DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT, made this 1st day of
December, 2005 by and between Xxxxx Xxxxxx Aggressive Growth
Fund Inc. ("Investment Company"), a Maryland corporation and Xxxx
Xxxxx Investor Services, LLC ("Distributor").
WHEREAS, the Investment Company is registered with the
Securities and Exchange Commission ("SEC") as an open-end
management investment company under the Investment Company Act
of 1940, as amended (the "1940 Act"), and has registered its shares for
the series thereof listed on Appendix A ("Shares"), as it may be
amended from time to time by agreement between the Distributor and
the Investment Company (each such series thereof, a "Fund") for sale to
the public under the Securities Act of 1933, as amended (the "1933
Act") and filed appropriate notices under various state securities laws;
and
WHEREAS, the Investment Company wishes to retain the
Distributor as the principal underwriter in connection with the offering
and sale of the Shares and to furnish certain other services to the
Investment Company as specified in this Agreement; and
WHEREAS, this Agreement has been approved by separate votes
of the Investment Company's Board of Directors ("Board") and of those
Board members who are not "interested persons" of the Investment
Company, as defined in the 1940 Act and who have no direct or indirect
financial interest in the operation of the plan of distribution adopted
pursuant to Rule 12b-1 under the 1940 Act ("Plan") of a Fund or in any
agreements related to such plan ("Independent Board Members") in
conformity with Section 15 of, and Rule 12b-1 under, the 1940 Act; and
WHEREAS, the Distributor is willing and able to furnish such
services on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed as follows:
1. (a) The Investment Company hereby appoints the
Distributor as non-exclusive principal underwriter and distributor in
connection with the offering and sale of Shares of the Fund to the public
directly and through registered and qualified securities dealers, banks
and other intermediaries (collectively, "Intermediaries"), and the
Distributor hereby accepts such appointment, on the terms and for the
period set forth in this Agreement. The Distributor, as agent for the
Investment Company, shall, in accordance with applicable federal and
state law and the organizational documents of the Investment Company
and the registration statement most recently filed by the Investment
Company with the SEC and effective under the 1940 Act and 1933 Act,
as such Registration Statement may be amended or supplemented from
time to time ("Registration Statement"): (i) promote the Fund; (ii) solicit
orders for the purchase of the Shares subject to such terms and
conditions as the Investment Company may specify; and (iii) accept
orders for the purchase of the Shares on behalf of the Investment
Company (collectively, "Distribution Services"). The Distributor shall
comply with all applicable federal and state laws and offer the Shares of
the Fund on an agency or "best efforts" basis under which the
Investment Company shall issue only such Shares as are actually sold.
(b) The Distributor may pay for ongoing shareholder
liaison services, including responding to shareholder inquiries, providing
shareholders with information on their investments, and any other
services now or hereafter deemed to be appropriate subjects for the
payments of "service fees" under Conduct Rule 2830 of the National
Association of Securities Dealers, Inc. ("NASD") (collectively,
"Shareholder Services"), as appropriate.
2. The Distributor may also enter into dealer or similar
agreements with qualified Intermediaries it may select for the
performance of Distribution Services and Shareholder Services. The
Distributor may also enter into agreements with Intermediaries and other
qualified entities to perform recordkeeping, shareholder servicing and
sub-accounting services. In making such arrangements, the Distributor
shall act only as principal and not as agent for the Investment Company.
No such Intermediary is authorized to act as agent for the Investment
Company in connection with the offering or sale of Shares to the public
or otherwise, except for the limited purpose of determining the time as
of which orders for the purchases, sales and exchanges of Shares are
deemed to have been received.
3. The public offering price of the Shares of the Fund shall be
the net asset value per share (as determined by the Investment Company)
of the outstanding Shares of the Fund (or class thereof) next determined
after receipt of an order by the Fund or its designated agent plus any
applicable sales charge, as described in the Registration Statement of the
Investment Company.
4. As compensation for providing Distribution Services under
this Agreement, the Distributor shall retain the sales charge, if any, on
purchases of Shares or retain deferred sales charges upon redemption of
Shares, as set forth in the Registration Statement. The Distributor is
authorized to collect the gross proceeds derived from the sale of the
Shares, remit the net asset value thereof to the Investment Company
upon receipt of the proceeds and retain the sales charge, if any. The
Distributor shall receive from each Fund fees at the rates and under the
terms and conditions of the Plan adopted by the Investment Company
with respect to each Fund, as such Plan is in effect from time to time,
and subject to any further limitations on such fees as the Board may
impose. The Distributor may reallow any or all of the sales charges that
it has received under this Agreement to such Intermediaries as it may
from time to time determine, consistent with the Registration Statement
and applicable law. The Distributor may pay any or all of the
distribution fees and service fees that it has received under this
Agreement to such Intermediaries as it may from time to time determine,
consistent with the Registration Statement and applicable law. The
Distributor may securitize or borrow against amounts to be received by
the Distributor under a Plan, in which case payments of the fees under
the Plan by the Fund may be made directly to the lender, security-holder
or an agent thereof pursuant to written instructions of the Distributor;
provided, however, that no such arrangement shall be deemed to give
rise to any obligation on the part of an Investment Company or its Board
to continue such payments if the Board determines that such payments
are not in the best interests of the Fund or its shareholders, or to create
any obligation of the Fund or Investment Company to the lender.
5. As used in this Agreement, the terms "Prospectus" and
"Statement of Additional Information" shall mean, respectively, the
form of prospectus and statement of additional information with respect
to the Fund filed by the Investment Company as part of the Registration
Statement, or as they may be amended or supplemented from time to
time.
6. The Distributor shall print and distribute to prospective
investors current Prospectuses, and shall print and distribute, upon
request, to prospective investors current Statements of Additional
Information, and may print and distribute such other sales literature,
reports, forms and advertisements in connection with the sale and offers
of sale of the Shares as it deems appropriate. In connection with such
sales and offers of sale, the Distributor and any Intermediary shall give
only such information and make only such statements or representations
as are contained in the Fund's Registration Statement, or in information
furnished in writing to the Distributor by the Investment Company and
intended for such use or approved in writing by authorized
representatives of the Investment Company or the Investment
Company's investment adviser, and the Investment Company shall not
be responsible in any way for any other information, statements or
representations given or made by the Distributor or any Intermediary.
Except as specifically provided in this Agreement, the Investment
Company shall bear none of the expenses of the Distributor in
connection with its offer and sale of the Shares.
7. Subject to the right of the Investment Company to cease to
offer Shares as set forth in paragraph 11 hereof, the Investment
Company agrees at its own expense to register, qualify or determine the
exemption for registration or qualification of the Shares then offered
with the SEC, state and other regulatory bodies, and to prepare and file
from time to time such Fund's Registration Statement, amendments
thereto, reports and other documents as may be necessary to maintain
the registration or qualification. The Distributor and Intermediaries shall
provide the Investment Company promptly with all information required
for such registration or qualification. Each Fund shall bear all expenses
related to preparing and typesetting such Prospectuses, Statements of
Additional Information, and other materials required by law and such
other expenses, including printing and mailing expenses, related to such
Fund's communications with persons who are shareholders of that Fund.
8. (a) The Distributor shall act as distributor of Shares in
compliance in all material respects with all applicable laws, rules and
regulations, including, without limitation, all rules and regulations made
or adopted pursuant to (i) the 1940 Act, (ii) the 0000 Xxx, (xxx) the
Securities Exchange Act of 1934 ("1934 Act"), (iv) any securities
association registered under the 1934 Act, including without limitation
the NASD Conduct Rules or rules of any other applicable self-regulatory
organization. The Distributor shall offer the Shares, and accept
purchases, redemptions and exchanges for Shares, in compliance with
the Fund's Registration Statement and applicable law.
(b) The Distributor shall be responsible for reviewing and
making such filings with the NASD, as required, of advertisements and
sales literature relating to each Fund. The Distributor shall be
responsible for reviewing the Registration Statement of each Fund, as
applicable, for compliance with the requirement of the NASD Conduct
Rules that a Fund's prospectus contain disclosure of the details of any
arrangement by which special cash compensation arrangements are
made available to an NASD member distributing the Fund's securities,
which arrangements are not made available on the same terms to all
NASD members who distribute the Fund's securities.
(c) The Distributor shall adopt and follow procedures for
the confirmation of sales to investors and Intermediaries timeliness of
orders, the collection of amounts payable by investors and
Intermediaries on such sales, the correction of errors related to
distribution of Shares, the cancellation of unsettled transactions, and
assisting with the solicitation of proxies, and any other matters governed
by Rule 38a-1 under the 1940 Act (as may apply to a principal
underwriter for a registered investment company), each as may be
necessary to comply with the requirements of the NASD, any other self-
regulatory organization, and the federal and state securities laws. The
Distributor shall provide reports or other information to the Investment
Company at the Investment Company's reasonable request, including,
without limitation, reports related to the operation and implementation
of the Fund's policies related to customer privacy, safeguarding of
customer information, sales and marketing practices or other policies
and procedures of the Investment Company.
9. The Distributor agrees that it has adopted and implemented
an anti-money-laundering program in compliance with the USA
PATRIOT Act of 2001, the regulations thereunder and NASD Conduct
Rules, including, without limitation, customer identification program
procedures and monitoring for suspicious activity. The Distributor
additionally agrees that it has adopted and implemented procedures to
comply with applicable law and regulation related to cash transaction
reporting requirements, as well as monitoring and reporting under
FinCEN, OFAC and other government watch lists. The Distributor shall
provide reports or other information to the Investment Company at the
Investment Company's reasonable request, related to the operation and
implementation of any of the Fund's anti-money-laundering policies for
which the Distributor is responsible.
10. (a) The Investment Company agrees to indemnify, defend
and hold the Distributor, its officers, directors and employees 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 reasonable cost of
investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Distributor, its
officers, directors and employees 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 or
necessary to make the Registration Statement not misleading, provided
that in no event shall anything contained in this Agreement be construed
so as to protect the Distributor or such other parties against any liability
to the Investment Company or its shareholders to which the Distributor
or such other parties would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of their
duties, or by reason of reckless disregard of their obligations and duties
under this Agreement, and further provided that, notwithstanding the
foregoing, the Investment Company shall not indemnify the Distributor
or such other parties if such indemnification obligations arose, directly
or indirectly, as a result of conduct as set forth in paragraph 10(b). The
Distributor agrees that it shall look only to the assets of the Fund, and
not to any other series of the Investment Company, for satisfaction of
any obligation created by this paragraph or otherwise arising under this
Agreement.
(b) The Distributor agrees to indemnify, defend and hold
the Investment Company, its several officers and Board members, and
any person who controls the Investment Company 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 Investment
Company, its officers or Board members, or any such controlling person
may incur, under the 1933 Act or under common law or otherwise, on
account of any act of the Distributor or its directors, officers, employees
or agents, constituting willful misfeasance, bad faith, or gross negligence
in the performance of its duties, or by reason of its reckless disregard of
its obligations and duties under this Agreement or 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 Investment
Company for use in the Registration Statement or 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 or
necessary to make such information not misleading. As used in this
paragraph, the term "employee" shall not include a corporate entity
under contract to provide services to the Fund, or any employee of such
a corporate entity, unless such person is otherwise an employee of the
Investment Company.
(c) Each party agrees to promptly notify the other of the
commencement of any litigation or proceedings involving any
indemnified party. The indemnification provisions of this paragraph 10
shall survive the termination of this Agreement.
11. The Investment Company reserves the right at any time to
withdraw any or all offerings of the Shares of a Fund, and at its
discretion to recommence offering any time thereafter, by written notice
to the Distributor at its principal office.
12. The Distributor may at its sole discretion, directly or through
Intermediaries, repurchase Shares offered for sale by the shareholders or
Intermediaries. Repurchase of Shares by the Distributor shall be at the
net asset value (less any applicable sales, redemption or other charges, as
described in the Fund's Registration Statement) next determined after a
repurchase order has been received. The Distributor will receive no
commission or other remuneration for repurchasing Shares, other than
deferred sales charges as described in the Fund's Registration Statement.
At the end of each business day, the Distributor shall notify, by means of
electronic transmission (as may be agreed-upon by the parties to this
Agreement) or in writing, the Investment Company and the Investment
Company's transfer agent, of the orders for repurchase of Shares
received by the Distributor since the last such report, the amount to be
paid for such Shares, and the identity of the shareholders or
Intermediaries offering Shares for repurchase. Upon such notice, the
Investment Company shall pay the Distributor such amounts as are
required by the Distributor to pay for the repurchase of such Shares in
cash or in the form of a credit against moneys due the Investment
Company from the Distributor as proceeds from the sale of Shares. The
Investment Company reserves the right to suspend such repurchase right
upon written notice to the Distributor. The Distributor further agrees to
act as agent for the Investment Company to receive and transmit
promptly to the Investment Company's transfer agent shareholder and
Intermediary requests for redemption of Shares.
13. The Distributor is an independent contractor and shall be
agent for the Investment Company only in respect to the sale,
redemption and exchange of the Shares, including for the limited
purpose of determining the time as of which Share transactions are
deemed to have been received.
14. The services of the Distributor to the Investment Company
under this Agreement are not to be deemed exclusive, and the
Distributor shall be free to render similar services or other services to
others so long as its services hereunder are not impaired thereby.
15. The Distributor shall prepare reports for the Board on a
quarterly basis, or more frequently as reasonably requested by the
Board, showing such information concerning expenditures related to this
Agreement or related to the operation and implementation of a Fund's
Plan.
16. As used in this Agreement, the terms "assignment,"
"interested person" and "majority of the outstanding voting securities"
shall have the meanings given to them by Section 2(a) of the 1940 Act,
subject to such exemptions as may be granted by the SEC or its staff, as
appropriate, by any rule, regulation, order, or no-action or interpretative
letter.
17. This Agreement will become effective with respect to the
Fund on the date first written above and, unless sooner terminated as
provided herein, will continue in effect for two years from the above
written date. Thereafter, if not terminated, this Agreement shall
continue in effect with respect to each Fund for successive annual
periods ending on the same date of each year, provided that such
continuance is specifically approved at least annually (i) by the Board or
(ii) by a vote of a majority of the outstanding voting securities (as
defined the in 0000 Xxx) of the Fund, provided that in either event the
continuance is also approved by a majority of the Investment
Company's Independent Board Members, by vote cast in person at a
meeting called for the purpose of voting on such approval.
18. This Agreement is terminable with respect to some or all of
the Funds without penalty by the Board, by vote of a majority of the
outstanding voting securities of the Fund (as defined in the 1940 Act), or
by the Distributor, on not less than 60 days' written notice to the other
party, and such notice period may be waived upon the mutual written
consent of the Distributor and the Investment Company. This
Agreement will also automatically and immediately terminate in the
event of its assignment (as defined in Section 16 of this Agreement).
19. Shares of any Fund may have been divided into separate
classes, as described in the applicable Fund's Registration Statement,
and may have sales charges or discounts or waivers available for certain
categories of investor.
20. The Fund and the Distributor agree that the information
exchanged hereunder and information about the respective customers
and potential customers of each is confidential and as such shall not be
disclosed, sold or used in any way except to carry out the terms of this
Agreement. Notwithstanding the foregoing, such confidential
information may be disclosed on a "need to know" basis as set forth in
applicable privacy rules and regulations. The obligations regarding
confidentiality hereunder shall not apply to any information which is (i)
otherwise publicly available, (ii) already possessed by the entity to
whom the information was disclosed prior to disclosure hereunder, (iii)
independently developed by the entity, or (iv) disclosed pursuant to law,
rule, regulation or court or administrative order. The Distributor 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 Agreement, provided that such use is consistent with
applicable law and the privacy policies of the Distributor and the Fund.
The Distributor further agrees to take commercially reasonable steps, in
accordance with applicable law, to safeguard customer information. The
provisions of this paragraph 20 will survive termination of this
Agreement.
21. From time to time, each Fund may implement policies,
procedures or charges in an effort to avoid the potential adverse effects
on the Funds of short-term trading by market timers. The Distributor
agrees to cooperate in good faith with the Investment Company in the
implementation of (i) any such policies, procedures and/or charges, and
(ii) the imposition and payment over to the Fund of redemption fees
specified in the Registration Statement. The Distributor agrees, where
appropriate, to make reasonable efforts to obtain the agreement of
Intermediaries to comply with the Funds' frequent trading and other
policies set forth in the Funds' Registration Statement or to take
alternative actions reasonably designed to achieve compliance with these
policies.
22. No provision of this Agreement may be changed, waived,
discharged or terminated, except by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought. This Agreement may be executed in multiple
counterparts.
23. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Maryland.
24. Notices shall be provided to each party, as noted below:
To the Distributor:
Attn: Xxxxxx Xxxxx
Xxxx Xxxxx Investor Services, LLC
c/x Xxxx Xxxxx, Inc.,
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
To the Investment Company:
Xxxxx Xxxxxx Aggressive Growth Fund Inc.
000 Xxxxx Xxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Secretary and Chief Legal Officer
25. The Articles of Incorporation of the Investment Company,
amended from time to time, which is on file with the Maryland State
Department of Assessments and Taxation, provides that to the fullest
extent permitted by Maryland law, no Board member or officer of the
Investment Company shall be personally liable to the Investment
Company or its stockholders for money damages, except to the extent
such exemption from liability or limitation thereof is not permitted by
the 1940 Act.
IN WITNESS WHEREOF, the parties hereto caused this
Agreement to be executed by their officers thereunto duly authorized.
ATTEST:
By: _____________________________ By: /s/ R. Xxx Xxxxxx
Assistant Secretary Chairman
ATTEST: XXXX XXXXX INVESTOR
SERVICES, LLC
By: ______________________________ By:
_____________________________________
Appendix A
Fund
Date Added:
Xxxxx Xxxxxx Aggressive Growth
Fund Inc.
December 1, 2005
10
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