FORM OF
UNDERWRITING AGREEMENT
XXXX XXXXX INCOME TRUST, INC.:
XXXX XXXXX CORE BOND FUND
This UNDERWRITING AGREEMENT, made this ___ day of ________, 2004 by and
between Xxxx Xxxxx Income Trust, Inc., a Maryland corporation ("Corporation"),
on behalf of Xxxx Xxxxx Core Bond Fund ("Fund"), and Xxxx Xxxxx Xxxx Xxxxxx,
Inc., a Maryland corporation ("LMWW" or "Distributor").
WHEREAS, the Corporation is registered with the Securities and Exchange
Commission as an open-end investment company under the Investment Company Act of
1940, as amended (the "1940 Act"), and has registered its shares of common stock
of the Fund for sale to the public under the Securities Act of 1933 (the "1933
Act") and filed appropriate notices under various state securities laws; and
WHEREAS, the Corporation wishes to retain the Distributor as the principal
underwriter in connection with the offering and sale of the shares of common
stock of the Fund ("Shares") and to furnish certain other services to the
Corporation as specified in this Agreement; and
WHEREAS, this Agreement has been approved by separate votes of the
Corporation's Board of Directors and of certain disinterested directors in
conformity with Section 15 of, and paragraph (b)(2) of Rule 12b-1 under, the
1940 Act; and
WHEREAS, the Distributor is willing to act as principal underwriter and 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 Corporation hereby appoints the Distributor as principal
underwriter in connection with the offering and sale of Shares of the Fund. The
Distributor, as exclusive agent for the Corporation, upon the commencement of
operations of the Fund and subject to applicable federal and state law and the
Articles of Incorporation and By-Laws of the Corporation, shall: (i) promote the
Fund; (ii) solicit orders for the purchase of the Shares subject to such terms
and conditions as the Corporation may specify; and (iii) accept orders for the
purchase of the Shares on behalf of the Corporation (collectively, "Distribution
Services"). The Distributor shall comply will all applicable federal and state
laws and offer the Shares of the Fund on an agency or "best efforts" basis under
which the Corporation shall issue only such Shares as are actually sold. The
Distributor shall have the right to use any list of shareholders of the
Corporation or the Fund or any other list of investors which it obtains in
connection with its provision of services under this Agreement; provided,
however, that the Distributor shall not sell or knowingly provide such list or
lists to any unaffiliated person without the consent of the Corporation's Board
of Directors.
(b) The Distributor shall provide 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 2830 of the National Association of Securities Dealers, Inc.
("NASD") (collectively, "Shareholder Services").
2. The Distributor may enter into dealer agreements with registered and
qualified securities dealers it may select for the performance of Distribution
and Shareholder Services and may enter into agreements with qualified dealers
and other qualified entities to perform recordkeeping and sub-accounting
services, the form of such agreements to be as mutually agreed upon and approved
by the Corporation and the Distributor. In making such arrangements, the
Distributor shall act only as principal and not as agent for the Corporation. No
such dealer or other entity is authorized to act as agent for the Corporation 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 Shares are to
be priced, and then only if the agreement expressly provides in writing that it
shall so act.
3. The public offering price of the Shares of the Fund shall be the net
asset value per share (as determined by the Corporation) of the outstanding
Shares of the Fund plus any applicable sales charge as described in the
Registration Statement of the Corporation. The Corporation shall furnish the
Distributor with a statement of each computation of public offering price and of
the details entering into such computation.
4. As compensation for providing Distribution Services under this
Agreement, the Distributor shall retain the sales charge, if any, on purchases
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 Corporation upon receipt of the
proceeds and retain the sales charge, if any. The Distributor shall receive from
the Fund a distribution fee and a service fee at the rates and under the terms
and conditions of the Plan of Distribution ("Plan") adopted by the Corporation
with respect to the Fund, as such Plan is in effect from time to time, and
subject to any further limitations on such fees as the Corporation's Board of
Directors may impose. The Distributor may reallow any or all of the sales
charge, distribution fee and service fee that it has received under this
Agreement to such dealers or sub-accountants as it may from time to time
determine; provided, however, that unless permitted under the rules of the NASD,
the Distributor may not reallow to any dealer for Shareholder Services an amount
in excess of 0.25% of the average annual net asset value of the shares with
respect to which said dealer provides Shareholder Services.
5. As used in this Agreement, the term "Registration Statement" shall
mean the registration statement most recently filed by the Corporation with the
Securities and Exchange Commission and effective under the 1940 Act and 1933
Act, as such Registration Statement is amended by any amendments thereto at the
time in effect, and 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 Corporation as part
of the Registration Statement, or as they may be amended from time to time.
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6. The Distributor shall print and distribute to prospective investors
Prospectuses, and shall print and distribute, upon request, to prospective
investors Statements of Additional Information, and may print and distribute
such other sales literature, reports, forms and advertisements in connection
with the sale of the Shares as comply with the applicable provisions of federal
and state law. In connection with such sales and offers of sale, the Distributor
and any dealer or sub-accountant shall give only such information and make only
such statements or representations as are contained in the Prospectus, Statement
of Additional Information, or in information furnished in writing to the
Distributor by the Corporation, and the Corporation shall not be responsible in
any way for any other information, statements or representations given or made
by the Distributor, any dealer or sub-accountant, or their representative or
agents. Except as specifically provided in this Agreement, the Corporation shall
bear none of the expenses of the Distributor in connection with its offer and
sale of the Shares.
7. The Corporation agrees at its own expense to register the Shares with
the Securities and Exchange Commission, state and other regulatory bodies, and
to prepare and file from time to time such Prospectuses, Statements of
Additional Information, amendments, reports and other documents as may be
necessary to maintain the Registration Statement. The 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. The Corporation hereby delegates to LMWW the implementation of the
Corporation's Anti-Money Laundering Program as it applies to the ownership of
shares held in shareholder accounts that are established by LMWW on LMWW's books
and records ("the LMWW accounts") pursuant to the terms and conditions as is
more fully set forth in Exhibit A.
9. The Corporation agrees to indemnify, defend and hold the Distributor,
its several officers and directors, 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 (including the
cost of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Distributor, its
officers or 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 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 against any liability to the
Corporation or its shareholders to which the Distributor would otherwise be
subject by reason of 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, and further provided that the
Corporation shall not indemnify the Distributor for conduct as set forth in
paragraph 9. The Distributor agrees that it shall look only to assets of the
Fund, and not to any other series of the Corporation, for satisfaction of any
obligation created by this paragraph or otherwise arising under this Agreement.
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10. The Distributor agrees to indemnify, defend and hold the Corporation,
its several officers and directors, and any person who controls the Corporation
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 Corporation, its
officers or directors, or any such controlling person may incur, under the 1933
Act or under common law or otherwise, on account of any wrongful act of the
Distributor or any of its employees 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 Corporation 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. As
used in this paragraph, the term "employee" shall not include a corporate entity
under contract to provide services to the Corporation or any series, or any
employee of such a corporate entity, unless such person is otherwise an employee
of the Corporation.
11. The Corporation reserves the right at any time to withdraw all
offerings of the Shares of the Fund by written notice to the Distributor at its
principal office.
12. The Corporation shall not issue certificates representing Shares
unless requested by a shareholder. If such request is transmitted through the
Distributor, the Corporation will cause certificates evidencing the Shares owned
to be issued in such names and denominations as the Distributor shall from time
to time direct, provided that no certificates shall be issued for fractional
Shares.
13. The Distributor may at its sole discretion, directly or through
dealers, repurchase Shares offered for sale by the shareholders or dealers.
Repurchase of Shares by the Distributor shall be at the net asset value next
determined after a repurchase order has been received. The Distributor will
receive no commission or other remuneration for repurchasing Shares. At the end
of each business day, the Distributor shall notify, by telex or in writing, the
Corporation and Boston Financial Data Services, the Corporation'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 dealers offering Shares for repurchase. Upon such notice,
the Corporation shall pay the Distributor such amounts as are required by the
Distributor for the repurchase of such Shares in cash or in the form of a credit
against moneys due the Corporation from the Distributor as proceeds from the
sale of Shares. The Corporation reserves the right to suspend such repurchase
right upon written notice to the Distributor. The Distributor further agrees to
act as agent for the Corporation to receive and transmit promptly to the
Corporation's transfer agent shareholder and dealer requests for redemption of
Shares.
14. The Distributor is an independent contractor and shall be agent for
the Corporation only in respect to the sale and redemption of the Shares.
15. The services of the Distributor to the Corporation 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.
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16. The Distributor shall prepare reports for the Corporation's Board of
Directors on a quarterly basis showing such information concerning expenditures
related to this Agreement as from time to time shall be reasonably requested by
the Board of Directors.
17. 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 Securities and Exchange Commission by any rule, regulation or
order.
18. This Agreement will become effective with respect to the Fund on the
date first written above and, unless sooner terminated as provided herein, will
continue in effect for one year from the above written date. Thereafter, if not
terminated, this Agreement shall continue in effect with respect to the 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
Corporation's Board of Directors or (ii) by a vote of a majority of the
outstanding voting securities of the Fund (as defined the in 1940 Act), provided
that in either event the continuance is also approved by a majority of the
Corporation's 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.
19. This Agreement is terminable, with respect to the Fund or in its
entirety, without penalty by the Corporation's Board of Directors, 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' notice to the other
party and will be terminated upon the mutual written consent of the Distributor
and the Corporation. This Agreement will also automatically and immediately
terminate in the event of its assignment.
20. No provision of this Agreement may be changed, waived, discharged or
terminated orally, except by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought.
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21. In the event this Agreement is terminated by either party or upon
written notice from the Distributor at any time, the Corporation hereby agrees
that it will eliminate from its corporate name and its series any reference to
the name of "Xxxx Xxxxx." The Corporation shall have the non-exclusive use of
the name "Xxxx Xxxxx" in whole or in part only so long as this Agreement is
effective or until such notice is given.
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be executed
by their officers thereunto duly authorized.
ATTEST: XXXX XXXXX INCOME TRUST, INC.
By: _____________________________ By: ____________________________________
ATTEST: XXXX XXXXX XXXX XXXXXX,
INCORPORATED
By: _____________________________ By: _____________________________________
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EXHIBIT A
WHEREAS, the USA PATRIOT Act of 2001 and the regulations promulgated
thereunder (collectively, the "PATRIOT Act") impose anti-money laundering
requirements on financial institutions, including investment companies;
WHEREAS, in accordance with the PATRIOT Act, the Corporation, on behalf of
the Fund, has implemented an Anti-Money Laundering Program ("AML Program");
WHEREAS, the PATRIOT Act permits the Corporation to contractually delegate
the implementation and operation of the AML Program to the Corporation's service
providers, including to LMWW;
WHEREAS, the Corporation, on behalf of the Fund, desires to delegate to
LMWW the implementation and operation of the AML Program and LMWW desires to
accept such delegation.
1. Delegation. The Corporation hereby directs LMWW, and LMWW agrees, to
implement and operate the following aspects of the AML Program:
(a) Verify, at the time of opening a new LMWW Account and on a daily
basis thereafter, that no account owner or person authorized to
effectuate transactions in an account appears on any government list
of persons with whom the Funds are prohibited from transacting
business;
(b) Implement a Customer Identification Program for the LMWW Accounts
meeting the standards set forth in the AML Program;
(c) To the extent required under applicable law, monitor cash
equivalent transactions in the LMWW Accounts and file Form 8300 in
accordance with Internal Revenue Code Section 6050I;
(d) Monitor each LMWW Account for unusual or suspicious activity and
file suspicious activity reports as necessary or appropriate;
(e) Institute a system to train all employees who will perform the
duties delegated herein;
(f) Institute an independent audit program designed to verify that
LMWW has adopted adequate policies and procedures to insure
performance of the duties delegated herein; and
(g) Maintain any records required by the PATRIOT Act to be maintained
in connection with the performance of the delegated duties.
2. Consent to Examination. LMWW understands and acknowledges that any
records LMWW maintains on behalf of the Corporation relating to the AML Program
may be subject, from time to time, to examination or inspection by the Funds or
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a government agency having jurisdiction over the Corporation so that the
Corporation or the government agency may evaluate the Corporation's compliance
with the PATRIOT Act. LMWW hereby consents to such examination or inspection and
agrees to cooperate with the Corporation or such government agency in connection
with its review. For purposes of such examination or inspection, LMWW will use
its best efforts to make available, during normal business hours, all required
records and information for review by the Corporation or such government agency.
3. Limitation on Delegation. The Corporation acknowledges and agrees that
LMWW, in accepting the delegation hereunder, is agreeing to perform only those
aspects of the AML Program that have been expressly delegated hereby and is not
undertaking and shall not be responsible for any other aspect of the AML Program
or for the overall compliance by the Corporation with the PATRIOT Act.
4. Notice to Corporation. In the event that LMWW files a suspicious
activity report, a Form 8300, or other report or notice with any regulatory or
government agency, then LMWW shall immediately notify the Corporation's
Anti-Money Laundering Compliance Officer, unless prohibited by applicable law.
5. Payment for Shares. LMWW shall follow the Fund's policies regarding
acceptable methods of payment for the purchase of Fund shares, which may change
from time to time.
6. Dealer Agreements. In the event that LMWW retains one or more brokers
in connection with the offering and sale of shares of the Fund, LMWW shall
obtain representations from such broker to the effect that such broker has
implemented an anti-money laundering program complying with such broker's legal
obligations under the PATRIOT Act.
7. Agents. LMWW may engage one or more agents to perform the anti-money
laundering services on behalf of the Corporation contemplated hereby, provided
that in such event LMWW shall remain responsible to the Corporation for the acts
or omissions of such agent to the same extent as LMWW is for its own acts or
omissions.
8. Reporting. At the written request of the Corporation, LMWW will
provide promptly to the Corporation, upon receipt or creation, the following
documents or information: (a) any policies or procedures adopted by LMWW to
insure performance of the duties delegated herein, and any material amendments
thereto; (b) any report or notice filed on behalf of the Funds with any
regulatory or government agency; (c) the results of any examination by any
regulatory or government agency as contemplated by Section 2, above; (d) any
audit report produced pursuant to Section 1.(f). herein; and (e) any other
information reasonably requested by the Funds.
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