UNDERWRITING AGREEMENT
This Agreement made as of March 10, 1998 by and between XXXXX VALUE
FUND, INC., a Maryland corporation (the "Fund"), and LADENBURG XXXXXXXX & CO.
INC., a Delaware corporation ("Underwriter").
WHEREAS, the Fund is an investment company registered under the Investment
Company Act of 1940, as amended (the "Act"); and
WHEREAS, Underwriter is a broker-dealer registered with the Securities and
Exchange Commission and a member of the National Association of Securities
Dealers, Inc. (the "NASD");
NOW, THEREFORE, in consideration of the promises and agreements of the
parties contained herein, the parties agree as follows:
1. Appointment.
The Fund hereby appoints Underwriter as its exclusive agent for the
distribution of the shares of capital stock (the "Shares") of the Fund, and
Underwriter hereby accepts such appointment under the terms of this Agreement.
While this Agreement is in force, the Fund shall not sell any Shares except on
the terms set forth in this Agreement. Notwithstanding any other provision
hereof, the Fund may terminate, suspend or withdraw the offering of Shares
whenever, in its sole discretion, it deems such action to be desirable.
2. Sale and Repurchase of Shares.
(a) Underwriter will have the right, as agent for the Fund, to enter
into dealer agreements with responsible investment dealers, and to sell Shares
to such investment dealers against
orders therefor at the public offering price (as defined in subparagraph 2(e)
hereof) less a discount determined by Underwriter, which discount shall not
exceed the amount of the sales charge stated in the Fund's effective
Registration Statement on Form N-1A under the Securities Act of 1933, as
amended, including the then current prospectus and statement of additional
information (the "Registration Statement"). Upon receipt of an order to purchase
Shares from a dealer with whom Underwriter has a dealer agreement, Underwriter
will promptly cause such order to be filled by the Fund.
(b) Underwriter will also have the right, as agent for the Fund, to
sell such Shares to the public against orders therefor at the public offering
price.
(c) Underwriter will also have the right, as agent for the Fund, to
sell Shares at their net asset value to such persons as may be approved by the
Directors of the Fund, all such sales to comply with the provisions of the Act
and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.
(d) Underwriter will also have the right to take, as agent for the
Fund, all actions which, in Underwriter's judgment, are necessary to carry into
effect the distribution of the Shares.
(e) The public offering price for the Shares of the Fund shall be the
net asset value of the Shares then in effect, plus any applicable sales charge
determined in the manner set forth in the Registration Statement or as permitted
by the Act
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and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder. In no event shall any applicable sales charge exceed the
maximum sales charge permitted by the Rules of Fair Practice of the NASD.
(f) The net asset value of the Shares shall be determined in the
manner provided in the Registration Statement, and when determined shall be
applicable to transactions as provided for in the Registration Statement. The
net asset value of the Shares shall be calculated by the Fund or by another
entity on behalf of the Fund. Underwriter shall have no duty to inquire into or
liability for the accuracy of the net asset value per Share as calculated.
(g) On every sale, the Fund shall receive the applicable net asset
value of the Shares promptly, but in no event later than the tenth business day
following the date on which Underwriter shall have received an order for the
purchase of the Shares. Underwriter shall have the right to retain the sales
charge less any applicable dealer discount.
(h) Upon receipt of purchase instructions, Underwriter will transmit
such instructions to the Fund or its transfer agent for registration of the
Shares purchased.
(i) Nothing in this Agreement shall prevent Underwriter or any
affiliated person (as defined in the Act) of Underwriter from acting as
underwriter or distributor for any other person, firm or corporation (including
other investment companies) or in any way limit or restrict Underwriter or any
such affiliated person from buying, selling or trading any
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securities for its or their own account or for the accounts of others for whom
it or they may be acting; provided, however, that Underwriter expressly
represents that it will undertake no activities which, in its judgment, will
adversely affect the performance of its obligations to the Fund under this
Agreement.
(j) Underwriter, as agent of and for the account of the Fund, may
repurchase the Shares at such prices and upon such terms and conditions as shall
be specified in the Registration Statement.
3. Sale of Shares by the Fund.
The Fund reserves the right to issue any Shares at any time directly
to the holders of Shares ("Shareholders"), to sell Shares to its Shareholders or
to other persons approved by Underwriter at not less than net asset value and to
issue Shares in exchange for substantially all the assets of any corporation or
trust or for the shares of any corporation or trust.
4. Basis of Sale of Shares.
Underwriter does not agree to sell any specific number of Shares.
Underwriter, as agent for the Fund, undertakes to sell Shares on a best efforts
basis only against orders therefor.
5. Rules of NASD, etc.
(a) Underwriter will conform to the Rules of Fair Practice of the NASD
and the securities laws of any jurisdiction in which it sells, directly or
indirectly, any Shares.
(b) Underwriter will require each dealer with whom Underwriter has a
dealer agreement to conform to the applicable provisions hereof and the
Registration Statement with respect to
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the public offering price of the Shares, and neither Underwriter nor any such
dealers shall withhold the placing of purchase orders so as to make a profit
thereby.
(c) Underwriter agrees to furnish to the Fund sufficient copies of any
agreements, plans or other materials it intends to use in connection with any
sales of Shares in adequate time for the Fund to file and clear them with the
proper authorities before they are put in use, and not to use them until so
filed and cleared.
(d) Underwriter, at its own expense, will qualify as dealer or broker,
or otherwise, under all applicable State or federal laws required in order that
Shares may be sold in such States as may be mutually agreed upon by the parties.
(e) Underwriter shall not make, or permit any representative, broker
or dealer to make, in connection with any sale or solicitation of a sale of the
Shares, any representations concerning the Shares except those contained in the
then current prospectus and statement of additional information covering the
Shares and in printed information approved by the Fund as information
supplemental to such prospectus and statement of additional information. Copies
of the then effective prospectus and statement of additional information and any
such printed supplemental information will be supplied by the Fund to
Underwriter in reasonable quantities upon request.
6. Records to be Supplied by Fund.
The Fund shall furnish to Underwriter copies of all information,
financial statements and other papers which
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Underwriter may reasonably request for use in connection with the distribution
of the Shares, and this shall include, but shall not be limited to, one
certified copy, upon request by Underwriter, of all financial statements
prepared for the Fund by independent public accountants.
7. Expenses.
In the performance of its obligations under this Agreement,
Underwriter will pay the costs incurred in qualifying as a broker or dealer
under state and federal laws and in establishing and maintaining its
relationships with the dealers selling the Shares. All other costs in connection
with the offering of the Shares will be paid by the Fund or Underwriter in
accordance with agreements between them as permitted by applicable law,
including the Act and rules and regulations promulgated thereunder.
8. Indemnification of Fund.
Underwriter, to the extent of the net commissions received by it from
the sale of Shares but to no greater amount, agrees to indemnify and hold
harmless the Fund, and each person who has been, is, or may hereafter be a
director, officer, employee, shareholder or control person of the Fund, against
any loss, damage or expense (including the reasonable costs of investigation)
reasonably incurred by any of them in connection with any claim or in connection
with any action, suit or proceeding to which any of them may be a party, which
arises out of or is alleged to arise out of or is based upon any untrue
statement or alleged untrue statement of a material fact, or the
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omission or alleged omission to state a material fact necessary to make the
statements not misleading, on the part of Underwriter or any agent or employee
of Underwriter or any other person for whose acts Underwriter is responsible,
unless such statement or omission was made in reliance upon written information
furnished by the Fund. Underwriter likewise, to the extent of the net
commissions received by it from the sale of Shares but to no greater amount,
agrees to indemnify and hold harmless the Fund and each such person in
connection with any claim or in connection with any action, suit or proceeding
which arises out of or is alleged to arise out of Underwriter's failure to
exercise reasonable care and diligence with respect to its services, if any,
rendered in connection with investment, reinvestment, automatic withdrawal and
other plans for Shares. The term "expenses" for purposes of this and the next
paragraph includes amounts paid in satisfaction of judgments or in settlements
which are made with Underwriter's consent. The foregoing rights of
indemnification shall be in addition to any other rights to which the Fund or
each such person may be entitled as a matter of law.
9. Indemnification of Underwriter.
Underwriter, its directors, officers, employees, shareholders and
control persons 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, except a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of any of such persons in
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the performance of Underwriter's duties or from the reckless disregard by any of
such persons of Underwriter's obligations and duties under this Agreement. The
Fund will advance attorneys' fees or other expenses incurred by any such person
in defending a proceeding, upon the undertaking by or on behalf of such person
to repay the advance if it is ultimately determined that such person is not
entitled to indemnification. Any person employed by Underwriter who may also be
or become an officer or employee of the Fund shall be deemed, when acting within
the scope of his employment by the Fund, to be acting in such employment solely
for the Fund and not as an employee or agent of Underwriter.
10. Termination and Amendment of this Agreement.
This Agreement shall automatically terminate, without the payment of
any penalty, in the event of its assignment. This Agreement may be amended only
if such amendment is approved (i) by Underwriter, (ii) either by action of the
Board of Directors of the Fund or at a meeting of the Shareholders of the Fund
by the affirmative vote of a majority of the outstanding Shares, and (iii) by a
majority of the Directors of the Fund who are not interested persons of the Fund
or of Underwriter by vote cast in person at a meeting called for the purpose of
voting on such approval.
Either the Fund or Underwriter may at any time terminate this
Agreement on sixty (60) days' written notice delivered or mailed by registered
mail, postage prepaid, to the other party.
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11. Effective Period of this Agreement.
This Agreement shall take effect upon its execution and shall remain
in full force and effect for a period of two (2) years from the date of its
execution (unless terminated automatically as set forth in Section 10), and from
year to year thereafter, subject to annual approval (i) by Underwriter, (ii) by
the Board of Directors of the Fund or a vote of a majority of the outstanding
Shares, and (iii) by a majority of the Directors of the Fund who are not
interested persons of the Fund or of Underwriter by vote cast in person at a
meeting called for the purpose of voting on such approval.
12. New Series.
The terms and provisions of this Agreement shall become automatically
applicable to any additional series of the Fund established during the initial
or renewal term of this Agreement.
13. Successor Investment Company.
Unless this Agreement has been terminated in accordance with Paragraph
10, the terms and provisions of this Agreement shall become automatically
applicable to any investment company which is a successor to the Fund as a
result of a reorganization, recapitalization or change of domicile.
14. Severability.
In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
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15. Questions of Interpretation.
(a) This Agreement shall be governed by the substantive laws of the
State of New York without regard to its conflict of law provisions. Any disputes
arising out of this Agreement shall be adjudicated solely in the courts of the
State of New York or the federal court for the Southern District of New York (in
either case only within New York County, New York). The parties each agree to
personal jurisdiction and venue solely within New York County, New York, waive
any objections to personal jurisdiction and venue in New York County, New York,
and agree not to seek personal jurisdiction and venue in any other location.
(b) Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Act shall be resolved by reference to such term or provision of the Act
and to interpretation thereof, if any, by the United States courts located in
New York County, New York or in the absence of any controlling decision of any
such court, by rules, regulations or orders of the Securities and Exchange
Commission issued pursuant to said Act. In addition, where the effect of a
requirement of the Act, reflected in any provision of this Agreement is revised
by rule, regulation or order of the Securities and Exchange Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order.
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16. Notices.
Any notices 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 notice. Until further notice
to the other party, it is agreed that the address of the Fund for this purpose
shall be 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and that the address of
Underwriter for this purpose shall be 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000.
IN WITNESS WHEREOF, the Fund and Underwriter have each caused this
Agreement to be signed in duplicate on its behalf, all as of the day and year
first above written.
ATTEST: XXXXX VALUE FUND, INC.
/s/ Xxxx Xxxxxx By:/s/ Xxxx X. Xxxxx
ATTEST: LADENBURG XXXXXXXX & CO. INC.
---------------------------- By:/s/ Xxx Xxxxxxxx
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