Exhibit 10.19
DISTRIBUTION
AGREEMENT
THIS AGREEMENT, originally made as of the 8th day of February,
1995, by and between Waddell & Reed Funds, Inc. and
Waddell & Reed, Inc. and as assigned, effective
June 16, 2003, to Ivy Funds Distributor, Inc., an
indirectly owned subsidiary of Waddell & Reed
Financial, Inc., the parent company of Waddell &
Reed, Inc., is hereby amended and restated as of the 3rd day
of September, 2003, by and between Ivy Funds, Inc. (f/k/a
W&R Funds, Inc.; f/k/a Waddell & Reed
Funds, Inc.), a Maryland Corporation (the
“Company”), and Ivy Funds Distributor, Inc.
(“IFDI”) a Florida Corporation;
I.
REPRESENTATIONS
A. The Company represents that
1) it is a registered open-end management investment company
(mutual fund), and
2) the shares of each of its classes of shares
(“Fund”) and of each sub-class thereof
(“Class”), if any, are, as of the date of the
effectiveness of this Agreement as to each such Fund or Class,
registered with the Securities and Exchange Commission
(“SEC”) and qualified or otherwise authorized for sale
in all states of the United States as may be agreed upon. (As
to any Fund or Class not registered with the SEC and qualified
or otherwise authorized for sale in all states of the United States
as may be agreed upon, this Agreement shall become effective as to
such Fund or Class upon such registration and qualification or
authorization.)
B. IFDI represents that
1) it is a broker-dealer registered with the SEC and is duly
qualified to offer shares of the Company in all states in which the
shares are currently qualified or otherwise authorized for offer
for sale;
2) it is a member of the National Association of Securities
Dealers, Inc. (“NASD”);
3) it does not engage in the retail sale of Company shares,
but rather maintains agreements with other registered
broker-dealers, authorizing such broker-dealers to offer Company
shares to the public;
4) it maintains and enforces procedures reasonably designed
to achieve compliance with applicable securities laws,
rules and regulations including the Rules of the NASD,
including those related to the review and approval of advertising
and sales literature used in solicitation of orders to buy Company
shares, and it files, when applicable, such advertising and sales
literature with the NASD.
II.
APPOINTMENT OF UNDERWRITER and OBLIGATIONS
The Company hereby, as applicable, appoints IFDI or continues the
appointment of IFDI, and IFDI, as applicable, agrees to act or
continues to act, as the Company’s principal underwriter
under the terms and provisions of this Agreement.
A.
Company agrees
1) to use its best efforts to register from time to time
under the Securities Act of 1933 (the “Securities Act”)
adequate amounts of its shares for sale by IFDI to the public
through broker-dealers with which IFDI contracts and to qualify or
to permit IFDI to qualify such shares for offering to the public in
such states as may from time to time be agreed upon;
2) to immediately advise IFDI (i) when any
post-effective amendment to its registration statement or any
further amendment or supplement thereto or any further registration
statement or amendment or supplement thereto becomes effective,
(ii) of any request by the SEC for amendments to the
registration statement(s) or any then effective prospectus or
for additional information, (iii) of the issuance by the SEC
of any stop-order suspending the effectiveness of the registration
statement or the initiation of any proceedings for that purpose,
and (iv) of the happening of any event which makes untrue any
material statement made in the registration statement or any then
effective prospectus or which, in the opinion of counsel for the
Company, requires the making of a change in the registration
statement or any then effective prospectus in order to make the
statements therein not misleading; in case of the happening at any
time of any event which materially affects the Company or its
securities and which should be set forth in a supplement to or an
amendment of any then effective prospectus in order to make the
statements therein not misleading, to prepare and furnish to IFDI
such amendment or amendments to that prospectus as will correct the
prospectus so that as corrected it will not contain, or such
supplement or supplements to that prospectus which when read in
conjunction with that prospectus will make the combined information
not contain any untrue statement of a material fact or any omission
to state any material fact necessary in order to make the
statements in that prospectus not misleading; if any time the SEC
shall issue any stop-order suspending the effectiveness of the
registration statement, to make every reasonable effort to obtain
the prompt lifting of such order; and, before filing any amendment
to the registration statement or to any then effective prospectus,
to furnish IFDI with a copy of the proposed amendment;
3) to advise IFDI of the net asset value of the shares of
each of its Funds and Classes, as applicable, as often as computed
and to furnish to IFDI as soon as practical such information as may
be reasonably requested by IFDI in order that it may know all of
the facts necessary to provide for the sale of shares of the
Company;
4) to pay or cause to be paid all expenses incident to the
issuance, transfer, registration and delivery of its shares, all
taxes in connection therewith, costs and expenses incident to
preparing and filing any registration statements and prospectuses
and any amendments or supplements to a registration statement or a
prospectus, statutory fees incidental to the registration of
additional shares with the SEC, statutory fees and expenses
incurred in
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connection with any
Blue Sky law qualifications undertaken by or at the request of
IFDI, and the fees and expenses of the Company’s counsel,
accountants or any other experts used in connection with the
foregoing; and
5) not without the consent of IFDI to offer any of its shares
for sale directly or to any persons or corporations other than
through IFDI, except only
a) the reinvestment of dividends and/or distributions or
their declaration in shares of the Company, in optional form or
otherwise;
b) the issuance of additional shares to stock splits or stock
dividends;
c) sale of shares to another investment or securities holding
company in the process of purchasing all or a portion of its
assets;
d) in connection with an exchange of shares of the Company
for shares in another investment or securities holding
company;
e) the sale of shares to registered unit investment trusts;
or
f) in connection with the exchange of one Fund’s shares
for shares of another Fund of the Company.
B.
IFDI agrees
1) to offer Company shares in such states as may be agreed
upon through broker-dealers which are members of the NASD on such
terms as are not inconsistent with this Agreement;
2) in offering shares through other broker-dealers to comply
with the provisions of the Articles of Incorporation and Bylaws of
the Company and with the provisions stated in its applicable then
current prospectus(es);
3) timely to inform the Company of any action or proceeding
to terminate, revoke or suspend IFDI’s registration as a
broker-dealer with the SEC, membership in the NASD, or authority
with any state securities commission to offer Company shares;
and
4) to pay the cost of all sales literature, advertising and
other materials which it may at its discretion use in connection
with the sale of Company shares, including the cost of reports to
the shareholders of the Company in excess of the cost of reports to
existing shareholders and the cost of printing the prospectus(es)
furnished to it by the Company.
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III.
TERMS FOR SALE OF SHARES
A.
It is mutually agreed that
1) IFDI shall act as principal in all matters relating to
promotion and sale of Company shares, including the preparation and
use of all advertising, sales literature and other promotional
materials, and shall make and enter into all other arrangements,
agreements and contracts as principal on its own account and not as
agent for the Company. Title to shares issued and sold by the
Company through IFDI shall pass directly from the Company to the
broker-dealer or investor; except provided, however, that IFDI may,
if so agreed by IFDI and the Company, act as agent of the Company
without commission on repurchase of shares of the
Company;
2) certificates for shares shall not be created or delivered
by the Company in any case in which the purchase is pursuant to any
provisions of the Company described in its applicable then current
prospectus(es) under the terms of which certificates are not to be
issued to the shareholder. Shares sold through IFDI shall be
registered in such name or names and amounts as the selling
broker-daeler or instructor may request from time to time, and all
shares when so paid for and issued shall be fully paid and
non-assessable; and
3) the offering price at which shares of the Company may be
sold through IFDI shall include such selling commission as may be
applicable to that Class and as may be fixed from time to time
by IFDI but shall not be in excess of 8.5 percent of the offering
price. IFDI shall retain any such sales commission and may
re-allow all or any part of the sales commission to selected
brokers and dealers who sell shares of the Company. IFDI may
designate, reduce or eliminate its selling commissions in certain
sales or exchanges to the extent described in the applicable then
current prospectus(es) of the Company and in accordance with
Section 22(d) of the Investment Company Act of 1940 and
any rules, regulations or orders of the SEC thereunder.
IV. THE
PLAN
A. It is mutually acknowledged that the Company has adopted a
plan pursuant to Rule 12b-1 under the Investment Company Act
of 1940, as amended (a “Plan”), which Plan is
applicable to certain shares and that the Company may in the future
adopt Plans applicable to certain Funds and Classes,
respectively.
B. With respect
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