EX. 99.6(d)
PRUDENTIAL INSTITUTIONAL LIQUIDITY PORTFOLIO, INC.
Form of Distribution Agreement
Agreement dated as of ____________, 1995 between Prudential Institutional
Liquidity Portfolio, Inc., a Maryland Corporation (the Fund), and Prudential
Securities Incorporated, a Delaware Corporation (the Distributor).
WITNESSETH
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the Investment Company Act), as a diversified, open-end, management
investment company and it is in the interest of the Fund to offer its shares of
the Liquid Assets Series for sale continuously;
WHEREAS, the Distributor is a broker-dealer registered under the Securities
Exchange Act of 1934, as amended, and is engaged in the business of selling
shares of registered investment companies either directly or through other
broker-dealers;
WHEREAS, the Fund and the Distributor wish to enter into an agreement with
each other, with respect to the continuous offering of the shares of the Liquid
Assets Series from and after the date hereof in order to promote the growth of
the Liquid Assets Series and facilitate the distribution of its shares; and
WHEREAS, the Fund and Prudential Mutual Fund Distributors, Inc. have
previously entered into a Distribution Agreement dated November 20, 1987, as
amended and restated on July 1, 1993 and April 11, 1995, which does not pertain
to the Liquid Assets Series;
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of the Distributor
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The Fund hereby appoints the Distributor as the principal underwriter and
distributor of the Liquid Assets Series to sell shares to the public on behalf
of the Liquid Assets Series and the Distributor hereby accepts such appointment
and agrees to act hereunder. The Fund hereby agrees during the term of this
Agreement to sell shares of the Liquid Assets Series through the Distributor on
the terms and conditions set forth below.
Section 2. Exclusive Nature of Duties
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The Distributor shall be the exclusive representative of the Fund to act as
principal underwriter and distributor of the shares of the Liquid Assets Series,
except that:
2.1 The exclusive rights granted to the Distributor to sell shares of the
Liquid Assets Series shall not apply to shares of the Liquid Assets Series
issued in connection with the merger or
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consolidation of any other investment company or personal holding company with
the Liquid Assets Series or the acquisition by purchase or otherwise of all (or
substantially all) the assets or the outstanding shares of any such company
by the Liquid Assets Series.
2.2 Such exclusive rights shall not apply to shares issued by the Liquid
Assets Series pursuant to reinvestment of dividends or capital gains
distributions.
2.3 Such exclusive rights shall not apply to shares issued by the Liquid
Assets Series pursuant to the reinstatement privilege afforded redeeming
shareholders.
2.4 Such exclusive rights shall not apply to purchases made through the
Fund's transfer and dividend disbursing agent in the manner set forth in the
currently effective Prospectus of the Liquid Assets Series. The term
"Prospectus" shall mean the Prospectus and Statement of Additional Information
of the Liquid Assets Series included as part of the Fund's Registration
Statement, as such Prospectus and Statement of Additional Information may be
amended or supplemented from time to time, and the term "Registration Statement"
shall mean the Registration Statement filed by the Fund with the Securities and
Exchange Commission and effective under the Securities Act of 1933, as amended
(Securities Act), and the Investment Company Act, as such Registration Statement
is amended from time to time.
Section 3. Purchase of Shares from the Fund
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3.1 The Distributor shall have the right to buy from the Fund on behalf of
investors the shares of the Liquid Assets Series needed, but not more than the
shares needed (except for clerical errors in transmission) to fill unconditional
orders for shares placed with the Distributor by investors or registered and
qualified securities dealers and other financial institutions (selected
dealers).
3.2 The shares shall be sold by the Distributor on behalf of the Liquid
Assets Series and delivered by the Distributor or selected dealers, as described
in Section 6.4 hereof, to investors at the offering price as set forth in the
Prospectus.
3.3 The Fund shall have the right to suspend the sale of the shares of the
Liquid Assets Series at times when redemption is suspended pursuant to the
conditions in Section 4.3 hereof or at such other times as may be determined by
the Directors. The Fund shall also have the right to suspend the sale of its
shares if a banking moratorium shall have been declared by federal or New York
authorities.
3.4 The Fund, or any agent of the Fund designated in writing by the Fund,
shall be promptly advised of all purchase orders for shares of the Liquid Assets
Series received by the Distributor.
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Any order may be rejected by the Fund; provided, however, that the Fund will
not arbitrarily or without reasonable cause refuse to accept or confirm orders
for the purchase of shares of the Liquid Assets Series. The Fund (or its
agent) will confirm orders upon their receipt, will make appropriate book
entries and upon receipt by the Fund (or its agent) of payment therefor, will
deliver deposit receipts for such shares pursuant to the instructions of the
Distributor. Payment shall be made to the Fund in New York Clearing House funds
or federal funds. The Distributor agrees to cause such payment and such
instructions to be delivered promptly to the Fund (or its agent).
Section 4. Repurchase or Redemption of Shares by the Fund
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4.1 Any of the outstanding shares of the Liquid Assets Series may be
tendered for redemption at any time, and the Fund agrees to repurchase or redeem
the shares of the Liquid Assets Series so tendered in accordance with its
Articles of Incorporation as amended from time to time, and in accordance with
the applicable provisions of the Prospectus. The price to be paid to redeem or
repurchase the shares of the Liquid Assets Series shall be equal to the net
asset value determined as set forth in the Prospectus. All payments by the Fund
hereunder shall be made in the manner set forth in Section 4.2 below.
4.2 The Fund shall pay the total amount of the redemption price as defined
in the above paragraph pursuant to the instructions of the Distributor on or
before the seventh calendar day subsequent to its having received the notice of
redemption in proper form. The proceeds of any redemption of shares of the
Liquid Assets Series shall be paid by the Fund to or for the account of the
redeeming shareholder, in each case in accordance with applicable provisions of
the Prospectus.
4.3 Redemption of shares of the Liquid Assets Series or payment may be
suspended at times when the New York Stock Exchange is closed for other than
customary weekends and holidays, when trading on said Exchange is restricted,
when an emergency exists as a result of which disposal by the Liquid Assets
Series of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund fairly to determine the value of its net
assets, or during any other period when the Securities and Exchange Commission,
by order, so permits.
Section 5. Duties of the Fund
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5.1 Subject to the possible suspension of the sale of shares as provided
herein, the Fund agrees to sell shares of the Liquid Assets Series so long as it
has shares available.
5.2 The Fund shall furnish the Distributor copies of all information,
financial statements and other papers which the
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Distributor may reasonably request for use in connection with the distribution
of shares of the Liquid Assets Series, and this shall include one certified
copy, upon request by the Distributor, of all financial statements prepared for
the Liquid Asset Series of the Fund by independent public accountants. The Fund
shall make available to the Distributor such number of copies of its Prospectus
and annual and interim reports as the Distributor shall reasonably request.
5.3 The Fund shall take, from time to time, but subject to the necessary
approval of the Directors/Trustees and the shareholders, all necessary action to
fix the number of authorized shares of the Liquid Assets Series and such steps
as may be necessary to register the same under the Securities Act, to the end
that there will be available for sale such number of shares of the Liquid Assets
Series as the Distributor reasonably may expect 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 will be no untrue statement of a material fact in
the Registration Statement, or necessary in order that there will be no omission
to state a material fact in the Registration Statement which omission would make
the statements therein misleading.
5.4 The Fund shall use its best efforts to qualify and maintain the
qualification of any appropriate number of shares of the Liquid Assets Series
for sale under the securities laws of such states as the Distributor and the
Fund may approve; 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 its
shares in any state from the terms set forth in its Registration Statement, 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 shares of the Liquid Assets Series. Any such qualification may be
withheld, terminated or withdrawn by the Fund at any time in its discretion. As
provided in Section 8.1 hereof, the expense of qualification and maintenance of
qualification shall be borne by the Fund. The Distributor shall furnish such
information and other material relating to its affairs and activities as may be
required by the Fund in connection with such qualifications.
Section 6. Duties of the Distributor
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6.1 The Distributor shall devote reasonable time and effort to effect sales
of shares of the Liquid Asset Series, but shall not be obligated to sell any
specific number of shares. Sales of the shares shall be on the terms described
in the Prospectus. The Distributor may enter into like arrangements with other
investment companies. The Distributor shall compensate the selected dealers as
set forth in the Prospectus.
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6.2 In selling the shares, the Distributor shall use its best efforts in
all respects duly to conform with the requirements of all federal and state laws
relating to the sale of such securities. Neither the Distributor nor any
selected dealer nor any other person is authorized by the Fund to give any
information or to make any representations, other than those contained in the
Registration Statement or Prospectus and any sales literature approved by
appropriate officers of the Fund.
6.3 The Distributor shall adopt and follow procedures for the confirmation
of sales to investors and selected dealers, the collection of amounts payable by
investors and selected dealers on such sales and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the
National Association of Securities Dealers, Inc. (NASD).
6.4 The Distributor shall have the right to enter into selected dealer
agreements with registered and qualified securities dealers and other financial
institutions of its choice for the sale of shares, provided that the Fund shall
approve the forms of such agreements. Within the United States, the Distributor
shall offer and sell shares only to such selected dealers as are members in good
standing of the NASD. Shares sold to selected dealers shall be for resale by
such dealers only at the offering price determined as set forth in the
Prospectus.
Section 7. Allocation of Expenses
----------------------
7.1 The Fund shall bear all costs and expenses of the continuous offering
of shares of the Liquid Assets Series, including fees and disbursements of its
counsel and auditors, in connection with the preparation and filing of any
required Registration Statements and/or Prospectuses under the Investment
Company Act or the Securities Act, and all amendments and supplements thereto,
and preparing and mailing annual and periodic reports and proxy materials to
shareholders (including but not limited to the expense of setting in type any
such Registration Statements, Prospectuses, annual or periodic reports or proxy
materials). The Fund shall also bear the cost and expenses of qualification of
the shares of the Liquid Assets Series for sale, and, if necessary or advisable
in connection therewith, of qualifying the Fund as a broker or dealer, in such
states of the United States or other jurisdictions as shall be selected by the
Fund and the Distributor pursuant to Section 5.4 hereof and the cost and expense
payable to each such state for continuing qualification therein until the Fund
decides to discontinue such qualification pursuant to Section 5.4 hereof.
Section 8. Indemnification
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8.1 The Fund agrees to indemnify, defend and hold the Distributor, its
officers and directors and any person who controls
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the Distributor within the meaning of Section 15 of the Securities 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 Securities Act, or under common law or otherwise, arising out of or
based upon any untrue statement of a material fact contained in the 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 shall not inure to the benefit
of any such officer, director, trustee or controlling person unless a court of
competent jurisdiction shall determine in a final decision on the merits, that
the person to be indemnified was not liable 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 under this Agreement (disabling
conduct), or, in the absence of such a decision, a reasonable determination,
based upon a review of the facts, that the indemnified person was not liable by
reason of disabling conduct, by (a) a vote of a majority of a quorum of
directors or trustees who are neither "interested persons" of the Fund as
defined in Section 2(a)(19) of the Investment Company Act nor parties to the
proceeding, or (b) an independent legal counsel in a written opinion. 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 by
letter or telegram addressed 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.
8.2 The Distributor agrees to indemnify, defend and hold the Fund, its
officers and Directors and any person who controls the Fund, if any, within the
meaning of Section 15 of the Securities 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 officers and
Directors or any such controlling person may incur under the Securities Act or
under common law or otherwise, but only to the extent that such liability or
expense
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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 Registration Statement
or Prospectus or shall arise out of or be based upon any alleged omission to
state a material fact in connection with such information required to be stated
in the Registration Statement or Prospectus or necessary to make such
information not misleading. The Distributor's agreement to indemnify the Fund,
its officers and Directors 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 officers and Directors or any such
controlling person, such notification being given to the Distributor at its
principal business office.
Section 9. Duration and Termination of this Agreement
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9.1 This Agreement shall become effective as of the date first above
written and shall remain in force for two years from the date hereof and
thereafter, but only so long as such continuance is specifically approved at
least annually by (a) the Directors of the Fund, or by the vote of a majority of
the outstanding voting securities of the shares of the Fund, and (b) by the vote
of a majority of those Directors who are not parties to this Agreement or
interested persons of any such parties and who have no direct or indirect
financial interest in this Agreement or in or in any agreement related thereto
(Rule 12b-1 Directors), cast in person at a meeting called for the purpose of
voting upon such approval.
9.2 This Agreement may be terminated at any time, without the payment of
any penalty, by a majority of the Rule 12b-1 Directors or by vote of a majority
of the outstanding voting securities of the shares of the Fund, or by the
Distributor, on sixty (60) days' written notice to the other party. This
Agreement shall automatically terminate in the event of its assignment.
9.3 The terms "affiliated person," "assignment," "interested person" and
"vote of a majority of the outstanding voting securities", when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act.
Section 10. Amendments to this Agreement
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This Agreement may be amended by the parties only if such amendment is
specifically approved by (a) the Directors of the Fund, or by the vote of a
majority of the outstanding voting securities of the shares of the Fund, and (b)
by the vote of a majority of the Rule 12b-1 Directors cast in person at a
meeting called for the purpose of voting on such amendment.
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Section 11. Governing Law
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The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the Investment Company Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company Act, the
latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year above written.
Prudential Securities Incorporated
By:----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President
Prudential Institutional
Liquidity Portfolio, Inc.
By:----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
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