Exhibit (e)(4)
DISTRIBUTION AGREEMENT
This Agreement made as of the 1st day of October, 2001, by and among
XXXXXXX, XXXXXXX FUNDS, INC., a Maryland corporation (the "Fund"), INVESTORS
BANK & TRUST COMPANY, a Massachusetts Trust Company (the "Bank") and QUASAR
DISTRIBUTORS, LLC, a Delaware limited liability company (the "Distributor").
WITNESSETH:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940 (the "1940 Act");
and it is in the interest of the Fund to offer its shares for sale continuously;
WHEREAS, the Fund offers four series of shares of common stock and may
offer additional series in the future (each, a "series" and collectively, the
"series"), which will have been registered under the Securities Act of 1933 (the
"1933 Act");
WHEREAS, the Bank serves as Administrator to the Fund;
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934 (the "1934 Act") and is a member in good
standing of the National Association of Securities Dealers, Inc. (the "NASD");
and
WHEREAS, the Fund, the Bank and the Distributor wish to enter into an
agreement with each other with respect to the continuous offering of the shares
of each existing and future series (the "Shares") of the Fund;
NOW, THEREFORE, the parties agree as follows:
1. Appointment of Distributor. The Fund hereby appoints the Distributor
as exclusive agent to sell and to arrange for the sale of the Shares, on the
terms and for the period set forth in this Agreement, and the Distributor hereby
accepts such appointment and agrees to act hereunder directly and/or through the
Fund's transfer agent in the manner set forth in the Prospectuses (as defined
below). This appointment applies to each existing series of Shares as well as
any future series, provided that (i) the Fund does not object to the Distributor
in writing on any basis and (ii) the Distributor does not object to the Fund and
the Bank in writing on the basis of the capabilities of the Distributor. In
return for the services to be performed by the Distributor hereunder, the
Distributor shall be paid in the manner agreed to by the parties hereto. It is
understood and agreed that the services of the Distributor hereunder are not
exclusive, and the Distributor may act as principal underwriter for the shares
of any other registered investment company.
2. Services and Duties of the Distributor.
(a) The Distributor agrees to sell the Shares, as agent for the
Fund, from time to time during the term of this Agreement upon the terms
described in a Prospectus. As used in this Agreement, the term "Prospectus"
shall mean a prospectus and statement of additional information included as part
of the Fund's Registration Statement, as such prospectus and statement of
additional information may be amended or supplemented from time to time, and the
term "Registration Statement" shall mean the Registration Statement filed from
time to time by the Fund with the Securities and Exchange Commission ("SEC") and
currently effective under the 1933 Act and the 1940 Act, as such Registration
Statement is amended by any amendments thereto at the time in effect. The
Distributor shall not be obligated to sell any certain number of Shares.
(b) Upon commencement of operations of any series, the Distributor
will hold itself available to receive orders, satisfactory to the Distributor,
for the purchase of the Shares and will accept such orders and will transmit
such orders and funds received by it in payment for such Shares as are so
accepted to the Fund's transfer agent or custodian, as appropriate, as promptly
as practicable. Purchase orders shall be deemed accepted and shall be effective
at the time and in the manner set forth in the series' Prospectuses. The
Distributor shall not make any short sales of Shares.
(c) The offering price of the Shares shall be the net asset value
per share of the Shares, plus the sales charge, if any, (determined as set forth
in the Prospectuses). The Fund shall furnish the Distributor, with all possible
promptness, an advice of each computation of net asset value and offering price.
(d) The Distributor shall have the right to enter into selected
dealer agreements with securities dealers of its choice ("selected dealers") for
the sale of Shares. Shares sold to selected dealers shall be for resale by such
dealers only at the offering price of the Shares as set forth in the
Prospectuses. The Distributor shall offer and sell Shares only to such selected
dealers as are members in good standing of the NASD, unless such dealers are not
eligible for membership in the NASD.
3. Representations and Warranties of the Distributor.
(a) The Distributor is a corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware and has
full power and authority, corporate and otherwise, to consummate the
transactions contemplated by this Agreement. The Distributor is duly qualified
to carry out its business, and is in good standing, in any state where such
qualification is required for the Distributor to carry out its duties under this
Agreement.
(b) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will violate any provision
of the Certificate of Incorporation or By-Laws of the Distributor.
(c) The Distributor is registered as a broker-dealer under the 1934
Act and is a member of the NASD.
4. Duties of the Fund.
(a) Maintenance of Federal Registration. The Fund shall, at its
expense, take, from time to time, all necessary action and such steps, including
payment of the related filing fees, as may be necessary to register and maintain
registration of a sufficient number of Shares under the 0000 Xxx. The Fund
agrees to file from time to time such amendments, reports and other documents as
may be necessary in order that there may be no untrue statement of a material
fact in a Registration Statement or Prospectus, or necessary in order that there
may be no omission to state a material fact in the Registration Statement or
Prospectus which omission would make the statements therein misleading.
(b) Maintenance of "Blue Sky" Qualifications. The Fund shall, at its
expense, use its best efforts to qualify and maintain the qualification of an
appropriate number of Shares for sale under the securities laws of such states
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 or
the series as a broker or dealer in such states; provided that the Fund shall
not be required to amend its Articles of Incorporation or By-Laws to comply with
the laws of any state, to maintain an office in any state, to change the terms
of the offering of the Shares in any state from the terms set forth in the
Prospectuses, to qualify as a foreign Fund in any state or to consent to service
of process in any state other than with respect to claims arising out of the
offering and sale of the Shares. The Distributor shall furnish such information
and other material relating to its affairs and activities as may be reasonably
required by the Fund or its series in connection with such qualifications.
(c) Copies of Reports and Prospectuses. The Fund shall, at its
expense, keep the Distributor fully informed with regard to its affairs and in
connection therewith 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 Shares, including such
reasonable number of copies of Prospectuses and annual and interim reports as
the Distributor may request and shall cooperate fully in the efforts of the
Distributor to sell and arrange for the sale of the Shares and in the
performance of the Distributor under this Agreement.
5. Expenses. Expenses connected with the Fund shall be allocable
between the Fund and the Distributor as follows:
(a) The Distributor shall furnish, at its expense and without cost
to the Fund, the services of personnel to the extent that such services are
required to carry out its obligations under this Agreement.
(b) The Fund assumes and shall pay or cause to be paid all other
expenses of the Fund, including, without limitation: the fees of the Fund's
investment adviser; the charges and expenses of any registrar, any custodian or
depository appointed by the Fund for the safekeeping of its cash, portfolio
securities and other property, and any stock transfer, dividend or accounting
agent or agents appointed by the Fund; the fees of any Fund administrator;
brokers' commissions chargeable to the Fund in connection with portfolio
securities transactions to which the Fund is a party; any fee paid pursuant to
any distribution plan, if and when adopted by the Fund pursuant to Rule 12b-1
under the 1940 Act; all taxes, including securities issuance and initial
transfer taxes, and corporate fees payable by the Fund to federal, state or
other governmental agencies; all costs and expenses in connection with the
organization of the Fund and the series and the registration of the Shares with
the SEC and under state securities laws and in connection with maintenance of
registration of the Fund, series and the Shares with the SEC and various states
and other jurisdictions (including filing fees and legal fees and disbursements
of counsel); the expenses of printing, including printing setup charges, and
distributing Prospectuses of the Fund and supplements thereto to the Fund's
shareholders; all expenses of shareholders' and Directors' meetings and of
preparing, printing and mailing of proxy statements and reports to shareholders;
fees and travel expenses of Directors who are not interested persons (as such
term is defined in the 0000 Xxx) of the Fund ("Non-Interested Directors") or
members of any advisory board or committee established by the Non-Interested
Directors; all expenses incident to the payment of any dividend, distribution,
withdrawal or redemption, whether in Shares or in cash; charges and expenses of
any outside service used for pricing of the Fund's Shares; charges and expenses
of legal counsel to the Fund and to the Non-Interested Directors, and of
independent accountants to the Fund, in connection with any matter relating to
the Fund; membership dues paid by the Fund to industry associations; interest
payable on Fund borrowings; postage; insurance premiums on property or personnel
(including officers and directors) of the Fund which inure to its benefit;
extraordinary expenses of the Fund (including, but not limited to, legal claims
and liabilities and litigation costs and any indemnification related thereto);
and all other charges and costs of the Fund's operation unless otherwise.
6. Conformity with Applicable Law and Rules. The Distributor agrees
that in selling Shares hereunder it shall conform in all respects with the laws
of the United States and of any state in which Shares may be offered, and with
applicable rules and regulations of the NASD.
7. Independent Contractor. In performing its duties hereunder, the
Distributor shall be an independent contractor and neither the Distributor, nor
any of its officers, directors, employees, or representatives is or shall be an
employee of the Fund in the performance of the Distributor's duties hereunder.
The Distributor shall be responsible for its own conduct and the employment,
control, and conduct of its agents and employees and for injury to such agents
or employees or to others through its agents or employees. The Distributor
assumes full responsibility for its agents and employees under applicable
statutes and agrees to pay all employee taxes thereunder.
8. Indemnification.
(a) Indemnification of Fund. The Distributor agrees to indemnify and
hold harmless the Fund and each of its present or former Directors, officers,
employees, representatives and each person, if any, who controls or previously
controlled the Fund within the meaning of Section 15 of the 1933 Act against any
and all losses, liabilities, damages, claims or expenses (including the
reasonable costs of investigating or defending any alleged loss, liability,
damage, claims or expense and reasonable legal counsel fees incurred in
connection therewith) to which the Fund or any such person may become subject
under the 1933 Act, under any other statute, at common law, or otherwise,
arising out of the acquisition of any Shares by any person which (i) may be
based upon any wrongful act by the Distributor or any of the Distributor's
directors, officers, employees or representatives (including, without limiting
the foregoing, any wrongful or unauthorized sales activities of the Distributor
or any of its registered representatives, as defined under the By-Laws of the
NASD, including any failure to conform with any requirement of any state or
federal law relating to the sale of Shares), or (ii) may be based upon any
untrue statement or alleged untrue statement of a material fact contained in a
Registration Statement, Prospectus, shareholder report or other information
covering Shares filed or made public by the Fund or any amendment thereof or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in reliance upon
and in conformity with information furnished to the Fund by the Distributor. The
Distributor shall also indemnify and hold harmless the Fund, its officers and
directors and control persons from any liability to the Fund or to the holders
of Shares by reason of the Distributor's 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. In no case (i) is
the Distributor's indemnity in favor of the Fund, or any person indemnified to
be deemed to protect the Fund or such indemnified person against any liability
to which the Fund or such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of the Fund's or
such person's duties or by reason of reckless disregard of the Fund's or such
person's obligations and duties under this Agreement or (ii) is the Distributor
to be liable under its indemnity agreement contained in this Paragraph with
respect to any claim made against the Fund or any person indemnified unless the
Fund or such 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 Fund or upon such person (or after the Fund or such person
shall have received notice of such service on any designated agent). However,
failure to notify the Distributor of any such claim shall not relieve the
Distributor from any liability which the Distributor may have to the Fund or any
person against whom such action is brought otherwise than on account of the
Distributor's indemnity agreement contained in this Paragraph.
The Distributor shall be entitled to participate, at its own
expense, in the defense, or, if the Distributor so elects, to assume the defense
of any suit brought to enforce any such claim, but, if the Distributor elects to
assume the defense, such defense shall be conducted by legal counsel chosen by
the Distributor and satisfactory to the Fund, and to the persons indemnified as
defendant or defendants, in the suit. In the event that the Distributor elects
to assume the defense of any such suit and retain such legal counsel, the Fund,
and the persons indemnified as defendant or defendants in the suit, shall bear
the fees and expenses of any additional legal counsel retained by them. If the
Distributor does not elect to assume the defense of any such suit, the
Distributor will reimburse the Fund and the persons indemnified defendant or
defendants in such suit for the reasonable fees and expenses of any legal
counsel retained by them and will provide advances for payment of the reasonable
expenses incurred by them in connection with the matters as to which it or they
are seeking indemnification in the matter and to the fullest extent permissible
by law. The Distributor agrees to promptly notify the Fund of the commencement
of any litigation of proceedings against it or any of its officers, employees or
representatives in connection with the issue or sale of any Shares.
(b) Indemnification of the Distributor. The Fund agrees to indemnify
and hold harmless the Distributor and each of its present or former directors,
officers, employees, representatives and each person, if any, who controls or
previously controlled the Distributor within the meaning of Section 15 of the
1933 Act against any and all losses, liabilities, damages, claims or expenses
(including the reasonable costs of investigating or defending any alleged loss,
liability, damage, claim or expense and reasonable legal counsel fees incurred
in connection therewith) to which the Distributor or any such person may become
subject under the 1933 Act, under any other statute, at common law, or
otherwise, arising out of the acquisition of any Shares by any person which (i)
may be based upon any wrongful act by the Fund or any of the Fund's Directors,
officers, employees or representatives (including, without limiting the
foregoing, any wrongful or unauthorized sales activities of the Fund, as defined
under the By-Laws of the NASD, including any failure to conform with any
requirement of any state or federal law relating to the sale of Shares), or (ii)
may be based upon any untrue statement or alleged untrue statement of a material
fact contained in a Registration Statement, Prospectus, shareholder report or
other information covering Shares filed or made public by the Fund or any
amendment thereof or supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading unless such statement or omission was made
in reliance upon and in conformity with information furnished to the Fund by the
Distributor. The Fund shall also indemnify and hold harmless the Distributor,
its officers and directors and control persons from any liability to the Fund or
to the holders of Shares by reason of the Fund's 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. In no
case (i) is the Fund's indemnity in favor of the Distributor, or any person
indemnified to be deemed to protect the Distributor or such indemnified person
against any liability 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 such person's duties or by reason of reckless disregard of such
person's obligations and duties under this Agreement or (ii) is the Fund to be
liable under their indemnity agreement contained in this Paragraph with respect
to any claim made against Distributor, or person indemnified unless the
Distributor, or such person, as the case may be, 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 upon such person (or after the Distributor
or such person shall have received notice of such service on any designated
agent). However, failure to notify the Fund of any such claim shall not relieve
the Fund from any liability which the Fund may have to the Distributor or any
person against whom such action is brought otherwise than on account of the
Fund's indemnity agreement contained in this Paragraph.
The Fund shall be entitled to participate, at its own expense, in
the defense, or, if the Fund so elects, to assume the defense of any suit
brought to enforce any such claim, but if the Fund elects to assume the defense,
such defense shall be conducted by legal counsel chosen by the Fund and
satisfactory to the Distributor and to the persons indemnified as defendant or
defendants, in the suit. In the event that the Fund elects to assume the defense
of any such suit and retain such legal counsel, the Distributor, the persons
indemnified as defendant or defendants in the suit, shall bear the fees and
expenses of any additional legal counsel retained by them. If the Fund does not
elect to assume the defense of any such suit, the Fund will reimburse the
Distributor and the persons indemnified as defendant or defendants in such suit
for the reasonable fees and expenses of any legal counsel retained by them and
will provide advances for payment of the reasonable expenses incurred by them in
connection with the matters as to which it or they are seeking indemnification
in the matter and to the fullest extent permissible by law. The Fund agrees to
promptly notify the Distributor of the commencement of any litigation or
proceedings against it or any of its Directors, officers, employees or
representatives in connection with the issue or sale of any Shares.
9. Authorized Representations. The Distributor is not authorized by
the Fund to give on behalf of the Fund any information or to make any
representations in connection with the sale of Shares other than the information
and representations contained in a Registration Statement or Prospectus filed
with the SEC under the 1933 Act and/or the 1940 Act, covering Shares, as such
Registration Statement and Prospectus may be amended or supplemented from time
to time, or contained in shareholder reports or other material that may be
prepared by or on behalf of the Fund for the Distributor's use. This shall not
be construed to prevent the Distributor from preparing and distributing
tombstone ads and sales literature or other material as it may deem appropriate.
No person other than the Distributor is authorized to act as principal
underwriter (as such term is defined in the 0000 Xxx) for the Fund.
10. Term of Agreement. The term of this Agreement shall begin on the
date first above written, and unless sooner terminated as hereinafter provided,
this Agreement shall remain in effect for a period of two years from the date
first above written. Thereafter, this Agreement shall continue in effect from
year to year, subject to the termination provisions and all other terms and
conditions thereof, so long as such continuation shall be specifically approved
at least annually by (i) the Board of Directors of the Fund or by vote of a
majority of the outstanding voting securities of each series of the Fund and,
(ii) by the vote, cast in person at a meeting called for the purpose of voting
on such approval, of a majority of the Directors of the Fund who are not parties
to this Agreement or interested persons of any such party. The Distributor shall
furnish to the Fund, promptly upon its request, such information as may
reasonably be necessary to evaluate the terms of this Agreement or any
extension, renewal or amendment hereof.
11. Amendment or Assignment of Agreement. This Agreement may not be
amended or assigned except as permitted by the 1940 Act, and this Agreement
shall automatically and immediately terminate in the event of its assignment.
12. Termination of Agreement. This Agreement may be terminated by the
Fund, the Bank or the Distributor, without the payment of any penalty, on not
more than 60 days' nor less than 30 days' prior notice in writing to the other
parties; provided, that in the case of termination by the Fund such action shall
have been authorized by resolution of a majority of the Directors of the Fund
who are not parties to this Agreement or interested persons of any such party,
or by vote of a majority of the outstanding voting securities of each series of
the Fund.
13. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Nothing herein contained shall be deemed to require the Fund to take
any action contrary to its Articles of Incorporation or By-Laws, or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of Directors of the Fund
of responsibility for and control of the conduct of the affairs of the Fund.
14. Definition of Terms. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretation thereof, if any, by the United
States courts or, in the absence of any controlling decision of any such court,
by rules, regulations or orders of the SEC validly issued pursuant to the 1940
Act. Specifically, the terms "vote of a majority of the outstanding voting
securities", "interested persons," "assignment," and "affiliated person," as
used in Paragraphs 10, 11 and 12 hereof, shall have the meanings assigned to
them by Section 2(a) of the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement is
relaxed by a rule, regulation or order of the SEC, whether of special or of
general application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order.
15. Compliance with Securities Laws. The Fund represents that it is
registered as an open-end management investment company under the 1940 Act, and
agrees that it will materially comply with all the provisions of the 1940 Act
and of the rules and regulations thereunder. The Fund and the Distributor each
agree to comply with all of the applicable terms and provisions of the 1940 Act,
the 1933 Act and, subject to the provisions of Section 4(d), all applicable
"Blue Sky" laws. The Distributor agrees to comply with all of the applicable
terms and provisions of the 1934 Act.
16. Confidentiality. The Distributor agrees on behalf of itself and its
directors, officers and employees to treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund
and its prior, present or potential shareholders, and not to use such records
and information for any purpose other than performance of its responsibilities
hereunder, except after prior notification to and approval in writing by the
Fund, which approval shall not be unreasonably withheld when requested to
divulge such information by duly constituted authorities and may not be withheld
when the Distributor would be exposed to civil or criminal contempt proceedings
for failure to comply, and the Distributor shall disclose all such records and
information to the Fund's investment adviser and other service providers upon
request.
17. Notices. Any notice required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by registered mail, postage
prepaid, to the Distributor at 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000,
Attn: Xxxxx X. Xxxxxxxxx; to the Bank at 000 Xxxxxxxxx Xxxxxx, Xxxxxx, XX 00000,
Attn: Xxxxx Xxxxxx, Director, Mutual Fund Administration, with a copy to Xxxxxx
Xxxxx, Assistant General Counsel; or to the Fund at Xxxxxxx, Loevner Funds,
Inc., 00 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000, Attn: Xxx Xxxxxx with
a copy to : Xxxx Xxxxxx, Dechert Price & Xxxxxx, 0000 X Xxxxxx, X.X.,
Xxxxxxxxxx, XX 00000.
18. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without regard to its
conflict of laws provisions.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the date first written above.
XXXXXXX, LOEVNER FUNDS, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
INVESTORS BANK & TRUST
COMPANY, solely for
purposes of Sections 12 and
17 and the Fee Schedule
hereof
By: /s/ Xxxxxx X. Xxxxxx
------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
QUASAR DISTRIBUTORS, LLC
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
FEE SCHEDULE
TO
DISTRIBUTION AGREEMENT
AMONG
XXXXXXX, XXXXXXX FUNDS, INC., INVESTORS BANK & TRUST COMPANY
AND
QUASAR DISTRIBUTORS, LLC
DATED October 1, 2001
(THE "AGREEMENT")
QUASAR DISTRIBUTORS, LLC (the "Distributor"), as distributor to Xxxxxxx, Loevner
Funds, Inc. (the "Fund"), shall be entitled to compensation for its services
under the Agreement from Investors Bank & Trust Company (the "Bank"), as
administrator to the Fund, as follows:
The Distributor shall receive compensation in the amount of $25,000 per annum,
to be paid no less frequently than monthly, payable in arrears by the Bank. In
addition, the Distributor will be entitled to reimbursement of reasonable
out-of-pocket expenses incurred (including but not limited to NASD filing fees
incurred pursuant to this Agreement) within 10 days of delivery of a valid
invoice.
XXXXXXX, XXXXXXX FUNDS, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
INVESTORS BANK & TRUST
COMPANY, solely for
purposes of Sections 12 and
17 and the Fee Schedule
hereof
By: /s/ Xxxxxx X. Xxxxxx
------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
QUASAR DISTRIBUTORS, LLC
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
