EXHIBIT NO. EX-99.E.9
FORM OF DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this ___ day of _______, 2001, by and between
_______________, a ___________ corporation (the "Corporation"), and Sunstone
Distribution Services, LLC, a Wisconsin limited liability company (the
"Distributor").
WHEREAS, the Corporation is an open-end investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act") and is
authorized to issue shares of common stock in separate series with each such
series representing interests in a separate portfolio of securities and other
assets;
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member of
the National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Corporation and Distributor desire to enter into an agreement
pursuant to which Distributor shall be the distributor of the shares of the
Corporation representing the investment portfolios described on Schedule A
hereto and any additional shares and/or investment portfolios the Corporation
and Distributor may agree upon and include on Schedule A as such Schedule may be
amended from time to time (such shares and any additional shares are referred to
as the "Shares" and such investment portfolios and any additional investment
portfolios are individually referred to as a "Fund" and collectively the
"Funds").
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
1. APPOINTMENT OF THE DISTRIBUTOR.
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The Corporation hereby appoints the Distributor as agent for the
distribution of the Shares, on the terms and for the period set forth in this
Agreement. Distributor hereby accepts such appointment as agent for the
distribution of the Shares on the terms and for the period set forth in this
Agreement.
2. SERVICES AND DUTIES OF THE DISTRIBUTOR.
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2.1 Distributor will act as agent for the distribution of Shares in
accordance with the instructions of the Corporation's Board of Directors and the
registration statement and prospectuses then in effect with respect to the Funds
under the Securities Act of 1933, as amended (the "1933 Act").
2.2 Distributor may incur expenses for appropriate distribution activities
which it deems reasonable which are primarily intended to result in the sale of
Shares, including, but not limited to, advertising, the printing and mailing of
prospectuses to other than current shareholders, and the printing and mailing of
sales literature. At the direction of the Corporation, Distributor may enter
into servicing and/or selling agreements with qualified broker/dealers and other
persons with respect to the offering of Shares to the public, and if it so
chooses Distributor will act as principal. The Distributor shall not be
obligated to incur any specific expenses nor sell any certain number of Shares
of any Fund.
2.3 All Shares of the Funds offered for sale by Distributor shall be
offered for sale to the public at a price per share (the "offering price")
provided in the Funds' then current prospectus. The Distributor shall have no
liability for the payment of the purchase price of the Shares sold pursuant to
this Agreement or with respect to redemptions or repurchases of Shares.
2.4 Distributor shall act as distributor of the Shares in compliance in all
material respects with all applicable laws, rules and regulations, including,
without limitation, all rules and regulations made or adopted pursuant to the
1940 Act, by the Securities and Exchange Commission (the "Commission") and the
NASD.
2.5 Distributor shall not utilize any materials in connection with the
sales or offering of Shares except the Corporation's prospectus and statement of
additional information and such other materials as the Corporation shall provide
or approve. The Distributor agrees to provide compliance review of all sales
literature and marketing materials prepared for use by or on behalf of the
Corporation in advance of the use of such materials. The Fund agrees to
incorporate such changes to such materials as the Distributor shall request. The
Distributor will file the materials as may be required with the NASD, SEC or
state securities commissioners. The Corporation represents that it will not use
or authorize the use of any advertising or sales material unless and until such
materials have been approved and authorized for use by the Distributor.
2.6 As compensation for the services performed hereunder and the expenses
incurred by Distributor, the Distributor shall be entitled to the fees and be
reimbursed the expenses as provided in Exhibit B hereto.
3. DUTIES AND REPRESENTATIONS OF THE CORPORATION.
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3.1 The Corporation represents that it is registered as an open-end
management investment company under the 1940 Act and that it has and will
continue to act in conformity with its Articles of Incorporation, By-Laws, its
registration statement as may be amended from time to time and resolutions and
other instructions of its Board of Directors and has and will continue to comply
with all applicable laws, rules and regulations including without limitation the
1933 Act, the 1934 Act, the 1940 Act, the laws of the states in which shares of
the Funds are offered and sold, and the rules and regulations thereunder.
3.2 The Corporation shall take or cause to be taken all necessary action to
register and maintain the registration of the Shares under the 1933 Act for sale
as herein contemplated and
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shall pay all costs and expenses in connection with the registration of Shares
under the 1933 Act, and be responsible for 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 Corporation hereunder.
3.3 The Corporation shall execute any and all documents and furnish any and
all information and otherwise take all actions which may be reasonably necessary
in the discretion of the Corporation's officers in connection with the
qualification of the Shares for sale in such states as Distributor and the
Corporation may approve, shall maintain the registration of a sufficient number
or amount of shares thereunder, and shall pay all costs and expenses in
connection with such qualification. The Corporation shall notify the
Distributor, or cause it to be notified, of the states in which the Shares may
be sold and shall notify the Distributor of any change to the information.
3.4 The Corporation shall, at its expense, keep the Distributor fully
informed with regard to its affairs. In addition, the Corporation shall furnish
Distributor from time to time such information, documents and reports with
respect to the Corporation and the Shares as Distributor may reasonably request,
and the Corporation warrants that the statements contained in any such
information shall be true and correct and fairly represent what they purport to
represent.
3.5 The Corporation represents to Distributor that all registration
statements and prospectuses of the Corporation filed or to be filed with the
Commission under the 1933 Act with respect to the Shares have been and will be
prepared in conformity with the requirements of the 1933 Act, the 1940 Act, and
the rules and regulations of the Commission thereunder. As used in this
Agreement the terms "registration statement" and "prospectus" shall mean any
registration statement and prospectus (together with the related statement of
additional information) at any time now or hereafter filed with the Commission
with respect to any of the Shares and any amendments and supplements thereto
which at any time shall have been or will be filed with said Commission. The
Corporation 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 the
1933 Act, the 1940 Act and the rules and regulations of the Commission; that all
information contained in the registration statement and prospectus will be true
and correct in all material respects when such registration statement becomes
effective; and that neither the 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
Corporation agrees to file from time to time such amendments, supplements,
reports and other documents as may be necessary or required in order to comply
with the 1933 Act and the 1940 Act and in order that there may be no untrue
statement of a material fact in a registration statement or prospectus, or
necessary or required in order that there may be no omission to state a material
fact in the registration statement or prospectus which omission would make the
statements therein misleading. The Corporation shall promptly notify the
Distributor of any advice given to it by counsel to the Corporation regarding
the necessity or advisability of amending or supplementing the registration
statement.
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3.6 The Corporation shall not file any amendment to the registration
statement or supplement to any prospectus without giving Distributor reasonable
notice thereof in advance and if the Distributor declines to assent to such
amendment (after a reasonable time), the Corporation may terminate this
Agreement forthwith by written notice to the Distributor without payment of any
penalty. If the Corporation shall not propose an amendment or amendments and/or
supplement or supplements promptly after receipt by the Corporation of a written
request in good faith from Distributor to do so, Distributor may, at its option,
immediately terminate this Agreement. In addition, if, at any time during the
term of this Agreement, the Distributor requests the Corporation to make any
change in its governing instruments or in its methods of doing business which
are necessary in order to comply with any requirement of applicable law or
regulation, and the Corporation fails (after a reasonable time) to make any such
change as requested, the Distributor may terminate this Agreement forthwith by
written notice to the Corporation without payment of any penalty. Nothing
contained in this Agreement shall in any way limit the Corporation's right to
file at any time any amendments to any registration statement and/or supplements
to any prospectus, of whatever character, as the Corporation may deem advisable,
with advice of its counsel, such right being in all respects absolute and
unconditional.
3.7 Whenever in their judgment such action is warranted by market, economic
or political conditions, or by circumstances of any kind, the Corporation may
decline to accept any orders for, or make any sales of, any Shares until such
time as it deems it advisable to accept such orders and to make such sales and
the Corporation shall advise Distributor promptly of such determination.
3.8 The Corporation agrees to advise the Distributor promptly in writing:
(i) of any correspondence or other communication by the Commission or
its staff relating to the Funds including requests by the Commission for
amendments to the registration statement or prospectuses;
(ii) in the event of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or prospectuses then
in effect or the initiation of any proceeding for that purpose;
(iii) of the happening of any event which makes untrue any statement
of a material fact made in the registration statement or prospectuses or which
requires the making of a change in such registration statement or prospectuses
in order to make the statements therein not misleading; and
(iv) of all actions taken by the Commission with respect to any
amendments to any registration statement or prospectus which may from time to
time be filed with the Commission.
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4. INDEMNIFICATION.
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4.1(a) The Corporation authorizes Distributor to use any prospectus or
statement of additional information, in the form furnished to Distributor from
time to time, in connection with the sale of Shares. The Corporation shall
indemnify, defend and hold the Distributor, and each of its present or former
directors, members, officers, employees, representatives and any person who
controls or previously controlled the Distributor within the meaning of Section
15 of the 1933 Act ("Distributor Indemnitees"), free and harmless (a) from and
against any and all losses, claims, demands, liabilities, damages, charges,
payments, costs and expenses (including the costs of investigating or defending
any alleged losses, claims, demands, liabilities, damages, charges, payments,
costs or expenses and any counsel fees incurred in connection therewith) of any
and every nature ("Losses") which Distributor and each of the Distributor
Indemnitees may incur under the 1933 Act, the 1934 Act, any other statute
(including Blue Sky laws) or any rule or regulation thereunder, 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 the registration statement or
any prospectus, an annual or interim report to shareholders or sales literature,
or any amendments or supplements thereto, or arising out of or based upon any
omission, or alleged omission, to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that the Corporation's obligation to indemnify Distributor
and any of the foregoing indemnitees shall not be deemed to cover any Losses
arising out of any untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with
information relating to the Distributor and furnished to the Corporation or its
counsel by Distributor in writing for the purpose of, and used in, the
preparation thereof; (b) from and against any and all Losses which Distributor
and each of the Distributor Indemnitees may incur in connection with this
Agreement or the Distributor's performance hereunder, except to the extent the
Losses result from the Distributor's willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement, or (c) from and
against any and all Losses which Distributor and each of the Distributor
Indemnitees may incur when acting in accordance with instructions from the
Corporation or its representatives.. Promptly after receipt by the Distributor
of notice of the commencement of an investigation, action, claim or proceeding,
the Distributor shall, if a claim for indemnification in respect thereof is to
made under this section, notify the Corporation in writing of the commencement
thereof, although the failure to do so shall not prevent recovery by the
Distributor or any Distributor Indemnitee.
4.1(b) The Corporation shall 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 loss, claim, demand, liability, damage or expense, but if the
Corporation elects to assume the defense, such defense shall be conducted by
counsel chosen by the Corporation and approved by the Distributor, which
approval shall not be unreasonably withheld. In the event the Corporation elects
to assume the defense of any such suit and retain such counsel and notifies the
Distributor of such election, the indemnified defendant or defendants in such
suit shall bear the fees and expenses of any additional counsel retained by them
subsequent to the receipt of the Corporation's election. If the Corporation does
not elect to assume the defense of any such suit, or in case the Distributor
does not, in the exercise of reasonable judgment, approve of counsel chosen by
the Corporation, or in case there is a conflict of interest between the
Corporation and the Distributor or any of the Distributor Indemnitees, the
Corporation will reimburse the
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indemnified person or persons named as defendant or defendants in such suit, for
the fees and expenses of any counsel retained by Distributor and them. The
Corporation's indemnification agreement contained in this Section 4.1 and the
Corporation'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 Distributor and each of the Distributor Indemnitees, and
shall survive the delivery of any Shares and the termination of this Agreement.
This agreement of indemnity will inure exclusively to the Distributor's benefit,
to the benefit of each of the Distributor Indemnitees and their estates and
successors. The Corporation agrees promptly to notify Distributor of the
commencement of any litigation or proceedings against the Corporation or any of
its officers or directors in connection with the issue and sale of any of the
Shares.
4.1(c) The Corporation acknowledges and agrees that in the event the
Distributor, at the direction of the Corporation, is required to give
indemnification to any entity selling Shares or providing shareholder services
to shareholders or others and such entity shall make a claim for indemnification
against the Distributor, the Distributor shall make a similar claim for
indemnification against the Corporation and shall be entitled to such
indemnification.
4.2(a) Distributor shall indemnify, defend and hold the Corporation, and
each of its present or former directors, officers, employees, representatives,
and any person who controls or previously controlled the Corporation within the
meaning of Section 15 of the 1933 Act ("Corporation Indemnitees"), free and
harmless from and against any and all Losses which the Corporation, and each of
its present or former directors, officers, employees, representatives, or any
such controlling person, may incur under the 1933 Act, the 1934 Act, any other
statute (including Blue Sky laws) or any rule or regulation thereunder, or under
common law or otherwise, (a) arising out of or based upon any untrue, or alleged
untrue, statement of a material fact contained in the Corporation's registration
statement or any prospectus, as from time to time amended or supplemented, or
the omission, or alleged omission, to state therein a material fact required to
be stated therein or necessary to make the statement not misleading, but only if
such statement or omission was made in reliance upon, and in conformity with,
information relating to the Distributor and furnished in writing to the
Corporation or its counsel by the Distributor for the purpose of, and used in,
the preparation thereof, and (b) to the extent any Losses arise out of or result
from the Distributor's willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement; Distributor's agreement to
indemnify the Corporation and any of the Corporation Indemnitees shall not be
deemed to cover any Losses tot he extent they arise out of or result from the
Corporation's 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. Promptly after receipt by the Corporation of
notice of the commencement of an investigation, action, claim or proceeding, the
Corporation shall, if a claim for indemnification in respect thereof is to made
under this section, notify the Distributor in writing of the commencement
thereof, although the failure to do so shall not prevent recovery by the
Corporation or any Corporation Indemnitee.
4.2(b) The Distributor shall 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 loss, claim, demand, liability, damage or expense, but if the
Distributor elects to assume the defense, such
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defense shall be conducted by counsel chosen by the Distributor and approved by
the Corporation, which approval shall not be unreasonably withheld. In the event
the Distributor elects to assume the defense of any such suit and retain such
counsel and notifies the distributor of such election, the indemnified defendant
or defendants in such suit shall bear the fees and expenses of any additional
counsel retained by them subsequent to the receipt of the Distributor's
election. If the Distributor does not elect to assume the defense of any such
suit, or in case the Corporation does not, in the exercise of reasonable
judgment, approve of counsel chosen by the Distributor, the Distributor will
reimburse the indemnified person or persons named as defendant or defendants in
such suit, for the fees and expenses of any counsel retained by the Corporation
and them. The Distributor's indemnification agreement contained in this Section
4.2 and the Distributor'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 Corporation or any of the Corporation Indemnitees,
and shall survive the delivery of any Shares and the termination of this
Agreement. This agreement of indemnity will inure exclusively to the
Corporation's benefit, to the benefit of each of the Corporation Indemnitees and
their estates and successors. The Distributor agrees promptly to notify the
Corporation of the commencement of any litigation or proceedings against the
Distributor or any of its officers or directors in connection with the issue and
sale of any of the Shares.
5. OFFERING OF SHARES.
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No Shares shall be offered by either the Distributor or the Corporation
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 Corporation 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 the current prospectus as required by Section
10 of the 1933 Act, as amended, is not on file with the Commission; provided,
however, that nothing contained in this paragraph 5 shall in any way restrict or
have an application to or bearing upon the Corporation's obligation to
repurchase Shares from any shareholder in accordance with the provisions of the
prospectus or Articles of Incorporation.
6. LIMITATION OF LIABILITY.
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6.1 The Distributor shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Company in connection with the
performance of its obligations and duties under this Agreement, except a loss
resulting from the Distributor's willful misfeasance, bad faith or [gross]
negligence in the performance of such duties and obligations, or by reason of
its reckless disregard thereof. Furthermore, notwithstanding anything herein to
the contrary, the Distributor shall not be liable for any action taken or
omitted to be taken in accordance with instructions received by the Distributor
from an officer or representative of the Corporation.
6.2 The Distributor assumes no responsibility hereunder, and shall not be
liable, for any default, damage, loss of data, errors, delay or any other loss
whatsoever caused by events beyond its reasonable control. The Distributor will,
however, take all reasonable steps to minimize service interruptions for any
period that such interruption continues beyond its control.
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6.3 Neither party may assert any cause of action against the other party
under this Agreement that accrued more than two (2) years prior to the filing of
suit (or commencement of arbitration proceedings) alleging such cause of action.
Each party shall have the duty to mitigate damages for which the other party may
become responsible. Notwithstanding anything in this agreement to the contrary,
in no event shall either party, its affiliates or any of its or their directors,
officers, employees, agents or subcontractors, be liable for lost profits or
consequential damages. This is a service agreement. Except as expressly provided
in this Agreement, the Distributor disclaims all other representations or
warranties express or implied, made to the Corporation, a Fund or any other
person, including without limitation, any warranties of merchantability, fitness
for a particular purpose or otherwise (irrespective of any course of dealing,
custom or usage of trade) of any services or any goods provided incidental to
services provided under this Agreement. The Distributor disclaims any warranty
of title or non-infringement except as otherwise set forth in this Agreement.
7. TERM.
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7.1 This Agreement shall become effective with respect to each Fund listed
on Schedule A hereof as of the date hereof and, with respect to each Fund not in
existence on that date, on the date an amendment to Schedule A to this Agreement
relating to that Fund is executed. Unless sooner terminated as provided herein,
this Agreement shall continue in effect with respect to each Fund until
__________, 200__. Thereafter, if not terminated, this Agreement shall continue
automatically in effect as to each Fund for successive annual periods, provided
such continuance is specifically approved at least annually by (i) the
Corporation's Board of Directors or (ii) the vote of a majority (as defined in
the 1940 Act and Rule 18f-2 thereunder) of the outstanding voting securities of
a Fund, and provided that in either event the continuance is also approved by a
majority of the Corporation's Board of Directors who are not "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.
7.2 This Agreement may be terminated without penalty with respect to a
particular Fund (1) through a failure to renew this Agreement at the end of a
term, (2) upon mutual consent of the parties, or (3) on no less than thirty (30)
days' written notice, by the Corporation's Board of Directors, by vote of a
majority (as defined with respect to voting securities in the 1940 Act and Rule
18f-2 thereunder) of the outstanding voting securities of a Fund, or by the
Distributor (which notice may be waived by the party entitled to such notice).
The terms of this Agreement shall not be waived, altered, modified, amended or
supplemented in any manner whatsoever except by a written instrument signed by
the Distributor and the Corporation. This Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act).
7.3 In the event of termination of this Agreement, all reasonable expenses
associated with movement of records and materials and conversion thereof shall
be borne by the Funds.
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8. MISCELLANEOUS.
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8.1 The services of the Distributor rendered to the Funds are not deemed to
be exclusive. The Distributor may render such services and any other services to
others, including other investment companies. The Corporation recognizes that
from time to time directors, officers, and employees of the Distributor may
serve as directors, trustees, officers and employees of other entities
(including other investment companies), that such other entities may include the
name of the Distributor as part of their name and that the Distributor or its
affiliates may enter into distribution, administration, fund accounting,
transfer agent or other agreements with such other entities.
8.2 Distributor agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Corporation all records
relative to the Funds shareholders of the Corporation, 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 Corporation, which approval may not be withheld where
the Distributor may be exposed to civil or criminal proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, when subject to governmental or regulatory audit or investigation,
or when so requested by the Corporation. Records and information which have
become known to the public through no wrongful act of the Distributor or any of
its employees, agents or representatives, and information which was already in
the possession of the Distributor prior to receipt thereof, shall not be subject
to this paragraph.
8.3 This Agreement shall be governed by Wisconsin law, excluding the laws
on conflicts of laws. To the extent that the applicable laws of the State of
Wisconsin, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control, and nothing herein shall
be construed in a manner inconsistent with the 1940 Act or any rule or order of
the Commission thereunder. Any provision of this Agreement which may be
determined by competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. In such case, the parties shall in good faith modify or
substitute such provision consistent with the original intent of the parties.
8.4 Any notice required or to be permitted to be given by either party to
the other shall be in writing and shall be deemed to have been given when sent
by registered or certified mail, postage prepaid, return receipt requested, as
follows: Notice to the Distributor shall be sent to Sunstone Distribution
Services, LLC, 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx X, Xxxxxxxxx, XX, 00000,
Attention: Xxxxxx X. Xxxxxxx, and notice to the Corporation shall be sent to
___________________ Attention: ______________.
8.5 This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original agreement but such counterparts shall
together constitute but one and the same instrument.
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8.6 The captions of this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise effect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer as of the day and year first above
written.
_______________________________
(the "Corporation")
By:____________________________________________
President
SUNSTONE DISTRIBUTION SERVICES, LLC
(the "Distributor")
By: ____________________________________________
Xxxxxx X. Xxxxxxx
President
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SCHEDULE A
TO THE
DISTRIBUTION AGREEMENT
BY AND BETWEEN
______________________
AND
SUNSTONE DISTRIBUTION SERVICES, LLC
NAME OF FUNDS
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FUND EFFECTIVE DATE
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_____________________________ ________________________________
_____________________________ ________________________________
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