Exhibit (e)(2)
FORM OF DISTRIBUTION AGREEMENT
AGREEMENT made this ___ day of September, 2000, by and between Lexington
Emerging Markets Fund, Inc. (the "Fund") and Pilgrim Securities, Inc.
("Distributor"), a Delaware Corporation.
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as a diversified open-end investment company and
offers its shares continuously to variable annuity contracts or variable life
insurance policies (the "Accounts") issued by participating insurance companies,
and its shares may be sold in the future to separate accounts of other
affiliated or unaffiliated insurance companies; and
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934 and is a member of the National Association of
Securities Dealers, Inc.; and
WHEREAS, the Fund and the Distributor wish to enter into this Agreement
whereby the Distributor will act as the Fund's principal underwriter for the
sale of shares of the Fund to the Accounts;
NOW, THEREFORE, the parties hereto agree as follows:
1. Appointment of the Distributor
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The Fund hereby appoints the Distributor as the principal underwriter and
distributor of the Fund to sell shares of the Fund to the Accounts, and the
Distributor hereby accepts such appointment.
2. Purchase of Shares from the Fund
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(a) The Fund herewith engages Distributor to act as exclusive distributor
of its shares. Said sales shall be made only to investors eligible to invest in
a registered investment company consistent with such company's serving as an
investment vehicle for variable annuities and variable life insurance company
contracts. The Distributor will hold itself available to receive by mail, telex
and/or telephone, orders for the purchase of shares and will accept or reject
such orders on behalf of the Fund in accordance with the provisions of the
Fund's prospectus, and will be available to transmit such orders as are so
accepted to the Fund's transfer agent as promptly as possible for processing at
the shares' net asset value next determined in accordance with the prospectus.
(b) All shares sold by the Distributor under this Agreement shall be sold
at the net asset value per share ("Offering Price") determined in the manner
described in the Fund's prospectus, as it may be amended from time to time.
3. Redemption of Shares by the Fund
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(a) Any of the outstanding shares of the Fund may be tendered for
redemption at any time, and the Fund agrees to redeem any such shares so
tendered in accordance with the applicable provisions of the Prospectus and
Fund's Articles of Incorporation and By-Laws. The redemption price is the net
asset value per share next determined after the initial receipt of proper notice
of redemption.
(b) The right to redeem shares or to receive payment with respect to any
redemption may be suspended only in accordance with applicable law.
4. Duties of the Fund
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(a) The Fund 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 of the Fund.
(b) The Fund shall take, from time to time, subject to the necessary
approval of its shareholders, all necessary action to fix the number of its
authorized shares and to register shares under the Securities Act of 1933, as
amended (the "1933 Act"), in order that there will be available for sale at
least the number of shares as investors may reasonably be expected to purchase.
5. Duties of the Distributor
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In selling the shares of the Fund, the Distributor shall use its best
efforts to conform with the requirements of all applicable federal and state
laws and regulations, and the regulations of the National Association of
Securities Dealers, Inc., relating to the sale of such securities. Except as
provided below, the Distributor is not authorized by the Fund to give any
information or make any representations, other than those contained in the
registration statement for the Fund and its shares, the Prospectus, and any
sales literature specifically approved a principal of the Distributor. The
Distributor shall furnish applicable federal and state regulatory authorities
with any information or reports in connection with its services under this
Agreement which such authorities may request in order to ascertain whether the
Fund's operations are being conducted in an manner consistent with any
applicable law or regulations. Nothing contained in this Agreement shall
prevent the Distributor from entering into distribution agreements with other
investment companies. The Distributor shall be without liability to the Fund
for any action taken or omitted by it in good faith without negligence.
6. Allocation of Expenses
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(a) The Fund will pay the following expenses in connection with the sales
and distribution of shares of the Fund:
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(i) expenses pertaining to the preparation of our audited and
certified financial statements to be included in any amendments ("Amendments")
to the Fund's Registration Statement under the 1933 Act, including the
Prospectus and Statement of Additional Information included therein;
(ii) expenses pertaining to the preparation, printing, and
distribution of any reports or communications, including Prospectus and
Statement of Additional Information, which are sent to existing shareholders of
the Fund;
(iii) filing and other fees to federal and state securities
regulatory authorities necessary to register and maintain registration of the
shares; and
(iv) expenses of the Fund's Administrator, including all costs and
expenses in connection with the issuance, transfer and registration of the
shares, including but not limited to any taxes and other governmental charges in
connection therewith.
(b) The Distributor will pay the following expenses:
(i) expenses of printing additional copies of the Prospectus and
Statement of Additional Information and any Amendments or supplements thereto
which are necessary to continue to offer shares of the Fund to the public; and
(ii) expenses pertaining to the printing of additional copies, for
use by the Distributor as sales literature, of reports or other communications
which have been prepared for distribution to existing shareholders of the Fund
or incurred by the Distributor in advertising, promoting and selling our shares
to the public.
7. Records
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All records maintained by the Distributor in connection with this Agreement
shall be the property of the Fund and shall be returned to the Fund upon
termination of this Agreement, free from any claims or retention of rights by
the Distributor. The Distributor shall keep confidential any information
obtained pursuant to this Agreement and shall disclose such information, only if
the Fund has authorized such disclosure, or if such disclosure is expressly
required by applicable federal or state regulatory authorities.
8. Duration and Termination of this Agreement
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This Agreement shall become effective on the date first written above or on
such later date approved by the Company's Board of Directors, including a
majority of those Directors who are not parties to this Agreement or interested
persons (as such term is defined in the 1940 Act) thereof. Unless terminated as
provided herein, the Agreement shall continue in full force and effect for two
(2) years from the effective date of this Agreement, and shall continue in
effect from year to year thereafter for successive one (1) year periods if
approved at least annually (i) by a vote of a majority of the outstanding voting
securities of the Fund or by a vote of the
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Directors of the Fund, and (ii) by a vote of a majority of the Directors of the
Fund who are not interested persons or parties to this Agreement (other than as
Directors of the Fund), cast in person at a meeting called for the purpose of
voting on this Agreement.
This Agreement may be terminated at any time without penalty on at least
sixty days notice by the Fund's Board of Directors or by a majority vote of its
shareholders, with respect to the Fund by a majority vote of the shareholders of
the capital stock of the Fund, or by Distributor on sixty days notice.
This Agreement shall terminate automatically in the event of its
assignment.
9. Miscellaneous
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This Agreement shall be subject to the laws of the State of Massachusetts
and shall be interpreted and construed to further and promote the operation of
the Fund as an open-end investment company. As used herein, the terms "Net Asset
Value," "Investment Company," "Open-End Investment Company," "Assignment,"
"Principal Underwriter," "Interested Person," and "Majority of the Outstanding
Voting Securities," shall have the meanings set forth in the 1933 Act and the
1940 Act, as applicable, and the rules and regulations promulgated thereunder.
10. Liability
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Nothing contained herein shall be deemed to protect the Distributor against
any liability to the Fund or its shareholders to which the Distributor would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Distributor's duties hereunder, or by
reason of the Distributor's reckless disregard of its obligations and duties
hereunder.
LEXINGTON EMERGING MARKETS FUND,
INC.
By: ______________________________
Xxxxxxx X. Xxxxxx
Senior Vice President
PILGRIM SECURITIES, INC.
By: ______________________________
Xxxxx X. Xxxxxxxx
Senior Executive Vice President
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