Exhibit 6
XXXXXX XXXXXXX FUND, INC.
DISTRIBUTION AGREEMENT
AGREEMENT dated as of January 1, 1997 by and between XXXXXX XXXXXXX FUND,
INC., a corporation organized under the laws of the State of Maryland (the
"Fund"), and XXX XXXXXX AMERICAN CAPITAL DISTRIBUTORS, INC., a corporation
organized under the laws of the State of Delaware (the "Distributor").
W I T N E S S E T H :
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company and it
is in the interest of the Fund to offer its shares for sale continuously and to
appoint a principal underwriter for the purpose of facilitating such offers and
sales;
WHEREAS, the Fund and the Distributor wish to enter into an agreement with
each other with respect to the continuous offering of the Fund's common stock,
par value $.001 per share ("Shares"), which commenced after the effectiveness of
its initial registration statement filed pursuant to the Securities Act of 1933,
as amended (the "1933 Act"), and the 1940 Act.
NOW, THEREFORE, the parties agree as follows:
SECTION 1. APPOINTMENT OF THE DISTRIBUTOR.
The Fund hereby appoints the Distributor its exclusive underwriter in connection
with the offering and sale of the Shares on the terms set forth in this
Agreement and the Distributor hereby accepts such appointment and agrees to act
hereunder.
SECTION 2. SERVICES AND DUTIES OF THE DISTRIBUTOR.
(a) The Distributor agrees to sell, as agent for the Fund, from time to
time during the term of this Agreement, Shares upon the terms described in the
Prospectus. As used in this Agreement, the term "Prospectus" shall mean the
prospectus included as part of the Fund's Registration Statement, as such
prospectus may be amended or supplemented from time to time, and the term
"Registration Statement" shall mean the Registration Statement most recently
filed from time to time by the Fund with the Securities and Exchange Commission
and effective under the 1933 Act and the 1940 Act, as such Registration
Statement is amended by any amendments thereto at the time in effect.
(b) The Distributor will hold itself available to receive orders,
satisfactory to the Distributor, for the purchase of Shares and will accept such
orders on behalf of the Fund and will transmit such orders as are so accepted to
the Fund's transfer and shareholder servicing agent as promptly as practicable.
The Distributor shall promptly forward to the Fund's Custodian funds received in
respect of purchases of shares in accordance with the instructions of the Fund's
Administrator. Purchase orders shall be deemed effective at the time and in the
manner set forth in the Prospectus.
(c) The offering price of the Shares shall be as defined in the Articles
of Incorporation of the Fund and determined as set forth in the Prospectus. The
Fund shall furnish the Distributor, with all possible promptness, an advice of
each computation of net asset value.
(d) The Distributor shall not be obligated to sell any certain number of
Shares and nothing herein contained shall prevent the Distributor from entering
into like distribution arrangements with other investment companies.
SECTION 3. DUTIES OF THE FUND.
(a) The Fund agrees to sell its Shares so long as it has Shares available
for sale and to cause the Fund's transfer and shareholder servicing agent to
record on its books the ownership of (or deliver certificates, if any, for) such
Shares registered in such names and amounts as the Distributor has requested in
writing or other means of data transmission, as promptly as practicable after
receipt by the Fund of the net
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asset value thereof and written request of the Distributor therefor.
(b) The Fund shall keep the Distributor fully informed with regard to its
affairs and shall furnish to the Distributor copies of all information,
financial statements and other papers which the Distributor may reasonably
request for use in connection with the distribution of Shares of the Fund, and
this shall include one certified copy, upon request by the Distributor, of all
financial statements prepared for the Fund by independent accountants and such
reasonable number of copies of its most current Prospectus and annual and
interim reports as the Distributor may request and shall cooperate fully in the
efforts of the Distributor to sell and arrange for the sale of the Shares and in
the performance of the Distributor under this Agreement.
(c) The Fund shall take, from time to time, such steps, including payment
of the related filing fee, as may be necessary to register its Shares under the
1933 Act to the end that there will be available for sale such number of Shares
as the Distributor may be expected to sell. The Fund agrees to file from time
to time such amendments, reports and other documents as may be necessary in
order that there may be no untrue statement of a material fact in a Registration
Statement of Prospectus, or necessary 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.
(d) The Fund shall use its best efforts to accomplish the requisite
filings and payment of fees to permit the ongoing offer and sale of an
appropriate number of its Shares under the securities laws of such states as
the Distributor and the Fund may approve, and, if necessary or appropriate in
connection therewith, to qualify and maintain the qualification of the Fund
as a broker or dealer in such states; provided that the Fund shall not be
required to amend its Articles of Incorporation or By-Laws to comply with the
laws of any state, to maintain an office in any state, to change the terms of
the offering of the Shares in any state from the terms set forth in its
Registration Statement and Prospectus, to qualify as a foreign corporation in
any state or to consent to service of process in any state other than with
respect to claims arising out of the offering of the Shares. The Distributor
shall furnish such information and other material relating to its
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affairs and activities as may be required by the Fund in connection with such
qualifications.
SECTION 4. EXPENSES.
(a) The Fund shall bear all costs and expenses of the continuous offering
of the Shares in connection with:
(i) fees and disbursements of its counsel and independent accountants, (ii)
the preparation, filing and printing of any registration statements and/or
prospectuses required to be filed by and under the federal and state
securities laws, (iii) the preparation and mailing of annual and interim
reports, prospectuses and proxy materials to shareholders and (iv) the
qualifications of Shares for sale and of the Fund as a broker or dealer under
the securities laws of such states or other jurisdictions as shall be
selected by the Fund and the Distributor pursuant to Section 3(d) hereof and
the cost and expenses payable to each such state for continuing qualification
therein.
(b) The Distributor shall bear (i) the costs and expenses of preparing,
printing and distributing any materials not prepared by the Fund and other
materials used by the Distributor in connection with its offering of the Shares
for sale to the public, including the additional cost of printing copies, at
printer's overrun cost, of the Prospectus and of annual and interim reports to
shareholders other than copies thereof required for distribution to shareholders
or for filing with any federal and state securities authorities, (ii) any
expenses of advertising incurred by the Distributor in connection with such
offering and (iii) the expenses of registration or qualification of the
Distributor as a dealer or broker under federal or state laws and the expenses
of continuing such registration or qualification.
SECTION 5. COMPENSATION.
(a) DISTRIBUTION FEE. The Fund shall pay to the Distributor, in
consideration of its services in connection with the distribution of Shares of
the Fund, compensation at an annual rate not to exceed 0.25% per annum of the
average daily net asset value of the Class A shares of the Fund, 0.75% per annum
of the
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average daily net asset value of the Class B shares of the Fund and 0.75% per
annum of the average daily net asset value of the Class C shares of the Fund
(the "Distribution Fees"), subject to the aggregate maximum limitation on the
distribution fee allowable under the Conduct Rules of the National Association
of Securities Dealers, Inc. (the "NASD Rules") and the Plan of Distribution
pursuant to Rule 12b-1 with respect to each such class of shares of the Fund
(each, a "12b-1 Plan"), which Distribution Fees shall accrue daily and be paid
monthly as promptly as possible after the last day of each month but in any
event prior to the tenth day of the following calendar month.
(b) SALES CHARGES. The Fund shall pay to the Distributor the proceeds
from any front-end sales charge and any contingent deferred sales charge
("CDSC") imposed on the purchase and redemption, respectively, of the Shares.
The Fund shall cause its transfer agent (the "Transfer Agent") to withhold, from
redemption proceeds payable to holders of Shares of the Fund, all CDSCs properly
payable by such holders in accordance with the terms of the Prospectuses
relating to such Shares and shall cause the Transfer Agent to pay such amounts
over to the Distributor as promptly as possible after the settlement date for
each redemption of such Shares.
(c) OTHER SERVICES; SERVICE FEE. The Distributor shall perform
stockholder services for the holders of the Class A, Class B and Class C
Shares on behalf of the Fund, which are in addition to the distribution
services performed by the Distributor and for which the Distributor may
receive an asset based service fee under the NASD Rules, including, but are
not limited to, the following: telephone service to stockholders, including
the acceptance of telephone inquiries and transaction requests; acceptance
and processing of written correspondence, new account applications and
subsequent purchases by check; mailing of confirmations, statements and tax
forms directly to stockholders; and acceptance of payment for trades by
check, Federal Reserve wire or Automated Clearing House payment. Subject to
the applicable 12b-1 Plans and examination by the Fund's independent
accountants, the Distributor is entitled to receive a stockholder services
fee at an annual rate not to exceed 0.25% per annum of the average daily net
assets of the Class A Shares pursuant to the Service Plan of the Class A
Shares and at an annual rate of 0.25% per annum of the average daily net
assets of the Class B Shares and Class C Shares, respectively, for providing
such
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stockholder services for the holders of such Class B and Class C Shares,
respectively. Such stockholder services fee shall be calculated daily and paid
monthly as promptly as possible after the last day of each month but in any
event prior to the tenth day of the following calendar month. The Distribution
Fees payable pursuant to this Agreement shall not be deemed to compensate the
Distributor for any stockholder services it may provide to the Fund.
The Distributor's payment or assumption of any expense of the Fund that the
Distributor is not required to pay or assume under this Agreement shall not
relieve the Distributor of any of its obligations to the Fund or obligate the
Distributor to pay or assume any similar expense on any subsequent occasion.
(d) REALLOCATION OF DISTRIBUTION FEES AND SALES CHARGES. The Distributor
may reallocate part or all of the Distribution Fees payable to the Distributor
with respect of any Shares of the Fund directly to investment dealers, banks or
financial services firms ("Participating Dealers") providing distribution
services. The Distributor may also reallocate part or all of the sales charges
payable to the Distributor in respect of any Shares of the Fund directly to
Participating Dealers providing distribution, administrative or shareholder
services.
(e) MAXIMUM CHARGES. Notwithstanding anything to the contrary contained
in this Agreement or in any relevant 12b-1 Plan, the amount of asset-based sales
charges and CDSCs paid to the Distributor by any class of Shares of the Fund
shall not exceed the amount permitted by the NASD Rules, as in effect from time
to time.
SECTION 6. INDEMNIFICATION. The Fund agrees to indemnify, defend and hold
the Distributor, its 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, 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 of a material fact contained in the
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Registration Statement or Prospectus or arising out of or based upon any alleged
omission to state a material fact required to be stated in either thereof or
necessary to make the statements in either thereof not misleading, except
insofar as such claims, demands, liabilities or expenses arise out of or are
based upon any such untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information furnished in
writing by the Distributor to the Fund for use in the Registration Statement or
Prospectus; provided, however, that this indemnity agreement, to the extent that
it might require indemnification of any person who is also an officer or
director of the Fund or who controls the Fund within the meaning of Section 15
of the 1933 Act, shall not inure to the benefit of such officer, director or
controlling person unless a court of competent jurisdiction shall determine, or
it shall have been determined by controlling precedent, that such result would
not be against public policy as expressed in the 1933 Act; and further provided,
that in no event shall anything contained herein be so construed as to protect
the Distributor against any liability to the Fund or to its security holders 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 it reckless disregard of its obligations under this Agreement. The
Fund's agreement to indemnify the Distributor, its officers and directors and
any such controlling person as aforesaid is expressly conditioned upon the
Fund's being promptly notified of any action brought against the Distributor,
its officers or directors, or any such controlling person, such notification to
be given to the Fund at its principal business office. The Fund agrees promptly
to notify the Distributor of the commencement of any litigation or proceedings
against it or any of its officers or directors in connection with the issue and
sale of any Shares.
The Distributor agrees to indemnify, defend and hold the Fund, its
directors and officers and any person who controls the Fund, if any, 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 against such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Fund, its directors or
officers or any such controlling person may incur under the 1933 Act or under
common
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law or otherwise, but only to the extent that such liability or expense incurred
by the Fund, its directors or officers or such controlling person resulting from
such claims or demands shall arise out of or be based upon any alleged untrue
statement of a material fact contained in information furnished in writing by
the Distributor to the Fund for use in the preparation of the Registration
Statement or Prospectus or shall arise out of or be based upon any alleged
omission to state a material fact in such information or a fact necessary to
make such information not misleading, it being understood that the Fund will
rely upon the information provided by the Distributor for use in the preparation
of the Registration Statement and Prospectus. The Distributor's agreement to
indemnify the Fund, its directors and officers, and any such controlling person
as aforesaid is expressly conditioned upon the Distributor's being promptly
notified of any action brought against the Fund, its directors or officers or
any such controlling person, such notification to be given to the Distributor at
its principal business office.
SECTION 7. COMPLIANCE WITH SECURITIES LAWS. The Fund represents that
it is registered as an open-end management investment company under the 1940
Act, and agrees that it will comply with the provisions of the 1940 Act and
of the rules and regulations thereunder. The Fund and the Distributor each
agree to comply with the applicable terms and provisions of the 1940 Act, the
1933 Act and, subject to the provisions of Section 3(d), applicable state
securities or "Blue Sky" laws. The Distributor agrees to comply with the
applicable terms and provisions of the Securities Exchange Act of 1934, as
amended.
SECTION 8. TERM OF AGREEMENT; TERMINATION. This Agreement shall
commence on the date first set forth above. This Agreement shall continue in
effect for a period more than two years from the date hereof only so long as
such continuance is specifically approved at least annually in conformity with
the requirements of the 1940 Act.
This Agreement shall terminate automatically in the event of its assignment
(as defined by the 1940 Act). In addition, this Agreement may be terminated by
either party at any time, without penalty, on not more than sixty days' nor less
than thirty days' written notice to the other party.
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SECTION 9. NOTICES. Any notice required to be given pursuant to this
Agreement shall be deemed duly given if delivered or mailed by registered mail,
postage prepaid, (1) to the Distributor at Xxx Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxx,
Xxxxxxxx 00000, or (2) to the Fund at Xxxxxx Xxxxxxx Fund, Inc., 1221 Avenue of
the Americas, 00xx Xxxxx, Xxx Xxxx, X.X. 00000, Xxxxxxxxx: Xxxxxx X. Xxxxx.
SECTION 10. The directors have authorized the execution of this
Agreement in their capacity as directors and not individually and the
Distributor agrees that neither the shareholders nor the directors nor any
officers, employee, representative or agent of the Fund shall be personally
liable upon, nor shall resort be had to their private property for the
satisfaction of, obligations given, executed or delivered on behalf of or by the
Fund, that the shareholders, directors, officers, employees, representatives and
agents of the Fund shall not be personally liable hereunder, and that it shall
look solely to the property of the Fund for the satisfaction of any claim
hereunder.
SECTION 11. GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
Xxxxxx Xxxxxxx Fund, Inc.
By
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Name:
Title:
Xxx Xxxxxx American Capital
Distributors, Inc.
By
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Name:
Title:
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