FORM OF
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 19th day of February 2005, by and between
JPMorgan Value Opportunities Fund, Inc. ("Fund"), a Maryland corporation having
its principal place of business at 0000 Xxxxxxx Xxxxxx, XX, Xxxxxxxxxx, XX 2005,
and JPMorgan Distribution Services, Inc. ("Distributor"), a Delaware corporation
having its principal place of business at 0000 Xxxxxxx Xxxxxxx, Xxxxxxxx, Xxxx
00000-0000.
WHEREAS, the Fund is an open-end, management investment company,
registered with the Securities and Exchange Commission ("Commission") under the
Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, it is intended that Distributor act as the distributor of the
shares ("Shares") of the Fund; and
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services as Distributor
1.1. Distributor will act as agent for the distribution of the Shares covered by
the registration statement and prospectuses of the Fund then in effect under the
Securities Act of 1933, as amended ("Securities Act"). As used in this
Agreement, the term "registration statement" shall mean Parts A (the
prospectuses), B (the Statement of Additional Information) and C of each
registration statement that is filed on Form N-1A, or any successor thereto,
with the Commission, together with any amendments thereto. The term "prospectus"
shall mean each form of prospectus and Statement of Additional Information used
by the Fund for delivery to shareholders and prospective shareholders after the
effective dates of the above referenced registration statements, together with
any amendments and supplements thereto.
1.2. Distributor agrees to use best efforts to solicit orders for the sale of
the Shares and will undertake such advertising and promotion as it believes
reasonable in connection with such solicitation. The Fund understands that
Distributor may presently and in the future be the distributor of the shares of
several investment companies or series (together, "Companies") including
Companies having investment objectives similar to those of the Fund. The Fund
further understands that investors and potential investors in the Fund may
invest in shares of such other Companies. The Fund agrees that Distributor's
duties to such Companies shall not be deemed in conflict with its duties to the
Fund under this paragraph 1.2.
Distributor may finance appropriate activities which it deems
reasonable which are primarily intended to result in the sale of the Shares,
including, but not limited to, advertising, compensation of underwriters,
dealers and sales personnel, the printing and mailing of prospectuses to other
than current Shareholders, and the printing and mailing of sales literature.
1.3. In its capacity as distributor of the Shares, all activities of Distributor
and its partners, agents, and employees shall comply with all applicable laws,
rules and regulations, including, without limitation, the 1940 Act, all rules
and regulations promulgated by the Commission thereunder and all rules and
regulations adopted by any securities association registered under the
Securities Exchange Act of 1934 ("Exchange Act"). Distributor may, without
further consent on the part of the Fund, subcontract for the performance of any
services hereof with any affiliated or unaffiliated entity that is duly
registered as a broker or dealer pursuant to Section 15 of the Exchange Act,
provided, however, that Distributor shall be fully responsible to the Fund for
the acts and omissions of any party with whom it contracts.
1.4. Distributor will transmit any orders received by it for purchase or
redemption of the Shares to the transfer agent and custodian for the Fund.
1.5. Whenever in their judgment such action is warranted by unusual market,
economic or political conditions, or by abnormal circumstances of any kind, the
Fund's officers may decline to accept any orders for, or make any sales of, the
Shares until such time as those officers deem it advisable to accept such orders
and to make such sales.
1.6. Distributor will act only on its own behalf as principal if it chooses to
enter into selling agreements with selected dealers or others.
1.7. The Fund agrees at its own expense to execute any and all documents and to
furnish any and all information and otherwise to take all actions that may be
reasonably necessary in connection with the qualification of the Shares for sale
in such states as Distributor may designate.
1.8. The Fund shall furnish from time to time, for use in connection with the
sale of the Shares, such information with respect to the Fund and the Shares as
Distributor may reasonably request; and the Fund warrants that the statements
contained in any such information shall fairly show or represent what they
purport to show or represent. The Fund shall also furnish Distributor upon
request with: (a) unaudited semi-annual statements of the Fund's books and
accounts prepared by the Fund and (b) from time to time such additional
information regarding the financial condition of the Fund as Distributor may
reasonably request.
1.9. The Fund represents to Distributor that, with respect to the Shares, all
registration statements and prospectuses filed by the Fund with the Commission
under the Securities Act have been prepared in conformity with requirements of
said Act and rules and regulations of the Commission thereunder. The
registration statement and prospectuses contain all statements required to be
stated therein in conformity with said Act and the rules and regulations of said
Commission and all statements of fact contained in any such registration
statement and prospectuses are true and correct. Furthermore, neither any
registration statement nor any prospectus includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser of the
Shares. The Fund shall not file any amendment to any registration statement or
supplement to any prospectus without giving Distributor reasonable notice
thereof in advance; provided, however, that nothing contained in this Agreement
shall in any way limit the Fund's right to file at any time such amendments to
any registration statement and/or supplements to any prospectus, of whatever
character, as the Fund may deem advisable, such right being in all respects
absolute and unconditional.
1.10. The Fund authorizes Distributor and dealers to use any prospectus in the
form furnished from time to time in connection with the sale of the Shares. The
Fund agrees to indemnify, defend and hold Distributor, its several directors,
officers and employees, and any person who controls Distributor within the
meaning of Section 15 of the Securities 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
reasonable counsel fees incurred in connection therewith) which Distributor, its
directors, officers and employees, or any such controlling person, may incur
under the Securities Act or under common law or otherwise, arising out of or
based upon (i) any untrue statement, or alleged untrue statement, of a material
fact contained in any registration statement or any prospectus, (ii) any
omission, or alleged omission, to state a material fact, required to be stated
in either any registration statement or any prospectus, or necessary to make the
statements in either thereof not misleading, or (iii) any Fund advertisement or
sales literature that is not in compliance with applicable laws, rules or
regulations (including, but not limited to the Conduct Rules of the National
Association of Securities Dealers, Inc.); provided, however, that the Fund's
agreement to indemnify Distributor, its directors, officers or employees, and
any such controlling person, shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of any statements or representations as are
contained in any prospectus, advertisement or sales literature and in such
financial and other statements as are furnished in writing to the Fund by
Distributor and used in the answers to the registration statement or in the
corresponding statements made in the prospectus, advertisement or sales
literature, or arising out of or based upon any omission or alleged omission to
state a material fact in connection with the giving of such information required
to be stated in such answers or necessary to make the answers not misleading;
and further provided that the Fund's agreement to indemnify Distributor and the
Fund's representations and warranties hereinbefore set forth in paragraph 1.9
shall not be deemed to cover any liability to the Fund or its Shareholders to
which 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
Distributor's reckless disregard of its obligations and duties under this
Agreement. The Fund's agreement to indemnify Distributor, its directors,
officers and employees and any such controlling person, as aforesaid, is
expressly conditioned upon the Fund being notified of any action brought against
Distributor, its officers or employees, or any such controlling person, such
notification to be given by letter or by facsimile addressed to the Fund at its
principal office in Washington, DC and sent to the Fund by the person against
whom such action is brought, within 10 business days after the summons or other
first legal process shall have been served. The failure to so notify the Fund of
any such action shall not relieve the Fund from any liability which the Fund may
have to the person against whom such action is brought by reason of any such
untrue, or allegedly untrue, statement or omission, or alleged omission,
otherwise than on account of the Fund's indemnity agreement contained in this
paragraph 1.10. The Fund will be entitled to assume the defense of any suit
brought to enforce any such claim, demand or liability, but, in such case, such
defense shall be conducted by counsel of good standing chosen by the Fund and
approved by Distributor, which approval shall not be unreasonably withheld. Such
counsel shall consult with Distributor and give Distributor the opportunity to
review any documents prepared by such counsel prior to filing the same with the
court. In the event the Fund elects to assume the defense of any such suit and
retain counsel of good standing approved by Distributor, the defendant or
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Fund does not elect to assume
the defense of any such suit, or in case Distributor does not approve of counsel
chosen by the Fund, the Fund will reimburse Distributor, its directors, officers
and employees, or the controlling person or persons named as defendant or
defendants in such suit, for the fees and expenses of any counsel retained by
Distributor or them. The Fund shall not, without the written consent of
Distributor, consent to entry of any judgment or enter into any settlement. Any
judgment or settlement shall include as an unconditional term the giving by the
claimant or plaintiff to Distributor and its directors, officers and employees,
or any such controlling person, of a release from all liability in respect to
such claim or litigation. The Fund's indemnification agreement contained in this
paragraph 1.10 and the Fund's representations and warranties in this Agreement
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of Distributor, its directors, officers and
employees, or any controlling person, and shall survive the delivery of any
Shares and the termination of this Agreement.
This Agreement of indemnity will inure exclusively to Distributor's
benefit, to the benefit of its several directors, officers and employees, and
their respective estates, and to the benefit of the controlling persons and
their successors. The Fund agrees promptly to notify Distributor of the
commencement of any litigation or proceedings against the Fund or any of its
officers or Directors in connection with the issue and sale of any Shares.
1.11. Distributor agrees to indemnify, defend and hold the Fund, its
several officers and Directors and any person who controls the
Fund within the meaning of Section 15 of the Securities Act
free and harmless from and against any and all claims,
demands, liabilities and expenses (including the costs of
investigating or defending such claims, demands or liabilities
and any reasonable counsel fees incurred in connection
therewith) which the Fund, its officers or Directors or any
such controlling person, may incur under the Securities Act or
under common law or otherwise, but only to the extent that
such liability or expense incurred by the Fund, its officers
or Directors or such controlling person resulting from such
claims or demands, shall arise out of or be based upon any
untrue, or alleged untrue, statement of a material fact
contained in information furnished in writing by Distributor
to the Fund and used in the answers to any of the items of the
registration statement or in the corresponding statements made
in the prospectuses, or shall arise out of or be based upon
any omission, or alleged omission, to state a material fact in
connection with such information furnished in writing by
Distributor to the Fund required to be stated in such answers
or necessary to make such information not misleading.
Distributor's agreement to indemnify the Fund, its officers
and Directors, and any such controlling person, as aforesaid,
is expressly conditioned upon Distributor being notified of
any action brought against the Fund, its officers or
Directors, or any such controlling person, such notification
to be given by letter or facsimile addressed to Distributor at
its principal office in Columbus, Ohio, and sent to
Distributor by the person against whom such action is brought,
within 10 business days after the summons or other first legal
process shall have been served. Distributor shall have the
right of first control of the defense of such action, with
counsel of its own choosing, satisfactory to the Fund, if such
action is based solely upon such alleged misstatement or
omission on Distributor's part, and in any other event the
Fund, its officers or Directors or such controlling person
shall each have the right to participate in the defense or
preparation of the defense of any such action. The failure to
so notify Distributor of any such action shall not relieve
Distributor from any liability which Distributor may have to
the Fund, its officers or Directors, or to such controlling
person by reason of any such untrue or alleged untrue
statement, or omission or alleged omission, otherwise than on
account of Distributor's indemnity agreement contained in this
paragraph 1.11.
1.12. No Shares shall be offered by either Distributor or the Fund
under any of the provisions of this Agreement and no orders
for the purchase or sale of Shares hereunder shall be accepted
by the Fund if and so long as the effectiveness of the
registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the
provisions of the Securities Act or if and so long as a
current prospectus as required by Section 10(b)(2) of said Act
is not on file with the Commission; provided, however, that
nothing contained in this paragraph 1.12 shall in any way
restrict or have an application to or bearing upon the Fund's
obligation to repurchase Shares from any Shareholder in
accordance with the provisions of the Fund's prospectuses,
Articles of Incorporation, or Bylaws.
1.13. The Fund agrees to advise Distributor as soon as reasonably
practical by a notice in writing delivered to Distributor or
its counsel:
(a) of any request by the Commission for amendments to the
registration statement or prospectus then in effect or for
additional information;
(b) in the event of the issuance by the Commission of any stop
order suspending the effectiveness of the registration
statement or prospectus then in effect or the initiation by
service of process on the Fund of any proceeding for that
purpose;
(c) of the happening of any event that makes untrue any statement
of a material fact made in the registration statement or
prospectuses then in effect or which requires the making of a
change in such registration statement or prospectus in order
to make the statements therein not misleading; and
(d) of all actions of the Commission with respect to any amendment
to any registration statement or prospectuses which may from
time to time be filed with the Commission.
For purposes of this section, informal requests by or acts of the Staff
of the Commission shall not be deemed actions of or requests by the Commission.
1.14. The Fund and Distributor acknowledge and agree on behalf of
themselves and their directors, Directors, officers and
employees that they may receive from each other information,
or access to information, about the customers or about
consumers generally (collectively, "Customer Information")
including, but not limited to, nonpublic personal information
such as a customer's name, address, telephone number, account
relationships, account balances and account histories. All
information, including Customer Information, obtained pursuant
to this Agreement shall be considered confidential
information. Neither party shall disclose such confidential
information to any other person or entity or use such
confidential information other than to carry out the purposes
of this Agreement, including its use under sections 248.14 and
248.15 of Regulation S-P (17 CFR 248.1 - 248.30) in the
ordinary course of carrying out the purposes of the
Distribution Agreement. Distributor agrees to:
(a) Limit access to Customer Information which is obtained
pursuant to this Addendum to employees who have a need to know
such Customer Information to effect the purposes of this
agreement;
(b) Safeguard and maintain the confidentiality and security of
Customer Information which is obtained pursuant to this
Addendum; and
(c) Use Customer Information obtained pursuant to this Addendum
only to carry out the purposes for which the Customer
Information was disclosed and for no other purpose.
Distributor shall not directly or through an affiliate,
disclose an account number or similar form of access number or access code for
an account for use in telemarketing, direct mail marketing, or marketing through
electronic mail, except as permitted in Section 248.12 of Regulation S-P.
1.15. This Agreement shall be governed by the laws of the State of Delaware.
1.16. The Distributor shall maintain policies and procedures that are
reasonably designed to prevent violations of the federal securities laws, and
shall employ personnel to administer the policies and procedures who have the
requisite level of skill and competence required to effectively discharge its
responsibilities. The Distributor shall also provide the Fund's chief compliance
officer with periodic reports regarding its compliance with the federal
securities laws, and shall promptly provide special reports in the event of any
material violation of the federal securities laws.
2. Term, Duration and Termination
This Agreement shall become effective February 19, 2005 and, unless
sooner terminated as provided herein, shall continue until October 31, 2006.
Thereafter, if not terminated, this Agreement shall continue automatically for
successive one-year terms, provided that such continuance is specifically
approved at least annually by (a) the vote of a majority of those members of the
Fund's Board of Directors who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting for the purpose of voting
on such approval and (b) the vote of the Fund's Board of Directors or the vote
of a majority of the outstanding voting securities of such Fund. This Agreement
may be terminated with respect to the Fund without penalty, on not less than 60
days prior written notice, by the Fund's Board of Directors, by vote of a
majority of the outstanding voting securities of the Fund or by Distributor.
This Agreement will also terminate automatically in the event of its assignment.
(As used in this Agreement, the terms "majority of the outstanding voting
securities", "interested persons" and "assignment" shall have the same meanings
as ascribed to such terms in the 1940 Act.)
3. Sale of Shares Subject to a Front-End Sales Load
3.1. Under this Agreement, the following provisions shall apply with respect to
the sale of and payment for Class A Shares sold at an offering price which
includes a front-end sales load ("Front-End Load Shares") as described in the
prospectuses of the Fund for the Front-End Load Shares:
(a) Distributor shall have the right to purchase Front-End Load Shares from the
Fund at their net asset value and to sell such Shares to the public against
orders therefor at the applicable public offering price, as defined in Section
3.2 below. Distributor also shall have the right to pay all or a portion of the
sales charge referred to in Section 3.2 below to brokers, dealers, and other
financial institutions and intermediaries selling Front-End Load Shares.
(b) Prior to the time of delivery of any Front-End Load Shares by the Fund to,
or on the order of, Distributor, Distributor shall pay or cause to be paid to
the Fund or to its order an amount in Boston or New York clearing house funds
equal to the applicable net asset value of such Shares. Distributor may retain
all or a portion of any sales charge payable to brokers, dealers, and other
financial institutions and intermediaries.
3.2. The public offering price of Front-End Load Shares of the Fund shall be the
net asset value of the Share, plus any applicable sales charge, all as set forth
in the current prospectus for the Front-End Load Shares. The net asset value of
Front-End Load Shares shall be determined in accordance with the provisions of
the Articles of Incorporation and the Fund's By-Laws, and the then-current
prospectus of such Shares.
3.3. The Fund reserves the right to issue, transfer or sell Front-End Load
Shares at net asset value (a) in connection with merger or consolidation of the
Fund with any other investment company or the acquisition by the Fund of all or
substantially all of the assets or of the outstanding Shares of any other
investment company; (b) in connection with a pro rata distribution directly to
the holders of Shares in the nature of a stock dividend or split; (c) upon the
exercise of subscription rights granted to the holders of Shares on a pro rata
basis; (d) in connection with the issuance of Shares pursuant to any exchange
and reinvestment privileges described in any then-current prospectus of the
Fund; and (e) otherwise in accordance with any then-current prospectus of the
Fund.
4. Shares Subject to a Rule 12b-1 Fee
4.1. Under this Agreement, the following provisions shall apply with respect to
the Fund's Class A Shares, which are subject to a fee under a Distribution Plan
under Rule 12b-1 ("Plan") as described in the prospectus for the Fund's Class A
Shares (the "Distribution Plan Class"):
(a) Distributor shall receive from the Fund all distribution fees, as
applicable, at the rate and under the terms and conditions set forth in the Plan
adopted by the Distribution Plan Class, as such Plan may be amended from time to
time, and subject to any further limitations on such fees as the Board may
impose. Distributor's right to payment of distribution fees on such Shares shall
continue after termination of this Agreement, subject only to the continued
effectiveness of the applicable Plan (such effectiveness controlled exclusively
by the terms of the Plan).
(b) Distributor may reallow any or all of the distribution fees, which it is
paid by the Fund with respect to the Distribution Plan Class of the Fund to such
brokers, dealers and other financial institutions and intermediaries as
Distributor may from time to time determine.
5. Shares Subject to a Contingent Deferred Sales Charge
5.1. The Fund may offer Shares subject to a contingent deferred sales charge
("CDSC"). Distributor may pay brokers, dealers and other financial institutions
and intermediaries commissions with regard to the sale of CDSC Shares. Under
this Agreement, the following provisions shall apply with respect to the Class B
and Class C Shares, each of which feature a CDSC (a "CDSC Class") as described
in the prospectus for such CDSC Classes of the Fund.
(a) Distributor shall be entitled to receive all CDSC payments on Shares of a
CDSC Class. Distributor may assign or sell to a third party (a "CDSC Financing
Entity") all or a part of the CDSC payments on Shares of a CDSC Class that
Distributor is entitled to receive under this Agreement. Distributor's right to
payment on Shares of a CDSC Class shall continue after termination of this
Agreement.
(b) Distributor shall be entitled to receive all distribution fees at the rate
and under the terms and conditions set forth in the Plan adopted by the Fund
with respect to a CDSC Class on Shares sold. The distribution-related services
rendered by Distributor for which Distributor is entitled to receive any portion
of such fees shall be deemed to have been completed at the time of the initial
purchase of the Shares taken into account in computing such portion of such
fees. Distributor may assign or sell to a CDSC Financing Entity all or a part of
the distribution fees Distributor is entitled to receive from the Fund under the
Plan. Distributor's right to payment of distribution fees on such Shares shall
continue after termination of this Agreement, subject only to the continued
effectiveness of the Plan (such effectiveness controlled exclusively by the
terms of such Plan). The Fund's obligation to pay distribution fees that are
assigned to a CDSC Financing Entity or paid to the Distributor in connection
with the financing of the Fund's CDSC Classes is absolute and unconditional and
shall not be subject to any dispute, offset, counterclaim or defense whatsoever.
(c) Distributor shall not be required to offer or sell Shares
of a CDSC Class if the Plan adopted by the CDSC Class is terminated and unless
and until it has received a binding commitment from a CDSC Financing Entity (a
"Commitment") satisfactory to Distributor which Commitment shall cover all
expenses and fees related to the offer and sale of such Shares of the CDSC Class
including but not limited to dealer reallowances, financing commitment fees, and
legal fees. If at any time during the term of this Agreement the Plan adopted by
the CDSC Class terminates or the then-current CDSC financing is terminated
through no fault of Distributor, Distributor has the right to immediately
suspend CDSC Share sales until substitute financing becomes effective.
(d) Distributor may enter into arrangements regarding the
financing of commissions pertaining to the sale of shares of a CDSC Class only
upon written approval of the Fund's Treasurer, or his or her designee, such
approval not to be unreasonably withheld.
(e) Distributor and the Fund hereby agree that the terms and
conditions set forth herein regarding the offer and sale of Shares of a CDSC
Class may be amended upon approval of both parties in order to comply with the
terms and conditions of any agreement with a CDSC Financing Entity to finance
the costs for the offer and sale of Shares of a CDSC Class so long as such terms
and conditions are in compliance with the Plan.
6. Anti-Money Laundering
Each of Distributor and the Fund acknowledges that it is a financial
institution subject to the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (PATRIOT ACT) Act
of 2001 and the Bank Secrecy Act (collectively, the "AML Acts"), which require
among other things, that financial institutions adopt compliance programs to
guard against money laundering. Each represents and warrants to the other that
it is in compliance with and will continue to comply with the AML Acts and
applicable regulations in all relevant respects. Each of Distributor and the
Fund agrees that it will take such further steps, and cooperate with the other,
to facilitate such compliance, including but not limited to the provision of
copies of its written procedures, policies and controls related thereto ("AML
Operations"). Distributor undertakes that it will grant to the Fund, the Fund's
compliance officer and the applicable regulatory agencies, reasonable access to
copies of Distributor's AML Operations, books and records pertaining to the
Fund. Distributor also hereby agrees to comply with all applicable laws and
regulations relating to anti-money laundering and terrorist financing and with
the provisions of the Fund's and Distributor's anti-money laundering program
designed to guard against money laundering activities.
7. Counterparts
This Agreement may be executed by the parties in any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same Agreement.
[SIGNATURE PAGE(S) FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
written above.
JPMORGAN VALUE OPPORTUNITIES FUND, INC.
By: _____________________________________
Name:
Title:
Accepted by:
JPMORGAN DISTRIBUTION SERVICES, INC.
By: _____________________________________
Name:
Title:
