Exhibit 99(e)
THE VALUE LINE SPECIAL SITUATIONS FUND, INC.
UNDERWRITING CONTRACT
This Agreement made this 20th day of January 1974, between The Value Line
Special Situations Fund, Inc. a Maryland Corporation (hereinafter called "the
Fund") and VALUE LINE SECURITIES, INC., a New York corporation (hereinafter
called "the Underwriter").
WITNESSETH
WHEREAS the Fund and the Underwriter duly entered into an Underwriting
Agreement made the 11th day of September, 1962 (hereinafter called "the
former Underwriting Contract").
AND WHEREAS the Underwriting Contract was amended successively by
Agreements between the Fund and the Underwriter made, respectively, on the
18th day of March, 1965, the 23rd day of March, 1967, the 1st day of March,
1968, and the 20th day of January, 1970.
AND WHEREAS the Underwriter has signified its willingness to continue to
act as principal udnerwriter and general distributor of the shares of the
Fund.
AND WHEREAS, it is contemplated that the Underwriter will also be the
principal underwriter and general distributor of the shares of The Value Line
Fund, Inc. and of The Value Line Income Fund, Inc.
AND WHEREAS it appears convenient and expedient that the amendments made
to the former Underwriting Contract be consolidated with the provisions of
the former Underwriting Contract.
AND WHEREAS it appears expedient that a further amendment be made to the
former Underwriting Contract to refelct the provisions of Rule N-22C-1 made
under the Investment Company Act of 1940.
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AND WHEREAS the Fund and the Underwriter desire, accordingly, to enter
into a new Underwriting Contract, having the same terms and provisions as
those of the former Underwriting Contract as presently amended and including
such further amendment, for the sale of shares of the Fund, through the
Underwriter acting as agent for the Fund, to dealers and investors, all
subject to, and in compliance with, the provisions of the Securities Act of
1933 and of the Investment Company Act of 1940, and of all other applicable
laws and regulations.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
Sec. 1. INTERPRETATION AND CONSTRUCTION
A. In this Underwriting Contract, unless the context otherwise
requires, -
(a) the expression "dealer" means a dealer in securities who is a
member of the National Association of Securities Dealers, Inc.,
or a dealer who is a "non-member broker or dealer in a foreign
country who is not eligible for membership in a registered
securities association" as that phrase is used in Paragraph (c)
Section 25 of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., or as that or any
similar phrase is used in any amendment of, or substitute for,
that Rule:
Provided that all future sales agreements contemplated by this
Underwriting Contract with such non-eligible foreign dealers
shall contain provisions forbidding the sale of shares of the
Fund by such dealers to residents, citizens or nationals of the
United States or to purchasers who such dealers have reason to
believe may resell such shares to such persons;
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(b) the expression "shares" means shares of the common stock of the
Fund;
(c) the expression "shareholder" means a registered holder of
shares;
(d) the expression "prospectus" means the prospectus of the Fund;
(e) the expression "net asset value", in relation to a share, means
the net asset value of that share determined in accordance with
the provisions of the currently effective prospectus;
(f) the expression "public offering price", in relation to the sale
of shares, means the net asset value of the shares together
with a selling commission, determined in accordance with the
provisions of the currently effective prospectus;
(g) the expression "selling commission" means, in relation to the
sale of shares, that part of the public offering price treated
as selling commission, determined in accordance with the
provisions of the currently effective prospectus;
(h) the expression "dealer's discount", in relation to the sale of
shares, means the proportion of the selling commission allowed
to a dealer when such sale is made by him;
(i) the expression "sales agreement" means an agreement relating to
the sale of shares in the form authorized by Section 7 of this
Underwriting Contract, and in effect between the Underwriter
and a dealer.
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B. Any reference in this Underwriting Contract to a term or thing in the
singular shall, where the context requires, also constitute a reference to
such terms or things in the plural.
Sec. 2. APPLICATION OF UNDERWRITING CONTRACT
This Underwriting Contract relates to the issue and sale of shares which
are from time to time fully authorized and registered and available for sale
by the Fund, including repurchased and treasury shares, if and to the extent
that such shares may legally be sold, but if, and only if, the Board of
Directors of the Fund sees fit to sell them.
Sec. 3. CONTINUATION OF APPOINTMENT OF UNDERWRITER
The Fund hereby continues the appointment of Value Line Securities, Inc.
as the principal underwriter (as defined in the Investment Company Act of
1940) and general distributor of the shares of the Fund as from the date of
this Underwriting Contract.
Sec. 4. CONTINUATION OF GRANT OF AUTHORITY TO UNDERWRITER TO SELL SHARES
A. The Fund hereby continues the grant to the Underwriter of authority
to sell shares as agent of the Fund; and in consideration of the continuation
of the grant of such authority the Underwriter agrees, subject to the terms
of any further instructions given to it from time to time by the Fund, to
continue to use its best efforts to sell shares to BONA FIDE investors and to
solicit orders for shares from responsible dealers, all upon the terms, and
subject to the conditions, set forth in this Underwriting Contract, and in
such manner as to maintain a broad distribution of shares.
B. The Fund hereby continues the grant to the Underwriter of authority,
during the term of this Underwriting Contract, to sell for the Fund shares to
be issued or sold by the Fund on orders for such shares placed with the
Underwriter by investors, or by dealers with whom the Underwriter has sales
agreements.
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C. The continued authority to sell shares granted to the Underwriter by
the foregoing provisions of this Section shall, subject as hereinafter
provided, be exclusive:
Provided that such exclusive authority shall not apply or have effect in
relation to -
(a) shares issued by the Fund to shareholders as a stock dividend;
(b) shares offered by the Fund to shareholders for reinvestment of
cash distribution by the Fund to shareholders (together with
cash received to pay for full shares) in any case where, by
virtue of the provisions of the currently effective prospectus,
no selling commission is required to be paid by the shareholder
in the circumstances;
(c) shares issued by the Fund to shareholders in connection with a
reorganization or recapitalization of the Fund, or the merger or
consolidation of any other investment company with the Fund, or
the acquisition by the Fund, by purchase or otherwise, of all or
substantially all of the outstanding stock of any cash investment
company.
(d) shares issued by the Fund at the asset value per share to any
registered unit investment trust or foreign unit investment trust
which is the issuer of periodic payment plan certificates (as that
expression is defined in the Investment Company Act of 1940) the
net proceeds of which are invested in shares of the Fund, and to
any foreign investment company substantially all the assets of
which, or substantially all the assets attributable to a class
of shares, of which, consist of shares of the Fund.
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D. The Underwriter hereby agrees that no selling commission shall be paid -
(a) in respect to any purchase of shares by the Fund's directors or
officers, or by the Underwriter, or by the Fund's Manager and
Investment Adviser, or by the directors, officers and BONA FIDE
full-time employees or sales representatives of the Underwriter
or of the Fund's Manager and Investment Adviser who have acted
as such for not less than ninety days, or by any pension or
profit sharing plan established for any of such persons, in any
case where the purchaser of such shares gives a written assurance
that the purchase is made for investment purposes and that the
shares will not be sold except through redemption or repurchase
by or on behalf of the Fund; or
(b) in respect of any purchase of shares in exercise of the dividend
reinvestment privilege as set forth in the currently effective
prospectus; or
(c) in respect of any purchase of shares in exercise of the transfer
of investment privilege from The Value Line Fund, Inc., or from
the Value Line Income Fund, Inc. as set forth in the currently
effective prospectus.
Sec. 5. SALES OF SHARES; PRICE AND TIME
The Fund agrees that it will cause the public offering price of shares
to be computed on each day during which the New York Stock Exchange ("the
NYSE") is open for trading as of the close of the NYSE.
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All sales of shares made hereunder, in respect of an order received by
the Underwriter prior to the close of the NYSE on a day when the NYSE is open
for trading, shall be at the public offering price computed as of the time of
such close.
The public offering price for orders received by dealers prior to the
close of the NYSE on a day when the NYSE is open for trading shall be the
public offering price computed as of the time of such close, provided the
order is accepted by the Underwriter and received by the Underwriter prior to
5:00 P.M. (New York City time) on that day.
Orders received by dealers on any day after the close of the NYSE, or on
any day which the NYSE is not open for trading, shall be filled, if accepted
by the Underwriter at the public offering price computed as of the next close
of the NYSE.
Sec. 6. COMPENSATION FOR SALES OF SHARES
A. As compensation for any sale of shares hereunder the Underwriter
shall be entitled to retain the applicable selling commission, less the
amount of the applicable dealer's discount (if any) which shall be paid to
the dealer in any case where he makes the sale.
B. The Fund shall in all cases receive not less than the difference
between the public offering price in effect at the time of the sale and the
selling commission.
Sec. 7. SALES AGREEMENTS
The form of all sales agreements between the Underwriter and dealers
shall at all times be in such form as may from time to time be approved by
the Board of Directors of the Fund.
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Sec. 8. COVENANTS BY UNDERWRITER
A. The Underwriter agrees that in selling shares it will in all respects
duly conform with all federal and state laws relating to the sale of such
securities.
B. The Underwriter agrees that it will endeavor to ensure that dealers
sell shares of the Fund only to bona fide investors and that the method and
materials used in selling such shares are sound and conservative.
C. The Underwriter agrees that it will indemnify and save harmless the
Fund from any damage or expense on account of any wrongful act done by it or
by its representatives.
D. All written communications or reports to shareholders or investors
and all sales literature and all advertisements or radio or television
boardcasts used in connection with the sale of shares or relating to the
Fund or the management of the Fund shall be approved in writing in advance or
any use thereof by the Board of Directors of the Fund or a duly authorized
representative of such Board.
Sec. 9. PAYMENT OF CHARGES BY FUND
The Fund agrees that it will pay, or cause to be paid, -
(a) all fees and expenses connected with, or incidental to, the
registration, under the Securities Act of 1933, of further
shares from time to time;
(b) all expenses connected with or incidental to the preparation
and filing under the Securities Act of 1933 of any new
prospectus relating to shares, or to such further shares which
have been so registered as aforesaid, and of all amendments and
revisions of such prospectus or of any such new prospectus, and
also all expenses connected with, or incidental to, printing
and delivering to the Underwriter, for use as aforesaid, of
copies of any such new prospectus or any such amendment or
revision;
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(c) all expenses connected with, or incidental to, the issue and
delivery of shares, including all cost of share certificates
and the issue (or initial) transfer taxes thereon; and
(d) all fees payable to States, or to state authorities in States,
in which the Underwriter desires to distribute shares, and all
other expenses, connected with, or incidental to, compliance
with the requirements of such States for the qualification, and
maintenance of qualification from time to time, of shares under
the applicable Blue Sky Laws.
Sec. 10. PAYMENT OF CHARGES BY UNDERWRITER
A. The Underwriter agrees that it will pay, or cause to be paid, -
(a) all expenses, including wire charges, incidental to quoting
prices of shares in newspapers and to shareholders, dealers and
others;
(b) all expenses incident to the distribution of prospectuses or of
any amendment or revision of a prospectus, and of any new
prospectus or any amendment or revision thereof; and
(c) all expenses connected with or incidental to the printing and
distribution of such statistical information and other
material, supplemental to any prospectus and not included in
the Fund's regular reports to its shareholders, as may be
furnished to it from time to time by the Fund.
B. The Underwriter agrees generally to endeavor, at its own expense, to
bring about and maintain a broad distribution of shares.
Sec. 11. DEALINGS WITH THE FUND
The Underwriter agrees that it will not deal with the Fund as principal
in connection with purchases or sales of securities or other property for the
account of the Fund, and that it will not take any long or short positions in
shares.
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Sec. 12. GUARANTEE BY UNDERWRITER OF NET PURCHASE PRICE TO FUND
With respect to any shares which are from time to time hereafter issued
pursuant to instructions of the Fund upon receipt of the net purchase price
therefor by check prior to clearance of such check through the Fund's
account, the Underwriter, in each such instance, guarantees to the Fund the
payment in full of such check and agrees to indemnify the Fund against, and
save it harmless from, any and all loss, cost, expense or damage which it may
directly or indirectly suffer, or be subject to, as a result of any such
check not being promptly honored in full upon presentment thereof for payment.
Sec. 13. AMENDMENT OF CONTRACT, BY-LAWS, ETC.
A. If at any time during the term of this Underwriting Contract the
Fund considers it necessary or advisable in its best interests that any
amendment of this Underwriting Contract be made in order to comply with any
recommendations or requirements of the Securities and Exchange Commission or
other government authority, or to obtain any advantage under federal or state
tax laws, and notifies the Underwriter of the form of amendment which it
considers necessary or advisable and the reasons therefor, and if the
Underwriter declines to assent to such amendment, then the Fund may terminate
this Underwriting Contract forthwith.
B. If at any time during the term of this Underwriting Contract, upon
request by the Underwriter, the Fund fails after a reasonable time to make any
changes in its Certificate of Incorporation or By-Laws or in its methods of
doing business which are necessary in order to comply with any requirements
of federal law or regulation of the Securities and Exchange Commission or of
a national securities association of which the Underwriter is or may be a
member, relating to the sales of shares, then the Underwriter may terminate
this Underwriting Contract forthwith.
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Sec. 14. APPROVAL AND CONTINUANCE OF UNDERWRITING CONTRACT
A. This Underwriting Contract shall continue for a period of two years
from the date first above written, but shall continue thereafter only so long
as such continuance is specifically approved at least annually by a majority
of the Directors of the Fund who are not affiliated with the Underwriter or
by the holders of a majority of the outstanding shares.
B. This Underwriting Contract may, on sixty (60) days' written notice
to the other party, be terminated at any time without payment of penalty -
(a) by the Fund acting pursuant to a direction given by a majority
of the Board of Directors of the Fund or by a vote of the holders
of a majority of the outstanding shares; or
(b) by the Underwriter
C. This Underwriter Contract shall automatically terminate in the event
of its assignment by the Underwriter, the term "assignment" for this purpose,
having the meaning defined in section 2 (a) (4) of the Investment Company Act
of 1940.
Sec. 15. COVENANT BY UNDERWRITER WITH REGARD TO ASSOCIATION WITH FUND
The Underwriter agrees that if it ceases to be the principal
underwriter, as defined in the Investment Company Act of 1940, of the Fund,
then -
(a) if the Fund continues thereafter to use the name The Value Line
Special Situations Fund, Inc., or any other name including the
words "Value Line", the Underwriter will, upon receipt of a
written request
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from the Fund, thenceforth cease to use the name "Value Line
Securities, Inc." or any other name including the words "Value
Line": and
(b) the Underwriter will not thenceforth in any manner refer to or
otherwise publicize its former association with the Fund.
Section 16. TERMINATION OF FORMER UNDERWRITING CONTRACT; COMMENCEMENT
OF CONTRACT
The Fund and the Underwriter mutually agree that, without prejudice to
any liabilities or benefits incurred or accrued thereunder, the former
Underwriting Contract shall be deemed to terminate, and this Underwriting
Contract shall be deemed simultaneously to have effect, as of the date first
above written.
IN WITNESS WHEREOF the Fund has caused this instrument to be executed in
its name and behalf and under its corporate seal by one of its Vice
Presidents thereunto duly authorized and the Underwriter has caused this
instrument to be executed in its name and behalf and under its corporate seal
by its Vice President thereunto duly authorized, all as of the
date and year first above written.
THE VALUE LINE SPECIAL SITUATIONS FUND, INC.
By /s/ Xxxxxx Xxxxxxxx
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Xxxxxx Xxxxxxxx, Vice President
VALUE LINE SECURITIES, INC.
By /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx, Vice President
