DISTRIBUTION AGREEMENT
AGREEMENT made as of the day of , 2000, by and between each
of the investment companies listed on Exhibit A, attached hereto, as such
Exhibit may be amended from time to time (each a "Fund," and collectively the
"Funds"), severally and not jointly, and FAM DISTRIBUTORS, INC., a Delaware
corporation (the "Distributor").
W I T N E S S E T H :
WHEREAS, each Fund is registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"), as an open-end investment
company, and it is affirmatively in the interest of each Fund to offer its
shares for sale continuously; and
WHEREAS, the Directors or Trustees of certain Funds (referred to herein
as the "Directors") are authorized to establish separate series relating to
separate portfolios of securities, and the Directors have established and
designated multiple series of certain Funds; and
WHEREAS, each Fund may offer one or more separate classes of shares of
common stock or beneficial interest, par value of $.10 per share (the "Shares");
and
WHEREAS, the Distributor is a securities firm engaged in the business
of selling shares of investment companies either directly to purchasers or
through financial intermediaries, including, without limitation, brokers,
dealers, retirement plans, financial consultants, registered investment advisers
and mutual fund supermarkets ("financial intermediaries"); and
WHEREAS, the Fund and the Distributor wish to enter into an agreement
with each other with respect to the continuous offering of each class of each
Fund's shares;
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of the Distributor. Each Fund hereby appoints
the Distributor as its principal underwriter and distributor to sell its Shares
to eligible investors (as defined below) and hereby agrees during the term of
this Agreement to sell the Shares to the Distributor upon the terms and
conditions herein set forth.
Section 2. Exclusive Nature of Duties. The Distributor shall be each
Fund's exclusive representative to act as principal underwriter and distributor
of its Shares, except that:
(a) Each Fund may, upon written notice to the Distributor, from time to
time designate other principal underwriters and distributors of Shares with
respect to areas other than the United States as to which the Distributor may
have expressly waived in writing its right to act as such. If such designation
is deemed exclusive, 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 effect until terminated in accordance with the other
provisions hereof.
(b) The exclusive rights granted to the Distributor to purchase Shares
from each Fund shall not apply to Shares issued in connection with the merger or
consolidation of any other investment company or personal holding company with a
Fund or a Fund's acquisition by purchase or otherwise of all (or substantially
all) the assets or the outstanding Shares of any such company.
2
(c) Such exclusive rights also shall not apply to Shares issued by a
Fund pursuant to reinvestment of dividends or capital gains distributions.
(d) Such exclusive rights also shall not apply to Shares of any class
issued by a Fund pursuant to any conversion, exchange or reinstatement privilege
afforded redeeming shareholders or to any other Shares as shall be agreed
between the Fund and the Distributor from time to time.
Section 3. Purchase of Shares from the Fund.
(a) Prior to the continuous offering of the Shares of a Fund,
commencing on a date agreed upon by that Fund and the Distributor, the
Distributor may solicit subscriptions for Shares during a subscription period
that shall last for such period as may be agreed upon by the parties hereto.
Subscriptions will be payable within three business days after the termination
of the relevant subscription period, at which time the Shares will be issued
against payment and such Fund will commence operations.
(b) After a Fund commences operations, the Fund will commence an
offering of its Shares, and thereafter the Distributor shall have the right to
buy from the Fund the Shares needed, but not more than the Shares needed (except
for clerical errors in transmission), to fill unconditional orders for Shares of
a Fund placed with the Distributor by eligible investors or financial
intermediaries. Investors eligible to purchase each class of Shares of each Fund
shall be those persons so identified in the currently effective prospectus and
statement of additional information of a Fund (the "prospectus" and "statement
of additional information," respectively)
3
under the Securities Act of 1933, as amended (the "Securities Act"), relating to
such class of Shares ("eligible investors"). The price that the Distributor
shall pay for Shares so purchased from a Fund shall be the net asset value,
determined as set forth in Section 3(e) hereof, used in determining the public
offering price on which such orders were based.
(c) The Shares are to be resold by the Distributor to eligible
investors at the public offering price, as set forth in Section 3(d) hereof, or
to financial intermediaries having agreements with the Distributor pursuant to
Section 7 hereof.
(d) The public offering price of each class of Shares, i.e., the price
per share at which the Distributor or financial intermediaries may sell the
Shares to eligible investors, shall be the public offering price as set forth in
the prospectus and statement of additional information relating to such class of
Shares, or as otherwise permissible under the federal and state securities laws.
If the public offering price does not equal an even cent, the public offering
price may be adjusted to the nearest cent. All payments to the Funds hereunder
shall be made in the manner set forth in Section 3(g).
(e) The net asset value of Shares shall be determined by the Fund or
any agent of the Fund in accordance with the method set forth in each Fund's
prospectus and statement of additional information and guidelines established by
the Directors.
(f) The Fund shall have the right to suspend the sale of its Shares at
times when redemption is suspended pursuant to the conditions set forth in
Section 4(b) hereof. Each Fund shall also have the right to suspend the sale of
its Shares if trading on the New York Stock
4
Exchange shall have been suspended, if a banking moratorium shall have been
declared by Federal or New York authorities, or if there shall have been some
other event, which, in the judgment of that Fund, makes it impracticable or
inadvisable to sell the Shares.
(g) A Fund, or any agent of a Fund designated in writing by that Fund,
shall be promptly advised of all purchase orders for Shares received by the
Distributor. Any order may be rejected by a Fund; provided, however, that a Fund
will not arbitrarily or without reasonable cause refuse to accept or confirm
orders for the purchase of Shares from eligible investors. A Fund (or its agent)
will confirm orders upon their receipt, will make appropriate book entries and,
upon receipt by a Fund (or its agent) of payment therefor, will deliver deposit
receipts or certificates for such Shares pursuant to the instructions of the
Distributor. Payment shall be made to that Fund through the National Securities
Clearing Corporation ("NSCC") in New York Clearing House funds or by Federal
Funds wire. The Distributor agrees to cause such payment and such instructions
to be delivered promptly to that Fund (or its agent).
Section 4. Repurchase or Redemption of Shares by a Fund.
(a) Any of the outstanding Shares may be tendered for redemption at any
time, and each Fund agrees to repurchase or redeem the Shares so tendered in
accordance with its obligations as set forth in its Articles of Incorporation or
Declaration of Trust, as amended from time to time, and in accordance with the
applicable provisions set forth in the prospectus and statement of additional
information relating to the applicable Fund. The price to be paid to redeem or
repurchase the Shares shall be equal to the net asset value calculated in
accordance with the provisions of Section 3(e) hereof, less any contingent
deferred sales charge ("CDSC"),
5
redemption fee or other charge(s), if any, set forth in the prospectus and
statement of additional information relating to the applicable Fund. All
payments by a Fund hereunder shall be made in the manner set forth below. The
redemption or repurchase by a Fund of any of the Shares purchased by or through
the Distributor will not affect the applicable sales charge, if any, secured by
the Distributor or any financial intermediary in the course of the original
sale, except that if any Shares are tendered for redemption or repurchase within
seven business days after the date of the confirmation of the original purchase,
the right to the sales charge, if any, shall be forfeited by the Distributor and
the financial intermediary that sold such Shares.
Each Fund shall pay the total amount of the redemption price as defined
in the above paragraph pursuant to the instructions of the Distributor through
NSCC, in New York Clearing House funds or by Federal Funds wire on or before the
seventh business day subsequent to its having received the notice of redemption
in proper form. The proceeds of any redemption of Shares shall be paid by each
Fund as follows: (i) any applicable CDSC shall be paid to the Distributor, and
(ii) the balance shall be paid to or for the account of the Shareholder, in each
case in accordance with the applicable provisions of the prospectus and
statement of additional information.
(b) Redemption of Shares or payment may be suspended at times when the
New York Stock Exchange is closed, when trading on said Exchange is suspended,
when trading on said Exchange is restricted, when an emergency exists as a
result of which disposal by a Fund of securities owned by it is not reasonably
practicable or it is not reasonably practicable for a Fund
6
fairly to determine the value of its net assets, or during any other period when
the Securities and Exchange Commission, by order, so permits.
Section 5. Duties of each Fund.
(a) Each Fund shall furnish to the Distributor copies of all
information, financial statements and other papers which the Distributor may
reasonably request for use in connection with the distribution of Shares of that
Fund, and this shall include, upon request by the Distributor, one certified
copy of all financial statements prepared for the Fund by independent public
accountants. Each Fund shall make available to the Distributor such number of
copies of the prospectus and statement of additional information as the
Distributor shall reasonably request.
(b) Each Fund shall take, from time to time, but subject to any
necessary approval of a Fund's shareholders, all necessary action to fix the
number of authorized Shares and such steps as may be necessary to register the
same under the Securities Act, to the end that there will be available for sale
such number of Shares of each class as the Distributor may reasonably be
expected to sell.
(c) Each Fund shall use its best efforts to qualify and maintain the
qualification of an appropriate number of its Shares for sale under the
securities laws of such states as the Distributor and that Fund may approve. Any
such qualification may be withheld, terminated or withdrawn by a Fund at any
time in its discretion. As provided in Section 8(c) hereof, the expense of
qualification and maintenance of qualification shall be borne by each Fund. The
7
Distributor shall furnish such information and other material relating to its
affairs and activities as may be required by a Fund in connection with such
qualification.
(d) Each Fund will furnish, in reasonable quantities upon request by
the Distributor, copies of its annual and interim reports.
Section 6. Duties of the Distributor.
(a) The Distributor shall devote reasonable time and effort to effect
sales of Shares of each Fund but shall not be obligated to sell any specific
number of Shares. The services of the Distributor to the Funds hereunder are not
to be deemed exclusive and nothing herein contained shall prevent the
Distributor from entering into like arrangements with other investment companies
so long as the performance of its obligations hereunder is not impaired thereby.
(b) In selling the Shares of the Funds, the Distributor shall use its
best efforts in all respects duly to conform with the requirements of all
Federal and state laws relating to the sale of such securities. Neither the
Distributor nor any financial intermediary having an agreement to offer and sell
shares pursuant to Section 7 hereof, nor any other person is authorized by any
Fund to give any information or to make any representations, other than those
contained in its registration statement or related prospectus and statement of
additional information and any sales literature specifically approved by such
Fund.
(c) The Distributor shall adopt and follow procedures, as approved by
the officers of each Fund, for the confirmation of sales to eligible investors
and financial intermediaries, the collection of amounts payable by eligible
investors and financial intermediaries on such sales,
8
and the cancellation of unsettled transactions, as may be necessary to comply
with the requirements of the National Association of Securities Dealers, Inc.
(the "NASD"), as such requirements may from time to time exist.
Section 7. Agreements with Financial Intermediaries.
(a) The Distributor shall have the right to enter into agreements with
financial intermediaries of its choice for the sale of Shares and to fix therein
the portion of the sales charge that may be allocated to the financial
intermediaries on such terms and conditions as the Distributor shall deem
necessary or appropriate; provided, however, that the Distributor shall
periodically inform the Directors of the nature and substance of such
agreements. Shares sold to financial intermediaries shall be for resale by such
intermediaries only at the public offering price(s) set forth in the applicable
prospectus and statement of additional information or as otherwise permissible
under the federal and state securities laws.
(b) With respect to financial intermediaries who are acting as brokers
or dealers within the United States, the Distributor shall offer and sell Shares
only to such financial intermediaries who are members in good standing of the
NASD and who agree to abide by the Conduct Rules of the NASD, as amended from
time to time.
Section 8. Payment of Expenses.
(a) Each Fund shall bear all costs and expenses of the Fund, including
fees and disbursements of its counsel and auditors, in connection with the
preparation and filing of any required registration statements and/or
prospectuses and statements of additional information
9
under the Investment Company Act, the Securities Act, and all amendments and
supplements thereto, and preparing and mailing annual and interim reports and
proxy materials to Shareholders (including but not limited to the expense of
setting in type any such registration statements, prospectuses, statements of
additional information, annual or interim reports or proxy materials).
(b) The Distributor shall be responsible for any payments made to
financial intermediaries. In addition, after the prospectuses, statements of
additional information and annual and interim reports have been prepared and set
in type, the Distributor shall bear the costs and expenses of printing and
distributing any copies thereof which are to be used in connection with the
offering of Shares to financial intermediaries or eligible investors pursuant to
this Agreement. The Distributor shall bear the costs and expenses of preparing,
printing and distributing any other literature used by the Distributor or
furnished by it for use by financial intermediaries in connection with the
offering of the Shares for sale to eligible investors and any expenses of
advertising incurred by the Distributor in connection with such offering. It is
understood and agreed that so long as any Distribution Plan pursuant to Rule
12b-1 under the Investment Company Act with respect to a particular class of
Shares of a Fund remains in effect, any expenses incurred by the Distributor
hereunder in connection with distribution and/or account maintenance activities
for such class of Shares, as applicable, may be paid from amounts recovered by
it from the Fund under such Plan.
(c) Each Fund shall bear the cost and expenses of qualification of its
Shares for sale pursuant to this Agreement and, if necessary or advisable in
connection therewith, of qualifying
10
the Fund as a broker or dealer in such states of the United States or other
jurisdictions as shall be selected by the Funds and the Distributor pursuant to
Section 5(c) hereof and the cost and expenses payable to each such state for
continuing qualification therein until the Fund decides to discontinue such
qualification pursuant to Section 5(c) hereof.
Section 9. Indemnification.
(a) Each Fund severally shall indemnify and hold harmless the
Distributor and each person, if any, who controls the Distributor against any
loss, liability, claim, damage or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damage or expense
and reasonable counsel fees incurred in connection therewith), as incurred,
arising by reason of any person acquiring any of its Shares, which may be based
upon the Securities Act, or on any other statute or at common law, on the ground
that the registration statement or related prospectus and statement of
additional information, as from time to time amended and supplemented, or an
annual or interim report to the Fund's shareholders, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, unless such statement or omission was made in reliance upon, and in
conformity with, information furnished to the Fund in connection therewith by or
on behalf of the Distributor; provided, however, that in no case (i) is the
indemnity of the Fund in favor of the Distributor and any such controlling
persons to be deemed to protect such Distributor or any such controlling persons
thereof against any liability to the Fund or its security holders to which the
Distributor or any such controlling persons would otherwise be subject by reason
of willful misfeasance, bad faith or gross
11
negligence in the performance of their duties or by reason of the reckless
disregard of their obligations and duties under this Agreement; or (ii) is the
Fund to be liable under its indemnity agreement contained in this paragraph with
respect to any claim made against the Distributor or any such controlling
persons, unless the Distributor or such controlling persons, as the case may be,
shall have notified the Fund in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon the Distributor or such controlling persons
(or after the Distributor or such controlling persons shall have received notice
of such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve it from any liability which it may have to the
person against whom such action is brought otherwise than on account of its
indemnity agreement contained in this paragraph. Each Fund will be entitled to
participate at its own expense in the defense or, if it so elects, to assume the
defense of any suit brought to enforce any such liability, but if the Fund
elects to assume the defense, such defense shall be conducted by counsel chosen
by it and satisfactory to the Distributor or such controlling person or persons,
defendant or defendants in the suit. In the event a Fund elects to assume the
defense of any such suit and retain such counsel, the Distributor or such
controlling person or persons, defendant or defendants in the suit shall bear
the fees and expenses of any additional counsel retained by them, but in case
the Fund does not elect to assume the defense of any such suit, it will
reimburse the Distributor or such controlling person or persons, defendant or
defendants in the suit, for the reasonable fees and expenses of any counsel
retained by them. Each Fund shall promptly notify the Distributor of the
commencement of any litigation or proceedings against it or any of its officers
or Directors in connection with the issuance or sale of any of the Shares.
12
(b) The Distributor shall indemnify and hold harmless each applicable
Fund and each of its Directors and officers and each person, if any, who
controls the Fund against any loss, liability, claim, damage or expense
described in the foregoing indemnity contained in subsection (a) of this
Section, but only with respect to statements or omissions made in reliance upon,
and in conformity with, information furnished to the Fund in writing by or on
behalf of the Distributor for use in connection with the registration statement
or related prospectus and statement of additional information, as from time to
time amended, or the annual or interim reports to shareholders. In case any
action shall be brought against a Fund or any person so indemnified, in respect
of which indemnity may be sought against the Distributor, the Distributor shall
have the rights and duties given to each Fund, and each Fund and each person so
indemnified shall have the rights and duties given to the Distributor by the
provisions of subsection (a) of this Section 9.
Section 10. Fee-Based or Other Programs. In connection with certain
fee-based or other programs offered by a Fund's investment adviser or its
affiliates or by financial intermediaries having agreements with the Distributor
pursuant to Section 7 hereof, the Distributor and its affiliates are authorized
to offer and sell Shares of each Fund, as agent for the Fund, to participants in
such programs. Similarly, any Shares of a Fund sold through a fee-based or other
program offered by a financial intermediary shall be sold by such intermediary
acting as agent. The terms of this Agreement shall apply to such sales,
including terms as to the offering price of Shares, the proceeds to be paid to
the Funds, the duties of the Distributor, the payment of expenses and
indemnification obligations of the Funds and the Distributor.
13
Section 11. Duration and Termination of this Agreement. This Agreement
shall become effective as of the date first above written and shall remain in
force until two years after the date first above written, and thereafter, but
only for so long as such continuance is specifically approved at least annually
by (i) the Directors, or with respect to any one Fund, by the vote of a majority
of the outstanding voting securities of that Fund and (ii) by the vote of a
majority of those Directors who are not parties to this Agreement or interested
persons of any such party cast in person at a meeting called for the purpose of
voting on such approval.
This Agreement may be terminated at any time, without the payment of
any penalty, with respect to any Fund or Funds by the Directors or by vote of a
majority of the outstanding voting securities of the applicable Fund(s), or by
the Distributor, on sixty days' written notice to the other party. This
Agreement shall automatically terminate in the event of its assignment.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person" and "interested person," when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act.
Section 12. Amendments of this Agreement. This Agreement may be amended
by the parties only if such amendment is specifically approved by (i) the
Directors or by the vote of a majority of outstanding voting securities of the
Fund and (ii) by the vote of a majority of those Directors of the Fund who are
not parties to this Agreement or interested persons of any such party cast in
person at a meeting called for the purpose of voting on such approval.
14
Section 13. Governing Law. The provisions of this Agreement shall be
construed and interpreted in accordance with the laws of the State of New York
as at the time in effect and the applicable provisions of the Investment Company
Act. To the extent that the applicable law of the State of New York, or any of
the provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
Section 14. Personal Liability. The Declaration of Trust establishing
each Fund that is organized as a Massachusetts business trust, together with all
amendments thereto (the "Declaration"), which is on file in the office of the
Secretary of the Commonwealth of Massachusetts, provides that the name of the
Fund refers to the Trustees under the Declaration collectively as Trustees, but
not as individuals or personally; and no Trustee, shareholder, officer, employee
or agent of a Fund shall be held to any personal liability, nor shall resort be
had to their private property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of a Fund, but the trust property only
shall be liable.
15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Each of the Investment Companies listed on Exhibit A
attached hereto
By: _____________________________
Title:
FAM DISTRIBUTORS, INC.
By: _____________________________
Title:
16
Exhibit A
Xxxxxxx Xxxxx U.S. Short Term Government Fund, Inc.
The Asset Program, Inc.
Xxxxxxx Xxxxx U.S. Government Mortgage Fund
Xxxxxxx Xxxxx Fundamental Growth Fund, Inc.
Xxxxxxx Xxxxx Phoenix Fund, Inc.
Xxxxxxx Xxxxx Real Estate Fund, Inc.
Summit Cash Reserves Fund of Financial Institutions Series Trust
Xxxxxxx Xxxxx Retirement Reserves Money Fund of Xxxxxxx Xxxxx Retirement Series
Trust
A-1
