Exhibit 23(e)(1)
DISTRIBUTING AGREEMENT
DISTRIBUTING AGREEMENT, dated as of September 15, 2005 between XXXXXXXX
TARGETHORIZON ETF PORTFOLIOS, 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 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 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 to other
purchasers on such terms as may be provided in the then current
prospectus 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.
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 at net asset values determined
by the Fund in conformity with the then current prospectus relating to
such Shares.
1
4. Compensation. (a) As compensation for the services of Xxxxxxxx Advisors
under this Agreement, the Fund shall pay to Xxxxxxxx Advisors an amount
equal to the sales charge, determined in conformity with the then
current prospectus relating to such Shares, on all sales of Shares
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 Administration, Shareholder Services and Distribution Plan
(the "Plan") of each series of the Fund, 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 applicable 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.
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 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 under the Securities Act of 1933 (the "Act"),
all fees and related expenses which may be incurred in connection with
the qualification of Shares 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 Shares, of supplying
2
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
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 Advisors
in connection with the sale of Shares 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 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 any Prospectus relating to the sale of Shares, 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 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, any series thereof and the 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.
3
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 any
Prospectus relating to Shares 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 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
4
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, 2006 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.
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.
5
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 TARGETHORIZON ETF
PORTFOLIOS, INC.
By /s/ Xxxxx X. Xxxx
------------------------------------
Xxxxx X. Xxxx
President
XXXXXXXX ADVISORS, INC.
By /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx
President
6
