DISTRIBUTION AGREEMENT
This Agreement made this day of , 1996 by and between
X'XXXXXXXXXXX FUNDS, INC., a Maryland Corporation (the "Corporation"), and FIRST
FUND DISTRIBUTORS, INC., a Delaware corporation (the "Distributor").
W I T N E S S E T H:
WHEREAS, the Corporation is registered as an open-end
management investment company under the Investment Company Act of 1940 (the
"1940 Act"), with shares of common stock organized into separate series as set
forth on Schedule A hereto ("series" or "portfolios"), and it is in the interest
of the Corporation to offer the shares of common stock of the series for sale
continuously; and
WHEREAS, the Distributor is registered as a broker-dealer
under the Securities Exchange Act of 1934 (the "1934 Act") and is a member in
good standing of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, the Corporation and the Distributor wish to enter
into an agreement with each other with respect to the continuous offering of the
shares of common stock of each series of the Corporation (the "Shares");
NOW, THEREFORE, the parties agree as follows:
1. Appointment of Distributor. The Corporation hereby appoints
the Distributor as exclusive agent to sell and to arrange for the sale of the
Shares, on the terms and for the period set forth in this Agreement, and the
Distributor hereby accepts such appointment and agrees to act hereunder directly
and/or through the Corporation's transfer agent in the manner set forth in the
Prospectuses (as defined below). It is understood and agreed that the services
of the Distributor hereunder are not exclusive, and the Distributor may act as
principal underwriter for the shares of any other registered investment company.
2. Services and Duties of the Distributor.
(a) The Distributor agrees to sell the Shares, as agent
for the Corporation, from time to time during the term of this Agreement upon
the terms described in a Prospectus. As used in this Agreement, the term
"Prospectus" shall mean a prospectus and statement of additional information
included as part of the Corporation's Registration Statement, as such prospectus
and statement of additional information may be amended or supplemented from time
to time, and the term "Registration Statement" shall mean the Registration
Statement most recently filed from time to time by the Corporation with the
Securities and Exchange Commission ("SEC") and effective under the Securities
Act of 1933 (the "1933 Act") and the 1940 Act, as such Registration Statement is
amended by any amendments thereto at the time in effect. The Distributor shall
not be obligated to sell any certain number of Shares.
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(b) Upon commencement of operations of the series, the
Distributor will hold itself available to receive orders, satisfactory to the
Distributor, for the purchase of the Shares and will accept such orders and will
transmit such orders and funds received by it in payment for such Shares as are
so accepted to the Corporation's transfer agent or custodian, as appropriate, as
promptly as practicable. Purchase orders shall be deemed accepted and shall be
effective at the time and in the manner set forth in the series' Prospectuses.
The Distributor shall not make any short sales of Shares.
( c) The offering price of the Shares shall be the net
asset value per share of the Shares, plus the sales charge, if any, (determined
as set forth in the Prospectuses). The Corporation shall furnish the
Distributor, with all possible promptness, an advice of each computation of net
asset value and offering price.
(d) The Distributor shall have the right to enter into
selected dealer agreements with securities dealers of its choice ("selected
dealers") for the sale of Shares. Shares sold to selected dealers shall be for
resale by such dealers only at the offering price of the Shares as set forth in
the Prospectuses. The Distributor shall offer and sell Shares only to such
selected dealers as are members in good standing of the NASD.
3. Duties of the Corporation.
(a) Maintenance of Federal Registration. The
Corporation shall, at its expense, take, from time to time, all necessary action
and such steps, including payment of the related filing fees, as may be
necessary to register and maintain registration of a sufficient number of Shares
under the 1933 Act. The Corporation agrees to file from time to time such
amendments, reports and other documents as may be necessary in order that there
may be no untrue statement of a material fact in a Registration Statement or
Prospectus, or necessary in order that there may be no omission to state a
material fact in the Registration Statement or Prospectus which omission would
make the statements therein misleading.
(b) Maintenance of "Blue Sky" Qualifications. The Corporation
shall, at its expense, use its best efforts to qualify and maintain the
qualification of an appropriate number of Shares for sale under the securities
laws of such states as the Distributor and the Corporation may approve, and, if
necessary or appropriate in connection therewith, to qualify and maintain the
qualification of the Corporation or the series as a broker or dealer in such
states; provided that the Corporation shall not be required to amend its
Articles of Incorporation or By-Laws to comply with the laws of any state, to
maintain an office in any state, to change the terms of the offering of the
Shares in any state, to change the terms of the offering of the Shares in any
state from the terms set forth in Prospectuses, to qualify as a foreign
corporation in any state or to consent to service of process in any state other
than with respect to claims arising out of the offering and sale of the Shares.
The Distributor shall furnish such information and other material relating to
its affairs and activities as may be required by the Corporation or its series
in connection with such qualifications.
(c) Copies of Reports and Prospectuses. The Corporation
shall, at its expense, keep the Distributor fully informed with regard to its
affairs and in connection therewith shall furnish to
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the Distributor copies of all information, financial statements and other papers
which the Distributor may reasonably request for use in connection with the
distribution of Shares, including such reasonable number of copies of
Prospectuses and annual and interim reports as the Distributor may request and
shall cooperate fully in the efforts of the Distributor to sell and arrange for
the sale of the Shares and in the performance of the Distributor under this
Agreement.
4. Conformity with Applicable Law and Rules. The Distributor
agrees that in selling Shares hereunder it shall conform in all respects with
the laws of the United States and of any state in which Shares may be offered,
and with applicable rules and regulations of the NASD.
5. Independent Contractor. In performing its duties hereunder,
the Distributor shall be an independent contractor and neither the Distributor,
nor any of its officers, directors, employees, or representatives is or shall be
an employee of the Corporation in the performance of the Distributor's duties
hereunder. The Distributor shall be responsible for its own conduct and the
employment, control, and conduct of its agents and employees and for injury to
such agents or employees or to others through its agents or employees. The
Distributor assumes full responsibility for its agents and employees under
applicable statutes and agrees to pay all employee taxes thereunder.
6. Indemnification.
(a) Indemnification of Corporation. The Distributor
agrees to indemnify and hold harmless the Corporation and each of its present or
former directors, officers, employees, representatives and each person, if any,
who controls or previously controlled the Corporation within the meaning of
Section 15 of the 1933 Act against any and all losses, liabilities, damages,
claims or expenses (including the reasonable costs of investigating or defending
any alleged loss, liability, damage, claims or expense and reasonable legal
counsel fees incurred in connection therewith) to which the Corporation or any
such person may become subject under the 1933 Act, under any other statute, at
common law, or otherwise, arising out of the acquisition of any Shares by any
person which (i) may be based upon any wrongful act by the Distributor or any of
the Distributor's directors, officers, employees or representatives, or (ii) may
be based upon any untrue statement or alleged untrue statement of a material
fact contained in a Registration Statement, Prospectus, shareholder report or
other information covering Shares filed or made public by the Corporation or any
amendment thereof or supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading if such statement or omission was made in
reliance upon and in conformity with information furnished to the Corporation by
the Distributor. In no case (i) is the Distributor's indemnity in favor of the
Corporation, or any person indemnified to be deemed to protect the Corporation
or such indemnified person against any liability to which the Corporation or
such person would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of the Corporation's or such
person's duties or by reason of reckless disregard of the Corporation's or such
person's obligations and duties under this Agreement or (ii) is the Distributor
to be liable under its indemnity agreement contained in this Paragraph with
respect to any claim made against the Corporation or any
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person indemnified unless the Corporation or such person, as the case may be,
shall have notified the Distributor in writing of the claim within a reasonable
time after the summons or other first written notification giving information of
the nature of the claim shall have been served upon the Corporation or upon such
person (or after the Corporation or such person shall have received notice of
such service on any designated agent). However, failure to notify the
Distributor of any such claim shall not relieve the Distributor from any
liability which the Distributor may have to the Corporation or any person
against whom such action is brought otherwise than on account of the
Distributor's indemnity agreement contained in this Paragraph.
The Distributor shall be entitled to participate, at its own
expense, in the defense, or, if the Distributor so elects, to assume the defense
of any suit brought to enforce any such claim, but, if the Distributor elects to
assume the defense, such defense shall be conducted by legal counsel chosen by
the Distributor and satisfactory to the Corporation, and to the persons
indemnified as defendant or defendants, in the suit. In the event that the
Distributor elects to assume the defense of any such suit and retain such legal
counsel, the Corporation, and the persons indemnified as defendant or defendants
in the suit, shall bear the fees and expenses of any additional legal counsel
retained by them. If the Distributor does not elect to assume the defense of any
such suit, the Distributor will reimburse the Corporation and the persons
indemnified defendant or defendants in such suit for the reasonable fees and
expenses of any legal counsel retained by them. The Distributor agrees to
promptly notify the Corporation of the commencement of any litigation of
proceedings against it or any of its officers, employees or representatives in
connection with the issue or sale of any Shares.
(b) Indemnification of the Distributor. The Corporation
agrees to indemnify and hold harmless the Distributor and each of its present or
former directors, officers, employees, representatives and each person, if any,
who controls or previously controlled the Distributor within the meaning of
Section 15 of the 1933 Act against any and all losses, liabilities, damages,
claims or expenses (including the reasonable costs of investigating or defending
any alleged loss, liability, damage, claim or expense and reasonable legal
counsel fees incurred in connection therewith) to which the Distributor or any
such person may become subject under the 1933 Act, under any other statute, at
common law, or otherwise, arising out of the acquisition of any Shares by any
person which (i) may be based upon any wrongful act by the Corporation or any of
the Corporation's directors, officers, employees or representatives, or (ii) may
be based upon any untrue statement or alleged untrue statement of a material
fact contained in a Registration Statement, Prospectus, shareholder report or
other information covering Shares filed or made public by the Corporation or any
amendment thereof or supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading unless such statement or omission was made
in reliance upon and in conformity with information furnished to the Corporation
by the Distributor. In no case (i) is the Corporation's indemnity in favor of
the Distributor, or any person indemnified to be deemed to protect the
Distributor or such indemnified person against any liability to which the
Distributor or such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of such person's
duties or by reason of reckless disregard of such person's obligations and
duties under this Agreement or (ii) is the Corporation to be liable under their
indemnity
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agreement contained in this Paragraph with respect to any claim made against
Distributor, or person indemnified unless the Distributor, or such person, as
the case may be, shall have notified the Corporation in writing of the claim
within a reasonable time after the summons or other first written notification
giving information of the nature of the claim shall have been served upon the
Distributor or upon such person (or after the Distributor or such person shall
have received notice of such service on any designated agent). However, failure
to notify the Corporation of any such claim shall not relieve the Corporation
from any liability which the Corporation may have to the Distributor or any
person against whom such action is brought otherwise than on account of the
Corporation's indemnity agreement contained in this Paragraph.
The Corporation shall be entitled to participate, at its own
expense, in the defense, or, if the Corporation so elects, to assume the defense
of any suit brought to enforce any such claim, but if the Corporation elects to
assume the defense, such defense shall be conducted by legal counsel chosen by
the Corporation and satisfactory to the Distributor and to the persons
indemnified as defendant or defendants, in the suit. In the event that the
Corporation elects to assume the defense of any such suit and retain such legal
counsel, the Distributor, the persons indemnified as defendant or defendants in
the suit, shall bear the fees and expenses of any additional legal counsel
retained by them. If the Corporation does not elect to assume the defense of any
such suit, the Corporation will reimburse the Distributor and the persons
indemnified as defendant or defendants in such suit for the reasonable fees and
expenses of any legal counsel retained by them. The Corporation agrees to
promptly notify the Distributor of the commencement of any litigation or
proceedings against it or any of its directors, officers, employees or
representatives in connection with the issue or sale of any Shares.
7. Authorized Representations. The Distributor is not
authorized by the Corporation to give on behalf of the Corporation any
information or to make any representations in connection with the sale of Shares
other than the information and representations contained in a Registration
Statement or Prospectus filed with the SEC under the 1933 Act and/or the 1940
Act, covering Shares, as such Registration Statement and Prospectus may be
amended or supplemented from time to time, or contained in shareholder reports
or other material that may be prepared by or on behalf of the Corporation for
the Distributor's use. This shall not be construed to prevent the Distributor
from preparing and distributing tombstone ads and sales literature or other
material as it may deem appropriate. No person other than the Distributor is
authorized to act as principal underwriter (as such term is defined in the 0000
Xxx) for the Corporation.
8. Term of Agreement. The term of this Agreement shall begin
on the date first above written, and unless sooner terminated as hereinafter
provided, this Agreement shall remain in effect for a period of two years from
the date first above written. Thereafter, this Agreement shall continue in
effect from year to year, subject to the termination provisions and all other
terms and conditions thereof, so long as such continuation shall be specifically
approved at least annually by (i) the Board of Directors or by vote of a
majority of the outstanding voting securities of each investment portfolio of
the Corporation and, (ii) by the vote, cast in person at a meeting called for
the purpose of voting on such approval, of a majority of the Directors of the
Corporation who are not parties to
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this Agreement or interested persons of any such party. The Distributor shall
furnish to the Corporation, promptly upon its request, such information as may
reasonably be necessary to evaluate the terms of this Agreement or any
extension, renewal or amendment hereof.
9. Amendment or Assignment of Agreement. This Agreement may
not be amended or assigned except as permitted by the 1940 Act, and this
Agreement shall automatically and immediately terminate in the event of its
assignment.
10. Termination of Agreement. This Agreement may be terminated
by either party hereto, without the payment of any penalty, on not more than
upon 60 days' nor less than 30 days' prior notice in writing to the other party;
provided, that in the case of termination by the Corporation such action shall
have been authorized by resolution of a majority of the Directors of the
Corporation who are not parties to this Agreement or interested persons of any
such party, or by vote of a majority of the outstanding voting securities of
each series of the Corporation.
11. Miscellaneous. The captions in this Agreement are included
for convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Nothing herein contained shall be deemed to require the
Corporation to take any action contrary to its Articles of Incorporation or
By-Laws, or any applicable statutory or regulatory requirement to which it is
subject or by which it is bound, or to relieve or deprive the Board of Directors
of the Corporation of responsibility for and control of the conduct of the
affairs of the Corporation.
12. Definition of Terms. 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 1940 Act shall be resolved by reference to such
term or provision of the 1940 Act and to interpretation thereof, if any, by the
United States courts or, in the absence of any controlling decision of any such
court, by rules, regulations or orders of the SEC validly issued pursuant to the
1940 Act. Specifically, the terms "vote of a majority of the outstanding voting
securities", "interested persons," "assignment," and "affiliated person," as
used in Paragraphs 8, 9 and 10 hereof, shall have the meanings assigned to them
by Section 2(a) of the 1940 Act. In addition, where the effect of a requirement
of the 1940 Act reflected in any provision of this Agreement is relaxed by a
rule, regulation or order of the SEC, whether of special or of general
application, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
13. Compliance with Securities Laws. The Corporation
represents that it is registered as an open-end management investment company
under the 1940 Act, and agrees that it
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will comply with all the provisions of the 1940 Act and of the rules and
regulations thereunder. The Corporation and the Distributor each agree to comply
with all of the applicable terms and provisions of the 1940 Act, the 1933 Act
and, subject to the provisions of Section 4(d), all applicable "Blue Sky" laws.
The Distributor agrees to comply with all of the applicable terms and provisions
of the 1934 Act.
14. Notices. Any notice required to be given pursuant to this
Agreement shall be deemed duly given if delivered or mailed by registered mail,
postage prepaid, to the Distributor at 0000 X. Xxxxxxxxx Xxxx., Xxxxx 000X,
Xxxxxxx, XX 00000 or to the Corporation at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX
00000.
15. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated below on the date first
written above.
X'XXXXXXXXXXX FUNDS, INC.
By:______________________________
Name:
Title:
FIRST FUND DISTRIBUTORS, INC.
By:_______________________________
Name:
Title:
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Schedule A
Series or Portfolios of X'Xxxxxxxxxxx Funds, Inc.
X'Xxxxxxxxxxx Cornerstone Value Fund
X'Xxxxxxxxxxx Cornerstone Growth Fund
X'Xxxxxxxxxxx Aggressive Growth Fund
X'Xxxxxxxxxxx Dogs of the Market(TM) Fund
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