EX-99.(e)(1)
DISTRIBUTING AGREEMENT
DISTRIBUTING AGREEMENT, dated as of July 19, 2001 between XXXXXXXX INVESTMENT
GRADE FIXED INCOME FUND, INC. a Maryland corporation (the "Fund"), and XXXXXXXX
ADVISORS, INC., a Delaware corporation ("Xxxxxxxx Advisors").
In consideration of the mutual agreements herein made, the parties hereto
agree as follows:
1. Exclusive Distributor. The Fund hereby agrees that Xxxxxxxx Advisors shall
be for the period of this Agreement exclusive agent for distribution within
the United States and its territories, and Xxxxxxxx Advisors agrees to use
its best efforts during such period to effect such distribution of shares
of Capital Stock ("Shares") of the Fund; provided, however, that nothing
herein shall prevent the Fund, if it so elects, from selling or otherwise
distributing its Shares directly to any persons other than dealers. The
Fund understands that Xxxxxxxx Advisors also acts as agent for distribution
of the shares of capital stock or beneficial interest of other open-end
investment companies which have entered into management agreements with J.
& X. Xxxxxxxx & Co. Incorporated (the "Manager").
2. Sales of Shares. Xxxxxxxx Advisors is authorized, as agent for the Fund and
not as principal, (a) to sell Shares of the Fund to such dealers as
Xxxxxxxx Advisors may select pursuant to the terms of written sales
agreements (which may also relate to sales of shares of capital stock or
shares of beneficial interest of other open-end investment companies which
have entered into management agreements with the Manager), substantially in
the form or forms approved by the Fund, and (b) to sell Shares of the Fund
to other purchasers on such terms as may be provided in the then current
prospectus of the Fund relating to such Shares; provided, however, that no
sales of Shares shall be confirmed by Xxxxxxxx Advisors at any time when,
according to advice received by Xxxxxxxx Advisors from the Fund, the
officers of the Fund have for any reason sufficient to them temporarily or
permanently suspended or discontinued the sale and issuance of the Shares.
Each sale of Shares shall be effected by Xxxxxxxx Advisors only at the
applicable price determined by the Fund in the manner prescribed in its
then current prospectus relating to such Shares. Xxxxxxxx Advisors shall
comply with all applicable laws, rules and regulations including, without
limiting the generality of the foregoing, all rules or regulations made or
adopted pursuant to Section 22 of the Investment Company Act of 1940, as
amended (the "1940 Act") by the Securities and Exchange Commission or any
securities association registered under the Securities Exchange Act of
1934.
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The Fund agrees, as long as its Shares may legally be issued, to fill all
orders confirmed by Xxxxxxxx Advisors in accordance with the provisions of
this Agreement.
3. Repurchase Agent. Xxxxxxxx Advisors is authorized, as agent for the Fund
and not as principal, to accept offers for resale to the Fund and to
repurchase on behalf of the Fund Shares of the Fund at net asset values
determined by the Fund in conformity with its then current prospectus
relating to such Shares.
4. Compensation. (a) As compensation for the services of Xxxxxxxx Advisors
under this Agreement (other than in respect of Class B Shares of the Fund),
the Fund shall pay to Xxxxxxxx Advisors an amount equal to the sales
charge, determined in conformity with the Fund's then current prospectus
relating to such Shares, on all sales of Shares of the Fund confirmed by
Xxxxxxxx Advisors hereunder and for which payment has been received by or
on behalf of the Fund, less the dealers' concession allowed in respect of
such sales. In addition, in accordance with the terms of the Fund's
Administration, Shareholder Services and Distribution Plan (the "Plan"),
the Fund may make payments from time to time to Xxxxxxxx Advisors in
accordance with the terms and limitations of, and for the purposes set
forth in the Plan.
(b) In accordance with the Plan, and subject to the limit on asset-based
sales charges set forth in NASD Conduct Rule 2830 (and any successor
provision thereto), the Fund shall pay to the Distributor or, at the
Distributor's direction, to a third party, monthly in arrears on or
prior to the 10th business day of the following calendar month, an
amount equal to the Distributor's Allocable Portion (as defined below)
of a fee (the "Class B Distribution Fee") which shall accrue daily in
an amount equal to the product of (A) the daily equivalent of 0.75%
per annum multiplied by (B) the net asset value of the Class B Shares
of the Fund outstanding on such day. The Fund agrees to withhold from
redemption proceeds of the Class B Shares the Distributor's Allocable
Portion of any contingent deferred sales charge ("CDSC") paid with
respect to the Class B Shares, as provided in the Fund's prospectus,
and to pay an amount equal to the same over to the Distributor or, at
the Distributor's direction to a third party, at the time the
redemption proceeds are paid to the holder of such shares redeemed.
Payment of these amounts in respect of CDSCs to the Distributor is not
contingent upon the adoption or continuation of any Plan.
(c) For purposes of this Agreement, the term "Allocable Portion" of the
Class B Distribution Fee and CDSCs payable with respect to Class B
Shares shall mean the portion of such Distribution Fees and CDSC
allocated to the Distributor in accordance with the Allocation
Schedule attached as Schedule A to the Plan.
(d) The Distributor shall be considered to have completely earned the
right to the payment of the amounts in clause (b) above upon the
settlement date of each Class B Share taken into account in
determining the Distributor's Allocable Portion of Class B
Distribution Fees.
(e) The provisions set forth in Section 8 of the Plan (in effect on the
date hereof) relating to Class B Shares, together with the related
definitions and Schedule A to the Plan are hereby incorporated into
this Section 4 by reference with the same force and effect as if set
forth herein in their entirety.
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5. Expenses. Xxxxxxxx Advisors agrees promptly to pay or reimburse the Fund
for all expenses (except expenses incurred by the Fund in connection with
the preparation, printing and distribution of any prospectus or report or
other communication to shareholders, to the extent that such expenses are
incurred to effect compliance with any Federal or State law or to enable
such distribution to shareholder(s)) (a) of printing and distributing
copies of any prospectus and of preparing, printing and distributing any
other material used by Xxxxxxxx Advisors in connection with offering Shares
of the Fund for sale, and (b) of advertising in connection with such
offering. The Fund agrees to pay all expenses in connection with the
registration of Shares of the Fund under the Securities Act of 1933 (the
"Act"), all fees and related expenses which may be incurred in connection
with the qualification of Shares of the Fund for sale in such States (as
well as the District of Columbia, Puerto Rico and other territories) as
Xxxxxxxx Advisors may designate, and all expenses in connection with
maintaining facilities for the issue and transfer of its Shares, of
supplying information, prices and other data to be furnished by it
hereunder, and through Xxxxxxxx Data Corp., of all data processing and
related services related to the share distribution activity contemplated
hereby.
The Fund agrees to execute such documents and to furnish such information
as may be reasonably necessary, in the discretion of the Directors of the
Fund, in connection with the qualification of Shares of the Fund for sale
in such States (as well as the District of Columbia, Puerto Rico and other
territories) as Xxxxxxxx Advisors may designate. Xxxxxxxx Advisors also
agrees to pay all fees and related expenses connected with its own
qualification as a broker or dealer under Federal or State laws and, except
as otherwise specifically provided in this Agreement or agreed to by the
Fund, all other expenses incurred by Xxxxxxxx
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Advisors in connection with the sale of Shares of the Fund as contemplated
in this Agreement (including the expenses of qualifying the Fund as a
dealer or broker under the laws of such States as may be designated by
Xxxxxxxx Advisors, if deemed necessary or advisable by the Fund).
It is understood and agreed that any payments made to Xxxxxxxx Advisors
pursuant to the Plan may be used to defray some or all of the expenses
incurred by Xxxxxxxx Advisors pursuant to this Agreement.
6. Prospectus and Other Information. The Fund represents and warrants to and
agrees with Xxxxxxxx Advisors that:
(a) A registration statement, including one or more prospectuses relating
to the Shares, has been filed by the Fund under the Act and has become
effective. Such registration statement, as now in effect and as from
time to time hereafter amended, and also any other registration
statement relating to the Shares which may be filed by the Fund under
the Act which shall become effective, is herein referred to as the
"Registration Statement", and any prospectus or prospectuses filed by
the Fund as a part of the Registration Statement, as the "Prospectus".
(b) At all times during the term of this Agreement, except when the
officers of the Fund have suspended or discontinued the sale and
issuance of Shares of the Fund as contemplated by Section 2 hereof,
the Registration Statement and Prospectus will conform in all respects
to the requirements of the Act and the rules and regulations of the
Securities and Exchange Commission, and neither of such documents will
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statement therein not misleading, except that the foregoing does not
apply to any statements or omissions in either of such documents based
upon written information furnished to the Fund by Xxxxxxxx Advisors
specifically for use therein.
The Fund agrees to prepare and furnish to Xxxxxxxx Advisors from time to
time a copy of its Prospectus, and authorizes Xxxxxxxx Advisors to use such
Prospectus, in the form furnished to Xxxxxxxx Advisors from time to time,
in connection with the sale of the Fund's Shares. The Fund also agrees to
furnish Xxxxxxxx Advisors from time to time, for use in connection with the
sale of such Shares, such information with respect to the Fund and its
Shares as Xxxxxxxx Advisors may reasonably request.
7. Reports. Xxxxxxxx Advisors will prepare and furnish to the Directors of the
Fund at least quarterly a written report complying with the requirements of
Rule 12b-1 under the 1940 Act setting forth all amounts expended under the
Plan and the purposes for which such expenditures were made.
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8. Indemnification.
(a) The Fund will indemnify and hold harmless Xxxxxxxx Advisors and each
person, if any, who controls Xxxxxxxx Advisors within the meaning of
the Act against any losses, claims, damages or liabilities to which
Xxxxxxxx Advisors or such controlling person may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material
fact contained in the Fund's Registration Statement or Prospectus or
any other written sales material prepared by the Fund which is
utilized by Xxxxxxxx Advisors in connection with the sale of Shares or
arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or (in the
case of the Registration Statement and Prospectus) necessary to make
the statements therein not misleading or (in the case of such other
sales material) necessary to make the statements therein not
misleading in the light of the circumstances under which they were
made; and will reimburse Xxxxxxxx Advisors and each such controlling
person for any legal or other expenses reasonably incurred by Xxxxxxxx
Advisors or such controlling person in connection with investigating
or defending any such loss, claim, damage, liability or action;
provided, however, that the Fund will not be liable -------- -------
in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in such
Registration Statement or Prospectus in conformity with written
information furnished to the Fund by Xxxxxxxx Advisors specifically
for use therein; and provided, further, that nothing herein shall be
so construed as to protect Xxxxxxxx Advisors against any liability to
the Fund or its security holders to which Xxxxxxxx Advisors would
otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence, in the performance of its duties, or by reason of
the reckless disregard by Xxxxxxxx Advisors of its obligations and
duties under this Agreement. This indemnity agreement will be in
addition to any liability which the Fund may otherwise have.
(b) Xxxxxxxx Advisors will indemnify and hold harmless the Fund, each of
its Directors and officers and each person, if any, who controls the
Fund within the meaning of the Act, against any losses, claims,
damages or liabilities to which the Fund or any such Director, officer
or controlling person may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement or Prospectus or any sales material not
prepared by the Fund which is utilized in connection with the sale of
Shares or arise out of or are based upon the omission or
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the alleged omission to state therein a material fact required to be
stated therein or (in the case of the Registration Statement and
Prospectus) necessary to make the statements therein not misleading or
(in the case of such other sales material) necessary to make the
statements therein not misleading in the light of the circumstances
under which they were made, in the case of the Registration Statement
and Prospectus to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission
was made in conformity with written information furnished to the Fund
by Xxxxxxxx Advisors specifically for use therein; and Xxxxxxxx
Advisors will reimburse any legal or other expenses reasonably
incurred by the Fund or any such Director, officer or controlling
person in connection with investigating or defending any such loss,
claim, damage, liability or action. This indemnity agreement will be
in addition to any liability which Xxxxxxxx Advisors may otherwise
have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying
party under this Section, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying
party will not relieve it from liability which it may have to any
indemnified party otherwise than under this Section. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate therein and, to the extent that it may
wish, to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to
such indemnified party of its election to assume the defense thereof,
the indemnifying party will not be liable to such indemnified party
under this Section for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
9. Effective Date. This Agreement shall become effective upon its execution by
an authorized officer of the respective parties to this Agreement, but in
no event prior to shareholder approval of the Plan.
10. Term of Agreement. This Agreement shall continue in effect until December
31, 2002 and through December 31 of each year thereafter if such
continuance is approved in the manner required by the 1940 Act and the
rules thereunder and Xxxxxxxx Advisors shall not have notified the Fund in
writing at least 60 days prior to the anniversary date of the previous
continuance that it does not desire such continuance. This Agreement may be
terminated at any time, without payment of penalty on 60 days' written
notice to the other party by vote of a majority of the Directors of the
Fund who are not interested persons (as defined in the 0000 Xxx) of the
Fund and have no direct or indirect financial interest in the operation of
the Plan or any agreement related thereto, or by vote of a majority of the
outstanding voting securities of the Fund (as defined in the 1940 Act).
This Agreement shall automatically terminate in the event of its assignment
(as defined in the 1940 Act). This Agreement, with respect to the Fund's
Class B Shares, has been approved in the manner required by the Act and the
rules thereunder in anticipation of the Distributor's transfer of its
Allocable Portion of the Class B Distribution Fee (but not its obligations
under this Agreement) to one or more third parties pursuant to one or more
"Purchase and Sale Agreements" in order to raise funds to cover
distribution expenditures in respect of the Class B Shares, and such
transfer will not cause a termination of this Agreement.
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11. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require,
or to impose any duty upon, either of the parties to do anything in
violation of any applicable laws or regulations.
IN WITNESS WHEREOF, the Fund and Xxxxxxxx Advisors have caused this
Agreement to be executed by their duly authorized officers as of the date first
above written.
XXXXXXXX INVESTMENT GRADE FIXED INCOME FUND, INC.
By /s/Xxxxx X. Xxxx
--------------------------------------------
Xxxxx X. Xxxx
President
XXXXXXXX ADVISORS, INC.
By /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
President
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