DISTRIBUTION AGREEMENT
AGREEMENT made as of February 28, 1997, between ROCKWOOD FUND, INC.
("Fund"), a corporation organized and existing under the laws of the State of
Maryland, and Investor Service Center, Inc. ("Distributor"), a corporation
organized and existing under the laws of the State of Delaware.
WHEREAS the Fund is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company; and
WHEREAS the Fund desires to retain the Distributor as principal
distributor in connection with the offering and sale of the shares of common
stock ("Shares") and of such other series as may hereafter be designated
("Series") by the Fund's Board of Directors ("Board"); and
WHEREAS the Distributor is willing to act as principal distributor for
such Shares and for each such Series on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints the Distributor as its exclusive agent
to be the principal distributor to sell and to arrange for the sale of the
Shares on the terms and for the period set forth in this Agreement. The
Distributor hereby accepts such appointment and agrees to act hereunder..
2. Services and Duties of the Distributor.
(a) The Distributor agrees to sell the Shares on a best efforts basis
from time to time during the term of this Agreement as agent for the Fund and
upon the terms described in the Registration Statement. As used in this
Agreement, the term "Registration Statement" shall mean the currently effective
registration statement of the Fund, and any supplements thereto, under the
Securities Act of 1933, as amended ("1933 Act"), and the 0000 Xxx.
(b) Upon the later of the date of this Agreement or the initial
offering of the Shares to the public by a Series, the Distributor will hold
itself available to receive purchase orders, satisfactory to the Distributor for
Shares of that Series and will accept such orders on behalf of the Fund as of
the time of receipt of such orders and promptly transmit such orders as are
accepted to the Fund's transfer agent. Purchase orders shall be deemed effective
at the time and in the manner set forth in the Registration Statement.
(c) The Distributor in its discretion may enter into agreements to sell
Shares to such registered and qualified retail dealers, as it may select. In
making agreements with such dealers, the Distributor shall act only as principal
and not as agent for the Fund.
(d) The offering price of the Shares of each Series shall be the net
asset value per Share as next determined by the Fund following receipt of an
order at the Distributor's principal office. The Fund shall promptly furnish the
Distributor with a statement of each computation of net asset value.
(e) The Distributor shall not be obligated to sell any certain number of Shares.
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(f) The Distributor shall provide ongoing shareholder services, which
include responding to shareholder inquiries, providing shareholders with
information on their investments in the Series and any other services now or
hereafter deemed to be appropriate subjects for the payments of "service fees"
under Rule 2830 of the National Association of Securities Dealers, Inc.'s
Conduct Rules (collectively, "service activities").
(g) The Distributor shall have the right to use any lists of
shareholders of the Fund or any other lists of investors which it obtains in
connection with its provision of services under this Agreement; provided,
however, that the Distributor shall not sell or knowingly provide such lists of
shareholders to any unaffiliated person unless reasonable payment is made to the
Fund.
3. Authorization to Enter into Dealer Agreements and to Delegate Duties as
Distributor. With respect to any or all Series, the Distributor may enter into a
dealer agreement with respect to sales of the Shares or the provision of service
activities with any registered and qualified dealer. In a separate contract or
as part of any such dealer agreement, the Distributor also may delegate to
another registered and qualified dealer ("sub-distributor") any or all of its
duties specified in this Agreement, provided that such separate contract or
dealer agreement imposes on the sub-distributor bound thereby all applicable
duties and conditions to which the Distributor is subject under this Agreement,
and further provided that such separate contract meets all requirements of the
1940 Act and rules thereunder.
4. Services Not Exclusive. The services furnished by the Distributor hereunder
are not to be deemed exclusive and the Distributor shall be free to furnish
similar services to others so long as its services under this Agreement are not
impaired thereby. Nothing in this Agreement shall limit or restrict the right of
any director, officer or employee of the Distributor, who may also be a
director, officer or employee of the Fund, to engage in any other business or to
devote his or her time and attention in part to the management or other aspects
of any other business, whether of a similar or a dissimilar nature.
5. Compensation for Distribution and Service Activities.
(a) As compensation for its distribution and service activities under
this Agreement with respect to each Series and its shareholders, the Distributor
shall receive from the Fund a fee (or fees) at the rate and under the terms and
conditions of the Plan of Distribution pursuant to Rule 00x-0 xxxxx xxx 0000 Xxx
("Xxxx") adopted by the Fund with respect to the Series, as such Plan is amended
from time to time, and subject to any further limitations on such fee as the
Board may impose.
(b) The Distributor may reallow any or all of the fees it is paid to such
dealers as the Distributor may from time to time determine.
6. Duties of the Fund.
(a) The Fund reserves the right at any time to withdraw offering Shares
of any or all Series by written notice to the Distributor at its principal
office.
(b) The Fund shall determine in its sole discretion whether
certificates shall be issued with respect to the Shares. If the Fund has
determined that certificates shall be issued, the Fund will not cause
certificates representing Shares to be issued unless so requested by
shareholders. If such request is transmitted by the
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Distributor, the Fund will cause certificates evidencing Shares to be issued in
such names and denominations as the Distributor shall from time to time direct.
(c) The Fund shall keep the Distributor fully informed of its affairs
and shall make available 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 Shares, including, without
limitation, certified copies of any financial statements prepared for the Fund
by its independent public accountant and such reasonable number of copies of the
most current prospectus, statement of additional information, and annual and
interim reports of any Series as the Distributor may request, and the Fund shall
cooperate fully in the efforts of the Distributor to sell and arrange for the
sale of the Shares of the Series and in the performance of the Distributor's
duties under this Agreement.
(d) The Fund shall take, from time to time, all necessary action,
including payment of the related filing fee, as may be necessary to register
Shares of each Series under the 1933 Act to the end that there will be available
for sale such number of Shares as the Distributor may be expected to sell. The
Fund agrees to file, from time to time, such amendments, reports, and other
documents as may be necessary in order that there will be no untrue statement of
a material fact in the Registration Statement, nor any omission of a material
fact which omission would make the statements therein misleading.
(e) The Fund shall use its best efforts to qualify and maintain the
qualification of an appropriate number of Shares of each Series for sale under
the securities laws of such states or other jurisdictions as the Distributor and
the Fund may approve, and, if necessary or appropriate in connection therewith,
to qualify and maintain the qualification of the Fund as a broker or dealer in
such jurisdictions; provided that the Fund shall not be required to amend its
Articles of Incorporation or By-Laws to comply with the laws of any
jurisdiction, to maintain an office in any jurisdiction, to change the terms of
the offering of the Shares in any jurisdiction from the terms set forth in its
Registration Statement, to qualify as a foreign corporation in any jurisdiction,
or to consent to service of process in any jurisdiction other than with respect
to claims arising out of the offering of the Shares. The Distributor shall
furnish such information and other material relating to its affairs and
activities as may be required by the Fund in connection with such
qualifications.
7. Expenses of the Fund. The Fund shall bear all costs and expenses of
registering the Shares with the Securities and Exchange Commission and state and
other regulatory bodies, and shall assume expenses related to communications
with shareholders of each Series, including (i) fees and disbursements of its
counsel and independent public accountant; (ii) the preparation, filing and
printing of registration statements and/or prospectuses or statements of
additional information required under the federal securities laws; (iii) the
preparation and mailing of annual and interim reports, prospectuses, statements
of additional information and proxy materials to shareholders; and (iv) the
qualifications of Shares for sale and of the Fund as a broker or dealer under
the securities laws of such jurisdictions as shall be selected by the Fund and
the Distributor pursuant to Paragraph 6(e) hereof, and the costs and expenses
payable to each such jurisdiction for con tinuing qualification therein.
8. Expenses of the Distributor. Distributor shall bear all costs and expenses of
(i) preparing, printing and distributing any materials not prepared by the Fund
and other materials used by the Distributor in connection with the sale of
Shares under this Agreement, including the additional cost of printing copies of
prospectuses, statements of additional information, and annual and interim
shareholder reports other than copies thereof required for distribution to
existing shareholders or for filing with any Federal or state securities
authorities; (ii) any expenses of advertising incurred by the Distributor in
connection with such
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offering; (iii) the expenses of registration or qualification of the Distributor
as a broker or dealer under federal or state laws and the expenses of continuing
such registration or qualification; and (iv) all compensa tion paid to the
Distributor's employees and others for selling Shares, and all expenses of the
Distributor, its employees and others who engage in or support the sale of
Shares as may be incurred in connection with their sales efforts.
9. Indemnification.
(a) The Fund agrees to indemnify, defend and hold the Distributor, its
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,
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 arising
out of or based upon any alleged omission to state a material fact required to
be stated in the Registration Statement or necessary to make the statements
therein not misleading, except insofar as such claims, demands, liabilities or
expenses arise out of or are based upon any such untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with information furnished in writing by the Distributor to the Fund for use in
the Registration Statement; provided, however, that this indemnity agreement
shall not inure to the benefit of any person who is also an officer or director
of the Fund or who controls the Fund within the meaning of Section 15 of the
1933 Act, unless a court of competent jurisdiction shall determine, or it shall
have been determined by controlling precedent, that such result would not be
against public policy as expressed in the 1933 Act; and further provided, that
in no event shall anything contained herein be so construed as to protect the
Distributor against any liability to the Fund or to the shareholders of any
Series 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 under this Agreement. The
Fund shall not be liable to the Distributor under this indemnity agreement with
respect to any claim made against the Distributor or any person indemnified
unless the Distributor or other such person shall have notified the Fund 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 such other person (or after the Distributor
or the person shall have received notice of service on any designated agent).
However, failure to notify the Fund of any claim shall not relieve the Fund from
any liability which it may have to the Distributor or any person against whom
such action is brought otherwise than on account of this indemnity agreement.
The Fund 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
subject to this indemnity agreement. If the Fund elects to assume the defense of
any such claim, the defense shall be conducted by counsel chosen by the Fund and
satisfactory to indemnified defendants in the suit whose approval shall not be
unreasonably withheld. In the event that the Fund elects to assume the defense
of any suit and retain counsel, the indemnified defendants shall bear the fees
and expenses of any additional counsel retained by them. If the Fund does not
elect to assume the defense of a suit, it will reimburse the indemnified
defendants for the reasonable fees and expenses of any counsel retained by the
indemnified defendants. The Fund 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 its
Shares.
(b) The Distributor shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates (including any loss
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arising out of the receipt by the Distributor of inadequate consideration in
connection with an order to purchase Shares whether in the form of fraudulent
check, draft or wire; a check returned for insufficient funds; or any other
inadequate consideration (hereinafter "Check Loss")), except a loss resulting
from the willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement; provided, however, that the Fund shall not be
liable for Check Loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Distributor.
(c) The Distributor agrees to indemnify, defend, and hold the Fund, its
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 against such claims, demands or liabilities and any counsel fees
incurred in connection there with) which the Fund, its directors or officers, 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 Statement, 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 necessary to
make such information not misleading, or arising out of any agreement between
the Distributor and any retail dealer, or arising out of any supplemental sales
literature or advertising used by the Distributor in connection with its duties
under this Agreement. 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 the claim, but if the Distributor elects to assume the
defense, the defense shall be conducted by counsel chosen by the Distributor and
satisfactory to the indemnified defendants whose approval shall not be
unreasonably withheld. In the event that the Distributor elects to assume the
defense of any suit and retain counsel, the defendants 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 indemnified defendants in the suit for the reasonable fees and expenses of
any counsel retained by them.
10. Services Provided to the Fund by Employees of the Distributor. Any person,
even though also an officer, director, employee or agent of the Distributor who
may be or become an officer, director, employee or agent of the Fund, shall be
deemed, when rendering services to the Fund or acting in any business of the
Fund, to be rendering such services to or acting for solely the Fund and not as
an officer, director, employee or agent or one under the control or direction of
the Distributor even though paid by the Distributor.
11. Duration and Termination.
(a) This Agreement shall become effective as of the date first written
above, provided that, with respect to any Series, this Agreement shall not take
effect unless such action has first been approved by vote of a majority of the
Board and by vote of a majority of those directors of the Fund who are not
interested persons of the Fund, and have no direct or indirect financial
interest in the operation of the Plan relating to the Series or in any
agreements related thereto (all such directors collectively being referred to
herein as the "Independent Directors"), cast in person at a meeting called for
the purpose of voting on such action.
(b) Unless sooner terminated as provided herein, this Agreement shall
continue in effect for one year from the above written date. Thereafter, if not
terminated, this Agreement shall continue automatically for successive periods
of twelve months each, provided that such continuance is specifically approved
at least annually (i) by a vote of a majority of the Independent Directors, cast
in person at a meeting called for the
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purpose of voting on such approval, and (ii) by the Board or with respect to any
given Series by vote of a majority of the outstanding voting securities of such
Series.
(c) Notwithstanding the foregoing, with respect to any Series, this
Agreement may be terminated at any time, without the payment of any penalty, by
vote of the Board, by vote of a majority of the Independent Directors or by vote
of a majority of the outstanding voting securities of the Shares of such Series
on sixty days' written notice to the Distributor or by the Distributor at any
time, without the payment of any penalty, on sixty days' written notice to the
Fund or such Series. This Agreement will automatically terminate in the event of
its assignment.
(d) Termination of this Agreement with respect to any given Series
shall in no way affect the continued validity of this Agreement or the
performance thereunder with respect to any other Series.
12. Amendment of this Agreement. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
13. Governing Law. This Agreement shall be construed in accordance with the laws
of the State of New York and the 1940 Act. To the extent that the applicable
laws of the State of New York conflict with the applicable provisions of the
1940 Act, the latter shall control.
14. Notice. Any notice required or permitted to be given by either party to the
other shall be deemed sufficient upon receipt in writing at the other party's
principal offices.
15. Miscellaneous. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect. If any provision of this
Agreement shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors. As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested person" and
"assignment" shall have the same meaning as such terms have in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated as of the day and year first above
written.
ATTEST: ROCKWOOD FUND, INC.
/s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
ATTEST: INVESTOR SERVICE CENTER, INC.
/s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
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