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DISTRIBUTION AGREEMENT
March 3, 1986
Xxxxx & Co.
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned, Standby Tax-Exempt Reserve Fund, Inc. (the "Fund"),
a corporation organized under the laws of the State of Maryland, has agreed
that Xxxxx & Co. ("Cowen") shall be, for the period of this Agreement, the
distributor of shares of the Fund.
1. Services as Distributor
1.1 Cowen will act as agent for the distribution of shares of the Fund covered
by the registration statement, prospectus and statement of additional
information then in effect (the "Registration Statement") under the Securities
Act of 1933, as amended (the "1933 Act"), and the Investment Company Act of
1940, as amended (the "1940 Act").
1.2 Cowen agrees to use its best efforts to solicit orders for the sale of
shares of the Fund at the public offering price, as determined in accordance
with the Registration Statement, and will undertake such advertising and
promotion as it believes is reasonable in connection with such solicitation.
Cowen agrees to bear all selling expenses, including the cost of printing
prospectuses and statements of additional information and distributing them to
prospective shareholders.
1.3 All activities by Cowen as distributor of the Fund's 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 (the "SEC") or by any securities association registered under the
Securities Exchange Act of 1934.
1.4 Cowen will provide one or more persons during normal business hours to
respond to telephone questions concerning the Fund.
1.5 Cowen acknowledges that, whenever in the judgment of the Fund's
officers such action is warranted for any reason, including, without
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limitation, market, economic or political conditions, those officers may
decline to accept any orders for, or make any sales of, the Fund's shares until
such time as those officers deem it advisable to accept such orders and to make
such sales.
1.6 Cowen will act only on its own behalf as principal should it choose to
enter into selling agreements with selected dealers or others.
2. Duties of the Fund
2.1 The Fund agrees at its own expense to execute any and all documents, to
furnish any and all information and to take any other actions that may be
reasonably necessary in connection with the qualification of the Fund's shares
for sale in those states that Cowen may designate.
2.2 The Fund shall furnish from time to time, for use in connection with the
sale of the Fund's shares, such information reports with respect to the Fund
and its shares as Cowen may reasonably request, all of which shall be signed by
one or more of the Fund's duly authorized officers; and the Fund warrants that
the statements contained in any such reports, when so signed by one or more of
the Fund's officers, shall be true and correct. The Fund shall also furnish
Cowen upon request with: (a) annual audits of the Fund's books and accounts
made by independent public accountants regularly retained by the Fund, (b)
semiannual unaudited financial statements pertaining to the Fund, (c) quarterly
earnings statements prepared by the Fund, (d) a monthly itemized list of the
securities in the Fund's portfolio, (e) monthly balance sheets as soon as
practicable after the end of each month and (f) from time to time such
additional information regarding the Fund's financial condition as Cowen may
reasonably request.
3. Representations and Warranties
The Fund represents to Cowen that all registration statements,
prospectuses and statements of additional information filed by the Fund with
the SEC under the 1933 Act and the 1940 Act with respect to the shares of the
Fund have been carefully prepared in conformity with the requirements of the
1933 Act, the 1940 Act and the rules and regulations of the SEC thereunder. As
used in this Agreement the terms "registration statement", "prospectus" and
"statement of additional information" shall mean any registration statement,
prospectus and statement of additional information filed by the Fund with the
SEC and any amendments and supplements thereto which at any time shall have
been filed with the SEC. The Fund represents and warrants to Cowen that any
registration
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statement, prospectus and statement of additional information, when such
registration statement becomes effective, will include all statements required
to be contained therein in conformity with the 1933 Act, the 1940 Act and the
rules and regulations of the SEC; that all statements of fact contained in any
registration statement, prospectus or statement of additional information will
be true and correct when such registration statement becomes effective; and
that neither any registration statement nor any prospectus or statement of
additional information 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 Fund's shares. Cowen 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 or
statement of additional information as, in the light of future developments,
may, in the opinion of Xxxxx'x 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 Cowen
to do so, Cowen may, at its option, terminate this Agreement. The Fund shall
not file any amendment to any registration statement or supplement to any
prospectus or statement of additional information without giving Cowen
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 or statement of additional information, of whatever character, as
the Fund may deem advisable, such right being in all respects absolute and
unconditional.
4. Indemnification
4.1 The Fund authorizes Cowen and any dealers with whom Cowen has
entered into dealer agreements to use any prospectus or statement of
additional information furnished by the Fund from time to time, in
connection with the sale of the Fund's shares. The Fund agrees to
indemnify, defend and hold Cowen, its several officers and directors, and any
person who controls Cowen 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
Cowen, its officers and directors, or any such controlling person, may incur
under the 1933 Act, the 1940 Act or common law or otherwise, arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any
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registration statement, any prospectus or any statement of additional
information, or arising out of or based upon any omission or alleged
omission to state a material fact required to be stated in any registration
statement, any prospectus or any statement of additional information, or
necessary to make the statements in any of them not misleading; provided,
however, that the Fund's agreement to indemnify Cowen, its officers or
directors, and any such controlling person shall not be deemed to cover any
claims, demands, liabilities or expenses arising out of or based upon any
statements or representations made by Cowen or its representatives or agents
other than such statements and representations as are contained in any
registration statement, prospectus or statement of additional information and
in such financial and other statements as are furnished to Cowen pursuant to
paragraph 2.2 hereof; and further provided that the Fund's agreement to
indemnify Cowen and the Fund's representations and warranties hereinbefore set
forth in paragraph 3 shall not be deemed to cover any liability to the Fund or
its shareholders to which Cowen would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of Xxxxx'x reckless disregard of its obligations and duties under
this Agreement. The Fund's agreement to indemnify Cowen, 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 Cowen,
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 New York, New York and sent to the Fund by the person against whom such
action is brought, within ten days after the summons or other first legal
process shall have been served. The failure so to notify the Fund of any such
action shall not relieve the Fund from any liability that the Fund may have to
the person against whom such action is brought by reason of any such untrue or
alleged untrue statement or omission or alleged omission otherwise than on
account of the Fund's indemnity agreement contained in this paragraph 4.1. 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 Cowen.
In the event the Fund elects to assume the defense of any such suit and retain
counsel of good standing approved by Cowen, 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 Cowen does not approve of counsel chosen by the Fund, the
Fund will reimburse Cowen, its officers and directors, or the controlling
person or persons named as defendant or defendants in such suit, for the fees
and expenses or any counsel retained by Cowen or them. The Fund's
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indemnification agreement contained in this paragraph 4.1 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
Cowen, its officers and directors, or any controlling person, and shall survive
the delivery of any of the Fund's shares. This agreement of indemnity will
inure exclusively to Xxxxx'x 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 to notify Cowen
promptly of the commencement of any litigation or proceedings against the Fund
or any of its officers or directors in connection with the issuance and sale
of-any of the Fund's shares.
4.2 Cowen 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 1933 Act, 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) that the Fund, its officers or directors or any such
controlling person may incur under the 1933 Act, the 1940 Act or 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 (a) any unauthorized
sales literature, advertisements, information, statements or representations or
(b) any untrue or alleged untrue statement of a material fact contained in
information furnished in writing by Cowen 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 statement of additional information, 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 Cowen
to the Fund and required to be stated in such answers or necessary to make such
information not misleading. Xxxxx'x agreement to indemnify the Fund, its
officers and directors, and any such controlling person, as aforesaid, is
expressly conditioned upon Xxxxx'x 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 Cowen at its
principal office in New York, New York and sent to Cowen by the person against
whom such action is brought, within ten days after the summons or other first
legal process shall have been served. Cowen 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 Xxxxx'x part, and in any other event the Fund, its
officers or directors or such controlling person
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shall each have the right to participate in the defense or preparation of the
defense of any such action. The failure so to notify Cowen of any such action
shall not relieve Cowen from any liability that Cowen 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 Xxxxx'x indemnity agreement contained in this paragraph 4.2.
Cowen agrees to notify the Fund promptly of the commencement of any litigation
or proceedings against Cowen or any of its officers or directors in connection
with the issuance and sale of any of the Fund's shares.
5. Effectiveness of Registration
None of the Fund's shares shall be offered by either Cowen or the Fund under
any of the provisions of this Agreement and no orders for the purchase or sale
of the 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 1933
Act or if and so long as a current prospectus as required by Section 5(b)(2) of
the 1933 Act is not on file with the SEC; provided, however, that nothing
contained in this paragraph 5 shall in any way restrict or have an application
to or bearing upon the Fund's obligation to repurchase its shares from any
shareholder in accordance with the provisions of the Fund's prospectus,
statement of additional information or articles of incorporation.
6. Notice to Cowen
The Fund agrees to advise Cowen immediately in writing:
(a) of any request by the SEC for amendments to the registration
statement, prospectus or statement of additional information then in effect or
for additional information;
(b) in the event of the issuance by the SEC of any stop order suspending the
effectiveness of the registration statement, prospectus or statement of
additional information then in effect or the initiation 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, prospectus or statement of additional
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information then in effect or that requires the making of a change
in such registration statement, prospectus or statement of additional
information in order to make the statements therein not misleading; and
(d) of all actions of the SEC with respect to any amendment to any
registration statement, prospectus or statement of additional information which
may from time to time be filed with the SEC.
7. Term of Agreement
This Agreement shall continue until March 3, 1988 and thereafter shall continue
automatically for successive annual periods ending on March 3rd. of each year,
provided such continuance is specifically approved at least annually by (a) the
Fund's Board of Directors or (b) a vote of a majority (as defined in the 0000
Xxx) of the Fund's outstanding voting securities, provided that in either event
the continuance is also approved by a majority of the Directors of the Fund who
are not interested persons (as defined in the 0000 Xxx) 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 60 days'
written notice, by the Fund's Board of Directors or by vote of the holders of a
majority of the Fund's shares, or on 90 days' written notice, by Cowen. This
agreement will also terminate automatically in the event of its assignment (as
defined in the 1940 Act). 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.
Very truly yours,
STANDBY TAX-EXEMPT RESERVE FUND, INC.
By: /s/ Xxxxxx Xxxxx, President
Accepted: Xxxxx & Co.
By: /s/ Xxxxxx Xxxxx, Authorized Officer
