DISTRIBUTION AGREEMENT
Xxxx Xxxxx Growth Trust, Inc.
This DISTRIBUTION AGREEMENT, made this 1st day of December, 2005 by and
between Xxxx Xxxxx Growth Trust, Inc. ("Investment Company"), a Maryland
Corporation and Xxxx Xxxxx Investor Services, LLC. ("Distributor").
WHEREAS, the Investment Company is registered with the Securities and
Exchange Commission ("SEC") as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"), and has
registered its shares or the series thereof listed on Appendix A ("Shares"), as
it may be amended from time to time by agreement between the Distributor and
respective Investment Company (each such investment company or series thereof,
as appropriate, a "Fund"), for sale to the public under the Securities Act of
1933, as amended (the "1933 Act"), and filed appropriate notices under various
state securities laws; and
WHEREAS, the Investment Company wishes to retain the Distributor as the
principal underwriter in connection with the offering and sale of the Shares and
to furnish certain other services to the Investment Company as specified in this
Agreement; and
WHEREAS, this Agreement has been approved by separate votes of the
Investment Company's Board of Directors ("Board") and of those Board members who
are not "interested persons" of the Investment Company and who have no direct or
indirect financial interest in the operation of a plan of distribution adopted
pursuant to Rule 12b-1 under the 1940 Act ("Plan") of a Fund or in any
agreements related to such plan ("Independent Board Members") in conformity with
Section 15 of, and Rule 12b-1 under, the 1940 Act; and
WHEREAS, the Distributor is willing and able to furnish such services
on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1. (a) The Investment Company hereby appoints the Distributor as
principal underwriter and distributor in connection with the offering and sale
of Shares of the Fund to the public directly and through registered and
qualified securities dealers, banks and other intermediaries (collectively
"Intermediaries"), and the Distributor hereby accepts such appointment, on the
terms and for the period set forth in this Agreement. The Distributor, as agent
for the Investment Company, shall, in accordance with applicable federal and
state law and the organizational documents of the Investment Company and the
registration statement most recently filed by the Investment Company with the
SEC and effective under the 1940 Act and 1933 Act, as such Registration
Statement may be amended or supplemented from time to time ("Registration
Statement"): (i) promote the Fund; (ii) solicit orders for the purchase of the
Shares subject to such terms and conditions as the Investment Company may
specify; and (iii) accept orders for the purchase of the Shares on behalf of the
Investment Company (collectively, "Distribution Services"). The Distributor
shall comply with all applicable federal and state laws and offer the Shares of
the Fund on an agency or "best efforts" basis under which the Investment Company
shall issue only such Shares as are actually sold.
(b) The Distributor may pay for ongoing shareholder liaison
services, including responding to shareholder inquiries, providing shareholders
with information on their investments, and any other services now or hereafter
deemed to be appropriate subjects for the payments of "service fees" under
Conduct Rule 2820 or 2830 of the National Association of Securities Dealers,
Inc. ("NASD") (collectively, "Shareholder Services"), as appropriate.
2. The Distributor may also enter into dealer or similar agreements
with qualified Intermediaries it may select for the performance of Distribution
Services and Shareholder Services. These agreements for Distribution Services,
Shareholder Services, and record keeping and sub-accounting services shall not
be inconsistent with the provisions and terms of this Agreement. The Distributor
may also enter into agreements with Intermediaries and other qualified entities
to perform recordkeeping, shareholder servicing and sub-accounting services and
shall ensure that the parties with whom it makes such arrangements agree to
carry out their responsibilities in conformance with applicable laws, rules,
regulations and the duties of Distributor as contained in this agreement to the
extent they are applicable to such parties. In making such arrangements, the
Distributor shall act only as principal and not as agent for the Investment
Company and shall ensure that the parties with whom it makes such arrangements
agree to carry out their responsibilities in conformance with applicable laws,
rules, regulations, and the provisions of the Funds' Registration Statement to
the extent they are applicable to such parties and their activities. No such
Intermediary is authorized to act as agent for the Investment Company in
connection with the offering or sale of Shares to the public or otherwise,
except for the limited purpose of determining the time as of which transactions
in Shares are deemed to have been received.
3. The public offering price of the Shares of the Fund shall be the net
asset value per share (as determined by the Investment Company) of the
outstanding Shares of the Fund (or class thereof) next determined after receipt
of an order by the Fund or its designated agent plus any applicable sales charge
as described in the Registration Statement of the Investment Company.
4. As compensation for providing Distribution Services under this
Agreement, the Distributor shall retain the sales charge, if any, on purchases
of Shares or retain deferred sales charges upon redemption of Shares, as set
forth in the Registration Statement. The Distributor is authorized to collect
the gross proceeds derived from the sale of the Shares, remit the net asset
value thereof to the Investment Company upon receipt of the proceeds and retain
the sales charge, if any. The Distributor shall receive from each Fund fees at
the rates and under the terms and conditions of the Plan adopted by the
Investment Company with respect to each Fund, as such Plan is in effect from
time to time, and subject to any further limitations on such fees as the Board
may impose. The Distributor may reallow any or all of the sales charges that it
has received under this Agreement to such Intermediaries as it may from time to
time determine, consistent with the Registration Statement and applicable law.
The Distributor may pay any or all of the distribution fees and service fees
that it has received under this Agreement to such Intermediaries as it may from
time to time determine, consistent with the Registration Statement and
applicable law. The Distributor may securitize or borrow against amounts to be
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received by the Distributor under a Plan, in which case payments of the fees
under the Plan by the Fund may be made directly to the lender, security-holder
or an agent thereof pursuant to written instructions of the Distributor;
provided, however, that no such arrangement shall be deemed to give rise to any
obligation on the part of an Investment Company or its Board to continue such
payments in the face of a determination by the Board that such payments are not
in the best interests of the Fund or its shareholders, or to create any
obligation of the Fund or Investment Company to the lender.
5. As used in this Agreement, the terms "Prospectus" and "Statement of
Additional Information" shall mean, respectively, the form of prospectus and
statement of additional information with respect to the Fund filed by the
Investment Company as part of the Registration Statement, as they may be amended
or supplemented from time to time.
6. The Distributor shall print and distribute to prospective investors
as required by law current Prospectuses, and shall print and distribute, upon
request, to prospective investors or current shareholders current Statements of
Additional Information, and may print and distribute such other sales
literature, reports, forms and advertisements in connection with the sale and
offers of sale of the Shares as it deems appropriate. Except as specifically
provided in this Agreement, the Investment Company shall bear none of the
expenses of the Distributor in connection with its offer and sale of the Shares.
7. The Investment Company agrees at its own expense to register,
qualify or determine the exemption from registration or qualification of the
Shares with the SEC, state and other regulatory bodies, and to prepare and file
from time to time such Registration Statement, amendments thereto, reports and
other documents as may be necessary to maintain the registration or
qualification. The Distributor and Intermediaries shall provide the Investment
Company promptly with all information required for such registration or
qualification. Each Fund shall bear all expenses related to preparing and
typesetting such Prospectuses, Statements of Additional Information, and other
materials required by law and such other expenses, including printing and
mailing expenses, related to such Fund's communications with persons who are
shareholders of that Fund.
8. (a) The Distributor shall act as distributor of Shares in compliance
with all applicable laws, rules and regulations, including, without limitation,
all rules and regulations made or adopted (i) pursuant to the 1940 Act; (ii)
pursuant to the Securities Act of1933 Act; as amended (iii) pursuant to the
Securities Exchange Act of 1934, as amended ("1934 Act"); and (iv) by any
securities association registered under the 1934 Act, including without
limitation the NASD Conduct Rules or rules of any other applicable
self-regulatory organization. The Distributor shall offer the Shares, and accept
purchases, redemptions and exchanges for Shares, in compliance with the Fund's
Registration Statement and applicable law.
(b) The Distributor shall be responsible for reviewing and
making such filings with the NASD, as required, of advertisements and sales
literature relating to each Fund. The Distributor shall be responsible for
reviewing the Registration Statement of each Fund for compliance with applicable
NASD Conduct Rules.
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(c) The Distributor shall adopt and follow procedures for the
confirmation of sales to investors and Intermediaries, timeliness of orders, the
collection of amounts payable by investors and Intermediaries on such sales, the
correction of errors related to distribution of Shares, the cancellation of
unsettled transactions, and assisting with the solicitation of proxies, and any
other matters governed by Rule 38a-1 under the 1940 Act (as may apply to a
principal underwriter for a registered investment company), each as may be
necessary to comply with the requirements of the NASD, any other self-regulatory
organization, and the federal and state securities laws. The Distributor shall
provide reports or other information to the Investment Company at the Investment
Company's reasonable request, including, without limitation, reports related to
the operation and implementation plan of the Fund's policies related to customer
privacy, compliance, safeguarding of customer information, sales and marketing
practices or other policies and procedures of the Investment Company.
9. (a) The Distributor agrees that it has adopted and implemented an
anti-money-laundering program in compliance with the USA Patriot Act of 2001,
the regulations thereunder and NASD Conduct Rules, including without limitation
customer identification procedures and monitoring for suspicious activity. The
Distributor additionally agrees, to the extent applicable, that it has adopted
and implemented procedures to comply with law and regulation related to cash
transaction reporting requirements, as well as monitoring and reporting under
Financial Crimes Enforcement Network ("FinCEN") and other government watch
lists.
(b) In conjunction with the foregoing, the Distributor agrees
to perform the following: (i) promptly obtain and submit all required customer
identification information to the Funds' transfer agent and promptly respond to
any exceptions identified by the Distributor or by the Funds' transfer agent
with respect to gathering or submitting of customer identification information;
(ii) complete and file, as appropriate, Suspicious Activity Reports with the
FinCEN relating to suspicious activity of which the Distributor knows or has
reason to know regarding the Funds; (iii) on a semimonthly basis, respond, if
necessary, to requests sent by FinCEN and request, if necessary, that the Funds'
transfer agent search the Funds' accounts against the FinCEN network and (iv)
maintain all records associated with the Distributor's request and the transfer
agent's responses to the FinCEN request identified in (iii).
(c) If the Distributor engages another entity to act on its
behalf with respect to its anti-money laundering program, (a "Sub-Service
Provider"), the Distributor will remain fully responsible to the Funds for the
acts and omissions of the Sub-Service Provider to the same extent as the
Distributor is for its own acts and omissions. The Distributor consents to
provide any government agency having jurisdiction over the Funds: (i)
information and records relating to the Distributor's provision of anti-money
laundering services to the Funds, and (ii) the ability to inspect the
Distributor for purposes of evaluating the Funds' compliance with their
anti-money laundering obligations under applicable law. The Distributor will
provide upon request to the Funds: (i) written copies of the Distributor's
anti-money laundering program, and (ii) such other information, certifications
and assurances relating to the Distributor's anti-money laundering policies and
procedures as the Funds shall reasonably request.
10. (a) The Investment Company agrees to indemnify, defend and hold the
Distributor, its officers, directors and employees and any person who controls
the Distributor within the meaning of Section 15 of the 1933 Act, free and
harmless from and against any and all claims, demands, liabilities and expenses
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(including the reasonable cost of investigating or defending such claims,
demands or liabilities and any counsel fees incurred in connection therewith)
which the Distributor, its officers, directors and employees or any such
controlling person may incur, under the 1933 Act or under common law or
otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in the Registration Statement or arising out of or based
upon any alleged omission to state a material fact required to be stated or
necessary to make the Registration Statement not misleading, provided that in no
event shall anything contained in this Agreement be construed so as to protect
the Distributor or such other parties against any liability to the Investment
Company or its shareholders to which the Distributor or such other parties would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of their duties, or by reason of reckless
disregard of their obligations and duties under this Agreement, and further
provided that, notwithstanding the foregoing, the Investment Company shall not
indemnify the Distributor or such other parties if such indemnification
obligation arose, directly or indirectly, as a result of conduct set forth in
paragraph 10(b).
(b) The Distributor agrees to indemnify, defend and hold the
Investment Company, its several officers and Board members, and any person who
controls the Investment Company 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 counsel fees incurred in connection therewith)
which the Investment Company, its officers or Board members, or any such
controlling person may incur, under the 1933 Act or under common law or
otherwise, on account of any act of the Distributor or its directors, officers,
employees or agents constituting willful misfeasance, bad faith, or, gross
negligence or a breach of this Agreement or arising out of or based upon any
alleged untrue statement of a material fact contained in information furnished
in writing by the Distributor to the Investment Company for use in the
Registration Statement or arising out of or based upon any alleged omission to
state a material fact in connection with such information required to be stated
in the Registration Statement or necessary to make such information not
misleading, or arising out of any information, statements, or representations
given or made by the Distributor or any Intermediary which is not limited to
information contained in the Fund's Registration Statement (as then amended or
supplemented by a subsequent filing with the SEC), or in information furnished
in writing to the Distributor by the Investment Company and intended for such
use.
(c) Each party agrees to promptly notify the other of the
commencement of any litigation or proceedings involving any indemnified party.
The indemnification provisions of this paragraph 10 shall survive the
termination of this Agreement.
11. The Investment Company reserves the right at any time to withdraw
all offerings of the Shares of any Fund and to recommence offering any time
thereafter by written notice to the Distributor at its principal office.
12. The Distributor may at its sole discretion, directly or through
Intermediaries, repurchase Shares offered for sale by the shareholders or
Intermediaries. Repurchase of Shares by the Distributor shall be at the net
asset value (less any applicable sales, redemption or other charges, as
described in the Fund's Registration Statement) next determined after a
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repurchase order has been received. The Distributor will receive no commission
or other remuneration for repurchasing Shares, other than deferred sales charges
as described in the Fund's Registration Statement. At the end of each business
day, the Distributor shall notify, by means of electronic transmission (as may
be agreed-upon by the parties to this Agreement) or in writing, the Investment
Company and the Investment Company's transfer agent of the orders for repurchase
of Shares received by the Distributor since the last such report, the amount to
be paid for such Shares, and the identity of the shareholders or Intermediaries
offering Shares for repurchase. Upon such notice, the Investment Company shall
pay the Distributor such amounts as are required by the Distributor to pay for
the repurchase of such Shares in cash or in the form of a credit against moneys
due the Investment Company from the Distributor as proceeds from the sale of
Shares. The Investment Company reserves the right to suspend such repurchase
right upon written notice to the Distributor. The Distributor further agrees to
act as agent for the Investment Company to receive and transmit promptly to the
Investment Company's transfer agent shareholder and Intermediary requests for
redemption of Shares
13. The Distributor is an independent contractor and shall be agent for
the Investment Company only in respect to the sale (but not the advertising, nor
contracting with any Intermediaries for the sale), redemption, and exchange of
the Shares, including for the limited purpose of determining the time as of
which Share transactions are deemed to have been received.
14. The services of the Distributor to the Investment Company under
this Agreement are not to be deemed exclusive, and the Distributor shall be free
to render similar services or other services to others so long as its services
hereunder are not impaired thereby.
15. The Distributor shall prepare reports for the Board on a quarterly
basis, or more frequently as reasonably requested by the Board, showing such
information concerning expenditures related to this Agreement or related to the
operation and implementation of each Fund's Plan.
16. As used in this Agreement, the terms "assignment," "interested
person" and "majority of the outstanding voting securities" shall have the
meanings given to them by Section 2(a) of the 1940 Act, subject to such
exemptions as may be granted by the SEC by any rule, regulation, order, or
no-action or interpretative letter.
17. This Agreement will become effective with respect to a Fund on the
date first written above and, unless sooner terminated as provided herein, will
continue in effect for two years from the above written date. Thereafter, if not
terminated, this Agreement shall continue in effect with respect to each Fund
for successive annual periods ending on the same date of each year, provided
that such continuance is specifically approved at least annually (i) by the
Board or (ii) by a vote of a majority of the outstanding voting securities (as
defined the in 0000 Xxx) of the Fund, provided that in either event the
continuance is also approved by a majority of the Investment Company's Board
members who are not Interested Board Members of any party to this Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval.
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18. This Agreement is terminable with respect to some or all of the
Funds without penalty by the Board, by vote of a majority of the outstanding
voting securities of the Fund (as defined in the 1940 Act), or by the
Distributor, on not less than 60 days' written notice to the other party, and
such notice period may be waived upon the mutual written consent of the
Distributor and the Investment Company. This Agreement will also automatically
and immediately terminate in the event of its assignment as defined in Section
16 of this Agreement.
19. Shares of any Fund may have been divided into separate classes, as
described in the applicable Fund's Registration Statement, and may have sales
charges or discounts or waivers available for certain categories of investor.
20. The Fund and the Distributor agree that the information exchanged
hereunder and information about the respective customers and potential customers
of each is confidential and as such shall not be disclosed, sold or used in any
way except to carry out the terms of this Agreement. Notwithstanding the
foregoing, such confidential information may be disclosed on a "need to know"
basis as set forth in applicable privacy rules and regulations. The obligations
regarding confidentiality hereunder shall not apply to any information which is
(i) otherwise publicly available, (ii) already possessed by the entity to whom
the information was disclosed prior to disclosure hereunder, (iii) independently
developed by the entity, or (iv) disclosed pursuant to law, rule, regulation, or
court or administrative order or regulatory request. The Distributor shall have
the right to use any list of shareholders of the Fund or any other list of
investors which it obtains in connection with its provision of services under
this Agreement, provided that such use is consistent with applicable law and the
privacy policies of the Distributor and the Fund. The Distributor further agrees
to take commercially reasonable steps, in accordance with applicable law, to
safeguard customer information. The provisions of this paragraph 20 will survive
termination of this Agreement.
21. From time to time, each Fund may implement policies, procedures or
charges in an effort to avoid the potential adverse effects on the Funds of
short-term trading by market timers. The Distributor agrees to cooperate in good
faith with the Investment Company in the implementation of any such policies,
procedures and/or charges, including the rejection or cancellation of any
purchase or exchange order, particularly when there appears to be a pattern of
market timing or other frequent purchases and sale, and the imposition and
payment over to the Fund of redemption fees specified in the prospectus. The
Distributor agrees, where appropriate, to make reasonable efforts to obtain the
agreement of Intermediaries to comply with the Funds' frequent trading and other
policies set forth in the Funds' Prospectus or to take alternative actions
reasonably designed to achieve compliance with these policies.
22. No provision of this Agreement may be changed, waived, discharged
or terminated, except by an instrument in writing signed by the party against
which enforcement of the change, waiver, discharge or termination is sought.
This Agreement may be executed in multiple counterparts.
23. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Maryland.
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24. Notices shall be provided to each party, as noted below:
To the Distributor: Xxxx Xxxxx Investor Services, LLC
000 Xxxxx Xxxxxx, X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxx 00000-0000,
Attn: Xxxxxx Xxxxx
To the Investment Company: Xxxx Xxxxx Growth Trust, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Fund Secretary
25. The Articles of Incorporation of the Investment Company, amended
from time to time, which is on file with the Secretary of State of Maryland,
provides that to the fullest extent permitted by Maryland law, no Board member
or officer of the Investment Company shall be personally liable to the
Investment Company or its stockholders for money damages, except to the extent
such exemption from liability or limitation thereof is not permitted by the 1940
Act.
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be
executed by their officers thereunto duly authorized.
ATTEST: XXXX XXXXX GROWTH TRUST, INC.
By: /s/ Xxxxx Xxxxxx-Ceci By: /s/ Xxxxx X. Xxxxxxxxx
----------------------- -----------------------
Assistant Secretary Vice President and Chief Financial Officer
ATTEST: XXXX XXXXX INVESTOR SERVICES, LLC
By: /s/ Xxxxx X. Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxx
----------------------- ----------------------------
Appendix A
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Investment Company Fund Date Added:
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Xxxx Xxxxx Growth Trust, Inc. Xxxx Xxxxx Growth Trust, Inc. December 1, 2005
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