FIRST DOMINION CAPITAL CORPORATION DISTRIBUTION AGREEMENT
FIRST
DOMINION CAPITAL CORPORATION
AGREEMENT made as of the 1st
day of February, 2008, between Z-Seven Fund, Inc., a corporation duly organized
and existing under the laws of the State of Maryland (the “Company”) and First
Dominion Capital Corporation (“FDCC”), a corporation duly organized and existing
under the laws of the Commonwealth of Virginia (the “Distributor”).
WHEREAS, the Company is registered
under the Investment Company Act of 1940, as amended (the “1940 Act”), as a
non-diversified, open-end management investment company and is authorized (i) to
issue shares in a series, with the shares of the series representing the
interests in a portfolio of securities and other assets, and (ii) to divide such
shares into one class (the “Shares”); and
WHEREAS, the Company wishes to employ
the services of the Distributor with respect to the distribution of the Shares
identified from time to time on Schedule A hereto (referred to herein as the
“Fund”) as such Schedule may be amended from time to time; and
WHEREAS, the Distributor wishes to
provide distribution services to the Company with respect to the
Shares.
NOW, THEREFORE, in consideration of the
mutual promises and undertakings herein contained, the parties agree as
follows:
1. SALE
OF SHARES BY THE DISTRIBUTOR. The Company grants to the Distributor
the right to sell Shares during the term of this Agreement and subject to the
registration requirements of the Securities Act of 1933, as amended (the “1933
Act”) and of the laws governing the sale of securities in the various states
(“Blue Sky Laws”), under the following terms and conditions: the Distributor (i)
shall have the right to sell, as agent and on behalf of the Company, Shares
authorized for issue and registered under the 1933 Act; and (ii) may sell such
Shares only in compliance with the terms set forth in the Company’s currently
effective registration statement, as may be in effect from time to time, and any
further limitations the Board of Directors of the Company (the “Board”) may
impose. The Distributor may also enter into dealer or similar
agreements with qualified intermediaries it may select for the performance of
Distribution and Shareholder Services. The Distributor may also enter
into agreements with intermediaries and other qualified entities to perform
recordkeeping, shareholder servicing and sub-accounting services. In
making such arrangements, the Distributor shall act only as principal and not as
agent for the Company. No such intermediary is authorized to act as
agent for the Company in connection with the offering or sale of shares to the
public or otherwise, except for the limited purpose of determining the time as
of which orders for the purchases, sales and exchanges of shares are deemed to
have been received.
2. SALE
OF SHARES BY THE COMPANY. The rights granted to the Distributor shall
be nonexclusive in that the Company reserves the right to sell its Shares to
investors on applications received and accepted by the Company. Any
purchase or sale shall be conclusively presumed to have been accepted by the
Company if the Company fails to notify the Distributor of the rejection of such
offer or sale prior to the next computation of the net asset value of the Shares
following receipt by the Fund of notice of such offer or sale. The
Company also reserves the right to issue Shares in connection with (i) the
merger or consolidation of the assets of, or acquisition by the Company through
purchase or otherwise, with any other investment company, trust or personal
holding company; (ii) a pro rata distribution directly to the holders of Shares
in the nature of a stock dividend or split-up; and (iii) as otherwise may be
provided in the then current registration statement of the Company.
3. SOLICITATION
OF SALES. In consideration of the rights granted to the Distributor under this
Agreement, the Distributor agrees to use all reasonable efforts, consistent with
its other business, to secure purchasers for the Shares. This shall
not prevent the Distributor from entering into like arrangements (including
arrangements involving the payment of underwriting commissions) with other
issuers. The Distributor will not directly or indirectly direct
remuneration from commissions paid by the Company for portfolio securities
transactions to a broker or dealer for promoting or selling the
Shares.
4. SHARES
COVERED BY THIS AGREEMENT. This Agreement shall apply to unissued
Shares, Shares held in the Company’s treasury in the event that in the
discretion of the Company treasury Shares shall be sold, and Shares repurchased
for resale.
5. VOLUNTARY
REPURCHASE OF SHARES BY THE COMPANY. The Company reserves the right,
by resolution of its Board, to authorize and require the Distributor to
repurchase, upon prices, terms and conditions to be set forth in such
resolution, as agent of the Company and for its account, such shares of the
Company as may be offered for voluntary repurchase by the Fund from time to
time.
6. PUBLIC
OFFERING PRICE. Except as otherwise noted in the Company’s current
prospectus (the “Prospectus”) or Statement of Additional Information (the
“SAI”), all Shares sold by the Distributor or the Company will be sold at the
public offering price plus any applicable sales charge described
therein. The public offering price for all accepted subscriptions
will be the net asset value per share, determined in the manner described in the
Company’s then current Prospectus and SAI. The Company shall in all
cases receive the net asset value per Share on all sales. If a sales
charge is in effect, the Distributor shall be entitled to retain the applicable
sales charges, if any, subject to any reallowance obligations of the Distributor
as set forth in any selling agreements with selected dealers and others for the
sale of Shares and/or as set forth in the Prospectus and/or SAI of the Company
with respect to Shares, in accordance with Section 22 of the 1940 Act and rules
thereunder.
7. SUSPENSION
OF SALES. If and whenever the determination of net asset value is
suspended and until such suspension is terminated, no further orders for Shares
shall be processed by the Distributor, except such unconditional orders placed
with the Distributor before it had knowledge of the suspension. In addition, the
Company reserves the right to suspend sales of Shares and the Distributor’s
authority to process orders for Shares if, in the judgment of the Company, it is
in the best interest of the Company to do so. Suspension will
continue for such period as may be determined by the Company. Such a
suspension of sales shall not effect a termination of this
Agreement.
8. AUTHORIZED
REPRESENTATIONS. The Distributor is not authorized by the Company to
give any information or to make any representations other than those contained
in the appropriate registration statement, Prospectuses or SAIs filed with the
Securities and Exchange Commission under the 1933 Act (as those registration
statements, Prospectuses and SAIs may be amended from time to time), or
contained in shareholder reports or other material that may be prepared by or on
behalf of the Company for the Distributor’s use. This shall not be construed to
prevent the Distributor from preparing and distributing, in compliance with
applicable laws and regulations, sales literature or other material as it may
deem appropriate. Distributor will furnish or cause to be furnished
copies of such sales literature or other material to the Company. Distributor
agrees to take appropriate action to cease using such sales literature or other
material to which the Company objects as promptly as practicable after receipt
of the objection. Distributor further agrees that, in connection with
the offer and sale of Shares, Distributor shall comply with all applicable
securities laws of the United States and each state thereof in which Shares are
offered and/or sold (including without limitation, the maintenance of effective
federal and state broker-dealer registrations, as required) and the rules and
regulations of the NASD.
9. REGISTRATION
OF SHARES. The Company agrees that it will use its best efforts to
register the Shares under the Blue Sky laws of any state as well as under the
1933 Act (subject to the necessary approval, if any, of its shareholders) and to
qualify and maintain the registration and qualification of an appropriate number
of shares under the 1933 Act so that there will be available for sale the number
of Shares the Distributor may reasonably be expected to
sell. Distributor shall furnish such information and other materials
relating to its affairs and activities as shall be required by the Company in
connection with such registration and qualification. The Distributor
agrees that it will not offer or sell Shares in any jurisdiction unless the
offer or sale of Shares has been so qualified or registered or is otherwise
exempt from such registration or qualification. The Company shall
furnish to the Distributor copies of all information, financial statements and
other papers which the Distributor may reasonably request for use in connection
with the distribution of the Shares.
10. EXPENSES
AND COMPENSATION.
(a) The Company will pay all of its own
expenses, except as expressly provided herein or in any other agreements which
the Company may have with the Distributor or any other person.
(b) The Distributor will pay all fees
and expenses (i) in connection with the printing and distributing Prospectuses
and SAIs to prospective shareholders and the costs of preparing, printing and
distributing such other sales literature, reports, forms and advertisements in
connection with the sale of Shares to persons other than current shareholders
and state and federal regulatory agencies; (ii) preparing, printing and
distributing all other sales literature used by the Distributor or by dealers
(including copies of Company reports to shareholders or state and federal
regulatory agencies, other than those sent to shareholders or state and federal
regulatory agencies, which the Company may permit to be used as sales
literature) in connection with the offering of Shares for sale to the public;
and (iii) any expenses of advertising in connection with the offering of Shares
for sale to the public.
(c) Compensation. It is understood and
agreed by the parties hereto that the Distributor will receive compensation for
services it performs hereunder in accordance with Schedule B hereto, as such
Schedule may be amended from time to time.
(d) Revenue Sharing. The
Company, through one or more of its investment advisers or their affiliates may
make payments to the Distributor with respect to any expenses incurred in the
distribution of shares by the Company, and such payments will be payable from
the past profits or other resources of the advisers or their affiliates
including advisory fees paid to it by the Company.
11. INDEMNIFICATION.
(a) The Company agrees to
indemnify and hold harmless the Distributor and each of its directors and
officers and each person, if any, who controls the Distributor within the
meaning of Section 15 of the 1933 Act against any loss, liability, claim, damage
or expense (including the reasonable cost of investigating or defending any
alleged loss, liability, claim, damage or expense and reasonable counsel fees
incurred in connection therewith) arising out of or based upon: (i) any
violation of the Company’s representations or covenants herein contained; (ii)
any wrongful act of the Company or any of its representatives (other than the
Distributor or any of its employees or representatives (regardless of the
capacity in which such employee or representative is acting) or any other person
for whose acts the Distributor is responsible or is alleged to be responsible
(including any selected dealer or person through whom sales are made pursuant to
an agreement with the Distributor)); or (iii) any untrue statement of a material
fact contained in a registration statement, Prospectus, SAI or shareholder
reports or other information filed or made public by the Company (as from time
to time amended) or any omission to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading
under the 1933 Act, or any other statute or common law, except to the extent the
statement or omission was made in reliance upon, and in conformity with,
information furnished to the Company by or on behalf of the
Distributor. In no case (i) is the indemnity by the Company in favor
of the Distributor or any person indemnified to be deemed to protect the
Distributor or any person against any liability to the Company or its security
holders to which the Distributor or such person 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, or (ii) is the Company to be liable under its
indemnity agreements contained in this paragraph with respect to any claim made
against the Distributor or any person indemnified unless the Distributor or
person, as the case may be, shall have notified the Company in writing of the
claim within a reasonable time after the summons or other first written
notification giving information of the nature of the claim shall have been
served upon the Distributor or any such person or after the Distributor or such
person shall have received notice of service on any designated agent. However,
failure to notify the Company of any claim shall not relieve the Company from
any liability which it may have to the Distributor or any person against whom
such action is brought other than on account of its indemnity agreement
contained in this paragraph 10(a).
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
claims, but if the Company elects to assume the defense, the defense shall be
conducted by counsel chosen by it and satisfactory to the Distributor, or person
or persons, defendant or defendants in the suit. In the event the
Company elects to assume the defense of any suit and retain counsel, the
Distributor, officers or directors or controlling person(s) or defendant(s) in
the 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 suit, it will
reimburse the Distributor, officers or directors or controlling person(s) or
defendant(s) in the suit for the reasonable fees and expenses of any counsel
retained by them. The Company agrees to notify the Distributor
promptly of the commencement of any litigation or proceedings against it or any
of its officers or Directors in connection with the issuance or sale of any of
the Shares.
(b) The Distributor agrees to indemnify
and hold harmless the Company and each of its Directors and officers and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act, against any loss, liability, claim, damage or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damage or expense and reasonable counsel fees incurred in connection
therewith) arising out of or based upon: (i) any violation of the Distributor’s
representations or covenants herein contained; (ii) any wrongful act of the
Distributor or any of its employees or representatives or any other person for
whose acts the Distributor is responsible or is alleged to be responsible
(including any selected dealer or person through whom sales are made pursuant to
an agreement with the Distributor); or (iii) any untrue statement of a material
fact contained in a registration statement, Prospectus, SAI or shareholder
reports or other information filed or made public by the Company (as from time
to time amended) or any omission to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading, but
only if the statement or omission was made in reliance upon, and in conformity
with, information furnished to the Company by or on behalf of the
Distributor. In no case (x) is the indemnity by the Distributor in
favor of the Company or any person indemnified to be deemed to protect the
Company or any person against any liability to the Distributor or its security
holders to which the Company or such person 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, or (y) is the Distributor to be liable under its indemnity
agreements contained in this paragraph with respect to any claim made against
the Company or any person indemnified unless the Company or person, as the case
may be, shall have notified the Distributor in writing of the claim within a
reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon the Company
or any such person or after the Company or such person shall have received
notice of service on any designated agent. However, failure to notify
the Distributor of any claim shall not relieve the Distributor from any
liability which it may have to the Company or any person against whom such
action is brought other than on account of its indemnity agreement contained in
this paragraph 10(b).
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
claims, but if the Distributor elects to assume the defense, the defense shall
be conducted by counsel chosen by it and satisfactory to the Company, or person
or persons, defendant or defendants in the suit. In the event the
Distributor elects to assume the defense of any suit and retain counsel, the
Company, officers or Directors or controlling person(s) or defendant(s) in the
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
suit, it will reimburse the Company, officers or Directors or controlling
person(s) or defendant(s) in the suit for the reasonable fees and expenses of
any counsel retained by them. The Distributor agrees to notify the
Company promptly of the commencement of any litigation or proceedings against it
or any of its officers or directors in connection with the issuance or sale of
any of the Shares.
(c) The indemnification
obligations of the parties in this Paragraph 11 shall survive the termination of
this Agreement.
12. CODE
OF ETHICS. The Distributor has adopted a written code of ethics that
complies with the requirements of Rule 17j-1 under the 1940 Act and will provide
the Company with a copy of such code of ethics and all subsequent modifications,
together with evidence of its adoption. At least annually, the
Distributor will provide the Company with a report which summarizes existing
procedures for compliance with the code and any changes in the procedures made
during the past year and identifies any recommended changes in existing
restrictions or procedures based upon experience with the code, evolving
industry practice, or developments in applicable laws or regulations, and must
certify that the distributor has adopted procedures reasonably necessary to
prevent “Access Persons” as defined in the code and Rule 17j-1 from violating
the code.
13. CONFIDENTIALITY. The
Distributor agrees to treat confidentially and as proprietary information of the
Company, all records and other information relative to the Company and its
prior, present or potential shareholders, and not to use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except when requested by the Company or when requested to
divulge such information by duly constituted authorities, after prior
notification to and approval by the Company. Such approval shall not
be unreasonably withheld and may not be withheld where the Distributor may be
exposed to civil or criminal contempt proceedings for failure to
comply.
Upon
termination of this Agreement, the Distributor shall return to the Company all
copies of confidential information received from the Company hereunder, other
than materials or information required to be retained by the Distributor under
applicable laws or regulations. Each party hereby agrees to dispose
of any “consumer report information,” as such term is defined in Regulation
S-P.
14. TERMINATION.
This Agreement shall become effective as follows: (i) with respect to
the Shares of the Fund identified on Schedule A hereto as of the date hereof,
and (ii) with respect to the shares of any Fund added to Schedule A hereto,
subsequent hereto, as of the date Schedule A is amended to add such
Fund. Unless terminated as provided herein, the Agreement shall
continue in force for one (1) year from the date of its execution and thereafter
from year to year, provided continuance is approved at least annually by either
(i) the vote of a majority of the Board, or by the vote of a majority of the
outstanding voting securities of the Company, and (ii) the vote of a majority of
those Directors of the Company who are not interested persons of the Company and
who are not parties to this Agreement or interested persons of any such party to
this Agreement, cast in person at a meeting called for the purpose of voting on
the approval.
This
Agreement shall automatically terminate in the event of its
assignment. In addition to termination by failure to approve
continuance or by assignment, this Agreement may at any time be terminated
without the payment of any penalty with respect to any fund of the Company or
class of shares thereof by vote of a majority of the Directors of the Company
who are not interested persons of the Company, or by vote of a majority of the
outstanding voting securities of the Company, on ninety (90) days’ prior written
notice by the Company. This Agreement may be terminated by the
Distributor on ninety (90) days’ prior written notice to the Company. As used in
this Paragraph 14, the terms “vote of a majority of the outstanding voting
securities,” “assignment” and “interested person” shall have the respective
meanings specified in the 1940 Act and the rules enacted thereunder as now in
effect or as hereafter amended.
15. AMENDMENTS.
This Agreement may be amended from time to time by a writing executed by the
Company and the Distributor.
16. NOTICE.
Any notice or other communication required by or permitted to be given in
connection with this Agreement shall be in writing, and shall be delivered in
person or sent by first-class mail, postage prepaid, to the respective parties
at their last known address. Notices to the Company shall be directed
to 0000 Xxxxx Xxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000, Attention: Mr.
Xxxx Xxxxx, III; and notices to the Distributor shall be directed to: 0000 Xxxxx
Xxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000, Attention: Mr. Xxxx Xxxxx,
III.
17. SEVERABILITY.
If any part, term or provision of this Agreement is held to be illegal, in
conflict with any law or otherwise invalid, the remaining portion or portions
shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
18. GOVERNING
LAW. This Agreement shall be construed in accordance with the laws of
the State of Maryland, without giving effect to the choice of laws provision
thereof.
19. LIMITATION
OF LIABILITY. The Distributor hereby acknowledges that the Fund’s
obligations hereunder with respect to the Shares are binding only on the assets
and property belonging to the Fund. The obligations of the parties
hereunder shall not be binding upon any of the Directors, shareholders,
nominees, officers, agents or employees of the Fund personally, but shall bind
only the property of the Fund. The execution and delivery of this
agreement by such officers shall not be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the Fund’s property.
20. AML
AND PRIVACY. The Distributor represents that it is in compliance in
all material respects, and will continue to so comply, with all applicable laws
and regulations relating to guarding against terrorism and money laundering, and
the Distributor agrees to comply with the Company’s anti-money laundering
program to the extent applicable. It is acknowledged and agreed that
other service providers to the Company perform anti-money laundering services
and reviews for the Company, and that the Distributor receives little, if any,
information concerning Fund shareholders. The Distributor also agrees
to comply with the Company’s privacy policies with respect to all information
obtained pursuant to this Agreement.
21. MARKET
TIMING. From time to time, the Company may implement policies,
procedures or charges in an effort to avoid the potential adverse affects on the
Fund of short-term trading by market timers. The Distributor agrees
to cooperate in good faith with the Company in the implementation of (i) any
such policies, procedures or charges, and (ii) the imposition and payment over
to the Company of redemption fees specified in the Company’s Prospectus and
SAI. The Distributor agrees, as required by applicable law, to make
reasonable efforts to obtain the complete assistance of intermediaries in
complying with the Company’s frequent trading and other policies set forth in
the Company’s Prospectus and SAI or take alternative actions reasonably designed
to achieve compliance with these policies.
22. EXECUTION
IN COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which, when so executed, shall be deemed to be an original, but such
counterparts shall together constitute but one and the same
instrument.
23. HEADINGS. All
Section headings contained in this Agreement are for convenience of reference
only, do not form a part of this Agreement and will not affect in any way the
meaning or interpretation of this Agreement. Words used herein,
regardless of the number and gender specifically used, will be deemed and
construed to include any other number, singular or plural, and any other gender,
masculine, feminine, or neuter, as the contract requires.
24. WAIVER. Any
term or provision of this Agreement may be waived at any time by the party
entitled to the benefit thereof by written instrument executed by such
party. No failure of either party hereto to exercise any power or
right granted hereunder, or to insist upon strict compliance with any obligation
hereunder, and no custom or practice of the parties with regard to the terms of
performance hereof, will constitute a waiver of the rights of such party to
demand full and exact compliance with the terms of this Agreement.
25. ENTIRE
AGREEMENT. This Agreement constitutes the entire agreement between
the parties hereto and supersedes all prior agreements, understandings and
arrangements with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties have
executed this Agreement as of the day and year first above written.
Z-SEVEN FUND, INC.
By: /s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
President
FIRST DOMINION CAPITAL
CORP.
By: /s/ Xxxx Xxxxx, III
Xxxx Xxxxx, III
President
Amended
and Restated
Schedule
A
to
the
between
Z-Seven
Fund, Inc. (the “Company”)
and
First
Dominion Capital Corporation (“FDCC”)
Dated
as of February 1, 2008
LIST
OF FUNDS
|
Funds
|
|
Z-Seven
Fund, Inc.
|
A-
Schedule
B
to
the
between
Z-Seven
Fund, Inc. (the “Company”)
and
First
Dominion Capital Corporation (“FDCC”)
Dated
as of February 1, 2008
DISTRIBUTION
FEE SCHEDULE
1. The
Distributor shall receive from the Fund, fees at the rates and under the terms
and conditions of the Rule 12b-1 Distribution Plan adopted by the Fund, as such
plan is in effect from time to time, and subject to any further limitations on
such fees as the Board of Directors of the Company may impose.
2. With
respect to any shares of the Fund sold subject to a sales charge, FDCC shall be
entitled to retain the underwriter’s portion of the sales charge for each
investment in the Fund’s shares, computed as a percentage of the offering price
determined in accordance with the Fund’s currently effective Prospectus and as
otherwise provided in the Fund’s registration statement.
3. With
respect to sales of shares of the Fund sold subject to a sales charge for which
FDCC is the selling dealer, FDCC shall retain the dealer’s sales charge for each
investment in the Fund’s shares, computed as a percentage of the offering price
determined in accordance with the Fund’s currently effective Prospectus and as
otherwise provided in the Fund’s registration statement.
4. With
respect to any shares of the Fund sold at net asset value (without a sales
charge), FDCC shall receive from the Fund reimbursement at the rate of $30 per
hour for the cost of personnel involved with assistance in the promotion of sale
of such shares and for out-of-pocket costs incurred by FDCC.
B-
