Exhibit e(2)
▇▇▇▇▇ ▇▇▇▇▇▇ TRUST II
FORM OF
DISTRIBUTION AGREEMENT
________ , 2002
PFS Distributors, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
This is to confirm that, in consideration of the agreements hereinafter
contained, ▇▇▇▇▇ ▇▇▇▇▇▇ Trust II (the "Trust"), a Massachusetts business trust,
on behalf of its series ▇▇▇▇▇ ▇▇▇▇▇▇ Capital Preservation Fund (the "Fund"), has
agreed that you shall be, for the period of this Agreement, the non-exclusive
principal underwriter and co-distributor of shares of the Fund. For purposes of
this Agreement, the term "Shares" shall mean shares of beneficial interest of
the Fund.
1. Services as Principal Underwriter and Distributor
1.1 You will act as agent for the distribution of Shares covered by, and in
accordance with, the registration statement, prospectus and statement of
additional information then in effect under the Securities Act of 1933, as
amended (the "1933 Act"), and the Investment Company Act of 1940, as amended
(the "1940 Act"), and will transmit or cause to be transmitted promptly any
orders received by you or those with whom you have sales or servicing agreements
for purchase or redemption of Shares to the Transfer and Dividend Disbursing
Agent for the Fund of which the Trust has notified you in writing.
1.2 You agree to use your best efforts to solicit orders for the sale of
Shares. It is contemplated that you will enter into sales or servicing
agreements with registered securities brokers and banks and into servicing
agreements with financial institutions and other industry professionals, such as
investment advisers, accountants and estate planning firms. In entering into
such agreements, you will act only on your own behalf as principal underwriter
and distributor. You will not be responsible for making any distribution plan or
service fee payments pursuant to any plans the Trust may adopt on behalf of the
Fund or agreements it may enter into.
1.3 You shall act as the non-exclusive principal underwriter and
co-distributor of Shares in compliance with all applicable laws, rules and
regulations, including, without limitation, all rules and regulations made or
adopted from time to time by the Securities and Exchange Commission (the "SEC")
pursuant to the 1933 Act or the 1940 Act or by any securities association
registered under the Securities Exchange Act of 1934, as amended.
1.4 Whenever in their judgment such action is warranted for any reason,
including, without limitation, market, economic or political conditions, the
Trust's officers may decline to accept any orders for, or make any sales of, any
Shares until such time as those officers deem it advisable to accept such orders
and to make such sales and the Trust shall advise you promptly of such
determination.
2. Duties of the Trust
2.1 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 Fund's
prospectuses and statements of additional information for regulatory purposes
and for distribution to shareholders; provided however, that nothing contained
herein shall be deemed to require the Trust to pay any costs of advertising or
marketing the sale of Shares.
2.2 The Trust agrees to execute any and all documents and to furnish any
and all information and otherwise to take any other actions that may be
reasonably necessary in the discretion of the Trust's officers in connection
with the qualification of Shares for sale in such states and other U.S.
jurisdictions as the Trust may approve and designate to you from time to time,
and the Trust agrees to pay all expenses that may be incurred in connection with
such qualification. You shall pay all expenses connected with your own
qualification as a securities broker or dealer under state or Federal laws and,
except as otherwise specifically provided in this Agreement, all other expenses
incurred by you in connection with the sale of Shares as contemplated in this
Agreement.
2.3 The Trust shall furnish you from time to time, for use in connection
with the sale of Shares, such information reports with respect to the Fund and
the Shares as you 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
statements contained in any such reports, when so signed by the Trust's
officers, shall be true and correct. The Trust also shall furnish you upon
request with (a) the reports of the annual audits of the financial statements of
the Fund made by independent certified public accountants retained by the Trust
for such purpose; (b) semi-annual unaudited financial statements pertaining to
the Fund; (c) quarterly earnings statements prepared by the Trust for the Fund;
(d) a monthly itemized list of the securities in the Fund's portfolio; (e)
monthly balance sheets as soon as practicable after the end of each month; (f)
the current net asset value and offering price per share for the Fund on each
day such net asset value is computed and (g) from time to time such additional
information regarding the financial condition of the Fund as you may reasonably
request.
3. Representations and Warranties
The Trust represents to you that all registration statements, prospectuses
and statements of additional information filed by the Trust on behalf of the
Fund with the SEC under the 1933 Act and the 1940 Act with respect to the Shares
have been prepared in conformity with the requirements of said Acts and the
rules and regulations of the SEC thereunder. As used in this Agreement, the
terms "registration statement", "prospectus" and "statement of additional
information" shall mean any registration statement, prospectus and statement of
additional information filed by the Trust on behalf of the Fund with the SEC and
any amendments and supplements thereto filed by the Trust on behalf of the Fund
with the SEC. The Trust represents and warrants to you that any such
registration statement, prospectus and statement of additional information, when
such registration statement becomes effective and as such prospectus and
statement of additional information are amended and supplemented, includes at
the time of such effectiveness, amendment or supplement all statements required
to be contained therein in conformance with the 1933 Act, the 1940 Act and the
rules and regulations of the SEC; that all statements of material fact contained
in any registration statement, prospectus or statement of additional information
will be true and correct when such registration statement becomes effective; and
that neither any registration statement nor any prospectus or statement of
additional information when such registration statement becomes effective will
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading to a purchaser of the Fund's Shares. 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 or
statement of additional information as, in the light of future developments,
may, in the opinion of the Trust, be necessary or advisable. If the Trust shall
not propose such amendment or amendments and/or supplement or supplements within
fifteen days after receipt by the Trust of a written request from you to do so,
you may, at your option, terminate this Agreement or decline to make offers of
the Fund's Shares until such amendments are made. The Trust shall not file any
amendment to any registration statement for the Fund or supplement to any
prospectus or statement of additional information for the Fund without giving
you 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 or statement of additional information, of whatever character, as the
Trust may deem advisable, such right being in all respects absolute and
unconditional.
4. Indemnification
4.1 The Trust authorizes you to use any prospectus or statement of
additional information furnished by the Trust from time to time, in connection
with the sale of Shares. The Trust agrees to indemnify, defend and hold you,
your several officers and directors, and any person who controls you 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 cost of
investigating or defending such claims, demands or liabilities and any such
counsel fees incurred in connection therewith) which you, your officers and
directors, or any such controlling person, may incur under the 1933 Act or under
common law or otherwise, arising out of or based upon any untrue statement, or
alleged untrue statement, of a material fact contained in any registration
statement for the Fund, any prospectus or any statement of additional
information for the Fund or arising out of or based upon any omission, or
alleged omission, to state a material fact required to be stated in any such
registration statement, any such prospectus or any statement of additional
information or necessary to make the statements in any of them not misleading;
provided, however, that the Trust's agreement to indemnify you, your officers or
directors, and any such controlling person shall not be deemed to cover any
claims, demands, liabilities or expenses arising out of any statements or
representations made by you or your representatives or agents other than such
statements and representations as are contained in any prospectus or statement
of additional information and in such financial and other statements as are
furnished to you pursuant to paragraph 2.3 of this Agreement; and further
provided that the Trust's agreement to indemnify you and the Trust's
representations and warranties herein before set forth in paragraph 3 of this
Agreement shall not be deemed to cover any liability to the Trust or the Fund or
its shareholders to which you would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of your duties, or
by reason of your reckless disregard of your obligations and duties under this
Agreement. The Trust's agreement to indemnify you, your officers and directors,
and any such controlling person, as aforesaid, is expressly conditioned upon the
Trust's being notified of any action brought against you, your officers or
directors, or any such controlling person, such notification to be given by
letter or by telegram addressed to the Trust at its principal office in New
York, New York and sent to the Trust by the person against whom such action is
brought, within ten days after the summons or other first legal process shall
have been served. The failure so to notify the Trust of any such action shall
not relieve the Trust from any liability that 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 4.1. The Trust will
be entitled to assume the defense of any suit brought to enforce any such claim,
demand or liability, but, in such case, such defense shall be conducted by
counsel of good standing chosen by the Trust. In the event the Trust elects to
assume the defense of any such suit and retains counsel of good standing, the
defendant or defendants in such suit shall bear the fees and expenses of any
additional counsel retained by any of them; but if the Trust does not elect to
assume the defense of any such suit, the Trust will reimburse you, your 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
retained by you or them. The Trust's indemnification agreement contained in this
paragraph 4.1 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 you, your officers and directors, or any
controlling person, and shall survive the delivery of any of the Trust's Shares.
This agreement of indemnity will inure exclusively to your benefit, to the
benefit of your several officers and directors, and their respective estates,
and to the benefit of the controlling persons and their successors. The Trust
agrees to notify you promptly of the commencement of any litigation or
proceedings against the Trust with respect to the Fund or any of its officers or
Board members in connection with the issuance and sale of any of the Fund's
Shares.
4.2 You agree to indemnify, defend and hold the Trust, its several officers
and Board members, 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 costs of investigating
or defending such claims, demands or liabilities and any counsel fees incurred
in connection therewith) that the Trust, its officers or Board members or any
such controlling person may incur under the 1933 Act, or under common law or
otherwise, but only to the extent that such liability or expense incurred by the
Trust, its officers or Board members, or such controlling person resulting from
such claims or demands shall arise out of or be based upon any untrue, or
alleged untrue, statement of a material fact contained in information furnished
in writing by you to the Trust and used in the answers to any of the items of
the registration statement for the Fund or in the corresponding statements made
in the prospectus or statement of additional information for the Fund, 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 you to
the Trust and required to be stated in such answers or necessary to make such
information not misleading. Your agreement to indemnify the Trust, its officers
or Board members, and any such controlling person, as aforesaid, is expressly
conditioned upon your being notified of any action brought against the Trust,
its officers or Board members, or any such controlling person, such notification
to be given by letter or telegram addressed to you at your principal office in
Duluth, Georgia and sent to you by the person against whom such action is
brought, within ten days after the summons or other first legal process shall
have been served. You shall have the right to control the defense of such
action, with counsel of your own choosing, satisfactory to the Trust, if such
action is based solely upon such alleged misstatement or omission on your part
or with the Trust's consent, and in any event the Trust, its officers or Board
members or such controlling person shall each have the right to participate in
the defense or preparation of the defense of any such action with counsel of its
own choosing reasonably acceptable to you but shall not have the right to settle
any such action without your consent, which will not be unreasonably withheld.
The failure to so notify you of any such action shall not relieve you from any
liability that you may have to the Trust, its officers or Board members, or to
such controlling person by reason of any such untrue, or alleged untrue,
statement or omission, or alleged omission, otherwise than on account of your
indemnity agreement contained in this paragraph 4.2. You agree to notify the
Trust promptly of the commencement of any litigation or proceedings against you
or any of your officers or directors in connection with the issuance and sale of
any of the Fund's Shares.
5. Effectiveness of Registration
No Shares shall be offered by either you or the Fund under any of the
provisions of this Agreement and no orders for the purchase or sale of such
Shares under this Agreement shall be accepted by the Fund if and so long as the
effectiveness of the registration statement for the Fund 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 for the Fund as required
by Section 5(b)(2) of the 1933 Act is not on file with the SEC; provided,
however, that nothing contained in this paragraph 5 shall in any way restrict or
have any application to or bearing upon the Fund's obligation to repurchase its
Shares from any shareholder in accordance with the provisions of the Fund's
prospectus, statement of additional information or charter documents, as amended
from time to time.
6. Offering Price
Shares of any class of any the Fund offered for sale by you shall be
offered for sale at a price per share (the "offering price") equal to (a) their
net asset value (determined in the manner set forth in the Fund's charter
documents and the then-current prospectus and statement of additional
information) plus (b) a sales charge, if applicable, which shall be the
percentage of the offering price of such Shares as set forth in the Fund's
then-current prospectus relating to such Shares. In addition to or in lieu of
any sales charge applicable at the time of sale, Shares of any class of the Fund
offered for sale by you may be subject to a contingent deferred sales charge as
set forth in the Fund's then-current prospectus and statement of additional
information. You shall be entitled to receive any sales charge levied at the
time of sale in respect of the Shares without remitting any portion to the Fund.
Any payments to a broker or dealer through whom you sell Shares shall be
governed by a separate agreement between you and such broker or dealer and the
Fund's then-current prospectus and statement of additional information. Any
payments to any provider of services to you shall be governed by a separate
agreement between you and such service provider.
7. Notice to You
The Trust agrees to advise you immediately in writing:
(a) of any request by the SEC for amendments to the registration statement,
prospectus or statement of additional information for the Fund 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 Fund's registration statement, prospectus or statement
of additional information then in effect or the initiation of any proceeding for
that purpose;
(c) of the happening of any event that makes untrue any statement of a
material fact made in the Fund's registration statement, prospectus or statement
of additional information then in effect or that requires the making of a change
in such registration statement, prospectus or statement of additional
information in order to make the statements therein not misleading; and
(d) of all actions of the SEC with respect to any amendment to the Fund's
registration statement, or any supplement to the prospectus or statement of
additional informationwhich may from time to time be filed with the SEC.
8. Term of the Agreement
This Agreement shall become effective on the date hereof, shall have an
initial term of one year from the date hereof, and shall continue for successive
annual periods thereafter so long as such continuance is specifically approved
at least annually by (a) the Trust's Board or (b) by a vote of a majority (as
defined in the ▇▇▇▇ ▇▇▇) of the Fund's outstanding voting securities, provided
that in either event the continuance is also approved by a majority of the Board
members of the Trust who are not interested persons (as defined in the ▇▇▇▇ ▇▇▇)
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 or
without cause, without penalty, on 60 days' notice by the Trust's Board or by
vote of holders of a majority of the Fund's outstanding voting securities, or on
90 days' notice by you. This Agreement will also terminate automatically, in the
event of its assignment (as defined in the 1940 Act and the rules and
regulations thereunder).
9. Arbitration
Any claim, controversy, dispute or deadlock arising under this Agreement
(collectively, a "Dispute") shall be settled by arbitration administered under
the rules of the American Arbitration Association ("AAA") in New York, New York.
Any arbitration and award of the arbitrators, or a majority of them, shall be
final and the judgment upon the award rendered may be entered in any state or
federal court having jurisdiction. No punitive damages are to be awarded.
10. Miscellaneous
So long as you act as a principal underwriter and distributor of Shares,
you shall not perform any services for any entity other than investment
companies advised or administered by Citigroup Inc. or its affiliates. The Trust
recognizes that the persons employed by you to assist in the performance of your
duties under this Agreement may not devote their full time to such service and
nothing contained in this Agreement shall be deemed to limit or restrict the
persons employed by you or any of your affiliates the right to engage in and
devote time and attention to other businesses or to render services of whatever
kind or nature, provided, however, that in conducting such business or rendering
such services your employees and affiliates would take reasonable steps to
assure that the other parties involved are put on notice as to the legal entity
with which they are dealing. This Agreement and the terms and conditions set
forth herein shall be governed by, and construed in accordance with, the laws of
the State of New York without giving effect to its conflict of interest
principles.
11. Limitation of Liability
The Trust and you acknowledge and agree that all obligations of the Trust
under this Agreement are binding only with respect to the Fund; that any
liability of the Trust under this Agreement, or in connection with the
transactions contemplated herein, shall be discharged only out of the assets of
the Fund; and that no other series of the Trust shall be liable with respect to
this Agreement or in connection with the transactions contemplated herein.
The obligations of the Trust shall not be binding upon any of the Trustees,
officers, or shareholders of the Trust personally, but shall bind only assets
and property of the Fund, and not any other series of the Trust. Any reference
to the Trust hereunder means and refers to the Trustees from time to time
serving under the Declaration of Trust of the Trust dated September 28, 2001, as
amended and restated (the "Declaration"), a copy of which is on file with the
Secretary of the Commonwealth of Massachusetts. The execution and delivery of
this Agreement has been authorized by the Trustees, and this Agreement has been
signed on behalf of the Trust by an authorized officer of the Trust, acting as
such and not individually, and neither such authorization by such Trustees nor
such execution and delivery by such officer shall be deemed to have been made by
any of them individually or to impose any liability on any of them personally,
but shall bind only the assets and property of the Trust as provided in the
Declaration.
If the foregoing is in accordance with your understanding, kindly indicate
your acceptance of this Agreement by signing and returning to us the enclosed
copy, whereupon this Agreement will become binding on you.
Very truly yours,
▇▇▇▇▇ ▇▇▇▇▇▇ TRUST II, on behalf
of ▇▇▇▇▇ ▇▇▇▇▇▇ Capital Preservation
Fund
By:
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Authorized Officer
Accepted:
PFS DISTRIBUTORS, INC.
By:
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Authorized Officer