DISTRIBUTION AGREEMENT
THIS AGREEMENT is made and entered into as of this 1st day of
September, 2000, by and among The Xxxxxxxx Funds, Inc., a Maryland business
company (the "Company"), The Xxxxxxxx Management Co., L.P., a California limited
partnership (the "Adviser") and Quasar Distributors, LLC, a Delaware limited
liability company ("Distributor").
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company, and
is authorized to issue shares of beneficial interests ("Shares") in separate
series with each such series representing interests in a separate portfolio of
securities and other assets;
WHEREAS, the Adviser is duly registered under the Investment Advisers
Act of 1940, as amended, and any applicable state securities laws, as an
investment adviser;
WHEREAS, the Company desires to retain the Distributor as principal
underwriter in connection with the offering and sale of the Shares of each
series listed on Schedule A (as amended from time to time) (the "Funds") to this
Agreement;
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member of
the National Association of Securities Dealers, Inc. (the "NASD");
WHEREAS, this Agreement has been approved by a vote of the Company's
board of directors ("Board") and its disinterested directors in conformity with
Section 15(c) of the 1940 Act; and
WHEREAS, the Distributor is willing to act as principal underwriter for
the Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto, intending to be legally bound,
do hereby agree as follows:
1. Appointment of the Distributor.
The Company hereby appoints the Distributor as its agent for the sale
and distribution of Shares of the Funds, subject to the terms and for the period
set forth in this Agreement. The Distributor hereby accepts such appointment and
agrees to act hereunder.
2. Services and Duties of the Distributor.
(a) The Distributor agrees to sell Shares of the Funds on a best
efforts basis as agent for the Company during the term of this Agreement, upon
the terms and at the current offering price (plus sales charge, if any)
described in the Prospectus. As used in this Agreement, the term "Prospectus"
shall mean the current prospectus, including the statement of additional
information, as amended or supplemented, relating to the Funds and included in
the currently effective registration statement or
post-effective amendment thereto (the "Registration Statement") of the Company
under the Securities Act of 1933 (the "1933 Act") and the 0000 Xxx.
(b) During the continuous public offering of Shares of the Funds, the
Distributor will hold itself available to receive orders, satisfactory to the
Distributor, for the purchase of Shares of the Funds and will accept such orders
on behalf of the Company. Such purchase orders shall be deemed effective at the
time and in the manner set forth in the Prospectus.
(c) The Distributor, with the operational assistance of the Company's
transfer agent, shall make Shares available for sale and redemption through the
National Securities Clearing Corporation's Fund/SERV System.
(d) In connection with all matters relating to this Agreement, the
Distributor agrees to act in conformity with the Company's Articles of
Incorporation and By-Laws and with the instructions of the Board and to comply
with the requirements of the 1933 Act, the 1934 Act, the 1940 Act, the
regulations of the NASD and all other applicable federal or state laws and
regulations. The Distributor acknowledges and agrees that it is not authorized
to provide any information or make any representations other than as contained
in the Prospectus and any sales literature specifically approved by the Company
and the Distributor.
(e) The Distributor agrees to cooperate with the Company in the
development of all proposed advertisements and sales literature relating to the
Funds. The Distributor agrees to review all proposed advertisements and sales
literature for compliance with applicable laws and regulations, and shall file
with appropriate regulators those advertisements and sales literature it
believes are in compliance with such laws and regulations. The Distributor
agrees to furnish to the Company any comments provided by regulators with
respect to such materials and to use its best efforts to obtain the approval of
the regulators to such materials.
(f) The Distributor at its sole discretion may repurchase Shares
offered for sale by shareholders of the Funds. Repurchase of Shares by the
Distributor shall be at the price determined in accordance with, and in the
manner set forth in, the current Prospectus. At the end of each business day,
the Distributor shall notify, by any appropriate means, the Company and its
transfer agent of the orders for repurchase of Shares received by the
Distributor since the last report, the amount to be paid for such Shares, and
the identity of the shareholders offering Shares for repurchase. The 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 Company to
receive and transmit promptly to the Company's transfer agent shareholder
requests for redemption of Shares.
(g) The Distributor may, in its discretion, enter into agreements with
such qualified broker-dealers as it may select, in order that such
broker-dealers also may sell Shares of the Funds. The form of any dealer
agreement shall be mutually agreed upon and approved by the Company and the
Distributor. The Distributor may pay a portion of any applicable sales charge,
or allow a discount, to a selling broker-dealer, as described in the Prospectus
or, if not described, as agreed upon with the broker-dealer. The Distributor
shall include in the forms of agreement with selling broker-dealers a provision
for the forfeiture by them of their sales charge or discount with respect to
Shares sold by them and redeemed, repurchased or tendered for redemption within
seven business days after the date of confirmation of such purchases.
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(h) The Distributor shall devote its best efforts to effect sales of
Shares of the Funds but shall not be obligated to sell any certain number of
Shares.
(i) The Distributor shall prepare reports for the Board regarding its
activities under this Agreement as from time to time shall be reasonably
requested by the Board, including regarding use of 12b-1 payments.
(j) The services furnished by the Distributor hereunder are not to be
deemed exclusive and the Distributor shall be free to furnish similar services
to others so long as its services under this Agreement are not impaired thereby.
The Company recognizes that from time to time officers and employees of the
Distributor may serve as directors, trustees, officers and employees of other
entities (including investment companies), that such other entities may include
the name of the Distributor as part of their name and that the Distributor or
its affiliates may enter into distribution, administration, fund accounting,
transfer agent or other agreements with such other entities.
3. Duties and Representations of the Company.
(a) The Company represents that it is duly organized and in good
standing under the law of its jurisdiction of incorporation and registered as an
open-end management investment company under the 1940 Act. The Company agrees
that it will act in material conformity with its Articles of Incorporation,
By-Laws, its Registration Statement as may be amended from time to time and
resolutions and other instructions of its Board. The Company agrees to comply in
all material respects with the 1933 Act, the 1940 Act, and all other applicable
federal and state laws and regulations. The Company represents and warrants that
this Agreement has been duly authorized by all necessary action by the Company
under the 1940 Act, state law and the Company's Articles of Incorporation and
By-Laws.
(b) The Company shall take or cause to be taken all necessary action to
register Shares of the Funds under the 1933 Act and to maintain an effective
Registration Statement for such Shares in order to permit the sale of Shares as
herein contemplated. The Company authorizes the Distributor to use the
Prospectus, in the form furnished to the Distributor from time to time, in
connection with the sale of Shares.
(c) The Company represents and agrees that all Shares to be sold by it,
including those offered under this Agreement, are validly authorized and, when
issued in accordance with the description in the Prospectus, will be fully paid
and nonassessable. The Company further agrees that it shall have the right to
suspend the sale of Shares of any Fund at any time in response to conditions in
the securities markets or otherwise, and to suspend the redemption of Shares of
any Fund at any time permitted by the 1940 Act or the rules of the Securities
and Exchange Commission ("SEC"). The Company shall advise the Distributor
promptly of any such determination.
(d) The Company agrees to advise the Distributor promptly in writing:
(i) of any correspondence or other communication by the SEC or
its staff relating to the Funds, including requests by the SEC for
amendments to the Registration Statement or Prospectus;
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(ii) in the event of the issuance by the SEC of any stop-order
suspending the effectiveness of the Registration Statement then in
effect or the initiation of any proceeding for that purpose;
(iii) of the happening of any event which makes untrue any
statement of a material fact made in the Prospectus or which requires
the making of a change in such Prospectus in order to make the
statements therein not misleading; and
(iv) of all actions taken by the SEC with respect to any
amendments to any Registration Statement or Prospectus which may from
time to time be filed with the SEC.
(e) The Company shall file such reports and other documents as may be
required under applicable federal and state laws and regulations. The Company
shall notify the Distributor in writing of the states in which the Shares may be
sold and shall notify the Distributor in writing of any changes to such
information.
(f) The Company agrees to file from time to time such amendments to
its Registration Statement and Prospectus as may be necessary in order that its
Registration Statement and Prospectus will not contain any untrue statement of
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(g) The Company shall fully cooperate in the efforts of the
Distributor to sell and arrange for the sale of Shares and shall make available
to the Distributor a statement of each computation of net asset value. In
addition, the Company shall keep the Distributor fully informed of its affairs
and shall provide to the Distributor from time to time copies of all
information, financial statements, and other papers that the Distributor may
reasonably request for use in connection with the distribution of Shares,
including, without limitation, certified copies of any financial statements
prepared for the Company by its independent public accountants and such
reasonable number of copies of the most current Prospectus, statement of
additional information and annual and interim reports to shareholders as the
Distributor may request. The Company shall forward a copy of any SEC filings,
including the Registration Statement, to the Distributor within one business day
of any such filings. The Company represents that it will not use or authorize
the use of any advertising or sales material unless and until such materials
have been approved and authorized for use by the Distributor.
(h) The Company represents and warrants that its Registration
Statement and any advertisements and sales literature of the Company (excluding
statements relating to the Distributor and the services it provides that are
based upon written information furnished by the Distributor expressly for
inclusion therein) shall not contain any untrue statement of material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and that all statements or
information furnished to the Distributor pursuant to this Agreement shall be
true and correct in all material respects.
4. Compensation.
As compensation for the services performed and the expenses assumed by
Distributor under this Agreement, Distributor shall be entitled to the fees and
expenses set forth in Schedule B to this Agreement which are payable promptly
after the last day of each month. Such fees shall be paid to Distributor by the
Company pursuant to its Rule 12b-1 plan or, if Rule 12b-1 payments are not
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sufficient to pay such fees and expenses, or if the Rule 12b-1 plan is
discontinued, or if the Fund's sponsor, the Adviser, otherwise determines that
Rule 12b-1 fees shall not, in whole or in part, be used to pay Distributor, the
Adviser shall be responsible for the payment of the amount of such fees not
covered by Rule 12b-1 payments.
5. Expenses.
(a) The Company shall bear all costs and expenses in connection with
registration of the Shares with the SEC and related compliance with state
securities laws, as well as all costs and expenses in connection with the
offering of the Shares and communications with shareholders of its Funds,
including but not limited to (i) fees and disbursements of its counsel and
independent public accountants; (ii) costs and expenses of the preparation,
filing, printing and mailing of Registration Statements and Prospectuses and
amendments thereto, as well as related advertising and sales literature, (iii)
costs and expenses of the preparation, printing and mailing of annual and
interim reports, proxy materials and other communications to shareholders of the
Funds; and (iv) fees required in connection with the offer and sale of Shares in
such jurisdictions as shall be selected by the Company pursuant to Section 3(e)
hereof.
(b) The Distributor shall bear 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. The
Distributor does not assume responsibility for any expenses not expressly
assumed hereunder.
6. Indemnification.
(a) The Company shall indemnify, defend and hold the Distributor, and
each of its present or former members, officers, employees, representatives and
any person who controls or previously controlled the Distributor within the
meaning of Section 15 of the 1933 Act, free and harmless from and against any
and all losses, claims, demands, liabilities, damages and expenses (including
the costs of investigating or defending any alleged losses, claims, demands,
liabilities, damages or expenses and any reasonable counsel fee incurred in
connection therewith) which the Distributor, each of its present and former
members, officers, employees or representatives or any such controlling person,
may incur under the 1933 Act, the 1934 Act, any other statute (including Blue
Sky laws) or any rule or regulation thereunder, 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 the Registration Statement or any
Prospectus, as from time to time amended or supplemented, or in any annual or
interim report to shareholders, or in any advertisement or sales literature, or
arising out of or based upon any omission, or alleged omission, to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the Company's
obligation to indemnify the Distributor and any of the foregoing indemnitees
shall not be deemed to cover any losses, claims, demands, liabilities, damages
or expenses arising out of any untrue statement or alleged untrue statement or
omission or alleged omission made in the Registration Statement, Prospectus,
annual or interim report, or any such advertisement or sales literature in
reliance upon and in conformity with information relating to the Distributor and
furnished to the Company or its counsel by the Distributor in writing and
acknowledging the purpose of its use for the purpose of, and used in, the
preparation thereof. The Company's agreement to indemnify the Distributor, and
any of the foregoing indemnitees, as the case may be, with respect to any
action, is expressly conditioned upon the Company being notified of such action
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brought against the Distributor, or any of the foregoing indemnitees, within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the
Distributor, or such person, unless the failure to give notice does not
prejudice the Company. Such notification shall be given by letter or by telegram
addressed to the Company's President, but the failure so to notify the Company
of any such action shall not relieve the Company from any liability which the
Company 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 Company's indemnity agreement contained in this
Section 6(a).
(b) The Company shall be entitled to participate at its own expense in
the defense or, if it so elects, to assume the defense of any suit brought to
enforce any such loss, claim, demand, liability, damage or expense, but if the
Company elects to assume the defense, such defense shall be conducted by counsel
chosen by the Company and approved by the Distributor, which approval shall not
be unreasonably withheld. In the event the Company elects to assume the defense
of any such suit and retain such counsel, the indemnified defendant or
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by them. If the Company does not elect to assume the defense of
any such suit, or in case the Distributor does not, in the exercise of
reasonable judgment, approve of counsel chosen by the Company or, if under
prevailing law or legal codes of ethics, the same counsel cannot effectively
represent the interests of both the Company and the Distributor, and each of its
present or former members, officers, employees, representatives or any
controlling person, the Company will reimburse the indemnified person or persons
named as defendant or defendants in such suit, for the fees and expenses of any
counsel retained by Distributor and them. The Company's indemnification
agreement contained in Sections 6(a) and 6(b) shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of the
Distributor, and each of its present or former directors, officers, employees,
representatives or any controlling person, and shall survive the delivery of any
Shares and the termination of this Agreement. This agreement of indemnity will
inure exclusively to the Distributor's benefit, to the benefit of each of its
present or former members, officers, employees or representatives or to the
benefit of any controlling persons and their successors. The Company agrees
promptly to notify the Distributor of the commencement of any litigation or
proceedings against the Company or any of its officers or directors in
connection with the issue and sale of any of the Shares.
(c) The Company shall advance attorney's fees and other expenses
incurred by any person in defending any claim, demand, action or suit which is
the subject of a claim for indemnification pursuant to this Section 6 to the
maximum extent permissible under applicable law.
(d) The Distributor shall indemnify, defend and hold the Company, and
each of its present or former directors, officers, employees, representatives,
and any person who controls or previously controlled the Company within the
meaning of Section 15 of the 1933 Act, free and harmless from and against any
and all losses, claims, demands, liabilities, damages and expenses (including
the costs of investigation or defending any alleged losses, claims, demands,
liabilities, damages or expenses, and any reasonable counsel fee incurred in
connection therewith) which the Company, and each of its present or former
directors, officers, employees, representatives, or any such controlling person,
may incur under the 1933 Act, the 1934 Act, any other statute (including Blue
Sky laws) or any rule or regulation thereunder, or under common law or
otherwise, arising out of or based upon any untrue, or alleged untrue, statement
of a material fact contained in the Company's Registration Statement or any
Prospectus, as from time to time amended or supplemented, or arising
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out of or based upon the omission, or alleged omission, to state therein a
material fact required to be stated therein or necessary to make the statement
not misleading, but only if such statement or omission was made in reliance
upon, and in conformity with, written information relating to the Distributor
and furnished to the Company or its counsel by the Distributor for the purpose
of, and used in, the preparation thereof. The Distributor's agreement to
indemnify the Company, and any of the foregoing indemnitees, is expressly
conditioned upon the Distributor's being notified of any action brought against
the Company, and any of the foregoing indemnitees, such notification to be given
by letter or telegram addressed to the Distributor's President, within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the Company
or such person unless the failure to give notice does not prejudice the
Distributor, but the failure so to notify the Distributor of any such action
shall not relieve the Distributor from any liability which the Distributor may
have to the person against whom such action is brought by reason of any such
untrue, or alleged untrue, statement or omission, otherwise than on account of
the Distributor's indemnity agreement contained in this Section 6(d).
(e) The Distributor shall be entitled to participate at its own expense
in the defense or, if it so elects, to assume the defense of any suit brought to
enforce any such loss, claim, demand, liability, damage or expense, but if the
Distributor elects to assume the defense, such defense shall be conducted by
counsel chosen by the Distributor and approved by the Company, which approval
shall not be unreasonably withheld. In the event the Distributor elects to
assume the defense of any such suit and retain such counsel, the indemnified
defendant or defendants in such suit shall bear the fees and expenses of any
additional counsel retained by them. If the Distributor does not elect to assume
the defense of any such suit, or in case the Company does not, in the exercise
of reasonable judgment, approve of counsel chosen by the Distributor or, if
under prevailing law or legal codes of ethics, the same counsel cannot
effectively represent the interests of both the Company and the Distributor, and
each of its present or former members, officers, employees, representatives or
any controlling person, the Distributor will reimburse the indemnified person or
persons named as defendant or defendants in such suit, for the fees and expenses
of any counsel retained by the Company and them. The Distributor's
indemnification agreement contained in Sections 6(d) and (e) shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of the Company, and each of its present or former directors,
officers, employees, representatives or any controlling person, and shall
survive the delivery of any Shares and the termination of this Agreement. This
Agreement of indemnity will inure exclusively to the Company's benefit, to the
benefit of each of its present or former directors, officers, employees or
representatives or to the benefit of any controlling persons and their
successors. The Distributor agrees promptly to notify the Company of the
commencement of any litigation or proceedings against the Distributor or any of
its officers or directors in connection with the issue and sale of any of the
Shares.
(f) No person shall be obligated to provide indemnification under this
Section 6 if such indemnificatin would be impermissible under the 1940 Act, the
1993 Act, the 1934 Act or the rules of the NASD; provided, however, in such
event indemnification shall be provided under this Section 6 to the maximum
extent so permissible.
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7. Obligations of Company.
This Agreement is executed by and on behalf of the Company and the
obligations of the Company hereunder are not binding upon any of the directors,
officers or shareholders of the Company individually but are binding only upon
the Company and with respect to the Funds to which such obligations pertain.
8. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original agreement but all of which counterparts
shall together constitute but one and the same instrument.
9. Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of Wisconsin, without regard to conflicts of law principles. To the extent
that the applicable laws of the State of Wisconsin, or any of the provisions
herein, conflict with the applicable provisions of the 1940 Act, the latter
shall control, and nothing herein shall be construed in a manner inconsistent
with the 1940 Act or any rule or order of the SEC thereunder.
10. Duration and Termination.
(a) This Agreement shall become effective with respect to each Fund
listed on Schedule A hereof as of the date hereof and, with respect to each Fund
not in existence on that date, on the date an amendment to Schedule A to this
Agreement relating to that Fund is executed. Unless sooner terminated as
provided herein, this Agreement shall continue in effect for two years from the
date hereof. Thereafter, if not terminated, this Agreement shall continue
automatically in effect as to each Fund for successive one-year periods,
provided such continuance is specifically approved at least annually by (i) the
Company's Board or (ii) the vote of a "majority of the outstanding voting
securities" of a Fund, and provided that in either event the continuance is also
approved by a majority of the Company's Board who are not "interested persons"
of any party to this Agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval.
(b) Notwithstanding the foregoing, this Agreement may be terminated,
without the payment of any penalty, with respect to a particular Fund (i)
through a failure to renew this Agreement at the end of a term, (ii) upon mutual
consent of the parties, or (iii) upon no less than 60 days' written notice, by
either the Company through a vote of a majority of the members of the Board who
are not "interested persons" of the Company and have no direct or indirect
financial interest in the operation of this Agreement or by vote of a "majority
of the outstanding voting securities" of a Fund, or by the Distributor. The
terms of this Agreement shall not be waived, altered, modified, amended or
supplemented in any manner whatsoever except by a written instrument signed by
the Distributor and the Company. If required under the 1940 Act, any such
amendment must be approved by the Company's Board, including a majority of the
Company's Board who are not "interested persons" of any party to this Agreement,
by vote cast in person at a meeting for the purpose of voting on such amendment.
In the event that such amendment affects the Adviser, the written instrument
shall also be signed by the Adviser. This Agreement will automatically terminate
in the event of its assignment.
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11. Confidentiality.
The Distributor agrees on behalf of its employees to treat all records
relative to the Company and prior, present or potential shareholders of the
Company as confidential, and not to use such records for any purpose other than
performance of the Distributor's responsibilities and duties under this
Agreement, except after notification and prior approval by the Company, which
approval shall not be unreasonably withheld, and may not be withheld where the
Distributor may be exposed to civil or criminal proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, when subject to governmental or regulatory audit or investigation,
or when so requested by the Company. Records and information which have become
known to the public through no wrongful act of the Distributor or any of its
employees, agents or representatives shall not be subject to this paragraph.
12. Miscellaneous.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. Any provision of this Agreement
which may be determined by competent authority to be prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person," and "assignment" shall have the same meaning as such terms
have in the 1940 Act.
13. Notice.
Any notice required or permitted to be given by any party to the others
shall be in writing and shall be deemed to have been given on the date delivered
personally or by courier service or 3 days after sent by registered or certified
mail, postage prepaid, return receipt requested or on the date sent and
confirmed received by facsimile transmission to the other parties' respective
addresses set forth below:
Notice to the Distributor shall be sent to:
Quasar Distributors, LLC
Attn: President
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
notice to the Company shall be sent to:
The Xxxxxxxx Funds, Inc.
The Courtyard Square
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
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notice to the Adviser shall be sent to:
The Xxxxxxxx Management Co., L.P.
The Courtyard Square
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated as of the day and year first above
written.
The Xxxxxxxx Funds, Inc. Quasar Distributors, LLC
By: __________________________ By: ______________________________
Title: _______________________ Title: ____________________________
The Xxxxxxxx Management Co., L.P.
By: ________________________
Title: _______________________
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DISTRIBUTION AGREEMENT
THIS AGREEMENT is made and entered into as of this 1st day of
September, 2000, by and among The Xxxxxxxx Funds, Inc., a Maryland business
company (the "Company"), The Xxxxxxxx Management Co. 2, L.P., a California
limited partnership (the "Adviser") and Quasar Distributors, LLC, a Delaware
limited liability company ("Distributor").
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company, and
is authorized to issue shares of beneficial interests ("Shares") in separate
series with each such series representing interests in a separate portfolio of
securities and other assets;
WHEREAS, the Adviser is duly registered under the Investment Advisers
Act of 1940, as amended, and any applicable state securities laws, as an
investment adviser;
WHEREAS, the Company desires to retain the Distributor as principal
underwriter in connection with the offering and sale of the Shares of each
series listed on Schedule A (as amended from time to time) (the "Funds") to this
Agreement;
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member of
the National Association of Securities Dealers, Inc. (the "NASD");
WHEREAS, this Agreement has been approved by a vote of the Company's
board of directors ("Board") and its disinterested directors in conformity with
Section 15(c) of the 1940 Act; and
WHEREAS, the Distributor is willing to act as principal underwriter for
the Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto, intending to be legally bound,
do hereby agree as follows:
1. Appointment of the Distributor.
The Company hereby appoints the Distributor as its agent for the sale
and distribution of Shares of the Funds, subject to the terms and for the period
set forth in this Agreement. The Distributor hereby accepts such appointment and
agrees to act hereunder.
2. Services and Duties of the Distributor.
(a) The Distributor agrees to sell Shares of the Funds on a best
efforts basis as agent for the Company during the term of this Agreement, upon
the terms and at the current offering price (plus sales charge, if any)
described in the Prospectus. As used in this Agreement, the term "Prospectus"
shall mean the current prospectus, including the statement of additional
information, as amended or supplemented, relating to the Funds and included in
the currently effective registration statement or
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post-effective amendment thereto (the "Registration Statement") of the Company
under the Securities Act of 1933 (the "1933 Act") and the 0000 Xxx.
(b) During the continuous public offering of Shares of the Funds, the
Distributor will hold itself available to receive orders, satisfactory to the
Distributor, for the purchase of Shares of the Funds and will accept such orders
on behalf of the Company. Such purchase orders shall be deemed effective at the
time and in the manner set forth in the Prospectus.
(c) The Distributor, with the operational assistance of the Company's
transfer agent, shall make Shares available for sale and redemption through the
National Securities Clearing Corporation's Fund/SERV System.
(d) In connection with all matters relating to this Agreement, the
Distributor agrees to act in conformity with the Company's Articles of
Incorporation and By-Laws and with the instructions of the Board and to comply
with the requirements of the 1933 Act, the 1934 Act, the 1940 Act, the
regulations of the NASD and all other applicable federal or state laws and
regulations. The Distributor acknowledges and agrees that it is not authorized
to provide any information or make any representations other than as contained
in the Prospectus and any sales literature specifically approved by the Company
and the Distributor.
(e) The Distributor agrees to cooperate with the Company in the
development of all proposed advertisements and sales literature relating to the
Funds. The Distributor agrees to review all proposed advertisements and sales
literature for compliance with applicable laws and regulations, and shall file
with appropriate regulators those advertisements and sales literature it
believes are in compliance with such laws and regulations. The Distributor
agrees to furnish to the Company any comments provided by regulators with
respect to such materials and to use its best efforts to obtain the approval of
the regulators to such materials.
(f) The Distributor at its sole discretion may repurchase Shares
offered for sale by shareholders of the Funds. Repurchase of Shares by the
Distributor shall be at the price determined in accordance with, and in the
manner set forth in, the current Prospectus. At the end of each business day,
the Distributor shall notify, by any appropriate means, the Company and its
transfer agent of the orders for repurchase of Shares received by the
Distributor since the last report, the amount to be paid for such Shares, and
the identity of the shareholders offering Shares for repurchase. The 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 Company to
receive and transmit promptly to the Company's transfer agent shareholder
requests for redemption of Shares.
(g) The Distributor may, in its discretion, enter into agreements with
such qualified broker-dealers as it may select, in order that such
broker-dealers also may sell Shares of the Funds. The form of any dealer
agreement shall be mutually agreed upon and approved by the Company and the
Distributor. The Distributor may pay a portion of any applicable sales charge,
or allow a discount, to a selling broker-dealer, as described in the Prospectus
or, if not described, as agreed upon with the broker-dealer. The Distributor
shall include in the forms of agreement with selling broker-dealers a provision
for the forfeiture by them of their sales charge or discount with respect to
Shares sold by them and redeemed, repurchased or tendered for redemption within
seven business days after the date of confirmation of such purchases.
2
(h) The Distributor shall devote its best efforts to effect sales of
Shares of the Funds but shall not be obligated to sell any certain number of
Shares.
(i) The Distributor shall prepare reports for the Board regarding its
activities under this Agreement as from time to time shall be reasonably
requested by the Board, including regarding use of 12b-1 payments.
(j) The services furnished by the Distributor hereunder are not to be
deemed exclusive and the Distributor shall be free to furnish similar services
to others so long as its services under this Agreement are not impaired thereby.
The Company recognizes that from time to time officers and employees of the
Distributor may serve as directors, trustees, officers and employees of other
entities (including investment companies), that such other entities may include
the name of the Distributor as part of their name and that the Distributor or
its affiliates may enter into distribution, administration, fund accounting,
transfer agent or other agreements with such other entities.
3. Duties and Representations of the Company.
(a) The Company represents that it is duly organized and in good
standing under the law of its jurisdiction of incorporation and registered as an
open-end management investment company under the 1940 Act. The Company agrees
that it will act in material conformity with its Articles of Incorporation,
By-Laws, its Registration Statement as may be amended from time to time and
resolutions and other instructions of its Board. The Company agrees to comply in
all material respects with the 1933 Act, the 1940 Act, and all other applicable
federal and state laws and regulations. The Company represents and warrants that
this Agreement has been duly authorized by all necessary action by the Company
under the 1940 Act, state law and the Company's Articles of Incorporation and
By-Laws.
(b) The Company shall take or cause to be taken all necessary action to
register Shares of the Funds under the 1933 Act and to maintain an effective
Registration Statement for such Shares in order to permit the sale of Shares as
herein contemplated. The Company authorizes the Distributor to use the
Prospectus, in the form furnished to the Distributor from time to time, in
connection with the sale of Shares.
(c) The Company represents and agrees that all Shares to be sold by it,
including those offered under this Agreement, are validly authorized and, when
issued in accordance with the description in the Prospectus, will be fully paid
and nonassessable. The Company further agrees that it shall have the right to
suspend the sale of Shares of any Fund at any time in response to conditions in
the securities markets or otherwise, and to suspend the redemption of Shares of
any Fund at any time permitted by the 1940 Act or the rules of the Securities
and Exchange Commission ("SEC"). The Company shall advise the Distributor
promptly of any such determination.
(d) The Company agrees to advise the Distributor promptly in writing:
(i) of any correspondence or other communication by the SEC or
its staff relating to the Funds, including requests by the SEC for
amendments to the Registration Statement or Prospectus;
3
(ii) in the event of the issuance by the SEC of any stop-order
suspending the effectiveness of the Registration Statement then in
effect or the initiation of any proceeding for that purpose;
(iii) of the happening of any event which makes untrue any
statement of a material fact made in the Prospectus or which requires
the making of a change in such Prospectus in order to make the
statements therein not misleading; and
(iv) of all actions taken by the SEC with respect to any
amendments to any Registration Statement or Prospectus which may from
time to time be filed with the SEC.
(e) The Company shall file such reports and other documents as may be
required under applicable federal and state laws and regulations. The Company
shall notify the Distributor in writing of the states in which the Shares may be
sold and shall notify the Distributor in writing of any changes to such
information.
(f) The Company agrees to file from time to time such amendments to its
Registration Statement and Prospectus as may be necessary in order that its
Registration Statement and Prospectus will not contain any untrue statement of
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(g) The Company shall fully cooperate in the efforts of the Distributor
to sell and arrange for the sale of Shares and shall make available to the
Distributor a statement of each computation of net asset value. In addition, the
Company shall keep the Distributor fully informed of its affairs and shall
provide to the Distributor from time to time copies of all information,
financial statements, and other papers that the Distributor may reasonably
request for use in connection with the distribution of Shares, including,
without limitation, certified copies of any financial statements prepared for
the Company by its independent public accountants and such reasonable number of
copies of the most current Prospectus, statement of additional information and
annual and interim reports to shareholders as the Distributor may request. The
Company shall forward a copy of any SEC filings, including the Registration
Statement, to the Distributor within one business day of any such filings. The
Company represents that it will not use or authorize the use of any advertising
or sales material unless and until such materials have been approved and
authorized for use by the Distributor.
(h) The Company represents and warrants that its Registration Statement
and any advertisements and sales literature of the Company (excluding statements
relating to the Distributor and the services it provides that are based upon
written information furnished by the Distributor expressly for inclusion
therein) shall not contain any untrue statement of material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, and that all statements or information
furnished to the Distributor pursuant to this Agreement shall be true and
correct in all material respects.
4. Compensation.
As compensation for the services performed and the expenses assumed by
Distributor under this Agreement, Distributor shall be entitled to the fees and
expenses set forth in Schedule B to this Agreement which are payable promptly
after the last day of each month. Such fees shall be paid to Distributor by the
Company pursuant to its Rule 12b-1 plan or, if Rule 12b-1 payments are not
4
sufficient to pay such fees and expenses, or if the Rule 12b-1 plan is
discontinued, or if the Fund's sponsor, the Adviser, otherwise determines that
Rule 12b-1 fees shall not, in whole or in part, be used to pay Distributor, the
Adviser shall be responsible for the payment of the amount of such fees not
covered by Rule 12b-1 payments.
5. Expenses.
(a) The Company shall bear all costs and expenses in connection with
registration of the Shares with the SEC and related compliance with state
securities laws, as well as all costs and expenses in connection with the
offering of the Shares and communications with shareholders of its Funds,
including but not limited to (i) fees and disbursements of its counsel and
independent public accountants; (ii) costs and expenses of the preparation,
filing, printing and mailing of Registration Statements and Prospectuses and
amendments thereto, as well as related advertising and sales literature, (iii)
costs and expenses of the preparation, printing and mailing of annual and
interim reports, proxy materials and other communications to shareholders of the
Funds; and (iv) fees required in connection with the offer and sale of Shares in
such jurisdictions as shall be selected by the Company pursuant to Section 3(e)
hereof.
(b) The Distributor shall bear 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. The
Distributor does not assume responsibility for any expenses not expressly
assumed hereunder.
6. Indemnification.
(a) The Company shall indemnify, defend and hold the Distributor, and
each of its present or former members, officers, employees, representatives and
any person who controls or previously controlled the Distributor within the
meaning of Section 15 of the 1933 Act, free and harmless from and against any
and all losses, claims, demands, liabilities, damages and expenses (including
the costs of investigating or defending any alleged losses, claims, demands,
liabilities, damages or expenses and any reasonable counsel fee incurred in
connection therewith) which the Distributor, each of its present and former
members, officers, employees or representatives or any such controlling person,
may incur under the 1933 Act, the 1934 Act, any other statute (including Blue
Sky laws) or any rule or regulation thereunder, 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 the Registration Statement or any
Prospectus, as from time to time amended or supplemented, or in any annual or
interim report to shareholders, or in any advertisement or sales literature, or
arising out of or based upon any omission, or alleged omission, to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the Company's
obligation to indemnify the Distributor and any of the foregoing indemnitees
shall not be deemed to cover any losses, claims, demands, liabilities, damages
or expenses arising out of any untrue statement or alleged untrue statement or
omission or alleged omission made in the Registration Statement, Prospectus,
annual or interim report, or any such advertisement or sales literature in
reliance upon and in conformity with information relating to the Distributor and
furnished to the Company or its counsel by the Distributor in writing and
acknowledging the purpose of its use for the purpose of, and used in, the
preparation thereof. The Company's agreement to indemnify the Distributor, and
any of the foregoing indemnitees, as the case may be, with respect to any
action, is expressly conditioned upon the Company being notified of such action
5
brought against the Distributor, or any of the foregoing indemnitees, within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the
Distributor, or such person, unless the failure to give notice does not
prejudice the Company. Such notification shall be given by letter or by telegram
addressed to the Company's President, but the failure so to notify the Company
of any such action shall not relieve the Company from any liability which the
Company 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 Company's indemnity agreement contained in this
Section 6(a).
(b) The Company shall be entitled to participate at its own expense in
the defense or, if it so elects, to assume the defense of any suit brought to
enforce any such loss, claim, demand, liability, damage or expense, but if the
Company elects to assume the defense, such defense shall be conducted by counsel
chosen by the Company and approved by the Distributor, which approval shall not
be unreasonably withheld. In the event the Company elects to assume the defense
of any such suit and retain such counsel, the indemnified defendant or
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by them. If the Company does not elect to assume the defense of
any such suit, or in case the Distributor does not, in the exercise of
reasonable judgment, approve of counsel chosen by the Company or, if under
prevailing law or legal codes of ethics, the same counsel cannot effectively
represent the interests of both the Company and the Distributor, and each of its
present or former members, officers, employees, representatives or any
controlling person, the Company will reimburse the indemnified person or persons
named as defendant or defendants in such suit, for the fees and expenses of any
counsel retained by Distributor and them. The Company's indemnification
agreement contained in Sections 6(a) and 6(b) shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of the
Distributor, and each of its present or former directors, officers, employees,
representatives or any controlling person, and shall survive the delivery of any
Shares and the termination of this Agreement. This agreement of indemnity will
inure exclusively to the Distributor's benefit, to the benefit of each of its
present or former members, officers, employees or representatives or to the
benefit of any controlling persons and their successors. The Company agrees
promptly to notify the Distributor of the commencement of any litigation or
proceedings against the Company or any of its officers or directors in
connection with the issue and sale of any of the Shares.
(c) The Company shall advance attorney's fees and other expenses
incurred by any person in defending any claim, demand, action or suit which is
the subject of a claim for indemnification pursuant to this Section 6 to the
maximum extent permissible under applicable law.
(d) The Distributor shall indemnify, defend and hold the Company, and
each of its present or former directors, officers, employees, representatives,
and any person who controls or previously controlled the Company within the
meaning of Section 15 of the 1933 Act, free and harmless from and against any
and all losses, claims, demands, liabilities, damages and expenses (including
the costs of investigation or defending any alleged losses, claims, demands,
liabilities, damages or expenses, and any reasonable counsel fee incurred in
connection therewith) which the Company, and each of its present or former
directors, officers, employees, representatives, or any such controlling person,
may incur under the 1933 Act, the 1934 Act, any other statute (including Blue
Sky laws) or any rule or regulation thereunder, or under common law or
otherwise, arising out of or based upon any untrue, or alleged untrue, statement
of a material fact contained in the Company's Registration Statement or any
Prospectus, as from time to time amended or supplemented, or arising
6
out of or based upon the omission, or alleged omission, to state therein a
material fact required to be stated therein or necessary to make the statement
not misleading, but only if such statement or omission was made in reliance
upon, and in conformity with, written information relating to the Distributor
and furnished to the Company or its counsel by the Distributor for the purpose
of, and used in, the preparation thereof. The Distributor's agreement to
indemnify the Company, and any of the foregoing indemnitees, is expressly
conditioned upon the Distributor's being notified of any action brought against
the Company, and any of the foregoing indemnitees, such notification to be given
by letter or telegram addressed to the Distributor's President, within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the Company
or such person unless the failure to give notice does not prejudice the
Distributor, but the failure so to notify the Distributor of any such action
shall not relieve the Distributor from any liability which the Distributor may
have to the person against whom such action is brought by reason of any such
untrue, or alleged untrue, statement or omission, otherwise than on account of
the Distributor's indemnity agreement contained in this Section 6(d).
(e) The Distributor shall be entitled to participate at its own expense
in the defense or, if it so elects, to assume the defense of any suit brought to
enforce any such loss, claim, demand, liability, damage or expense, but if the
Distributor elects to assume the defense, such defense shall be conducted by
counsel chosen by the Distributor and approved by the Company, which approval
shall not be unreasonably withheld. In the event the Distributor elects to
assume the defense of any such suit and retain such counsel, the indemnified
defendant or defendants in such suit shall bear the fees and expenses of any
additional counsel retained by them. If the Distributor does not elect to assume
the defense of any such suit, or in case the Company does not, in the exercise
of reasonable judgment, approve of counsel chosen by the Distributor or, if
under prevailing law or legal codes of ethics, the same counsel cannot
effectively represent the interests of both the Company and the Distributor, and
each of its present or former members, officers, employees, representatives or
any controlling person, the Distributor will reimburse the indemnified person or
persons named as defendant or defendants in such suit, for the fees and expenses
of any counsel retained by the Company and them. The Distributor's
indemnification agreement contained in Sections 6(d) and (e) shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of the Company, and each of its present or former directors,
officers, employees, representatives or any controlling person, and shall
survive the delivery of any Shares and the termination of this Agreement. This
Agreement of indemnity will inure exclusively to the Company's benefit, to the
benefit of each of its present or former directors, officers, employees or
representatives or to the benefit of any controlling persons and their
successors. The Distributor agrees promptly to notify the Company of the
commencement of any litigation or proceedings against the Distributor or any of
its officers or directors in connection with the issue and sale of any of the
Shares.
(f) No person shall be obligated to provide indemnification under this
Section 6 if such indemnificatin would be impermissible under the 1940 Act, the
1993 Act, the 1934 Act or the rules of the NASD; provided, however, in such
event indemnification shall be provided under this Section 6 to the maximum
extent so permissible.
7
7. Obligations of Company.
This Agreement is executed by and on behalf of the Company and the
obligations of the Company hereunder are not binding upon any of the directors,
officers or shareholders of the Company individually but are binding only upon
the Company and with respect to the Funds to which such obligations pertain.
8. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original agreement but all of which counterparts
shall together constitute but one and the same instrument.
9. Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of Wisconsin, without regard to conflicts of law principles. To the extent
that the applicable laws of the State of Wisconsin, or any of the provisions
herein, conflict with the applicable provisions of the 1940 Act, the latter
shall control, and nothing herein shall be construed in a manner inconsistent
with the 1940 Act or any rule or order of the SEC thereunder.
10. Duration and Termination.
(a) This Agreement shall become effective with respect to each Fund
listed on Schedule A hereof as of the date hereof and, with respect to each Fund
not in existence on that date, on the date an amendment to Schedule A to this
Agreement relating to that Fund is executed. Unless sooner terminated as
provided herein, this Agreement shall continue in effect for two years from the
date hereof. Thereafter, if not terminated, this Agreement shall continue
automatically in effect as to each Fund for successive one-year periods,
provided such continuance is specifically approved at least annually by (i) the
Company's Board or (ii) the vote of a "majority of the outstanding voting
securities" of a Fund, and provided that in either event the continuance is also
approved by a majority of the Company's Board who are not "interested persons"
of any party to this Agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval.
(b) Notwithstanding the foregoing, this Agreement may be terminated,
without the payment of any penalty, with respect to a particular Fund (i)
through a failure to renew this Agreement at the end of a term, (ii) upon mutual
consent of the parties, or (iii) upon no less than 60 days' written notice, by
either the Company through a vote of a majority of the members of the Board who
are not "interested persons" of the Company and have no direct or indirect
financial interest in the operation of this Agreement or by vote of a "majority
of the outstanding voting securities" of a Fund, or by the Distributor. The
terms of this Agreement shall not be waived, altered, modified, amended or
supplemented in any manner whatsoever except by a written instrument signed by
the Distributor and the Company. If required under the 1940 Act, any such
amendment must be approved by the Company's Board, including a majority of the
Company's Board who are not "interested persons" of any party to this Agreement,
by vote cast in person at a meeting for the purpose of voting on such amendment.
In the event that such amendment affects the Adviser, the written instrument
shall also be signed by the Adviser. This Agreement will automatically terminate
in the event of its assignment.
8
11. Confidentiality.
The Distributor agrees on behalf of its employees to treat all records
relative to the Company and prior, present or potential shareholders of the
Company as confidential, and not to use such records for any purpose other than
performance of the Distributor's responsibilities and duties under this
Agreement, except after notification and prior approval by the Company, which
approval shall not be unreasonably withheld, and may not be withheld where the
Distributor may be exposed to civil or criminal proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, when subject to governmental or regulatory audit or investigation,
or when so requested by the Company. Records and information which have become
known to the public through no wrongful act of the Distributor or any of its
employees, agents or representatives shall not be subject to this paragraph.
12. Miscellaneous.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. Any provision of this Agreement
which may be determined by competent authority to be prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person," and "assignment" shall have the same meaning as such terms
have in the 1940 Act.
13. Notice.
Any notice required or permitted to be given by any party to the others
shall be in writing and shall be deemed to have been given on the date delivered
personally or by courier service or 3 days after sent by registered or certified
mail, postage prepaid, return receipt requested or on the date sent and
confirmed received by facsimile transmission to the other parties' respective
addresses set forth below:
Notice to the Distributor shall be sent to:
Quasar Distributors, LLC
Attn: President
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
notice to the Company shall be sent to:
The Xxxxxxxx Funds, Inc.
The Courtyard Square
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
9
notice to the Adviser shall be sent to:
The Xxxxxxxx Management Co. 0, X.X.
Xxx Xxxxxxxxx Xxxxxx
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated as of the day and year first above
written.
The Xxxxxxxx Funds, Inc. Quasar Distributors, LLC
By: __________________________ By: ______________________________
Title: _______________________ Title: ____________________________
The Xxxxxxxx Management Co. 2, L.P.
By: ________________________
Title: _______________________
10
