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UNDERWRITING AGREEMENT
BETWEEN
X. XXXX PRICE DIVERSIFIED SMALL-CAP GROWTH FUND, INC.
AND
X. XXXX PRICE INVESTMENT SERVICES, INC.
THIS UNDERWRITING AGREEMENT, made as of the 24th day of
April, 1997, by and between X. XXXX PRICE DIVERSIFIED SMALL-CAP
GROWTH FUND, INC., a corporation organized and existing under the
laws of the State of Maryland (hereinafter called the "Fund"),
and X. XXXX PRICE INVESTMENT SERVICES, INC., a corporation
organized and existing under the laws of the State of Maryland
(hereinafter called the "Distributor").
WITNESSETH:
WHEREAS, the Fund proposes to engage in business as an
open-end management investment company and to register as such
under the federal Investment Company Act of 1940, as amended
("ICA-40"); and
WHEREAS, the Distributor is engaged principally in the
business of distributing shares of the investment companies
sponsored and managed by either X. Xxxx Price Associates, Inc.
("Price Associates") or Xxxx Xxxxx-Xxxxxxx International, Inc.
("Xxxxx-Xxxxxxx") and is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended, ("SEA-34") and is a
member of the National Association of Securities Dealers, Inc.
("NASD"); and
WHEREAS, the Fund desires the Distributor to act as the
distributor in the public offering of its shares;
NOW, THEREFORE, in consideration of the premises and
the mutual promises hereinafter set forth, the parties hereto
agree as follows:
1. Delivery of Fund Documents. The Fund has
furnished Distributor with copies, properly certified or
authenticated, of each of the following:
(a) Articles of Incorporation, dated April 22, 1997.
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(b) By-Laws of the Fund as in effect on the date
hereof.
(c) Resolutions of the Board of Directors of the Fund
selecting Distributor as principal underwriter
and approving this form of agreement.
The Fund shall furnish the Distributor from time to
time with copies, properly certified or authenticated, of all the
amendments of, or supplements to, the foregoing, if any.
The Fund shall furnish Distributor promptly with
properly certified or authenticated copies of any registration
statements filed by it with the Securities and Exchange
Commission under the Securities Act of 1933, as amended ("SA-33")
or ICA-40, together with any financial statements and exhibits
included therein, and all amendments or supplements thereto
hereafter filed.
2. Sale of Shares. Subject to the provisions of
Paragraphs 3, 4, and 6 hereof, and to such minimum purchase
requirements as may from time to time be currently indicated in
the Fund's prospectus, the Distributor is authorized to sell, as
agent on behalf of the Fund, shares of the Fund's capital stock
("Shares") authorized for issuance and registered under SA-33.
Distributor may also sell Shares under offers of exchange between
and among the investment companies for which Price Associates
and/or Xxxxx-Xxxxxxx act as investment advisers ("Price Funds").
Distributor may also purchase as principal such Shares for resale
to the public. Such sale will be made by Distributor on behalf
of the Funds by accepting unconditional orders to purchase the
Shares placed with Distributor by investors and such purchases
will be made by Distributor only after acceptance by Distributor
of such orders. The sales price to the public of such Shares
shall be the public offering price as defined in Paragraph 5
hereof.
3. Sale of Shares by the Fund. The rights granted
to the Distributor shall be nonexclusive in that the Fund
reserves the right to sell its Shares to investors pursuant to
applications received and accepted by the Fund or its transfer
agent. Further, the Fund reserves the right to issue Shares in
connection with the merger or consolidation of any other
investment company, trust or personal holding company with the
Fund or the Fund's acquisition by the purchase or otherwise, of
all or substantially all of the assets of an investment company,
trust or personal holding company. Any right granted to
Distributor to accept orders for Shares, or to make sales on
behalf of the Fund or to purchase Shares for resale, will not
apply to Shares issued in connection with the merger or
consolidation of any other investment company with the Fund or
its acquisition by purchase or otherwise, of all or substantially
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all of the assets of any investment company, trust or personal
holding company, or substantially all of the outstanding shares
or interests of any such entity, and such right shall not apply
to Shares that may be offered by the Fund to shareholders by
virtue of their being shareholders of the Fund.
4. Shares Covered by this Agreement. This Agreement
relates to the issuance and sale of Shares that are duly
authorized, registered, and available for sale by the Fund,
including redeemed or repurchased Shares if and to the extent
that they may be legally sold and if, but only if, the Fund
authorizes the Distributor to sell them.
5. Public Offering Price. All Shares sold by the
Distributor pursuant to this Agreement shall be sold at the
public offering price. The public offering price for all
accepted subscriptions will be the net asset value per share, as
determined in the manner provided in the Fund's Articles of
Incorporation, as now in effect, or as they may be amended (and
as reflected in the Fund's then current prospectus), next
determined after the order is accepted by the Distributor. The
Distributor will process orders submitted by brokers for the sale
of Shares at the public offering price exclusive of any
commission charged by such broker to his customer.
6. Suspension of Sales. If and whenever the
determination of net asset value is suspended and until such
suspension is terminated, no further orders for Shares shall be
accepted by the Distributor except such unconditional orders
placed with the Distributor before it had knowledge of the
suspension. In addition, the Fund reserves the right to suspend
sales and Distributor's authority to accept orders for Shares on
behalf of the Fund if, in the judgment of the Board of Directors
of the Fund, it is in the best interests of the Fund to do so,
such suspension to continue for such period as may be determined
by the Board of Directors of the Fund; and in that event, no
orders to purchase Shares shall be processed or accepted by the
Distributor on behalf of the Fund while such suspension remains
in effect except for Shares necessary to cover unconditional
orders accepted by Distributor before it had knowledge of the
suspension, unless otherwise directed by the Board of Directors
of the Fund.
7. Solicitation of Orders. In consideration of the
rights granted to the Distributor under this Agreement,
Distributor will use its best efforts (but only in states in
which Distributor may lawfully do so) to obtain from investors
unconditional orders for Shares authorized for issuance by the
Fund and registered under SA-33, provided that Distributor may in
its discretion reject any order to purchase Shares. This does
not obligate the Distributor to register or maintain its
registration as a broker or dealer under the state securities
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laws of any jurisdiction if, in the discretion of the
Distributor, such registration is not practical or feasible. The
Fund shall make available to the Distributor at the expense of
the Distributor such number of copies of the Fund's currently
effective prospectus as the Distributor may reasonably request.
The Fund 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.
8. Authorized Representations. The Fund is not
authorized by the Distributor to give, on behalf of the
Distributor, any information or to make any representations other
than the information and representations contained in a
registration statement or prospectus filed with the SEC under
SA-33 and/or ICA-40, covering Shares, as such registration
statement and prospectus may be amended or supplemented from time
to time.
Distributor is not authorized by the Fund to give on
behalf of the Fund 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 Securities and Exchange Commission
("SEC") under SA-33 and/or ICA-40, 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 Fund 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 Distributor is authorized
to act as principal underwriter (as such term is defined in
ICA-40, as amended) for the Fund.
9. Registration and Sale of Additional Shares. The
Fund will, from time to time, use its best efforts to register
under SA-33, such Shares of the Fund as Distributor may
reasonably be expected to sell on behalf of the Fund. In
connection therewith, the Fund hereby agrees to register an
indefinite number of Shares pursuant to Rule 24f-2 under ICA-40,
and to register such Shares as shall be deemed advisable pursuant
to Rule 24e-2 under ICA-40, as amended. The Fund will, in
cooperation with the Distributor, take such action as may be
necessary from time to time to qualify such Shares (so registered
or otherwise qualified for sale under SA-33), in any state
mutually agreeable to the Distributor and the Fund, and to
maintain such qualification.
10. Expenses. The Fund shall pay all fees and
expenses:
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a. in connection with the preparation, setting in
type and filing of any registration statement and
prospectus under SA-33 and/or ICA-40, and any
amendments or supplements that may be made from
time to time;
b. in connection with the sale in the various states
in which the Fund shall determine it advisable to
sell such Shares. (Including registering the
Fund as a broker or dealer or any officer of the
Fund or other person as agent or salesman of the
Fund in any state.);
c. of preparing, setting in type, printing and
mailing any report or other communication to
shareholders of the Fund in their capacity as
such;
d. of preparing, setting in type, printing and
mailing prospectuses annually to existing
shareholders;
e. in connection with the issue and transfer of
Shares resulting from the acceptance by
Distributor of orders to purchase Shares placed
with the Distributor by investors, including the
expenses of confirming such purchase orders; and
f. of any issue taxes or (in the case of Shares
redeemed) any initial transfer taxes.
The Distributor shall pay (or will enter into
arrangements providing that persons other than Distributor shall
pay) all fees and expenses:
a. of printing and distributing any prospectuses or
reports prepared for its use in connection with
the distribution of Shares to the public;
b. of preparing, setting in type, printing and
mailing any other literature used by the
Distributor in connection with the distribution
of the Shares to the public;
c. of advertising in connection with the
distribution of such Shares to the public;
d. incurred in connection with its registration as a
broker or dealer or the registration or
qualification of its officers, directors or
representatives under federal and state laws; and
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e. incurred in connection with the sale and offering
for sale of Shares which have not been herein
specifically allocated to the Fund.
11. Conformity With Law. Distributor agrees that in
selling Shares it shall duly conform in all respects with the
laws of the United States and any state in which such Shares may
be offered for sale by Distributor pursuant to this Agreement and
to the rules and regulations of the NASD.
12. Independent Contractor. Distributor shall be an
independent contractor and neither Distributor, nor any of its
officers, directors, employees, or representatives is or shall be
an employee of the Fund in the performance of Distributor's
duties hereunder. 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. Distributor assumes full
responsibility for its agents and employees under applicable
statutes and agrees to pay all employee taxes thereunder.
13. Indemnification. Distributor agrees to indemnify
and hold harmless the Fund and each of its directors, officers,
employees, representatives and each person, if any, who controls
the Fund within the meaning of Section 15 of SA-33 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
Fund or such of its directors, officers, employees,
representatives or controlling person may become subject under
SA-33, 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 Distributor or any of
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 Fund 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 information furnished to the Fund by Distributor. In no
case (i) is Distributor's indemnity in favor of the Fund, or any
person indemnified to be deemed to protect the Fund or such
indemnified person against any liability to which the Fund or
such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of
his duties or by reason of his reckless disregard of his
obligations and duties under this Agreement or (ii) is
Distributor to be liable under its indemnity agreement contained
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in this Paragraph with respect to any claim made against the Fund
or any person indemnified unless the Fund or such person, as the
case may be, shall have notified 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 Fund or upon such person
(or after the Fund or such person shall have received notice of
such service on any designated agent). However, failure to
notify Distributor of any such claim shall not relieve
Distributor from any liability which Distributor may have to the
Fund or any person against whom such action is brought otherwise
than on account of Distributor's indemnity agreement contained in
this Paragraph.
Distributor shall be entitled to participate, at its
own expense, in the defense, or, if Distributor so elects, to
assume the defense of any suit brought to enforce any such claim,
but, if Distributor elects to assume the defense, such defense
shall be conducted by legal counsel chosen by Distributor and
satisfactory to the Fund, to its directors, officers, employees
or representatives, or to any controlling person or persons,
defendant or defendants, in the suit. In the event that
Distributor elects to assume the defense of any such suit and
retain such legal counsel, the Fund, its directors, officers,
employees, representatives or controlling person or persons,
defendant or defendants in the suit, shall bear the fees and
expenses of any additional legal counsel retained by them. If
Distributor does not elect to assume the defense of any such
suit, Distributor will reimburse the Fund, such directors,
officers, employees, representatives or controlling person or
persons, defendant or defendants in such suit for the reasonable
fees and expenses of any legal counsel retained by them.
Distributor agrees to promptly notify the Fund 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.
The Fund agrees to indemnify and hold harmless
Distributor and each of its directors, officers, employees,
representatives and each person, if any, who controls Distributor
within the meaning of Section 15 of SA-33 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 Distributor or
such of its directors, officers, employees, representatives or
controlling person may become subject under SA-33, 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 Fund or any of the Fund's directors,
officers, employees or representatives, or (ii) may be based upon
any untrue statement or alleged untrue statement of a material
PAGE 8
fact contained in a registration statement, prospectus,
shareholder report or other information covering Shares filed or
made public by the Fund 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 information furnished to
Distributor by the Fund. In no case (i) is the Fund'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 his duties or by
reason of his reckless disregard of his obligations and duties
under this Agreement, or (ii) is the Fund to be liable under its
indemnity agreement contained in this Paragraph with respect to
any claim made against Distributor, or person indemnified unless
Distributor, or such person, as the case may be, shall have
notified the Fund 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 Distributor or upon such person (or after Distributor or
such person shall have received notice of such service on any
designated agent). However, failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which
the Fund may have to Distributor or any person against whom such
action is brought otherwise than on account of the Fund's
indemnity agreement contained in this Paragraph.
The Fund shall be entitled to participate, at its own
expense, in the defense, or, if the Fund so elects, to assume the
defense of any suit brought to enforce any such claim, but, if
the Fund elects to assume the defense, such defense shall be
conducted by legal counsel chosen by the Fund and satisfactory to
Distributor, to its directors, officers, employees or
representatives, or to any controlling person or persons,
defendant or defendants, in the suit. In the event that the Fund
elects to assume the defense of any such suit and retain such
legal counsel, Distributor, its directors, officers, employees,
representatives or controlling person or persons, defendant or
defendants in the suit, shall bear the fees and expenses of any
additional legal counsel retained by them. If the Fund does not
elect to assume the defense of any such suit, the Fund will
reimburse Distributor, such directors, officers, employees,
representatives or controlling person or persons, defendant or
defendants in such suit for the reasonable fees and expenses of
any legal counsel retained by them. The Fund agrees to promptly
notify 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.
PAGE 9
14. Duration and Termination of This Agreement. This
Agreement shall become effective upon its execution ("effective
date") and, unless terminated as provided, shall remain in effect
through April 30, 1998 and from year to year thereafter, but only
so long as such continuance is specifically approved at least
annually by the vote of a majority of the directors of the Fund
who are not interested persons of Distributor or of the Fund,
cast in person at a meeting called for the purpose of voting on
such approval, and by vote of the directors of the Fund or of a
majority of the outstanding voting securities of the Fund. This
Agreement may, on 60 days' written notice, be terminated at any
time, without the payment of any penalty, by the vote of a
majority of the directors of the Fund who are not interested
persons of Distributor or the Fund, by a vote of a majority of
the outstanding voting securities of the Fund, or by Distributor.
This Agreement will automatically terminate in the event of its
assignment. In interpreting the provisions of this Paragraph 14,
the definitions contained in Section 2(a) of ICA-40 (particularly
the definitions of "interested person," "assignment," and
"majority of the outstanding securities") shall be applied.
15. Amendment of this Agreement. No provisions of
this Agreement may be changed, waived, discharged, or terminated
orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge, or
termination is sought. If the Fund should at any time deem it
necessary or advisable in the best interests of the Fund that any
amendment of this Agreement be made in order to comply with the
recommendations or requirements of the SEC or other governmental
authority or to obtain any advantage under state or federal tax
laws and notifies Distributor of the form of such amendment, and
the reasons therefor, and if Distributor should decline to assent
to such amendment, the Fund may terminate this Agreement
forthwith. If Distributor should at any time request that a
change be made in the Fund's Articles of Incorporation or By-Laws
or in its methods of doing business, in order to comply with any
requirements of federal law or regulations of the SEC, or of a
national securities association of which Distributor is or may be
a member relating to the sale of Shares, and the Fund should not
make such necessary change within a reasonable time, Distributor
may terminate this Agreement forthwith.
16. Miscellaneous. It is understood and expressly
stipulated that neither the shareholders of the Fund, nor the
directors of the Fund shall be personally liable hereunder. The
captions in this Agreement are included for convenience of
reference only, and in no way define or delimit 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.
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17. Notice. Any notice required or permitted to be
given by either party to the other shall be deemed sufficient if
sent by registered or certified mail, postage prepaid, addressed
by the party giving notice to the other party at the last address
furnished by the other party to the party giving notice: if to
the Fund, 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, and
if to the Distributor, at 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxx 00000.
ATTEST: X. XXXX PRICE DIVERSIFIED SMALL-CAP
GROWTH FUND, INC.
/s/Xxxxxxxx X. Xxxxxxx By:/s/Xxxxxxx X. Xxxxxxx
Xxxxxxxx X. Xxxxxxx Xxxxxxx X. Xxxxxxx
Assistant Secretary President
ATTEST: X. XXXX PRICE INVESTMENT SERVICES,
INC.
/s/Xxxxxxx Xxx Xxxx By:/s/Xxxxx X. Xxxxxxx
Xxxxxxx Xxx Xxxx Xxxxx X. Xxxxxxx
Assistant Secretary Vice President
