts, processing investors' purchase and redemption orders, responding
to inquiries from Fund shareholders concerning the status of their accounts
and the operations of a Fund, and communicating with a Fund and its
transfer agent on behalf of Fund shareholders in such manner and amount as
the Distributor may deem appropriate.
EXPENSES. The expenses connected with distribution shall be allocable
between the Funds and the Distributor as follows:
The Distributor shall furnish the services of personnel to the extent
that such services are required to carry out its obligations under
this Agreement.
Each Fund assumes and shall pay or cause to be paid the following
expenses incurred on its behalf:
registration of shares including the expense of printing and
distributing prospectuses to existing shareholders; expenses incurred
for corporate services; taxes and expenses related to portfolio
transactions; charges and expenses of any registrar, custodian or
depository for portfolio securities and other property, and any stock
transfer, dividend or account agent or agents; brokers' commissions
chargeable in connection with portfolio securities transactions; all
taxes, including securities issuance and transfer taxes, and corporate
fees payable to federal, state or other governmental agencies; the
costs and expenses of engraving or printing of stock certificates, if
any; costs and expenses in connection with the registration and
maintenance of registration of a Fund and its shares with the SEC and
various states and other jurisdictions (including filing fees, legal
fees and disbursements of counsel); expenses of shareholders' and
directors' meetings and preparing, printing, and mailing of proxy
statements and reports to shareholders; fees and travel expenses of
"disinterested" directors; expenses incident to the payment of any
dividend, distribution, withdrawal or redemption, whether in shares or
in cash; charges and expenses of any outside service used for pricing
of a Fund's shares; fees and expenses of legal counsel and of
independent accountants; membership dues of industry associations;
postage (excluding postage for promotional and sales literature);
insurance premiums on property of personnel (including, but not
limited to legal claims and liabilities and litigation costs and any
indemnification related thereto); and all other charges and costs of a
Fund's operation unless otherwise explicitly provided herein.
Subject to the schedule of fees set forth in Exhibit A as from time to
time approved by the Board of Trustees and agreed to by the Trust and
the Distributor, each Fund shall be permitted to compensate the
Distributor for distribution expenses in accordance with the
provisions of this section, which shall constitute a "distribution
plan" as contemplated by Rule 12b-1 promulgated pursuant to the 1940
Act, as follows:
(i) With respect to Class A shares, each Fund shall be authorized to
pay a service fee equal to an annual rate of (i) .15% of a Fund's
average daily net assets attributable to Class A shares in the
case of Composite Money Market Fund and Composite Tax-Exempt
Money Market Fund and (ii) .25% of such assets in the case of the
other Funds.
(ii) With respect to Class B shares, each Fund shall be authorized to
pay a distribution fee equal to an annual rate of .75% of a
Fund's average daily net assets attributable to Class B shares
and a service fee equal to an annual rate of .25% of such assets.
(iii) With respect to Class S shares, each Fund shall be authorized
to pay a distribution fee equal to an annual rate of .75% of a
Fund's average daily net assets attributable to Class S shares
and a service fee equal to an annual rate of .25% of such assets.
Proceeds from any contingent deferred sales charges applicable to
Class A shares, Class B shares or Class S shares shall be paid to the
Distributor.
The Distributor will furnish the board of trustees statements of
distribution revenues and expenditures at least quarterly with respect
to each class of shares of each Fund as required by Rule 12b-1.
Each Fund will record all payments made under the distribution plan as
expenses in the calculation of its net investment income. The amount
of distribution expenses incurred by the Distributor that may be paid
pursuant to the plan in future periods will not be incurred as a
liability, unless the standards for accrual of a liability under
generally accepted accounting principles have been satisfied. Such
distribution expenses will be recorded as an expense in future periods
as they are paid by a Fund.
For purposes of Section 6 of this Distribution Contract, the
Distributor shall not be responsible for the payment of distribution
expenses that are subject to reimbursement, as the Distributor has
acted solely as the agent of Composite or
of a specific Fund in connection therewith.
NON-EXCLUSIVITY. The services of the Distributor are not exclusive and the
Distributor shall be entitled to render distribution or other services to
others (including other investment companies) and to engage in other
activities. It is understood and agreed that officers of the Distributor
may serve as officers or trustees of the Trust, and that officers or
trustees of the Trust may serve as officers of the Distributor to the
extent permitted by law; and that officers of the Distributor are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers or
directors of any other firm or corporation, including other investment
companies and broker/dealers.
TERM AND APPROVAL. This Agreement shall become effective as of
______________________, and shall continue in force and effect from year to
year thereafter, provided that, with respect to any Fund or Class, such
continuance is specifically approved at least annually:
By the Trust's board of trustees or by the vote of a majority of the
outstanding voting securities of the Fund (as defined in Section
2(a)(42) of the 1940 Act), and
The affirmative vote of a majority of the board of trustees of the
Trust who are not (i) parties to this Agreement, (ii) interested
persons of any such party (as defined in Section 2(a)(19) of the 0000
Xxx) or (iii) persons having a direct or indirect financial interest
in the operation of this Agreement or any agreement related to this
Agreement ("Qualified Trustees"), by votes cast in person at a meeting
called for the purpose of voting on such approval.
TERMINATION. This Agreement may be terminated, with respect to any Fund or
Class, at any time, without the payment of any penalty, by vote of the
board of trustees of the Trust, or by a vote of a majority of the Qualified
Trustees, or by a vote of a majority of the outstanding voting securities
of the Fund (as defined in Section 2(a)(42) of the 1940 Act), or by the
Distributor on sixty (60) days' written notice to the Fund. The notice
provided for herein may be waived by either party. This Agreement shall
automatically terminate in the event of its assignment, the term
"assignment" for this purpose having the meaning defined in Section (a)(4)
of the 1940 Act.
AMENDMENTS. This Agreement may be amended, with respect to any Fund or
Class, by the parties hereto only if such amendment is specifically
approved (i) by the board of trustees of the Trust or by the vote of
majority of outstanding voting securities of the Fund, and (ii) by a
majority of those trustees who are not parties to this Agreement or
interested persons of any such party, which vote must be cast in person at
a meeting called for the purpose of voting on such approval; provided,
however, that any such amendment that constitutes an amendment of the
distribution plan for any Class of the Fund shall be approved by
shareholders pursuant to Rule 12b-1 to the extent required
by applicable law.
LIABILITY OF THE DISTRIBUTOR. In the performance of its duties hereunder,
the Distributor shall be obligated to exercise care and diligence and to
act in good faith and to use its best efforts within reasonable limits to
insure the accuracy of all services performed under this Agreement, but the
Distributor shall not be liable for any act or omission which does not
constitute willful misfeasance, bad faith or gross negligence on the part
of the Distributor or reckless disregard by the Distributor of its duties
under this Agreement.
NOTICES. Any notices under this Agreement shall be in writing, addressed
and delivered or mailed postage paid to the other party at such address as
such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of each
Fund shall be 000 Xxxx Xxxx Xxxxxx, Xxxxxxx, XX 00000, and the address of
the Distributor shall be 0000 Xxxxx Xxxxxx, Xxxxxxx, XX 00000.
DECLARATION OF TRUST AND LIMITATION OF LIABILITY. A copy of the
Declaration of Trust of the Trust is on file with the Secretary of State of
The Commonwealth of Massachusetts, and notice is hereby given that this
Agreement is executed by an officer of the Trust on behalf of the trustees
of the Trust, as trustees and not individually, on further behalf of each
Fund, and that the obligations of this Agreement with respect to each Fund
shall be binding upon the assets and properties of the Fund only and shall
not be binding upon the assets and properties of any other Fund or series
of the Trust or upon any of the trustees, officers, employees, agents or
shareholders of the Fund or the Trust individually.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate by their respective officers on the day and year first above
written.
THE COMPOSITE TRUST,
on behalf of its series
COMPOSITE BOND & STOCK FUND,
COMPOSITE GROWTH & INCOME FUND,
COMPOSITE NORTHWEST FUND,
COMPOSITE U.S. GOVERNMENT SECURITIES FUND,
COMPOSITE INCOME FUND,
COMPOSITE TAX-EXEMPT BOND FUND,
COMPOSITE MONEY MARKET FUND, and
COMPOSITE TAX-EXEMPT MONEY MARKET FUND
By: ___________________________________
Xxxxxxx X. Xxxxxx
President
Attest:
By: _________________________
Xxxx X. Xxxx
Secretary
COMPOSITE FUNDS DISTRIBUTOR, INC.
By: ___________________________________
Xxxxxxx X. Xxxxxx
President
Attest:
By: _________________________
Xxxxxx X. Xxxxxxx
Secretary
EXHIBIT A
THE COMPOSITE FUNDS
1997 ANNUAL 12b-1 RATES
MAXIMUM CURRENT* REVISED**
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COMPOSITE GROWTH & INCOME FUND
CLASS A 0.25% 0.25% 0.25%
CLASS B 1.00% 1.00% 1.00%
CLASS S 1.00% 1.00% 1.00%
COMPOSITE NORTHWEST FUND
CLASS A 0.25% 0.25% 0.25%
CLASS B 1.00% 1.00% 1.00%
CLASS S 1.00% 1.00% 1.00%
COMPOSITE BOND & STOCK FUND
CLASS A 0.25% 0.25% 0.25%
CLASS B 1.00% 1.00% 1.00%
CLASS S 1.00% 1.00% 1.00%
COMPOSITE U.S. GOVERNMENT SECURITIES FUND
CLASS A 0.25% 0.20% 0.25%
CLASS B 1.00% 1.00% 1.00%
CLASS S 1.00% 1.00% 1.00%
COMPOSITE INCOME FUND
CLASS A 0.25% 0.20% 0.25%
CLASS B 1.00% 1.00% 1.00%
CLASS S 1.00% 1.00% 1.00%
COMPOSITE TAX-EXEMPT BOND FUND
CLASS A 0.25% 0.20% 0.25%
CLASS B 1.00% 1.00% 1.00%
CLASS S 1.00% 1.00% 1.00%
COMPOSITE MONEY MARKET FUND
CLASS A 0.15% 0.07% 0.00%
CLASS B 1.00% 1.00% 1.00%
CLASS S 1.00% 1.00% 1.00%
COMPOSITE TAX-EXEMPT MONEY MARKET FUND
CLASS A 0.15% 0.00% 0.00%
CLASS B 1.00% 1.00% 1.00%
CLASS S 1.00% 1.00% 1.00%
* As currently in effect for the Funds as Washington corporations (or series
thereof).
** Rates approved by the board of trustees of the Trust. The first 25 basis
points of each fee shall be "service fees" under the rules of the NASD.
