EXHIBIT (e)
FORM OF DISTRIBUTION AGREEMENT
AGREEMENT made as of [ ], 2002 between XXXXXXX X. XXXXXXXXX FUND II,
INC., a Maryland corporation (the "Corporation") and XXXXXXX X. XXXXXXXXX & CO.,
LLC, a Delaware Limited Liability Company (the "Underwriter").
WITNESSETH
WHEREAS, the Corporation is registered under the Investment Company
Act of 1940, as amended (the "Investment Company Act"), as a diversified,
open-end management investment company and it is in the interest of the
Corporation to offer its shares for sale continuously;
WHEREAS, the Underwriter is a securities firm engaged in the business
of selling shares of investment companies directly to purchasers;
WHEREAS, the Corporation and the Underwriter wish to enter into an
agreement with each other with respect to the continuous offering of the
Corporation's shares in order to promote the growth of the Corporation and
facilitate the distribution of its shares;
NOW, THEREFORE, the parties agree as follows:
SECTION 1. Appointment of the Underwriter. The Corporation hereby
appoints the Underwriter as the principal underwriter and distributor of the
Corporation to sell shares of common stock of the Corporation to the public
(referred to herein as the "shares") and hereby agrees during the term of this
Agreement to sell shares of the Corporation to the Underwriter upon the terms
and conditions herein set forth.
SECTION 2. Exclusive Nature of Duties. The Underwriter shall be the
exclusive representative of the Corporation to act as principal underwriter and
distributor of the shares except that the rights given under this Agreement to
the Underwriter shall not apply to shares issued in connection with (a) the
merger or consolidation of any other investment company with the Corporation,
(b) the Corporation's acquisition by purchase or otherwise of all or
substantially all of the assets or stock of any other investment company or (c)
the reinvestment in shares by the Corporation's shareholders of dividends or
other distributions.
SECTION 3. Purchase of Shares from the Corporation.
(a) The Corporation will commence a continuous offering of its shares
and thereafter the Underwriter shall have the right to buy from a portfolio the
shares needed to fill unconditional orders for shares of such portfolo placed
with the
Underwriter by investors. The price which the Underwriter shall pay for the
shares so purchased from a portfolio shall be the net asset value, determined as
set forth in Section 3(d) hereof, used in determining the public offering price
on which such orders are based.
(b) The shares are to be resold by the Underwriter to investors at a
public offering price as set forth in section 3(c) hereof.
(c) The public offering price of the shares, i.e., the price per share
at which the Underwriter may sell shares to the public, shall be the public
offering price determined in accordance with the current prospectus and
statement of additional information of the Corporation ("Prospectus" and
"Statement of Additional Information," respectively) under the Securities Act of
1933, as amended (the "Securities Act"), relating to such shares, but not to
exceed the net asset value at which the Underwriter is to purchase such shares.
All payments to the Corporation hereunder shall be made in the manner set forth
in Section 3(f) hereof.
(d) The net asset value of shares of the Corporation portfolio shall
be determined by the Corporation, or any agent of the Corporation, as of the
close of regular trading on the New York Stock Exchange on each Corporation
business day in accordance with the method set forth in the Prospectus and
Statement of Additional Information and guidelines established by the Directors
of the Corporation.
(e) The Corporation reserves the right to suspend the offering of its
shares at any time in the absolute discretion of its Directors.
(f) The Corporation, or any agent of the Corporation designated in
writing to the Underwriter by the Corporation, shall be promptly advised by the
Underwriter of all purchase orders for shares received by the Underwriter. Any
order may be rejected by the Corporation; provided, however, that the
Corporation will not arbitrarily or without reasonable cause refuse to accept or
confirm orders for the purchase of shares. The Corporation (or its agent) will
confirm orders upon their receipt, will make appropriate book entries and, upon
receipt by the Corporation (or its agent) of payment thereof, will deliver
deposit receipts or certificates for such shares pursuant to the instructions of
the Underwriter. Payment shall be made to the Corporation in New York Clearing
House funds. The Underwriter agrees to cause such payment and such instructions
to be delivered promptly to the Corporation (or its agent).
SECTION 4. Repurchase or Redemption of Shares by the Corporation.
(a) Any of the outstanding shares may be tendered for redemption at
any time, and the Corporation agrees to redeem or
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repurchase the shares so tendered in accordance with its obligations as set
forth in ARTICLE FIFTH of its Articles of Incorporation and in accordance with
the applicable provisions set forth in the Prospectus and Statement of
Additional Information. The price to be paid to redeem or repurchase the shares
shall be equal to the net asset value calculated in accordance with the
provisions of Section 3(d) hereof. All payments by the Corporation hereunder
shall be made in the manner set forth below.
The Corporation (or its agent) shall pay the total amount of the
redemption price pursuant to the instructions of the Underwriter in New York
Clearing House funds on or before the seventh business day subsequent to its
having received the notice of redemption in proper form.
(b) Redemption of shares or payment may be suspended at times when the
New York Stock Exchange is closed, when trading thereon is restricted, when an
emergency exists as a result of which disposal by the Corporation of securities
owned by it is not reasonably practicable or it is not reasonably practicable
for the Corporation fairly to determine the value of its net assets, or during
any other period when the Securities and Exchange Commission, by order, so
permits.
SECTION 5. Duties of the Corporation.
(a) The Corporation shall furnish to the Underwriter copies of all
information, financial statements and other papers that the Underwriter may
reasonably request for use in connection with the distribution of shares of the
Corporation, and this shall include one certified copy, upon request by the
Underwriter, of all financial statements prepared for the Corporation by the
Corporation's independent public accountants. The Corporation shall make
available to the Underwriter such number of copies of the Prospectus and
Statement of Additional Information as the Underwriter shall reasonably request.
(b) The Corporation shall take, from time to time, but subject to any
necessary approval of its shareholders, all necessary action to fix the number
of authorized shares and such steps as may be necessary to register the same
under the Securities Act, to the end that there will be available for sale such
number of shares as the Underwriter reasonably may be expected to sell.
(c) The Corporation shall use its best efforts to qualify for sale and
maintain the qualification for sale of an appropriate number of its shares under
the securities laws of such states as the Underwriter and the Corporation may
approve. Any such qualification may be withheld, terminated or withdrawn by the
Corporation at any time in its discretion. As provided in Section 7(b) hereof,
the expense of qualification and maintenance of qualification shall be borne by
the Corporation. The Underwriter shall furnish such information and other
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material relating to its affairs and activities as may be required by the
Corporation in connection with such qualification.
(d) The Corporation will furnish, in reasonable quantities upon
request by the Underwriter, copies of annual and interim reports of the
Corporation.
SECTION 6. Duties of the Underwriter.
(a) The Underwriter shall devote reasonable time and effort to effect
sales of shares of the Corporation, but shall not be obligated to sell any
specific number of shares. The services hereunder of the Underwriter to the
Corporation are not to be deemed exclusive as to the Underwriter and nothing in
this Agreement shall prevent the Underwriter from entering into like
arrangements with other investment companies so long as the performance of its
obligations hereunder is not impaired thereby.
(b) In selling shares of the Corporation, the Underwriter shall use
its best efforts in all material respects duly to conform with the requirements
of all federal and state laws relating to the sale of such securities. Neither
the Underwriter nor any other person is authorized by the Corporation to give
any information or to make any representations, other than those contained in
the Corporation's Registration Statement on Form N-1A (the "Registration
Statement"), as amended from time to time, under the Securities Act and the
Investment Company Act or the Prospectus and Statement of Additional Information
or in any sales literature specifically approved in writing by the Corporation.
(c) The Underwriter shall adopt and follow procedures, as approved by
the appropriate officers of the Corporation, for the confirmation of sales to
investors, the collection of amounts payable by investors on such sales, and the
cancellation of unsettled transactions, as may be necessary to comply with the
requirements of the NASD, as such requirements may from time to time exist.
SECTION 7. Payment of Expenses.
(a) The Corporation shall bear all costs and expenses of the
Corporation, including fees and disbursements of its counsel and auditors, in
connection with the preparation and filing of the Corporation's Registration
Statement and Prospectus and Statement of Additional Information, and all
amendments and supplements thereto, and preparing and mailing annual and interim
reports and proxy materials to shareholders (including but not limited to the
expense of printing any such registration statements, prospectuses, annual or
interim reports or proxy materials).
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(b) The Corporation shall bear the cost of expenses of qualification
of shares for sale, and, if necessary or advisable in connection therewith, of
qualifying the Corporation as an issuer or as a broker or dealer, in such states
of the United States or other jurisdiction as shall be selected by the
Corporation and the Underwriter pursuant to Section 5(c) hereof and the cost and
expenses payable to each such state for continuing qualification therein until
the Corporation decides to discontinue such qualification pursuant to Section
5(c) hereof.
SECTION 8. Indemnification.
(a) The Corporation shall indemnify, defend and hold the Underwriter,
and any person who controls the Underwriter within the meaning of Section 15 of
the Securities 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 Underwriter or any such controlling person may
incur, under the Securities Act, or under common law or otherwise, arising out
of or based upon any alleged untrue statement of a material fact contained in
the Corporation's Registration Statement, Prospectus or Statement of Additional
Information in effect from time to time under the Securities Act or arising out
of or based upon any alleged omission to state a material fact required to be
stated in any one thereof or necessary to make the statements in any one thereof
not misleading; provided, however, that in no event shall anything herein
contained be so construed as to protect the Underwriter against any liability to
the Corporation or its security holders to which the Underwriter would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties, or by reason of the Underwriter's reckless
disregard of its obligations and duties under this Agreement. The Corporation's
agreement to indemnify the Underwriter and any such controlling person as
aforesaid is expressly conditioned upon the Corporation's being notified of the
commencement of any action brought against the Underwriter or any such
controlling person, such notification to be given by letter or by telegram
addressed to the Corporation at its principal office in New York, New York, and
sent to the Corporation 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 to so notify the Corporation of the commencement of any such action
shall not relieve the Corporation from any liability which it may have to the
person against whom such action is brought by reason of any such alleged untrue
statement or omission otherwise than on account of the indemnity agreement
contained in this Section 8. The Corporation will be entitled to assume the
defense of any suit brought to enforce any such claim, and to retain counsel of
good standing chosen by the Corporation and approved by the Underwriter. In the
event the Corporation does not elect to assume the defense of any such suit and
retain counsel of good
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standing approved by the Underwriter, the defendant or defendants in such suit
shall bear the fees and expenses of any additional counsel retained by any of
them; but if Corporation does not elect to assume the defense of any such suit,
or in case the Underwriter does not approve of counsel chosen by the
Corporation, the Corporation will reimburse the Underwriter or the controlling
person or persons named as defendant or defendants in such suit, for the fees
and expenses of any counsel retained by the Underwriter or any such person. The
indemnification agreement contained in this Section 8 shall remain operative and
in full force and effect regardless of any investigation made by or on behalf of
the Underwriter or any controlling person and shall survive the sale of any of
the Corporation's shares made pursuant to subscriptions obtained by the
Underwriter. This agreement of indemnity will inure exclusively to the benefit
of the Underwriter, to the benefit of its successors and assigns, and to the
benefit of any controlling persons and their successors and assigns. The
Corporation shall promptly notify the Underwriter of the commencement of any
litigation or proceeding against the Corporation in connection with the issue
and sale of any of its shares.
(b) The Underwriter shall indemnify, defend and hold the
Corporation, its several officers and directors, and any person who controls the
Corporation within the meaning of Section 15 of the Securities 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
Corporation, its officers or directors, or any such controlling person may incur
under the Securities Act or under common law or otherwise, but only to the
extent that such liability, or expense incurred by the Corporation, its
officers, directors 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 Underwriter
to the Corporation for use in its Registration Statement, Prospectus or
Statement of Additional Information in effect from time to time under the
Securities Act, or shall arise out of or be based upon any alleged omission to
state a material fact in connection with such information required to be stated
in the Registration Statement, Prospectus or Statement of Additional Information
or necessary to make such information not misleading. The Underwriter's
agreement to indemnify the Corporation, its officers and directors, and any such
controlling person as aforesaid is expressly conditioned upon the Underwriter
being notified of the commencement of any action brought against the
Corporation, its officers or directors or any such controlling person, such
notification to be given by letter or telegram addressed to the Underwriter at
its principal office in New York, and sent to the Underwriter by the person
against whom such action is brought, within ten days after the summons or other
first legal process shall have been served.
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The Underwriter shall have a right to control the defense of such action, with
counsel of its own choosing, satisfactory to the Corporation, if such action is
based solely upon such alleged misstatement or omission on its part, and in any
other event the Underwriter and the Corporation, and their officers and
directors or such controlling person, shall each have the right to participate
in the defense or preparation of the defense of any such action. The failure so
to notify the Underwriter of the commencement of any such action shall not
relieve the Underwriter from any liability which it may have to the Corporation,
to its officers and directors, or to such controlling person by reason of any
such untrue statement or omission on the part of the Underwriter otherwise than
on account of the indemnity agreement contained in this Section 8.
SECTION 9. Notification by the Corporation.
The Corporation shall advise the Underwriter immediately:
(a) of any request by the Securities and Exchange Commission for any
amendment to the Corporation's Registration Statement, Prospectus or Statement
of Additional Information or for additional information,
(b) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of the Corporation's
Registration Statement, Prospectus or Statement of Additional Information or the
initiation of any proceeding for that purpose,
(c) of the happening of any material event which makes untrue any
statement made in the Corporation's Registration Statement, Prospectus or
Statement of Additional Information or which requires the making of a change in
any one thereof in order to make the statements therein not misleading, and
(d) of all actions of the Securities and Exchange Commission with
respect to any amendment to the Corporation's Registration Statement, Prospectus
or Statement of Additional Information which may from time to time be filed with
the Securities and Exchange Commission under the Securities Act.
SECTION 10. Term of Agreement.
(a) This Agreement shall become effective on the date hereof and shall
continue in effect until December 31, 2003 and continue in effect thereafter
with respect to a portfolio so long as its continuance with respect such
portfolio is specifically approved annually by the Directors of the Corporation
or by vote of the holders of a majority of the outstanding voting securities (as
defined in the Investment Company Act) of such portfolio, and, in either case,
by a majority of the Directors of the Corporation who are not parties
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to this Agreement or interested persons, as defined in the Investment Company
Act, of any such party (other than as directors of the Corporation); provided,
however, that if the continuation of this Agreement is not approved as to a
portfolio, the Underwriter may continue to render to such portfolio the services
described herein in the manner and to the extent permitted by the Act and the
rules and regulations thereunder. This Agreement may be terminated (i) by the
Corporation with respect to any portfolio at any time, without the payment of
any penalty, by the vote of a majority of the outstanding voting securities (as
so defined) of such portfolio, or by a vote of a majority of the Board of
Directors of the Corporation on sixty days' written notice to the Underwriter;
or (ii) by the Underwriter with respect any portfolio on sixty days' written
notice to the Corporation.
(b) This Agreement may be amended at any time with the approval of the
Directors of the Corporation, provided that any material amendments of the terms
hereof will become effective only upon approval as provided in the first
sentence of Section 10(a) hereof.
SECTION 11. No Assignment. This Agreement may not be transferred,
assigned, sold or in any manner hypothecated or pledged by either party hereto,
and this Agreement shall terminate automatically in the event of any such
transfer, assignment, sale, hypothecation or pledge. The terms "transfer",
"assignment", and "sale" as used in this paragraph shall have the meanings
ascribed thereto by governing law and any interpretation thereof contained in
rules or regulations promulgated by the Securities and Exchange Commission
thereunder.
SECTION 12. Notices. Any notice required or permitted to be given
hereunder by either party to the other shall be deemed sufficiently given if
sent by registered mail, postage prepaid, addressed by the party giving such
notice to the other party at the last address furnished by such other party to
the party given notice, and unless and until changed pursuant to the foregoing
provisions hereof addressed to the Corporation or the Underwriter.
SECTION 13. Governing Law. The provisions of this Agreement shall be,
to the extent applicable, construed and interpreted in accordance with the laws
of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
XXXXXXX X. XXXXXXXXX FUND II, INC.
By:
---------------------------------
Xxxxxx X. Xxxxxx, Xx.
Secretary
XXXXXXX X. XXXXXXXXX & CO., LLC.
By:
---------------------------------
[Name]
{Title]
