DISTRIBUTION AGREEMENT
AUGUST 2, 1985
Fairfield Group, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Gentlemen:
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned, Red Oak Cash Reserve Fund, Inc. ("the Fund"), a
Maryland corporation, has agreed that Fairfield Group, Inc. ("Fairfield") shall
be, for the period of this Agreement, the distributor of shares of common stock
("Common Shares") of the Fund.
1. Services as Distributor.
1.1 Fairfield will act as agent for the distribution of the Common
Shares covered by the registration statement and prospectus then in effect under
the Securities Act of 1933.
1.2 Fairfield agrees to use appropriate efforts to solicit orders for
the sale of the Common Shares and will undertake such advertising and promotion
as it believes reasonable in connection with such solicitation. The Fund
understands that Fairfield is the distributor, and may in the future be the
distributor, of the shares of several investment companies ("Companies")
including Companies having investment objectives similar to those of the Fund.
The Fund further understands that investors and potential investors in the Fund
may invest in shares of such other Companies. The Fund agrees that Fairfield's
duties to such Companies shall
not be deemed in conflict with its duties to the Fund under this paragraph 1.2.
Fairfield shall, at its own expense, finance appropriate activities
which it deems reasonable which are primarily intended to result in the sale of
the Common Shares, including, but not limited to, advertising, compensation of
underwriters, dealers, and sales personnel, the printing and mailing of
prospectuses to other than current shareholders, and the printing and mailing of
sales literature; provided, however, that Fairfield agrees that it shall furnish
to the Fund's investment adviser, prior to any use or distribution thereof,
copies of all prospectuses, statements of additional information, proxy
statements, reports to shareholders, sales literature, advertisements, and other
material prepared for distribution to shareholders of the Fund or to the public,
which in any way refer to or describe the investment adviser or which include
any tradenames, trademarks, or logos of the investment adviser or any affiliate
of the investment adviser. Fairfield further agrees that it shall not use or
distribute any such material if the investment adviser reasonably objects in
writing to such use or distribution within ten business days after the date such
material is furnished to it.
1.3 All activities by Fairfield and its agents and employees as
distributor of the Common Shares shall comply with all applicable laws, rules,
and regulations, including, without limitation, all rules and regulations made
or adopted by the Securities and Exchange
Commission or any securities association registered under the Securities
Exchange Act of 1934.
1.4 Fairfield will provide one or more persons, during normal business
hours, to respond to telephone questions with respect to the Fund.
1.5 Fairfield will transmit any orders received by it for purchase or
redemption of the Common Shares to the Fund's transfer agent and custodian.
1.6 Whenever in their judgment such action is warranted by unusual
market, economic, or political conditions, or by abnormal circumstances of any
kind, the Fund's officers may decline to accept any orders for, or make any
sales of, the Common Shares until such time as those officers deem it advisable
to accept such orders and to make such sales.
1.7 Fairfield will act only on its own behalf as principal if it chooses
to enter into selling agreements with selected dealers or others.
1.8 The Fund agrees at its own expense to execute any and all documents
and to furnish any and all information and otherwise to take all actions that
may be reasonably necessary in connection with the qualification of the Common
Shares for sale in such states as Fairfield may designate.
1.9 The Fund shall furnish from time to time, for use in connection with
the sale of the Common Shares, such information with respect to the Fund and the
Common Shares as Fairfield may reasonably request; and the Fund warrants that
the statements contained in any such information shall fairly show or represent
what they purport to show or represent. The Fund shall also furnish Fairfield
upon request with: (a) unaudited semiannual statements of the Fund's books and
accounts prepared by the Fund, (b) quarterly earnings statements prepared by the
Fund, (c) a monthly itemized list of the securities in each Portfolio of the
Fund, (d) monthly balance sheets as soon as practicable after the end of each
month, and (e) from time to time such additional information regarding the
Fund's financial condition as Fairfield may reasonably request.
1.10 The Fund represents to Fairfield that all registration statements
and prospectuses filed by the Fund with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, with respect to the Common Shares
have been carefully prepared in conformity with the requirements of said Act and
rules and regulations of the Securities and Exchange Commission thereunder. As
used in this agreement the terms "registration statement" and "prospectus" shall
mean any registration statement and prospectus filed with the Securities and
Exchange Commission and any amendments and supplements thereto which at any time
shall have been filed with the same Commission. The Fund represents and warrants
to Fairfield that any registration statement and prospectus, when such
registration statement becomes effective, will contain all statements required
to be stated therein in conformity with said Act and the rules and regulations
of said Commission; that all statements of fact
contained in any such registration statement and prospectus will be true and
correct when such registration statement becomes effective; and that neither any
registration statement nor any prospectus when such registration statement
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 the Common Shares. The Fund
may but shall not be obligated to propose from time to time such amendment or
amendments to any registration statement and such supplement or supplements to
any prospectus as, in the light of future developments, may, in the opinion of
the Fund's counsel, be necessary or advisable. If the Fund shall not propose
such amendment or amendments and/or supplement or supplements within fifteen
days after receipt by the Fund of a written request from Fairfield to do so,
Fairfield may, at its option, terminate this agreement. The Fund shall not file
any amendment to any registration statement or supplement to any prospectus
without giving Fairfield reasonable notice thereof in advance; provided,
however, that nothing contained in this agreement shall in any way limit the
Fund's right to file at any time such amendments to any registration statement
and/or supplements to any prospectus, of whatever character, as the Fund may
deem advisable, such right being in all respects absolute and unconditional.
1.11 The Fund authorizes Fairfield and dealers to use any prospectus in
the form furnished from time to time in connection with the sale of the Common
Shares. The Fund agrees to indemnify, defend, and hold Fairfield, its several
officers and directors, and any person who controls Fairfield within the meaning
of Section 15 of the Securities Act of 1933,
as amended, 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 Fairfield, its officers and directors, or any such controlling
person, may incur under the Securities Act of 1933, as amended, or under common
law or otherwise, arising out of or based upon any untrue statement, or alleged
untrue statement, of a material fact contained in any registration statement or
any prospectus or arising out of or based upon any omission, or alleged
omission, to state a material fact required to be stated in either any
registration statement or any prospectus or necessary to make the statements in
either thereof not misleading; provided, however, that the Fund's agreement to
indemnify Fairfield, its officers or directors, and any such controlling person
shall not be deemed to cover any claims, demands, liabilities, or expenses
arising out of any statements or representations as are contained in any
prospectus and in such financial and other statements as are furnished in
writing to the Fund by Fairfield and used in the answers to any of the items of
the registration statement or in the corresponding statements made in the
prospectus, or arising out of or based upon any omission or alleged omission to
state a material fact in connection with the giving of such information required
to be stated in such answers or necessary to make the answers not misleading;
and further provided that the Fund's agreement to indemnify Fairfield and the
Fund's representations and warranties hereinbefore set forth in paragraph 1.10
shall not be deemed to cover any liability to the Fund or its shareholders to
which Fairfield would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of its duties, or by reason of
Fairfield's
reckless disregard of its obligations and duties under this agreement. The
Fund's agreement to indemnify Fairfield, its officers and directors, and any
such controlling person, as aforesaid, is expressly conditioned upon the Fund's
being notified of any action brought against Fairfield, its officers or
directors, or any such controlling person, such notification to be given by
letter or by telegram addressed to the Fund at its principal office in Horsham,
Pennsylvania and sent to the Fund by the person against whom such action is
brought, within 10 days after the summons or other first legal process shall
have been served. The failure to so notify the Fund of any such action shall not
relieve the Fund from any liability which the Fund may have to the person
against whom such action is brought by reason of any such untrue, or allegedly
untrue, statement or omission, or alleged omission, otherwise than on account of
the Fund's indemnity agreement contained in this paragraph 1.11. The Fund will
be entitled to assume the defense of any suit brought to enforce any such claim,
demand, or liability, but, in such case, such defense shall be conducted by
counsel of good standing chosen by the Fund and approved by Fairfield, which
approval shall not unreasonably be withheld. In the event the Fund elects to
assume the defense of any such suit and retain counsel of good standing approved
by Fairfield, 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 the Fund
does not elect to assume the defense of any such suit, or in case Fairfield
reasonably does not approve of counsel chosen by the Fund, the Fund will
reimburse Fairfield, its officers and directors, or the controlling person or
persons named as defendant or defendants in such suit, for the fees and expenses
of any counsel retained by Fairfield or them. The Fund's indemnification
agreement contained in this paragraph
1.11 and the Fund's representations and warranties in this agreement shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of Fairfield, its officers and directors, or any
controlling person, and shall survive the delivery of any Common Shares. This
agreement of indemnity will inure exclusively to Fairfield's benefit, to the
benefit of its several officers and directors, and their respective estates, and
to the benefit of the controlling persons and their successors. The Fund agrees
promptly to notify Fairfield of the commencement of any litigation or
proceedings against the Fund or any of its officers or directors in connection
with the issue and sale of any Common Shares.
1.12 Fairfield agrees to indemnify, defend, and hold the Fund, its
several officers and directors, and any person who controls the Fund within the
meaning of Section 15 of the Securities Act of 1933, as amended, free and
harmless from and against any and all claims, demands, liabilities, and expenses
(including the costs of investigating or defending such claims, demands, or
liabilities and any counsel fees incurred in connection therewith) which the
Fund, its officers or directors, or any such controlling person, may incur under
the Securities Act of 1933, as amended, or under common law or otherwise, but
only to the extent that such liability or expense incurred by the Fund, its
officers or directors, or such controlling person resulting from such claims or
demands, shall arise out of or be based upon any untrue, or alleged untrue,
statement of a material fact contained in information furnished in writing by
Fairfield to the Fund and used in the answers to any of the items of the
registration statement or in the corresponding statements made in the
prospectus, or shall arise out of or be based upon any omission, or alleged
omission, to state a material fact in connection with such information furnished
in writing by Fairfield to the Fund required to be stated in such answers or
necessary to make such information not misleading. Fairfield's agreement to
indemnify the Fund, its officers and directors, and any such controlling person,
as aforesaid, is expressly conditioned upon Fairfield's being notified of any
action brought against the Fund, its officers or directors, or any such
controlling person, such notification to be given by letter or telegram
addressed to Fairfield at its principal office in Horsham, Pennsylvania, and
sent to Fairfield by the person against whom such action is brought, within 10
days after the summons or other first legal process shall have been served.
Fairfield shall have the right of first control of the defense of such action,
with counsel of its own choosing, satisfactory to the Fund, if such action is
based solely upon such alleged misstatement or omission on Fairfield's part, and
in any other event the Fund, its 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 so to notify Fairfield of any such
action shall not relieve Fairfield from any liability which Fairfield may have
to the Fund, its officers or directors, or to such controlling person by reason
of any such untrue or alleged untrue statement, or omission or alleged omission,
otherwise than on account of Fairfield's indemnity agreement contained in this
paragraph 1.12.
1.13 No Common Shares shall be offered by either Fairfield or the Fund
under any of the provisions of this agreement and no orders for the purchase or
sale of Common Shares hereunder shall be accepted by the
Fund if and so long as the effectiveness of the registration statement then in
effect or any necessary amendments thereto shall be suspended under any of the
provisions of the Securities Act of 1933, as amended, or if and so long as a
current prospectus as required by Section 10(b)(2) of said Act, as amended, is
not on file with the Securities and Exchange Commission; provided, however, that
nothing contained in this paragraph 1.13 shall in any way restrict or have an
application to or bearing upon the Fund's obligation to repurchase Common Shares
from any shareholder in accordance with the provisions of the Fund's prospectus
or Articles of Incorporation.
1.14 The Fund agrees to advise Fairfield as soon as reasonably
practicable by a notice in writing delivered to Fairfield or its counsel:
(a) of any request by the Securities and Exchange Commission for
amendments to the registration statement or prospectus then in effect or for
additional information;
(b) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of the registration
statement or prospectus then in effect or the initiation by service of process
on the Fund of any proceeding for that purpose;
(c) of the happening of any event that makes untrue any statement of a
material fact made in the registration statement or prospectus then in effect or
which requires the making of a
change in such registration statement or prospectus in order to make the
statements therein not misleading; and
(d) of all action of the Securities and Exchange Commission with respect
to any amendment to any registration statement or prospectus which may from time
to time be filed with the Securities and Exchange Commission.
For purposes of this section, informal requests by or acts of the staff
of the Securities and Exchange Commission shall not be deemed actions of or
requests by the Securities and Exchange Commission.
1.15 Fairfield agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Fund all records and other
information relative to the Fund and its prior, present, or potential
shareholders, and not to use such records and information for any purpose other
than performance of its responsibilities and duties hereunder, except after
prior notification to and approval in writing by the Fund, which approval shall
not be unreasonably withheld and may not be withheld where Fairfield may be
exposed to civil or criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted authorities, or when
so requested by the Fund. Fairfield shall provide such information to the Fund's
other service providers at such time or times and in such form or forms as the
Fund may reasonably request.
1.16 This agreement shall be governed by the laws of the Commonwealth of
Pennsylvania.
2. Term.
This agreement shall become effective August 2, 1985, and, unless sooner
terminated as provided herein, shall continue until June 30, 1987 and thereafter
shall continue automatically for successive annual periods ending on June 30 of
each year, provided such continuance is specifically approved at least annually
by (i) the Fund's Board of Directors or (ii) by a vote of a majority (as defined
in the Investment Company Act of 1940) of the Fund's outstanding voting
securities; provided that, in either event, the continuance is also approved by
the majority of the Fund's directors who are not parties to the agreement or
interested persons (as defined in the Investment Company Act of 1940) of any
party to this agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This agreement is terminable without
penalty, on not less than sixty days' notice, by the Fund's Board of Directors,
by vote of a majority (as defined in the Investment Company Act of 1940) of the
Fund's outstanding voting securities, or by Fairfield. This agreement will also
terminate automatically in the event of its assignment (as defined in the
Investment Company Act of 1940).
Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place below indicated,
whereupon it shall become a binding agreement between us.
Yours very truly,
RED OAK CASH RESERVE FUND, INC.
By /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Accepted:
FAIRFIELD GROUP, INC.
By /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Authorized Officer
