FORM OF
DISTRIBUTION AGREEMENT
AGREEMENT made this __ day of May, 1997, between XXXXXX XXXXXXX
STRATEGIC ADVISER FUND, INC., a Maryland Corporation (the "Fund"), and XXXXXX
XXXXXXX & CO. INCORPORATED, a Delaware corporation (the "Distributor").
W I T N E S S E T H :
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as a diversified open-end management
investment company and it is in the interest of the Fund to offer its shares for
sale continuously and to appoint a principal underwriter for the purpose of
facilitating such offers and sales;
WHEREAS, the Fund and the Distributor wish to enter into an agreement
with each other with respect to the continuous offering of the Fund's shares of
beneficial interest ("Shares"), to commence after the effectiveness of its
initial registration statement filed pursuant to the Securities Act of 1933, as
amended (the "1933 Act"), and the 1940 Act.
NOW, THEREFORE, the parties agree as follows:
Section 1. APPOINTMENT OF THE DISTRIBUTOR.
The Fund hereby appoints the Distributor its exclusive underwriter in connection
with the offering and sale of the Shares on the terms set forth in this
Agreement and the Distributor hereby accepts such appointment and agrees to act
hereunder.
Section 2. SERVICES AND DUTIES OF THE DISTRIBUTOR.
(a) The Distributor agrees to sell, as agent for the Fund, from time
to time during the term of this Agreement, Shares upon the terms described in
the Prospectus. As used in this Agreement, the term "Prospectus" shall mean the
prospectus included as part of the Fund's Registration Statement, as such
prospectus 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 Fund with the Securities and Exchange Commission
and effective under the 1933 Act and the 1940 Act, as such Registration
Statement is amended by any amendments thereto at the time in effect.
(b) Upon commencement of the Fund's operations, the Distributor will
hold itself available to receive orders, satisfactory to the Distributor, for
the purchase of Shares and will accept such orders on behalf of the Fund and
will transmit such orders as are so accepted to
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the Fund's transfer and shareholder servicing agent as promptly as
practicable. The Distributor shall promptly forward to the Fund's Custodian
funds received in respect of purchases of shares in accordance with the
instructions of the Fund's Administrator. Purchase orders shall be deemed
effective at the time and in the manner set forth in the Prospectus.
(c) The offering price of the Shares shall be the net asset value
(determined as set forth in the Prospectus) per Share next determined following
receipt of an order. The Fund shall furnish the Distributor, with all possible
promptness, an advice of each computation of net asset value.
(d) The Distributor shall not be obligated to sell any certain number
of Shares and nothing herein contained shall prevent the Distributor from
entering into like distribution arrangements with other investment companies.
Section 3. DUTIES OF THE FUND.
(a) The Fund agrees to sell its Shares so long as it has Shares
available for sale and to cause the Fund's transfer and shareholder servicing
agent to record on its books the ownership of (or deliver certificates, if any,
for) such Shares registered in such names and amounts as the Distributor has
requested in writing or other means of data transmission, as promptly as
practicable after receipt by the Fund of the net asset value thereof and written
request of the Distributor therefor.
(b) The Fund shall keep the Distributor fully informed with regard to
its affairs and shall furnish to 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 of the Fund, and
this shall include one certified copy, upon request by the Distributor, of all
financial statements prepared for the Fund by independent accountants and such
reasonable number of copies of its most current Prospectus 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.
(c) The Fund shall take, from time to time, such steps, including
payment of the related filing fee, as may be necessary to register its Shares
under the 1933 Act to the end that there will be available for sale such number
of Shares as the Distributor may be expected to sell. The Fund 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.
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(d) The Fund shall use its best efforts to qualify and maintain the
qualification of an appropriate number of its Shares for sale under the
securities laws of such states as the Distributor and the Fund may approve, and,
if necessary or appropriate in connection therewith, to qualify and maintain the
qualification of the Fund as a broker or dealer in such states; provided that
the Fund 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 from the terms set
forth in its Registration Statement and Prospectus, 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 of the Shares. The
Distributor shall furnish such information and other material relating to its
affairs and activities as may be required by the Fund in connection with such
qualifications.
Section 4. EXPENSES.
(a) The Fund shall bear all costs and expenses of the continuous
offering of the Shares in connection with (i) fees and disbursements of its
counsel and independent accountants, (ii) the preparation, filing and printing
of any registration statements and/or prospectuses required to be filed by and
under the federal and state securities laws, (iii) the preparation and mailing
of annual and interim reports, prospectuses and proxy materials to shareholders
and (iv) the qualifications of Shares for sale and of the Fund as a broker or
dealer under the securities laws of such states or other jurisdictions as shall
be selected by the Fund and the Distributor pursuant to Section 3(d) hereof and
the cost and expenses payable to each such state for continuing qualification
therein.
(b) The Distributor shall bear (i) the costs and expenses of
preparing, printing and distributing any materials not prepared by the Fund and
other materials used by the Distributor in connection with its offering of the
Shares for sale to the public, including the additional cost of printing copies,
at printer's over-run cost, of the Prospectus and of annual and interim reports
to shareholders other than copies thereof required for distribution to
shareholders or for filing with any federal and state securities authorities,
(ii) any expenses of advertising incurred by the Distributor in connection with
such offering and (iii) the expenses of registration or qualification of the
Distributor as a dealer or broker under federal or state laws and the expenses
of continuing such registration or qualification.
Section 5. COMPENSATION. For the services to be rendered and the
expenses assumed by the Distributor with respect to the Class B Shares, the Fund
shall pay to the Distributor, compensation at the annual rate of .25% of the
average daily net assets of the Class B Shares. Except as hereinafter set
forth, continuing compensation under this Agreement shall be calculated and
accrued daily and the amounts of the daily accruals shall be paid monthly in
arrears within ten days after the end of the month. If this Agreement becomes
effective subsequent to the first day of a month or shall terminate before the
last day of a month, compensation for that part of the month this Agreement is
in effect shall be prorated in a manner consistent with the calculations of the
fees as set forth above. Payment of the Distributor's
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compensation for the preceding month shall be made as promptly as possible,
but in no event later than ten days after the end of the month.
Section 6. INDEMNIFICATION. The Fund agrees to indemnify, defend and
hold the Distributor, its officers and directors 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 cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which the
Distributor, its officers, directors or any such controlling person may incur
under the 1933 Act, or under common law or otherwise, arising out of or based
upon any untrue statement of a material fact contained in the Registration
Statement or Prospectus or arising out of or based upon any alleged omission to
state a material fact required to be stated in either thereof or necessary to
make the statements in either thereof not misleading, except insofar as such
claims, demands, liabilities or expenses arise out of or are based upon any such
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information furnished in writing by the
Distributor to the Fund for use in the Registration Statement or Prospectus;
provided, however, that this indemnity agreement, to the extent that it might
require indemnity of any person who is also an officer or Director of the fund
or who controls the Fund within the meaning of Section 15 of the 1933 Act, shall
not inure to the benefit of such officer, Director or controlling person unless
a court of competent jurisdiction shall determine, or it shall have been
determined by controlling precedent, that such result would not be against
public policy as expressed in the 1933 Act; and further provided, that in no
event shall anything contained herein be so construed as to protect the
Distributor against any liability to the Fund or to its security holders to
which the Distributor would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of its duties, or
by reason of its reckless disregard of its obligations under this Agreement.
The Fund's agreement to indemnify the Distributor, its officers and directors
and any such controlling person as aforesaid is expressly conditioned upon the
Fund's being promptly notified of any action brought against the Distributor,
its officers or directors, or any such controlling person, such notification to
be given to the Fund at its principal business office. The Fund agrees promptly
to notify the Distributor of the commencement of any litigation or proceedings
against it or any of its officers or Directors in connection with the issue and
sale of any Shares.
The Distributor agrees to indemnify, defend and hold the Fund, its
Directors and officers and any person who controls the Fund, if any, 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 against such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Fund, its Directors or
officers or any such controlling person may incur under the 1933 Act or under
common law or otherwise, but only to the extent that such liability or expense
incurred by the Fund, its Directors or officers or such controlling person
resulting from such claims or demands shall arise out of or be based upon any
alleged untrue statement of a material fact contained in information furnished
in writing by the Distributor to the Fund for use in the preparation of the
Registration Statement
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or Prospectus or shall arise out of or be based upon any alleged omission to
state a material fact in such information or a fact necessary to make such
information not misleading, it being understood that the Fund will rely upon
the information provided by the Distributor for use in the preparation of the
Registration Statement and Prospectus. The Distributor's agreement to
indemnify the Fund, its Directors and officers, and any such controlling
person as aforesaid is expressly conditioned upon the Distributor's being
promptly notified of any action brought against the Fund, its Directors or
officers or any such controlling person, such notification to be given to the
Distributor at its principal business office.
Section 7. COMPLIANCE WITH SECURITIES LAWS. The Fund represents that
it is registered as a diversified open-end management investment company under
the 1940 Act, and agrees that it will comply with the provisions of the 1940 Act
and of the rules and regulations thereunder. The Fund and the Distributor each
agree to comply with the applicable terms and provisions of the 1940 Act, the
1933 Act and, subject to the provisions of Section 3(d), applicable state "Blue
Sky" laws. The Distributor agrees to comply with the applicable terms and
provisions of the Securities Exchange Act of 1934.
Section 8. TERM OF AGREEMENT; TERMINATION. This Agreement shall
commence on the date first set forth above. This Agreement shall continue in
effect for a period more than two years from the date hereof only so long as
such continuance is specifically approved at least annually in conformity with
the requirements of the 1940 Act.
This Agreement shall terminate automatically in the event of its
assignment (as defined by the 1940 Act). In addition, this Agreement may be
terminated by either party at any time, without penalty, on not more than sixty
days' nor less than thirty days' written notice to the other party.
Section 9. 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, (1) to the Distributor at Xxxxxx Xxxxxxx & Co. Incorporated,
1221 Avenue of the Americas, 00xx Xxxxx, Xxx Xxxx, X.X. 00000, Xxxxxxxxx:
Xxxxxxx X. Xxxxx, or (2) to the Fund at Xxxxxx Xxxxxxx Strategic Adviser Fund,
Inc., ________________. Attention: Secretary.
Section 10. The Directors have authorized the execution of this
Agreement in their capacity as Directors and not individually and the
Distributor agrees that neither the shareholders nor the Directors nor any
officer, employee, representative or agent of the Fund shall be personally
liable upon, nor shall resort be had to their private property for the
satisfaction of, obligations given, executed or delivered on behalf of or by the
Fund, that the shareholders, Directors, officers, employees, representatives and
agents of the Fund shall not be personally liable hereunder, and that it shall
look solely to the property of the Fund for the satisfaction of any claim
hereunder.
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Section 11. 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 executed this Agreement on
the day and year first above written.
XXXXXX XXXXXXX & CO. INCORPORATED
By
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XXXXXX XXXXXXX
STRATEGIC ADVISER FUND, INC.
By
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