Xxxxxxx Xx. 0
XXXXXXXXXXX XXX TAX-FREE FUND, INC
DISTRIBUTION CONTRACT
CONTRACT made as of July 7, 1993, between PAINEWEBBER RMA TAX-FREE FUND,
INC., a Maryland Corporation, ("Fund"), and PAINEWEBBER INCORPORATED, a Delaware
corporation ("PaineWebber").
WHEREAS the Fund is registered under the Investment Company Act of 1940, as
amended ("1940 Act"), as an open-end management investment company and currently
has one series of shares of common stock ("Series"), which corresponds to a
distinct portfolio; and
WHEREAS the Fund desires to retain PaineWebber as principal distributor in
connection with the offering and sale of the shares of common stock ("Shares")
of the above-referenced Series and of such other Series as may hereafter be
designated by the Fund's board of directors ("Board"); and
WHEREAS PaineWebber is willing to act as principal distributor for each
such Series on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Fund hereby appoints PaineWebber as its exclusive
agent to be the principal distributor to sell and to arrange for the sale of the
Shares on the terms and for the period set forth in this Contract. PaineWebber
hereby accepts such appointment and agrees to act hereunder.
2. SERVICES AND DUTIES OF PAINEWEBBER
(a) PaineWebber agrees to sell the Shares on a best efforts basis
from time to time during the term of this Contract as agent for the Fund and
upon the terms described in the Registration Statement. As used in this
Contract, the term "Registration Statement" shall mean the currently effective
registration statement of the Fund, and any supplements thereto, under the
Securities Act of 1933, as amended ("1933 Act"), and the 0000 Xxx.
(b) Upon the later of the date of this Contract or the initial
offering of the Shares to the public by a Series, PaineWebber will hold itself
available to receive purchase orders, satisfactory to PaineWebber for Shares of
that Series and will accept such orders on behalf of the Fund as of the time of
receipt of such orders and promptly transmit such orders as are accepted to the
Fund's transfer agent. Purchase orders shall be deemed effective at the time
and in the manner set forth in the Registration Statement.
(c) PaineWebber in its discretion may enter into agreements to sell
Shares to such registered and qualified retail dealers, including but not
limited to Xxxxxxxx Xxxxxxxx Asset Management Inc. ("Xxxxxxxx Xxxxxxxx"), as it
may select. In making agreements with such dealers, Xxxxxxxx Xxxxxxxx shall act
only as principal and not as agent for the Fund.
(d) The offering price of the Shares of each Series shall be the net
asset value per Share as next determined by the Fund following receipt of an
order at PaineWebber's principal office. The Fund shall promptly furnish
PaineWebber with a statement of each computation of net asset value.
(e) PaineWebber shall not be obligated to sell any certain number of
Shares.
(f) To facilitate redemption of Shares by shareholders directly or
through dealers, PaineWebber is authorized but not required on behalf of the
Fund to repurchase Shares presented to it by shareholders and dealers at the
price determined in accordance with, and in the manner set forth in, the
Registration Statement.
(g) PaineWebber shall provide ongoing shareholder services, which
include responding to shareholder inquiries, providing shareholders with
information on their investments in the Series and any other services now or
hereafter deemed to be appropriate subjects for the payments of "service fees"
under Section 26(d) of the National Association of Securities Dealers, Inc.
("NASD") Rules of Fair Practice (collectively, "service activities"). "Service
activities" do not include the transfer agency-related and other services for
which PaineWebber receives compensation under the Service Contract between
PaineWebber and the Fund.
(h) PaineWebber shall have the right to use any list of shareholders
of the Fund or any other list of investors which it obtains in connection with
its provision of services under this Contract; provided, however, that
PaineWebber shall not sell or knowingly provide such list or lists to any
unaffiliated person.
3. AUTHORIZATION TO ENTER INTO EXCLUSIVE DEALER AGREEMENTS AND TO
DELEGATE DUTIES AS DISTRIBUTOR. With respect to any or all Series, PaineWebber
may enter into an exclusive dealer agreement with Xxxxxxxx Xxxxxxxx or any other
registered and qualified dealer with respect to sales of the Shares or the
provision of service activities. In a separate contract or as part of any such
exclusive dealer agreement, PaineWebber also may delegate to Xxxxxxxx Xxxxxxxx
or another registered and qualified dealer ("sub-distributor") any or all of its
duties specified in this Contract, provided that such separate contract or
exclusive dealer agreement imposes on the sub-distributor bound thereby all
applicable duties and conditions to which PaineWebber is subject under this
Contract, and further provided that such separate contract or exclusive dealer
agreement meets all requirements of the 1940 Act and rules thereunder.
4. SERVICES NOT EXCLUSIVE. The services furnished by PaineWebber
hereunder are not to be deemed exclusive and PaineWebber shall be free to
furnish similar services to others so long as its services under this Contract
are not impaired thereby. Nothing in this Contract shall limit or restrict the
right of any director, officer or employee of PaineWebber, who may also be a
director, officer or employee of the Fund, to engage in any other business or to
devote his or her time and attention in part to the management or other aspects
of any other business, whether of a similar or a dissimilar nature.
5. COMPENSATION.
(a) No compensation will be paid under this Contract by the Fund to
PaineWebber except with respect to the service activities as defined in
paragraph 2(g) above.
(b) As compensation for its service activities under this Contract,
PaineWebber shall receive from the Fund a fee at the rate and under the terms
and conditions of the Plan of Distribution pursuant to Rule 00x-0 xxxxx xxx 0000
Xxx ("Xxxx") adopted by the Fund with respect to the Series, as such Plan is
amended from time to time, and subject to any further limitations on such fee as
the Board may impose.
(c) PaineWebber may reallow any or all of the fee which it is paid
under this Contract to such dealers as PaineWebber may from time to time
determine.
6. DUTIES OF THE FUND.
(a) The Fund reserves the right at any time to withdraw offering
Shares of any or all Series by written notice to PaineWebber at its principal
office.
(b) The Fund shall determine in its sole discretion whether
certificates shall be issued with respect to the Shares. If the Fund has
determined that certificates shall be issued, the Fund will not cause
certificates representing Shares to be issued unless so requested by
shareholders. If such request is transmitted by PaineWebber, the Fund will
cause certificates evidencing Shares to be issued in such names and
denominations as PaineWebber shall from time to time direct.
(c) The Fund shall keep PaineWebber fully informed of its affairs and
shall make available to PaineWebber copies of all information, financial
statements, and other papers which PaineWebber may reasonably request for use in
connection with the distribution of Shares, including, without limitation,
certified copies of any financial statements prepared for the Fund by its
independent public accountant and such reasonable number of copies of the most
current prospectus, statement of additional information, and annual and interim
reports of any Series as PaineWebber may request, and the Fund shall cooperate
fully in the efforts of PaineWebber to sell and arrange for the sale of the
Shares of the Series and in the performance of PaineWebber under this Contract.
(d) The Fund shall take, from time to time, all necessary action,
including payment of the related filing fee, as may be necessary to register
Shares of each Series under the 1933 Act to the end that there will be available
for sale such number of Shares as PaineWebber may be expected to sell. The Fund
agrees to file, from time to time, such amendments, reports, and other documents
as may be necessary in order that there will be no untrue statement of a
material fact in the Registration Statement, nor any omission of a material fact
which omission would make the statements therein misleading.
(e) The Fund shall use its best efforts to qualify and maintain the
qualification of an appropriate number of Shares of each Series for sale under
the securities laws of such states or other jurisdictions as PaineWebber and the
Fund may approve, and, if necessary or appropriate in connection therewith, to
qualify and maintain the qualification of the Fund as a broker or dealer in such
jurisdictions; provided that the Fund shall not be required to amend its
Articles of Incorporation or By-Laws to comply with the laws of any
jurisdiction, to maintain an office in any jurisdiction, to change the terms of
the offering of the Shares in any jurisdiction from the terms set forth in its
Registration Statement, to qualify as a foreign corporation in any jurisdiction,
or to consent to service of process in any jurisdiction other than with respect
to claims arising out of the offering of the Shares. PaineWebber shall furnish
such information and other material relating to its affairs and activities as
may be required by the Fund in connection with such qualifications.
7. EXPENSES OF THE FUND. The Fund shall bear all costs and expenses of
registering the Shares with the Securities and Exchange Commission and state and
other regulatory bodies, and shall assume expenses related to communications
with shareholders of each Series, including (i) fees and disbursements of its
counsel and independent public accountant; (ii) the preparation, filing and
printing of registration statements and/or prospectuses or statements of
additional information required under the federal securities laws; (iii) the
preparation and mailing of annual and interim reports, prospectuses, statements
of additional information and proxy materials to shareholders; and (iv) the
qualifications of Shares for sale and of the Fund as a broker or dealer under
the securities laws of such jurisdictions as shall be selected by the Fund and
PaineWebber pursuant to Paragraph 6(e) hereof, and the costs and expenses
payable to each such jurisdiction for continuing qualification therein.
8. EXPENSES OF PAINEWEBBER. PaineWebber shall bear all costs and
expenses of (i) preparing, printing and distributing any materials not prepared
by the Fund and other materials used by PaineWebber in connection with the sale
of Shares under this Contract, including the additional cost of printing copies
of prospectuses, statements of additional information, and annual and interim
shareholder reports other than copies thereof required for distribution to
existing shareholders or for filing with any federal or state securities
authorities; (ii) any expenses of advertising incurred by PaineWebber in
connection with such offering; (iii) the expenses of registration or
qualification of PaineWebber as a broker or dealer under federal or state laws
and the expenses of continuing such registration or qualification; and (iv) all
compensation paid to PaineWebber employees and others for selling Shares, and
all expenses of
PaineWebber, its employees and others who engage in or support the sale of
Shares as may be incurred in connection with their sales efforts.
9. INDEMNIFICATION.
(a) The Fund agrees to indemnify, defend and hold PaineWebber, its
officers and directors, and any person who controls PaineWebber 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 PaineWebber, 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 alleged untrue
statement of a material fact contained in the Registration Statement or arising
out of or based upon any alleged omission to state a material fact required to
be stated in the Registration Statement or necessary to make the statements
therein 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 PaineWebber to the Fund for use in the
Registration Statement; provided, however, that this indemnity agreement shall
not inure to the benefit of any person who is also an officer or director of the
Fund or who controls the Fund within the meaning of Section 15 of the 1933 Act,
unless a court of competent jurisdiction shall determine, or it shall have been
determined by controlling precedent, that such result would not be against
public policy as expressed in the 1933 Act; and further provided, that in no
event shall anything contained herein be so construed as to protect PaineWebber
against any liability to the Fund or to the shareholders of any Series to which
PaineWebber 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 under this Contract. The Fund shall not
be liable to PaineWebber under this indemnity agreement with respect to any
claim made against PaineWebber or any person indemnified unless PaineWebber or
other such person 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 PaineWebber
or such other person (or after PaineWebber or the person shall have received
notice of service on any designated agent). However, failure to notify the Fund
of any claim shall not relieve the Fund from any liability which it may have to
PaineWebber or any person against whom such action is brought otherwise than on
account of this indemnity agreement. 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 claims subject to this indemnity agreement. If
the Fund elects to assume the defense of any such claim, the defense shall be
conducted by counsel chosen by the Fund and satisfactory to indemnified
defendants in the suit whose approval shall not be unreasonably withheld. In
the event that the Fund elects to assume the defense of any suit and retain
counsel, the indemnified defendants shall bear the fees and expenses of any
additional counsel retained by them. If the Fund does not elect to assume the
defense of a suit, it will reimburse the indemnified defendants for the
reasonable fees and expenses of any counsel retained by the indemnified
defendants. The Fund agrees to notify PaineWebber promptly of the commencement
of any litigation or
proceedings against it or any of its officers or directors in connection with
the issuance or sale of any of its Shares.
(b) PaineWebber shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Contract relates (including any loss arising out of the
receipt by PaineWebber of inadequate consideration in connection with an order
to purchase Shares whether in the form of fraudulent check, draft or wire; a
check returned for insufficient funds; or any other inadequate consideration
(hereinafter "Check Loss")), except a loss resulting from the willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Contract; PROVIDED, HOWEVER, that the Fund shall not be liable for Check Loss
resulting from willful misfeasance, bad faith or negligence on the part of
PaineWebber.
(c) PaineWebber agrees to indemnify, defend, and hold the Fund, its
officers and directors and any person who controls the Fund 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 the Fund, its directors or officers, or
any such controlling person may incur under the 1933 Act or under common law or
otherwise arising out of or based upon any alleged untrue statement of a
material fact contained in information furnished in writing by PaineWebber to
the Fund for use in the Registration Statement, arising out of or based upon any
alleged omission to state a material fact in connection with such information
required to be stated in the Registration Statement necessary to make such
information not misleading, or arising out of any agreement between PaineWebber
and any retail dealer, or arising out of any supplemental sales literature or
advertising used by PaineWebber in connection with its duties under this
Contract. PaineWebber 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 the claim, but if PaineWebber elects to assume the defense, the defense
shall be conducted by counsel chosen by PaineWebber and satisfactory to the
indemnified defendants whose approval shall not be unreasonably withheld. In
the event that PaineWebber elects to assume the defense of any suit and retain
counsel, the defendants in the suit shall bear the fees and expenses of any
additional counsel retained by them. If PaineWebber does not elect to assume
the defense of any suit, it will reimburse the indemnified defendants in the
suit for the reasonable fees and expenses of any counsel retained by them.
10. SERVICES PROVIDED TO THE FUND BY EMPLOYEES OF PAINEWEBBER. Any
person, even though also an officer, director, employee or agent of PaineWebber
who may be or become an officer, director, employee or agent of the Fund, shall
be deemed, when rendering services to the Fund or acting in any business of the
Fund, to be rendering such services to or acting solely for the Fund and not as
an officer, director, employee or agent or one under the control or direction of
PaineWebber even though paid by PaineWebber.
11. DURATION AND TERMINATION.
(a) This Contract shall become effective upon the date hereabove
written, provided that, with respect to any Series, this Contract shall not take
effect unless such action has first been approved by vote of a majority of the
Board and by vote of a majority of those directors of the Fund who are not
interested persons of the Fund, and have no direct or indirect financial
interest in the operation of the Plan relating to the Series or in any
agreements related thereto (all such directors collectively being referred to
herein as the "Independent Directors"), cast in person at a meeting called for
the purpose of voting on such action.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for one year from the above written date. Thereafter, if not
terminated, this Contract shall continue automatically for successive periods of
twelve months each, provided that such continuance is specifically approved at
least annually (i) by a vote of a majority of the Independent Directors, cast in
person at a meeting called for the purpose of voting on such approval, and (ii)
by the Board or with respect to any given Series by vote of a majority of the
outstanding voting securities of such Series.
(c) Notwithstanding the foregoing, with respect to any Series, this
Contract may be terminated at any time, without the payment of any penalty, by
vote of the Board, by vote of a majority of the Independent Directors or by vote
of a majority of the outstanding voting securities of the Shares of such Series
on sixty days' written notice to PaineWebber or by PaineWebber at any time,
without the payment of any penalty, on sixty days' written notice to the Fund or
such Series. This Contract will automatically terminate in the event of its
assignment.
(d) Termination of this Contract with respect to any given Series
shall in no way affect the continued validity of this Contract or the
performance thereunder with respect to any other Series.
12. AMENDMENT OF THIS CONTRACT. No provision of this Contract may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
13. GOVERNING LAW. This Contract shall be construed in accordance with
the laws of the State of Delaware and the 1940 Act. To the extent that the
applicable laws of the State of Delaware conflict with the applicable provisions
of the 1940 Act, the latter shall control.
14. NOTICE. Any notice required or permitted to be given by either party
to the other shall be deemed sufficient upon receipt in writing at the other
party's principal offices.
15. MISCELLANEOUS. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors. As used in this Contract,
the terms "majority of the outstanding voting securities," "interested person"
and "assignment" shall have the same meaning as such terms have in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be
executed by their officers designated as of the day and year first above
written.
ATTEST: PAINEWEBBER RMA TAX-FREE FUND, INC.
/s/ Xxxxxxx X. Xxxx By: /s/ Xxxx X. Xxxxxx
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ATTEST: PAINEWEBBER INCORPORATED
/s/ Xxxxxx X. X'Xxxxxxx By: /s/ Xxxxxx X. Xxxxx
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