EXHIBIT 5
THE XXXXXXX FUNDS, INC.
DISTRIBUTION AND SERVICES AGREEMENT
AGREEMENT made as of the _____ day of August, 2001, between The Xxxxxxx
Funds, Inc., a Maryland corporation (the "Company"), and Xxxxxxx & Company,
Inc., a Delaware corporation (the "Distributor"), such Distributor to act in the
manner contemplated by this Agreement.
WITNESSETH:
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as a series, open-end management investment
company;
WHEREAS, the Company and the Distributor wish to enter into an agreement
with each other with respect to the continuous offering of shares (the "Shares")
of the Company's portfolios, as are listed on Exhibit A hereto, as such exhibit
may from time to time be amended as set forth herein (each a "Fund" and,
collectively, the "Funds").
NOW, THEREFORE, the parties agree as follows:
Section 1. APPOINTMENT OF THE DISTRIBUTOR. The Company hereby appoints the
Distributor the non-exclusive agent for each of the Funds to sell and to arrange
for the sale of the Shares, including both issued and treasury 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.
Section 2. SERVICES AND DUTIES OF THE DISTRIBUTOR.
(a) The Distributor agrees to sell, as agent for each of the Funds, from
time to time during the term of this Agreement, Shares (whether unissued or
treasury shares, in each Fund's sole discretion) upon the terms described in the
prospectus of the applicable Fund (the "Prospectus"). As used in this Agreement,
the term "Prospectus" shall mean the Prospectus and Statement of Additional
Information included as part of the Company's registration statement on Form
N-1A, 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 on Form N-1A most recently filed by the Company
with the Securities and Exchange Commission and effective under the Securities
Act of 1933, as amended (the "1933 Act"), and the 1940 Act, as such Registration
Statement is amended by any amendments thereto at the time in effect.
(b) The Distributor will hold itself available to receive orders,
satisfactory to the Distributor, for the purchase of Shares and will accept such
orders as of the time of payment for those orders and will transmit such orders
as are so accepted to the Company's transfer and dividend disbursing agent as
promptly as practicable. Purchase orders shall be deemed effective at the time
and in the manner set forth in the Prospectus.
(c) The Distributor in its discretion may 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
Company or any of the Funds.
(d) The offering price of the Shares shall be the net asset value (as
defined in the Articles of Incorporation of the Company and determined as set
forth in the Prospectus) next
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determined following receipt of payment. Each Fund shall furnish the
Distributor, with all possible promptness, an advice of each computation of net
asset value.
(e) The Distributor shall not be obligated to sell any certain number of
Shares and nothing herein contained shall prevent the Distributor from entering
into like distribution arrangements with other investment companies so long as
the performance of its obligations hereunder is not impaired thereby.
Section 3. COMPENSATION OF THE DISTRIBUTOR.
(a) As promptly as possible after the first business day of each month this
Distribution Agreement is in effect, each Fund shall pay to the Distributor for
its distribution and services expenditures and activities hereunder made or
performed during the previous month at the annual rate of .25% of the average
daily net assets of the Fund which are related to the Distributor's activities
hereunder; provided that payment shall be made in any month only to the extent
that such payment, together with any other payments made by the Fund pursuant to
its Plan (as defined herein) to the Distributor or others, shall not exceed an
annual rate of .25% of the average daily net assets of the Fund for that month.
The payments by the Fund made pursuant to this Agreement to the Distributor are
authorized pursuant to the plan adopted by the Board of Directors of the Company
on behalf of each Fund under Rule 12b-1 under the 1940 Act (the "Plan").
(b) For purposes of this Agreement, "distribution expenditures and service
activities" of the Distributor shall mean all expenditures and activities of the
Distributor primarily intended to result in the sale of Shares, including, but
not limited to, the following: (i) compensation to personnel of the Distributor
and to securities dealers and other financial institutions and organizations for
various distribution related services for each Fund; (ii) expenditures for
support
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services such as telephone facilities and expenses and shareholder services as
each Fund may reasonably request; (iii) formulation and implementation of
marketing and promotional activities, including, but not limited to, direct mail
promotions and television, radio, newspaper, magazine and other mass media
advertising; (iv) preparation, printing and distribution of sales literature;
(v) preparation, printing and distribution of the Prospectus for recipients
other than existing shareholders of each Fund; (vi) provision to each Fund of
such information, analyses and opinions, with respect to marketing and
promotional activities as each Fund may, from time to time, reasonably request;
and (vii) payment of capital or other expenses associated with the foregoing
including equipment, rent, salaries, bonuses or other overhead costs.
(c) The Distributor shall prepare and deliver such reports to the Treasurer
of the Company as may be required by the Plan.
Section 4. DUTIES OF THE FUNDS.
(a) Each Fund agrees to sell the Shares so long as it has shares available
for sale and to deliver certificates for, or cause the Company's transfer and
dividend disbursing agent to issue non-negotiable share deposit receipts
evidencing, such shares registered in such names and amounts as the Distributor
has requested in writing, as promptly as practicable after receipt by the Fund
of the net asset value thereof and written request of the Distributor therefor.
(b) Each Fund shall keep the Distributor fully informed with regard to its
affairs and 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 of each Fund,
including one certified copy, upon request by the Distributor, of all financial
statements prepared for each Fund by independent accountants and such reasonable
number of copies
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of the most current Prospectus as the Distributor may request, and each Fund
shall cooperate fully in the efforts of the Distributor to sell and arrange for
the sale of the Fund's Shares and in the performance of the Distributor under
this Agreement.
(c) Each Fund shall take, from time to time, all necessary action to fix
the number of authorized shares and such steps, including payment of the related
filing fee, as may be necessary to register the same under the 1933 Act and the
1940 Act to the end that there will be available for sale such number of Shares
as the Distributor may be expected to sell. The Company agrees to file from time
to time such amendments, reports and other documents as may be necessary to
ensure that there will be no untrue statement of a material fact in a
Registration Statement or Prospectus, or that there will be no omission to state
a material fact in the Registration Statement or Prospectus which omission would
make the statements therein misleading.
(d) Each Fund shall use its best efforts to qualify and maintain the
qualification of an appropriate number of the Shares for sale under the
securities laws of such states as the Distributor and the Company may approve;
provided however, that the Company 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 Shares in any state
from the terms set forth in its Registration Statement and Prospectus, to
qualify as a foreign corporation in any state or to consent to service of
process in any state 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 in connection
with such qualifications.
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Section 5. EXPENSES.
(a) Each Fund shall bear all costs and expenses of the continuous offering
of its Shares in connection with: (i) fees and disbursements of its counsel and
independent accountants, (ii) the preparation, filing and printing of the
Registration Statement and/or Prospectus required under the federal securities
laws, (iii) the preparation and mailing of annual and interim reports,
prospectuses and proxy materials to existing shareholders and (iv) the
qualifications of Shares for sale under the securities laws of such states or
other jurisdictions as shall be selected by the Company and the Distributor
pursuant to Section 4(d) hereof and the cost and expenses payable to each such
state for continuing qualification therein.
(b) The Distributor shall bear (i) the costs and expenses of preparing,
printing and distributing any materials not prepared by any Fund and other
materials used by the Distributor in connection with its offering of Shares for
sale to the public, (ii) the expenses of registration or qualification of the
Distributor as a dealer or broker under federal or state laws and the expenses
of continuing such registration or qualification and (iii) the expenses of any
sales commissions for sales of the Shares (except such expenses as are
specifically undertaken herein by each Fund).
Section 6. INDEMNIFICATION. Each 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 untrue statement of a material fact contained in the
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Registration Statement or Prospectus or arising out of or based upon any alleged
omission to state a material fact required to be stated in either thereof or
necessary to make the statements in either thereof 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 Company for use in the Registration Statement
or Prospectus; provided, however, that this indemnity agreement shall not inure
to the benefit of such officer, director or controlling person unless a court of
competent jurisdiction shall determine, in a final decision on the merits, that
the person to be indemnified was not liable, 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 ("disabling
conduct"), or, in the absence of such a decision, a reasonable determination,
based upon a review of the facts, that the indemnified person was not liable by
reason of disabling conduct, by (a) a vote of a majority of a quorum of
directors of the Company who are neither "interested persons" of the Company as
defined in Section 2(a)(19) of the 1940 Act nor parties to the proceeding, or
(b) an independent legal counsel in a written opinion. Each Fund's agreement to
indemnify the Distributor, its officers and directors and any such controlling
person as aforesaid is expressly conditioned upon each Fund being promptly
notified of any action brought against the Distributor, its officers or
directors, or any such controlling person, such notification to be given by
letter or telegram addressed to the Fund at its principal business office. Each
Fund agrees to promptly notify the Distributor of the commencement of any
litigation or proceedings against it or any of its officers or directors in
connection with the issue and sale of any of its Shares.
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The Distributor agrees to indemnify, defend and hold each Fund and the
Company, its officers and directors and any person who controls any Fund or the
Company, if any, 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 therewith) which any
of the above may incur under the 1933 Act or under common law or otherwise, but
only to the extent that such liability or expense incurred by any of the above
resulting from such claims or demands shall arise out of or be based upon any
alleged untrue statement of a material fact contained in information furnished
in writing by the Distributor to the Company for use in the Registration
Statement or Prospectus or shall arise out of or be based upon any alleged
omission to state a material fact in connection with such information required
to be stated in the Registration Statement or Prospectus or necessary to make
such information not misleading. The Distributor's agreement to indemnify the
Funds and the Company, its directors and officers, and any such controlling
person as aforesaid is expressly conditioned upon the Distributor's being
promptly notified of any action brought against any of the above, such
notification being given to the Distributor at its principal business office.
Section 7. COMPLIANCE WITH SECURITIES LAWS. The Company represents that it
is registered as an open-end management investment company under the 1940 Act,
and agrees that it will comply with all of the provisions of the 1940 Act and of
the rules and regulations thereunder. The Company, each 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) hereof,
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all applicable state securities laws. The Distributor agrees to comply with all
of the applicable terms and provisions of the Securities Exchange Act of 1934.
Section 8. EFFECTIVENESS, DURATION AND TERMINATION OF THIS AGREEMENT. This
Agreement shall become effective with respect to each Fund upon approval by a
majority of both (a) the Board of Directors of the Company and (b) the Directors
who are not interested persons of the Company and who have no direct or indirect
financial interest in the operation of this Agreement or the Plan or any
agreements related to it, cast in person at a meeting called for the purpose of
voting upon such approval. This Agreement shall continue in effect for a period
of more than one year from the effective dates only for so long as such
continuance specifically approved annually in the manner provided above.
This Agreement may be terminated at any time, with respect to any Fund,
without the payment of any penalty, by the Board of Directors of the Company, by
a majority of the Directors of the Company who are not interested persons of the
Company and who have no direct or indirect financial interest in this Agreement
or the Plan or by vote of a majority of the outstanding voting Shares of any
Fund, or by the Distributor, on not more than sixty (60) days' nor less than
thirty (30) days' written notice to the other party. This Agreement shall
automatically terminate in the event of its assignment (as defined in the 1940
Act).
Section 9. AMENDMENTS OF THIS AGREEMENT. With respect to each Fund, this
Agreement may be amended by the parties only if such amendment is specifically
approved by (i) the Board of Directors of the Company or by the vote of a
majority of outstanding voting Shares of the respective Fund, and (ii) a
majority of those directors of the Company who are not parties to this Agreement
or interested persons of any such party and who have no direct or indirect
financial
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interest in this Agreement, cast in person at a meeting called for the purpose
of voting on such approval.
Section 10. 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, (1) to the Distributor at 000 Xxxx Xxxxxx, Xxx Xxxx, X.X.
00000, Attention: Xxxxxx X. Xxxxxxx or (2) to the Company or any Fund at 000
Xxxx Xxxxxx, Xxx Xxxx, X.X. 00000, Attention: President, or such other address
or addresses as the parties hereto may designate in writing.
Section 11. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties hereto and supersedes all prior agreements, understandings
and arrangements with respect to the subject matter hereof.
Section 12. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
THE XXXXXXX FUNDS, INC.
By:
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Name:
Title:
XXXXXXX & COMPANY, INC.
By:
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Name:
Title:
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EXHIBIT A
XXXXXXX AGGRESSIVE GROWTH FUND
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