FORM OF DISTRIBUTION AGREEMENT
JACOB INTERNET FUND INC.
(the "Fund")
New York, New York
_____, 1999
Lepercq, de Neuflize Securities Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
1. In consideration of the agreements on your part herein
contained and of the payment by us to you of the fees set forth herein ("Asset
Based Sales Charge"), determined in accordance with paragraph 11 herein and on
the terms and conditions set forth herein, we have agreed that you shall be, for
the period of this agreement, a distributor, as our agent, for the unsold
portion of such number of shares of the Fund, $.001 par value per share, as may
be effectively registered from time to time under the Securities Act of 1933, as
amended (the "1933 Act"). This agreement is being entered into pursuant to the
Distribution and Service Plan (the "Plan") adopted by us in accordance with Rule
12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act").
2. We hereby agree that you will act as our agent, and
hereby appoint you our agent, to offer, and to solicit offers to subscribe to,
the unsold balance of shares of the Fund as shall then be effectively registered
under the Act. All subscriptions for the Fund's shares obtained by you shall be
directed to us for acceptance and shall not be binding on us until accepted by
us. You shall have no authority to make binding subscriptions on our behalf. We
reserve the right to sell shares of the Fund through other distributors or
directly to investors through subscriptions received by us at our principal
office in New York, New York. The right given to you under this agreement shall
not apply to shares of our common stock issued in connection with (a) the merger
or consolidation of any other investment company with us, (b) our acquisition by
purchase or otherwise of all or substantially all of the assets or stock of any
other investment company, or (c) the reinvestment in the Fund's shares by our
stockholders of dividends or other distributions or any other offering by us of
securities to our stockholders.
3. You will use your best efforts to obtain subscriptions
to shares of the Fund upon the terms and conditions contained herein and in our
Prospectus, as in effect from time to time. You will send to us promptly all
subscriptions placed with you. We shall furnish you from time to time, for use
in connection with the offering of shares of the Fund,
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such other information with respect to us and such shares as you may reasonably
request. We shall supply you with such copies of our Registration Statement and
Prospectus, as in effect from time to time, as you may request. Except as we may
authorize in writing, you are not authorized to give any information or to make
any representation that is not contained in the Registration Statement or
Prospectus, as then in effect. You may use employees, agents and other persons,
at your cost and expense, to assist you in carrying out your obligations
hereunder, but no such employee, agent or other person shall be deemed to be our
agent or have any rights under this agreement. You may sell the Fund's shares to
or through qualified brokers, dealers and financial institutions under selling
and servicing agreements provided that no dealer, financial institution or other
person shall be appointed or authorized to act as our agent without our written
consent. You will arrange for organizations whose customers or clients are
shareholders of our corporation ("Shareholder Servicing Agents") to enter into
agreements with you for providing assistance in distributing the Fund's shares.
4. You may make payments from time to time from your own
resources, which may include the Asset Based Sales Charge and past profits, for
the following purposes:
(a) to compensate certain Shareholder Servicing Agents for providing
assistance in distributing the Fund's shares;
(b) to pay the cost of printing and distributing the Fund's prospectus
to prospective investors; and
(c) to defray the cost of the preparation and printing of brochures and
other promotional materials, mailings to prospective shareholders,
advertising, and other promotional activities, including the
salaries and/or commissions of sales personnel in connection with
the distribution of the Fund's shares.
You in your sole discretion, will determine the amount of such payments,
provided that such payments will not increase the amount which we are required
to pay to you for any fiscal year under this agreement. Such payments will be
made only pursuant to written agreements approved in form and substance by our
Board of Directors to be entered into by you and the Shareholder Servicing
Agents. It is recognized that we shall have no obligation or liability to you or
any Shareholder Servicing Agents for any such payments under the agreements with
Shareholder Servicing Agents. Our obligation is solely to make payments to you
under this agreement. All sales of our shares effected through you will be made
in compliance with all applicable federal securities laws and regulations and
the Constitution, rules and regulations of the National Association of
Securities Dealers, Inc. ("NASD").
5. We reserve the right to suspend the offering of shares
of the Fund at any time, in the absolute discretion of our Board of Directors,
and upon notice of such suspension you shall cease to offer such shares
hereunder.
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6. Both of us will cooperate with each other in taking such
action as may be necessary to qualify the Fund's shares for sale under the
securities laws of such states as we may designate, provided, that you shall not
be required to register as a broker-dealer or file a consent to service of
process in any such state where you are not now so registered. Pursuant to the
Investment Advisory Agreement in effect between us and our advisor, we will pay
all fees and expenses of registering the Fund's shares under the Act and of
qualification of such shares, and to the extent necessary, our qualification
under applicable state securities laws. You will pay all expenses relating to
your broker-dealer qualification.
7. We represent to you that our Registration Statement and
Prospectus have been carefully prepared to date in conformity with the
requirements of the 1933 Act and the 1940 Act and the rules and regulations of
the Securities and Exchange Commission (the "SEC") thereunder. We represent and
warrant to you, as of the date hereof, that our Registration Statement and
Prospectus contain all statements required to be stated therein in accordance
with the 1933 Act and the 1940 Act and the SEC's rules and regulations
thereunder; that all statements of fact contained therein are or will be true
and correct at the time indicated or the effective date as the case may be; and
that neither our Registration Statement nor our Prospectus, when they shall
become effective or be authorized for use, will include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser of shares
of our common stock. We will from time to time file such amendment or amendments
to our Registration Statement and Prospectus as, in the light of future
development, shall in the opinion of our counsel, be necessary in order to have
our Registration Statement and Prospectus at all times contain all material
facts required to be stated therein or necessary to make any statements therein
not misleading to a purchaser of shares of our common stock. If we shall not
file such amendment or amendments within fifteen days after our receipt of a
written request from you to do so, you may, at your option, terminate this
agreement immediately. We will not file any amendment to our Registration
Statement or Prospectus without giving you reasonable notice thereof in advance;
provided, however, that nothing in this agreement shall in any way limit our
right to file such amendments to our Registration Statement or Prospectus, of
whatever character, as we may deem advisable, such right being in all respects
absolute and unconditional. We represent and warrant to you that any amendment
to our Registration Statement or Prospectus hereafter filed by us will be
carefully prepared in conformity within the requirements of the 1933 Act and the
1940 Act and the SEC's rules and regulations thereunder and will, when it
becomes effective, contain all statements required to be stated therein in
accordance with the 1933 Act and the 1940 Act and the SEC's rules and
regulations thereunder; that all statements of fact contained therein will, when
the same shall become effective, be true and correct; and that no such
amendment, when it becomes effective, will include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser of our
shares.
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8. We agree to indemnify, defend and hold you, and any
person who controls you within the meaning of Section 15 of the 1933 Act, free
and harmless from and against any and all claims, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which you or
any such controlling person may incur, under the 1933 Act or the 1940 Act, or
under common law or otherwise, arising out of or based upon any alleged untrue
statement of a material fact contained in our Registration Statement or
Prospectus in effect from time to time or arising out of or based upon any
alleged omission to state a material fact required to be stated in either of
them or necessary to make the statements in either of them not misleading;
provided, however, that in no event shall anything herein contained be so
construed as to protect you against any liability to us or our security holders
to which you would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of your duties, or by reason of
your reckless disregard of your obligations and duties under this agreement. Our
agreement to indemnify you and any such controlling person is expressly
conditioned upon our being notified of any action brought against you or any
such controlling person, such notification to be given by letter or by telegram
addressed to us at our principal office in New York, New York, and sent to us by
the person against whom such action is brought within ten days after the summons
or other first legal process shall have been served. The failure so to notify us
of any such action shall not relieve us from any liability which we may have to
the person against whom such action is brought other than on account of our
indemnity agreement contained in this paragraph 8. We will be entitled to assume
the defense of any suit brought to enforce any such claim, and to retain counsel
of good standing chosen by us and approved by you. In the event we do elect to
assume the defense of any such suit and retain counsel of good standing approved
by you, 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 we do
not elect to assume the defense of any such suit, or in case you, in good faith,
do not approve of counsel chosen by us, we will reimburse you or the controlling
person or persons named as defendant or defendants in such suit, for the fees
and expenses of any counsel retained by you or them. Our indemnification
agreement contained in this paragraph 8 and our representations and warranties
in this agreement shall remain in full force and affect regardless of any
investigation made by or on behalf of you or any controlling person and shall
survive the sale of any shares of our common stock made pursuant to
subscriptions obtained by you. This agreement of indemnity will inure
exclusively to your benefit, to the benefit of your successors and assigns, and
to the benefit of any of your controlling persons and their successors and
assigns. We agree promptly to notify you of the commencement of any litigation
or proceeding against us in connection with the issue and sale of any shares of
our common stock.
9. You agree to indemnify, defend and hold us, our several
officers and directors, and any person who controls us 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 reasonable counsel fees
incurred in connection therewith) which we, our officers or directors,
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or any such controlling person may incur under the 1933 Act or under common law
or otherwise, but only to the extent that such liability or expense incurred by
us, our officers or directors or such controlling person shall arise out of or
be based upon any alleged untrue statement of a material fact contained in
information furnished in writing by you to us for use in our Registration
Statement or Prospectus as in effect from time to time, 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. Your agreement
to indemnify us, our officers and directors, and any such controlling person is
expressly conditioned upon your being notified of any action brought against us,
our officers or directors or any such controlling person, such notification to
be given by letter or telegram addressed to you at your principal office in New
York, New York, and sent to you by the person against whom such action is
brought, within ten days after the summons or other first legal process shall
have been served. You shall have a right to control the defense of such action,
with counsel of your own choosing, satisfactory to us, if such action is based
solely upon such alleged misstatement or omission on your part, and in any other
event you and we, our 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 you of any such action shall not
relieve you from any liability which you may have to us, to our officers or
directors, or to such controlling person other than on account of your indemnity
agreement contained in this paragraph 9.
10. We agree to advise you immediately:
(a) of any request by the SEC for amendments to our
Registration Statement or Prospectus or for additional information,
(b) of the issuance by the SEC of any stop order suspending
the effectiveness of our Registration Statement or Prospectus or the initiation
of any proceedings for that purpose,
(c) of the happening of any material event which makes
untrue any statement made in our Registration Statement or Prospectus or which
requires the making of a change in either of them in order to make the
statements therein not misleading, and
(d) of all action of the SEC with respect to any amendments
to our Registration Statement or Prospectus.
11. In addition, we will compensate you for distribution
assistance with respect to sales of the Fund's shares with an Asset Based Sales
Charge equal to .10% per annum of the Fund's average daily net assets. Your fee
above will be accrued by us daily, and will be payable on the last day of each
calendar month for services performed hereunder during that month or an such
other schedule as you shall request of us in writing. You may
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waive your right to any fee to which you are entitled hereunder, provided such
waiver is delivered to us in writing.
12. This agreement will become effective on the date hereof
and will remain in effect until ____________, 2000 and thereafter for successive
twelve-month periods (computed from each _________), provided that such
continuation is specifically approved at least annually by vote of our Board of
Directors and of a majority of those of our directors who are not interested
persons (as defined in the 0000 Xxx) and have no direct or indirect financial
interest in the operation of the Plan or in any agreements related to the Plan,
cast in person at a meeting called for the purpose of voting on this agreement.
This agreement may be terminated at any time, without the payment of any
penalty, by vote of a majority of our entire Board of Directors, or by a vote of
a majority of our Directors who are not interested persons (as defined in the
0000 Xxx) and who have no direct or indirect financial interest in the operation
of the Plan or in any agreement related to the Plan, or by vote of a majority of
our outstanding voting securities (with each Class of the Fund voting
separately), as defined in the 1940 Act, on sixty days' written notice to you,
or by you on sixty days' written notice to us.
13. This agreement may not be transferred, assigned, sold
or in any manner hypothecated or pledged by you and this agreement shall
terminate automatically in the event of any such transfer, assignment, sale,
hypothecation or pledge by you. The terms "transfer", "assignment" and "sale" as
used in this paragraph shall have the meanings ascribed thereto by governing law
and in applicable rules or regulations of the SEC thereunder.
14. Except to the extent necessary to perform your
obligations hereunder, nothing herein shall be deemed to limit or restrict your
right, or the right of any of your directors, officers or employees, who may
also be a director, officer or employee of ours, or of a person affiliated with
us, as defined in the 1940 Act, to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
another corporation, firm, individual or association.
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If the foregoing is in accordance with your understanding,
will you kindly so indicate by signing and returning to us the enclosed copy
hereof.
Very truly yours,
JACOB INTERNET FUND INC.
By: ____________________________________
Accepted:
LEPERCQ, DE NEUFLIZE SECURITIES INC.
By: __________________________________
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