DISTRIBUTION AGREEMENT
AGREEMENT made as of __________________, 1995, between BULL & BEAR
FUNDS II, INC. ("Fund"), a corporation organized and existing under the laws of
the State of Maryland, and Investor Service Center, Inc. ("Distributor"), a
corporation organized and existing under the laws of the State of Delaware.
WHEREAS the Fund is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company; and
WHEREAS the Fund desires to retain the Distributor as principal
distributor in connection with the offering and sale of the shares of common
stock ("Shares") and of such other series as may hereafter be designated
("Series") by the Fund's Board of Directors ("Board"); and
WHEREAS the Distributor 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 the Distributor 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
Agreement. The Distributor hereby accepts such appointment and agrees to
act hereunder.
2. Services and Duties of the Distributor.
(a) The Distributor agrees to sell the Shares on a best
efforts basis from time to time during the term of this Agreement as agent for
the Fund and upon the terms described in the Registration Statement. As used in
this Agreement, 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 Agreement or the
initial offering of the Shares to the public by a Series, the Distributor will
hold itself available to receive purchase orders, satisfactory to the
Distributor 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 Regis tration Statement.
(c) The Distributor in its discretion may enter into
agreements to sell Shares to such registered and qualified retail dealers, as it
may select. In making agreements with such dealers, the Distributor shall act
only as principal and not as agent for the 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 the Distributor's principal office. The Fund shall promptly
furnish the Distributor with a statement of each computation of net asset value.
(e) The Distributor shall not be obligated to sell any
certain number of Shares.
(f) The Distributor 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").
(g) The Distributor shall have the right to use any lists of
shareholders of the Fund or any other lists of investors which it obtains in
connection with its provision of services under this Agreement; provided,
however, that the Distributor shall not sell or knowingly provide such lists of
shareholders to any unaffiliated person unless reasonable payment is made to the
Fund.
3. Authorization to Enter into Dealer Agreements and to Delegate Duties
as Distributor. With respect to any or all Series, the Distributor may enter
into a dealer agreement with respect to sales of the Shares or the provision of
service activities with any registered and qualified dealer. In a separate
contract or as part of any such dealer agreement, the Distributor also may
delegate to another registered and qualified dealer ("sub-distributor") any or
all of its duties specified in this Agreement, provided that such separate
contract or dealer agreement imposes on the sub-distributor bound thereby all
applicable duties and conditions to which the Distributor is subject under this
Agreement, and further provided that such separate contract meets all
requirements of the 1940 Act and rules thereunder.
4. Services Not Exclusive. The services furnished by the Distributor
hereunder are not to be deemed exclusive and the Distributor shall be free to
furnish similar services to others so long as its services under this Agreement
are not impaired thereby. Nothing in this Agreement shall limit or restrict the
right of any director, officer or employee of the Distributor, 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 for Distribution and Service Activities.
(a) As compensation for its distribution and service
activities under this Agreement with respect to each Series and its
shareholders, the Distributor shall receive from the Fund a fee (or fees) 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.
(b) The Distributor may reallow any or all of the fees it is
paid to such dealers as the Distributor 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 the Distributor 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 the Distributor, the Fund will
cause certificates evidencing Shares to be issued in such names and
denominations as the Distributor shall from time to time direct.
(c) The Fund shall keep the Distributor fully informed of its
affairs and shall make available to the Distributor copies of all information,
financial statements, and other papers which the Distributor may reasonably
request for use in connection with the distribution of Shares, 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 the Distributor may request, and the
Fund shall cooperate fully in the efforts of the Distributor to sell and arrange
for the sale of the Shares of the Series and in the performance of the
Distributor's duties under this Agreement.
(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 the Distributor 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 the
Distributor 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 jurisdic tion 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. The
Distributor 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
the Distributor pursuant to Paragraph 6(e) hereof, and the costs and expenses
payable to each such jurisdiction for continuing qualification therein.
8. Expenses of the Distributor. Distributor shall bear all costs and
expenses of (i) preparing, printing and distributing any materials not prepared
by the Fund and other materials used by the Distributor in connection with the
sale of Shares under this Agreement, 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 the Distributor in
connection with such offering; (iii) the expenses of registration or
qualification of the Distributor 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 the Distributor's employees and others for selling
Shares, and all expenses of the Distributor, 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 the
Distributor, its officers and directors, and any person who controls the
Distributor within the meaning of Section 15 of the 1933 Act, free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which the
Distributor, its officers, directors or any such controlling person may incur
under the 1933 Act, or under common law or otherwise, arising out of or based
upon any 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 the
Distributor 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 the Distributor against any liability to
the Fund or to the shareholders of any Series to which the 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 its reckless
disregard of its obligations under this Agreement. The Fund shall not be liable
to the Distributor under this indemnity agreement with respect to any claim made
against the Distributor or any person indemnified unless the Distributor 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 the
Distributor or such other person (or after the Distributor 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 the Distributor 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 the Distributor 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) The Distributor 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 Agreement relates (including any loss arising out
of the receipt by the Distributor 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 Agreement; provided, however, that the Fund shall not be
liable for Check Loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Distributor.
(c) The Distributor 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
the Distributor 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 the Distributor and any retail dealer, or arising out of any
supplemental sales literature or advertising used by the Distributor in
connection with its duties under this Agreement. The Distributor 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 the
Distributor elects to assume the defense, the defense shall be conducted by
counsel chosen by the Distributor and satisfactory to the indemnified defendants
whose approval shall not be unreasonably withheld. In the event that the
Distributor 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 the Distributor 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 the Distributor. Any
person, even though also an officer, director, employee or agent of the
Distributor 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 for solely the
Fund and not as an officer, director, employee or agent or one under the control
or direction of the Distributor even though paid by the Distributor.
11. Duration and Termination.
(a) This Agreement shall become effective upon the date
hereabove written, provided that, with respect to any Series, this Agreement
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
Agreement shall continue in effect for one year from the above written date.
Thereafter, if not terminated, this Agreement 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 Agreement 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 the Distributor or by the
Distributor at any time, without the payment of any penalty, on sixty days'
written notice to the Fund or such Series. This Agreement will automatically
terminate in the event of its assignment.
(d) Termination of this Agreement with respect to any given
Series shall in no way affect the continued validity of this Agreement or the
performance thereunder with respect to any other Series.
12. Amendment of this Agreement. No provision of this Agreement 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 Agreement shall be construed in accordance with
the laws of the State of New York and the 1940 Act. To the extent that the
applicable laws of the State of New York 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 Agreement 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 Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in this
Agreement, 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 Agreement to be
executed by their officers designated as of the day and year first above
written.
ATTEST: BULL & BEAR FUNDS II, INC.
By:
ATTEST: INVESTOR SERVICE CENTER, INC.
By:
