Exhibit 6(a)
UNDERWRITING AGREEMENT
This UNDERWRITING AGREEMENT, made this 8th day of September,
1986, by and between ADDISON CAPITAL SHARES, INC., a Maryland corporation (the
"Fund") and XXXXXX XXXXXXXXXX XXXXX INC., a Delaware corporation (the
"Distributor").
WHEREAS, the Fund is registered as an open-end, diversified
investment company under the Investment Company Act of 1940 (the "1940 Act") and
has registered its shares of common stock (the "Shares") for sale to the public
under the Securities Act of 1933 (the "1933 Act") and various state securities
laws; and
WHEREAS, the Fund wishes to retain the Distributor as the
principal underwriter in connection with the offering and sale of the Shares and
to furnish certain other services to the Fund as specified in this Agreement;
and
WHEREAS, this Agreement has been approved by a vote of the
Fund's Board of Directors and certain disinterested directors in conformity with
Paragraph (b)(2) of Rule 12b-1 under the 1940 Act; and
WHEREAS, the Distributor is willing to act as principal
underwriter and to furnish such services on the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, and intending to be legally bound, the Fund and the
Distributor agree as follows:
1. The Fund hereby appoints the Distributor as principal
underwriter in connection with the offering and sale of the Shares. The Fund
authorizes the Distributor, as exclusive agent for the Fund, subject to
applicable federal and state law and the Articles of
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Incorporation and By-Laws of the Fund: (a) to promote the Fund; (b) to solicit
orders for the purchase of the Shares subject to such terms and conditions as
the Fund may specify; and (c) to accept orders for the purchase of the Shares on
behalf of the Fund. The Distributor shall comply with all applicable federal and
state laws and offer the Shares on an agency or "best efforts" basis under which
the Fund shall only issue such Shares as are actually sold.
2. The public offering price of each Share shall be (a) the
net asset value per share (as determined by the Fund) of the outstanding Shares
of the Fund Plans (b) a sales charge equal to 3% of such net asset value per
share, subject to reduction in the circumstances set forth in the Fund's current
Prospectus. The Fund shall furnish the Distributor with a statement of each
computation of the public offering price of Shares and of the details entering
into such computation.
3. (a) As compensation for the services performed and the
expenses assumed by the Distributor under this Agreement including, but not
limited to, any commissions paid for sales of Shares, the Fund shall pay the
Distributor, as promptly as possible after the last day of each month, an amount
equal to (i) the aggregate of the per share loads paid on sales of Shares during
such month, plus (ii) a fee (the "Distribution Fee"), calculated daily, of 0.65%
per annum of the Fund's average daily net assets. The first payment of this
amount shall be made as promptly as possible at the end of the month next
succeeding the effective date of this Agreement, and shall constitute a full
payment of the fee due the Distributor for all services performed prior to that
date.
(b) If this Agreement is terminated as of any date not the
last day of a month, the amounts due under this section shall be paid as
promptly as possible after such date of
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termination, and the fee described in clause (a)(ii) shall be based on the
average daily net assets of the Fund in that period from the beginning of such
month to such date of termination, and shall be that proportion of such average
daily net assets as the number of business days in such period bears to the
number of business days in such month.
(c) The average daily net assets of the Fund shall in all
cases be based only on business days and be computed as of the regular close of
business of the New York Stock Exchange, or such other time as may be determined
by the Board of Directors of the Fund.
(d) If the expenses borne by the Fund in any fiscal year
exceed the applicable expense limitations imposed by the securities regulations
of any state in which Fund shares are registered or qualified for sale to the
public, the Distributor will reimburse the Fund for its pro rate share of the
excess up to the amount of the Distribution Fee payable to it during the fiscal
year pursuant to subclause (a)(ii) above. The Distributor's "pro rata share of
the excess" shall mean the percentage reduction of the Distributor's fee that is
equal, on a percentage basis, to a reduction of the normal advisory fee due to
the Fund's Investment Adviser for such year, such that the sum, in dollars of
both reductions equals, in aggregate, the total excess.
(e) Each payment due under this Section 3 shall be accompanied
by a report of the Fund prepared either by the Fund or by a reputable firm of
independent accountants which shall show the amount properly payable to the
Distributor under this Agreement and the detailed computation thereof.
4. As used in this Agreement, the term "Registration
Statement" shall mean the Registration Statement most recently filed by the Fund
with the Securities and Exchange Commission and effective under the 1933 Act, as
such Registration Statement is amended by any
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amendments thereto at the time in effect, and the term "Prospectus" shall mean
the form of prospectus filed by the Fund as part of the Registration Statement.
5. The Distributor, at no expense to the Fund, shall print and
distribute to prospective investors Prospectuses, and may print and distribute
such other sales literature, reports, forms, and advertisements in connection
with the sale of the Shares as comply with the applicable provisions of federal
and state law. The Distributor shall also pay its brokers commissions on sales
of Fund shares made by or through them, except that no commission need be paid
when the sale price does not include a per share load. In connection with such
sales and offers of sale, the Distributor shall give only such information and
make only such statements or representations as are contained in the
Registration Statement or in information furnished in writing to the Distributor
by the Fund, and the Fund shall not be responsible in any way for any other
information, statements or representations given or made by Distributor or its
representatives or agents. Except as specifically provided in this Agreement,
the Fund shall bear none of the expenses of the Distributor in connection with
its offer and sale of the Shares.
6. The Fund agrees, at its own expense, to register the Shares
with the Securities and Exchange Commission, state and other regulatory bodies,
and to prepare and file from time to time such Prospectuses, amendments, reports
and other documents as may be necessary to maintain the Registration Statement.
The Fund shall bear all expenses related to preparing and typesetting such
Prospectuses and other materials required by law and such other expenses,
including printing and mailing expenses. Related to the Fund's communications
with persons who are stockholders of the Fund.
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7. The Fund agrees to indemnify, defend and hold harmless the
Distributor, its several officers and directors, and any person who controls the
Distributor within the meaning of Section 15 of the 1933 Act, free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which the
Distributor, its officers and directors, or any such controlling person may
incur, under the 1933 Act or under common law or otherwise, arising out of or
based upon any alleged untrue statement of a material fact contained in the
Registration Statement or 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, provided that
in no event shall anything contained in this Agreement be construed as to
protect the Distributor against any liability to the Fund or its stockholders to
which the Distributor would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence, in the performance of its duties,
or by reason of its reckless disregard of its obligations and duties under this
Agreement.
8. The Distributor agrees to indemnify, defend and hold the
Fund, its several officers and directors, and any person who controls the Fund
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 Fund, its officers or
directors, or any such controlling person may incur, under the 1933 Act or under
common law or otherwise, arising out of or based upon any alleged untrue
statement of a material fact contained in information furnished in writing by
the Distributor to the Fund for use in the Registration
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Statement or Prospectus or arising out of or based upon any alleged omission to
state a material fact in connection with such information required to be stated
in the Registration Statement or Prospectus or necessary to make such
information not misleading.
9. The Fund reserves the right at any time to withdraw all
offerings of the Shares by written notice to the Distributor at its principal
office.
10. The Fund shall not issue certificates representing Shares
unless requested by a shareholder. If such request is transmitted through the
Distributor, the Fund will cause certificates evidencing the Shares owned to be
issued in such names and denominations as the Distributor shall from time to
time direct, provided that no certificates shall be issued for fractional
Shares.
11. The Distributor may at its sole discretion repurchase
Shares offered for sale by the stockholders. A repurchase of Shares by the
Distributor shall be at the net asset value next determined after a repurchase
order has been received. The Distributor will receive no commission or other
remuneration for repurchasing Shares. At the end of each business day, the
Distributor shall notify by telex or in writing, the Fund and Provident
Financial Processing Corporation, the Fund's transfer agent, of the orders for
repurchase of shares received by the Distributor since the last such report, the
amount to be paid for such Shares, and the identity of the stockholders offering
Shares for repurchase. Upon such notice, the Fund shall pay the Distributor such
amounts as are required by the Distributor for the repurchase of such Shares in
cash or in the form of a credit against moneys due the Fund from the Distributor
as proceeds from the sale of Shares. The Fund reserves the right to suspend such
repurchases upon written notice to the Distributor. The Distributor further
agrees to act as agent for the Fund to receive
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and transmit promptly to the Fund's transfer agent shareholder requests for
redemption of Shares.
12. The Distributor is an independent contractor and shall be
agent for the Fund only in respect to the sale and redemption of the Shares.
13. The services of the Distributor to the Fund under this
Agreement are not to be deemed exclusive, and the Distributor shall be free to
render similar services or other services to others so long as its services
hereunder are not impaired thereby.
14. The Distributor shall prepare reports for the Board of
Directors of the Fund on a quarterly basis showing such information concerning
expenditures related to this Agreement as from time to time shall be reasonably
requested by the Board of Directors.
15. As used in this Agreement, the terms "securities", and
"net assets", shall have the meanings ascribed to them in the Articles of
Incorporation of the Fund; and the terms "assignment", "interested person", and
"Majority of the outstanding voting securities" shall have the meanings given to
them by Section 2(a) of the 1940 Act, subject to such exemptions as may be
granted by the Securities and Exchange Commission by any rule, regulation or
order.
16. Subject to the provisions of paragraph 17 below, this
Agreement will remain in effect for two years from the date of its execution and
from year to year thereafter, provided however that (a) the Distributor does not
notify the Fund in writing at least sixty (60) days prior to the expiration date
in any year that it does not wish continuance of the Agreement for an additional
year, (b) such continuance is specifically approved at least annually (i) by a
majority vote of the Fund's Board of Directors, and (ii) by the vote of a
majority of the directors of the Fund who are not interested persons of the Fund
and who have no direct or indirect
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financial interest in the operation of the Fund's Distribution Plan pursuant to
Rule 12b-1 under the 1940 Act (the "12b-1 Plan"), in this Agreement or in any
agreement related to the Fund's Distribution Plan (the "Rule 12b-1 Directors"),
cast in person at a meeting called for the purpose of voting on such approval,
and (c) the amount of the Distribution Fee may be reduced or eliminated after
the date one year from the date hereof if the Fund's 12b-1 Plan is discontinued
or modified to provide for a lower Distribution Fee, in which event the
Distributor shall have the option of terminating this Agreement on sixty (60)
days notice.
17. This Agreement shall automatically terminate in the event
of its assignment and may be terminated at any time without the payment of any
penalty by the Fund or by the Distributor on sixty (60) days' written notice to
the other party. The Fund may effect such termination by a vote of (i) a
majority of the Board of Directors of the Fund, (ii) a majority of the Fund's
12b-1 Directors, or (iii) a majority of the outstanding voting securities of the
Fund.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers thereunto duly authorized.
(SEAL) ADDISON CAPITAL SHARES, INC.
Attest:
/s/ Xxxxxxxxx Xxxxxxx By: /s/ Xxx Xxxxxx
-------------------------------- --------------------------------
Secretary President
(SEAL) XXXXXX XXXXXXXXXX XXXXX INC.
Attest:
/s/ X. Xxxxxxx X'Xxxxxx By: /s/ Xxxxx Xxxxx, Xx.
--------------------------------- --------------------------------
Secretary Co-Chairman of the Board of
Directors
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