EXHIBIT 99.(h)(a)
XXXXX XXXXX PRIME RATE RESERVES
DISTRIBUTION AGREEMENT
AGREEMENT dated July 14, 1989 between XXXXX XXXXX PRIME RATE RESERVES,
a Massachusetts business trust having its principal place of business in Boston
in the Commonwealth of Massachusetts, hereinafter called the "Fund", and XXXXX
XXXXX DISTRIBUTORS, INC., a Massachusetts corporation having its principal place
of business in said Boston, hereinafter sometimes called the "Principal
Underwriter".
IN CONSIDERATION of the mutual promises and undertakings herein
contained, the parties hereto agree:
1. The Fund grants to the Principal Underwriter the right to purchase
common shares of the Fund upon the terms hereinbelow set forth during the term
of this Agreement. While this Agreement is in force, the Principal Underwriter
agrees to use its best efforts to find purchasers for shares of the Fund.
The Principal Underwriter shall have the right to buy from the Fund the
shares needed, but not more than the shares needed (except for clerical errors
and errors of transmission) to fill unconditional orders for shares of the Fund
placed with the Principal Underwriter by dealers or investors as set forth in
the current Prospectus relating to shares of the Fund. The price which the
Principal Underwriter shall pay for the shares so purchased shall be equal to
the net asset value used in determining the public offering price to be paid by
investors upon purchasing such shares. The Principal Underwriter shall notify
the Custodian of the Fund, at the end of each business day, or as soon
thereafter as the orders placed with it have been compiled, of the number of
shares and the prices thereof which the Principal Underwriter is to purchase as
principal for resale. The Principal Underwriter shall take down and pay for
shares ordered from the Fund on or before the eleventh business day (excluding
Saturdays) after the shares have been so ordered.
The right granted to the Principal Underwriter to buy shares from the
Fund shall be exclusive, except that said exclusive right shall not apply to
shares issued in connection with the merger or consolidation of any other
investment company or personal holding company with the Fund or the acquisition
by purchase or otherwise of all (or substantially all) the assets or the
outstanding shares of any such company, by the Fund; nor shall it apply to
shares, if any, issued by the Fund in distribution of net investment income or
realized capital gains of the Fund payable in shares or in cash at the option of
the shareholder.
2. The shares may be resold by the Principal Underwriter to dealers
having selling group agreements with the Principal Underwriter, and to
investors, upon the following terms and conditions.
The public offering price, i.e., the price per share at which the
Principal Underwriter or dealer purchasing shares from the Principal Underwriter
may sell shares to the public, shall be equal to the public offering price as
set forth in the current Prospectus relating to the shares, but not to exceed
the net asset value at which the Principal Underwriter is to purchase the
shares, plus a sales charge not to exceed 8.5% of the public offering price (the
net asset value divided by .915). If the resulting public offering price does
not come out to an even cent, the public offering price shall be adjusted to the
nearer cent.
The net asset value of shares of the Fund shall be determined by the
Fund or the Custodian, as the agent of the Fund, as of the close of trading on
the New York Stock Exchange on each business day on which said Exchange is open,
or as of such other time on each such business day as may be determined by the
Trustees of the Fund. The Fund may also cause the net asset value to be
determined in substantially the same manner or estimated in such manner and as
of such other time or times as may from time to time be agreed upon by the Fund
and Principal Underwriter. The Fund will notify the Principal Underwriter each
time the net asset value of shares is determined and when such value is so
determined it shall be applicable to transactions as set forth in the current
Prospectus relating to shares.
No shares of the Fund shall be sold by the Fund during any period when
the determination of net asset value is suspended, except to the Principal
Underwriter, in the manner and upon the terms above set forth to cover contracts
of sale made by the Principal Underwriter with its customers prior to any such
suspension, and except as provided in the last paragraph of paragraph 1 hereof.
The Fund shall also have the right to suspend the sale of its shares if in the
judgment of the Fund conditions obtaining at any time render such action
advisable. The Principal Underwriter shall have the right to suspend sales at
any time, to refuse to accept or confirm any order from an investor or dealer,
or to accept or confirm any such order in part only, if in the judgment of the
Principal Underwriter such action is in the best interests of the Fund.
3. The Fund agrees that it will, from time to time, but subject to the
necessary approval of the shareholders, take such steps as may be necessary to
register its shares under the federal Securities Act of 1933, as amended from
time to time (the "1933 Act"), to the end that there will be available for sale
such number of shares as the Principal Underwriter may reasonably be expected to
sell. The Fund agrees to indemnify and hold harmless the Principal Underwriter
and each person, if any, who controls the Principal Underwriter within the
meaning of Section 15 of the 1933 Act against any loss, liability, claim,
damages or expense (including the reasonable cost of investigating or defending
any alleged loss, liability, claim, damages or expense and reasonable counsel
fees incurred in connection therewith), arising by reason of any person
acquiring any shares, which may be based upon the 1933 Act or on any other
statute or at common law, on the ground that the Registration Statement or
Prospectus, as from time to time amended and supplemented, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, unless such statement or omission was made in reliance upon, and in
conformity with, information furnished in writing to the Fund in connection
therewith by or on behalf of the Principal Underwriter; provided, however, that
in no case (i) is the indemnity of the Fund in favor of the Principal
Underwriter and any such controlling person to be deemed to protect such
Principal Underwriter or any such controlling person against any liability to
the Fund or its security holders to which such Principal Underwriter or any such
controlling person 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 and duties under this Agreement, or
(ii) is the Fund to be liable under its indemnity agreement contained in this
paragraph 3 with respect to any claim made against the Principal Underwriter or
any such controlling person unless the Principal Underwriter or such controlling
person, as the case may be, shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the Principal
Underwriter or upon such controlling person (or after such Principal Underwriter
or such controlling person shall have received notice of such service on any
designated agent), but failure to notify the Fund of any such claim shall not
relieve it from any liability which it may have to the person against whom such
action is brought otherwise than on account of its indemnity agreement contained
in this paragraph 3. 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 such liability, but if the Fund elects to assume the
defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Principal Underwriter or controlling person or persons,
defendant or defendants in the suit. In the event the Fund elects to assume the
defense of any such suit and retains such counsel, the Principal Underwriter or
controlling person or persons, defendant or defendants in the suit, shall bear
the fees and expenses of any additional counsel retained by them, but, in case
the Fund does not elect to assume the defense of any such suit, it shall
reimburse the Principal Underwriter or controlling person or persons, defendant
or defendants in the suit, for the reasonable fees and expenses of any counsel
retained by them. The Fund agrees promptly to notify the Principal Underwriter
of the commencement of any litigation or proceedings against it or any of its
officers or Trustees in connection with the issuance or sale of any of the
shares.
4. The Principal Underwriter covenants and agrees that, in selling the
shares of the Fund, it will use its best efforts in all respects duly to conform
with the requirements of all state and federal laws relating to the sale of such
securities, and will indemnify and hold harmless the Fund and each of its
Trustees and officers and each person, if any, who controls the Fund within the
meaning of Section 15 of the 1933 Act against any loss, liability, damages,
claim or expense (including the reasonable cost of investigating or defending
any alleged loss, liability, damages, claim or expense and reasonable counsel
fees incurred in connection therewith), arising by reason of any person
acquiring any shares, which may be based upon the 1933 Act or any other statute
or at common law, on account of any wrongful act of the Principal Underwriter or
any of its employees (including any failure to conform with any requirement of
any state or federal law relating to the sale of such securities) or on the
ground that the Registration Statement or Prospectus, as from time to time
amended and supplemented, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, insofar as any such
statement or omission was made in reliance upon, and in conformity with
information furnished in writing to the Fund in connection therewith by or on
behalf of the Principal Underwriter, provided, however, that in no case (i) is
the indemnity of the Principal Underwriter in favor of any person indemnified to
be deemed to protect the Fund or any such person against any liability to which
the Fund or any such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of its or his
duties or by reason of its or his reckless disregard of its obligations and
duties under this Agreement, or (ii) is the Principal Underwriter to be liable
under its indemnity agreement contained in this paragraph 4 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 Principal Underwriter in
writing within a reasonable time after the summons or other first legal process
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), but failure to notify the
Principal Underwriter of any such claim shall not relieve it from any liability
which it may have to the Fund or any person against whom such action is brought
otherwise than on account of its indemnity agreement contained in this paragraph
4. The Principal Underwriter 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 such liability, but if the Principal Underwriter elects
to assume the defense, such defense shall be conducted by counsel chosen by it
and satisfactory to the Fund, or to its officers or Trustees, or to any
controlling person or persons, defendant or defendants in the suit. In the event
that the Principal Underwriter elects to assume the defense of any such suit and
retains such counsel, the Fund or such officers or Trustees or controlling
person or persons, defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them, but, in case the Principal
Underwriter does not elect to assume the defense of any such suit, it shall
reimburse the Fund, any such officers and Trustees or controlling person or
persons, defendant or defendants in such suit, for the reasonable fees and
expenses of any counsel retained by them. The Principal Underwriter agrees
promptly to notify the Fund of the commencement of any litigation or proceedings
against it in connection with the issue and sale of any of the shares.
Neither the Principal Underwriter nor any dealer nor any other person
is authorized by the Fund to give any information or to make any
representations, other than those contained in the Registration Statement or
Prospectus filed with the Securities and Exchange Commission under the 1933 Act,
as amended (as said Registration Statement and Prospectus may be amended or
supplemented from time to time), covering the shares of the Fund. Neither the
Principal Underwriter nor any dealer nor any other person is authorized to act
as agent for the Fund in connection with the offering or sale of shares of the
Fund to the public or otherwise. All such sales made by the Principal
Underwriter shall be made by it as principal, for its own account. The Principal
Underwriter may, however, act as agent in connection with "exchanges" between
investment companies for which the Principal Underwriter acts as Principal
Underwriter or investment manager as provided in the agreement among such
companies as from time to time in effect.
5(a). The Fund will pay, or cause to be paid -
(i) all the costs and expenses of the Fund, including fees and
disbursements of its counsel, in connection with the preparation and filing of
any required Registration Statement and/or Prospectus under the 1933 Act,
covering its shares and all amendments and supplements thereto, and preparing
and mailing periodic reports and Prospectuses to shareholders (including the
expense of setting up in type any such Registration Statement, Prospectus or
periodic report);
(ii) the cost of preparing temporary and permanent share
certificates (if any) for shares of the Fund;
(iii) The cost and expenses of delivering to the Principal
Underwriter at its office in Boston, Massachusetts, all shares purchased by it
as principal hereunder;
(iv) all the federal and state (if any) issue and/or transfer
taxes payable upon the issue by or (in the case of treasury shares) transfer
from the Fund to the Principal Underwriter of any and all shares purchased by
the Principal Underwriter hereunder;
(v) all expenses of registration and maintaining registration
of the shares for sale under federal and state securities laws, and, if
necessary or advisable in connection therewith, of qualifying the Fund as a
dealer or broker, in such states as shall be selected by the Principal
Underwriter and the fees payable to each such state for continuing the
qualification therein until the Principal Underwriter notifies the Fund that it
does not wish such qualification continued; and
(vi) all costs and expenses of conducting the Fund's periodic
tender offers for, or other repurchases or redemptions of, shares issued by the
Fund.
(b). All other costs and expenses of conducting the continuous
offering of the Fund's shares shall be borne in such manner as shall be agreed
upon from time to time by the Fund and the Principal Underwriter.
(c). The Principal Underwriter shall be entitled to receive all Early
Withdrawal Charges paid or payable on repurchases of shares by the Fund pursuant
to any tender offer made by the Fund.
6. If, at any time during the existence of this Agreement, the Fund
shall deem it necessary or advisable in the best interests of the Fund that any
amendment of this Agreement be made in order to comply with the recommendations
or requirements of the Securities and Exchange Commission (the "Commission") or
other governmental authority or to obtain any advantage under Massachusetts or
federal tax laws, and shall notify the Principal Underwriter of the form of
amendment which it deems necessary or advisable and the reasons therefor, and,
if the Principal Underwriter declines to assent to such amendment, the Fund may
terminate this Agreement forthwith by written notice to the Principal
Underwriter. If, at any time during the existence of its agreement upon request
by the Principal Underwriter, the Fund fails (after a reasonable time) to make
any changes in its Declaration of Trust, as amended, or in its methods of doing
business which are necessary in order to comply with any requirement of federal
law or regulations of the Commission or of a national securities association of
which the Principal Underwriter is or may be a member, relating to the sale of
the shares of the Fund, the Principal Underwriter may terminate this Agreement
forthwith by written notice to the Fund.
7. In connection with purchases or sales of portfolio securities for
the account of the Fund, neither the Principal Underwriter nor any officer or
director of the Principal Underwriter shall act as a principal. The Principal
Underwriter convenants that it and its officers and directors shall comply with
the provisions of Article XIV of the Fund's By-Laws applicable to them.
8. The Principal Underwriter agrees that it will not take any long or
short positions in the shares of the Fund except as permitted by paragraph 1
hereof, and that, so far as it can control the situation, it will prevent any
officer, director or owner of voting common stock of the Principal Underwriter
from taking any long or short position in the shares of the Fund, except as
permitted by the By-Laws of the Fund as from time to time in effect.
9. The term "net asset value" of a common share as used in this
Agreement with reference to the shares of the Fund shall have the same meaning
as the term "net asset value" as used in the Declaration of Trust of the Fund,
as amended, and as defined in Article XII thereof.
10. (a) The Principal Underwriter is a corporation in the United States
organized under the laws of Massachusetts and holding membership in the National
Association of Securities Dealers, Inc., a securities association registered
under Section 15A of the Securities Exchange Act of 1934, and during the life of
this Agreement will continue to be so resident in the United States, so
organized and a member in good standing of said Association. The Principal
Underwriter will comply with the Fund's Declaration of Trust and By-Laws, and
the 1940 Act and the rules promulgated thereunder, insofar as they are
applicable to the Principal Underwriter.
(b) The Principal Underwriter shall maintain in the United States
and preserve therein for such period or periods as the Commission shall
prescribe by rules and regulations applicable to it as Principal Underwriter of
a closed-end investment company registered under the 1940 Act such accounts,
books and other documents as are necessary or appropriate to record its
transactions with the Fund. Such accounts, books and other documents shall be
subject at any time and from time to time to such reasonable periodic, special
and other examinations by the Commission or any member or representative thereof
as the Commission may prescribe. The Principal Underwriter shall furnish to the
Commission within such reasonable time as the Commission may prescribe copies of
or extracts from such records which may be prepared without effort, expense or
delay as the Commission may by order require.
11. This Agreement shall continue in force indefinitely until
terminated as in this Agreement above provided, except that:
(a) this Agreement shall continue in effect for a period of more
than two (2) years from the date of its original execution only so long as such
continuance is specifically approved at least annually (i) by the vote of a
majority of the Trustees of the Fund who are not "interested persons" (as
defined in Section 2(a)(19) of the 0000 Xxx) of the Fund or of the Principal
Underwriter cast in person at a meeting called for the purchase of voting on
such approval, and (ii) by the Board of Trustees of the Fund or by vote of a
majority of the outstanding voting securities (as defined in Section 2(a)(42) of
the 0000 Xxx) of the Fund;
(b) either party shall have the right to terminate this Agreement
on six (6) months' written notice thereof given in writing to the other party;
and
(c) the Fund shall have the right to terminate this Agreement
forthwith in the event that it shall have been established by a court of
competent jurisdiction that the Principal Underwriter or any director or officer
of the Principal Underwriter has taken any action which results in a breach of
the covenants set out in paragraph 7 hereof.
12. In the event of the assignment (as defined in Section 2(a)(4) of
the 0000 Xxx) of this Agreement by the Principal Underwriter, this Agreement
shall automatically terminate.
13. Any notice under this Agreement shall be in writing, addressed and
delivered, or mailed postage paid, to the other party, at such address as such
other party may designate for the receipt of such notices. Until further notice
to the other party, it is agreed that the record address of the Fund, and that
of the Principal Underwriter, shall be 00 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000.
14. The services of the Principal Underwriter to the Fund hereunder are
not to be deemed to be exclusive, the Principal Underwriter being free to (a)
render similar services to, and to act as principal underwriter in connection
with the distribution of shares of, other investment companies, and (b) engage
in other businesses and activities from time to time.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement on
July 14, 1989.
XXXXX XXXXX PRIME RATE RESERVES
By /s/ Xxxxx X. Xxxxxx
-----------------------------
President
XXXXX XXXXX DISTRIBUTORS, INC.
By /s/ Xxxxx X. Xxxxxxxxxx
-----------------------------
President
