DISTRIBUTION AGREEMENT
AGREEMENT made this 12th day of July 1996 by and between LORD XXXXXX
AFFILIATED FUND, INC., a Maryland Corporation (hereinafter called the
"Corporation"), and LORD XXXXXX DISTRIBUTOR LLC, a New York limited liability
company (hereinafter called the "Distributor").
WHEREAS, the Corporation desires to enter into an agreement with the
Distributor for the purpose of finding purchasers for its securities which are
issued in various Series, and the Distributor is desirous of undertaking to
perform these services upon the terms and conditions hereinafter provided.
NOW, THEREFORE in consideration of the mutual covenants and of other good
and valuable consideration, receipt of which is hereby acknowledged, it is
agreed as follows:
1. The Corporation hereby appoints the Distributor its exclusive selling
agent for the sale of its shares of capital stock, of all classes, and all other
securities now or hereafter created or issued by the Corporation (except notes
and other evidences of indebtedness issued for borrowed money), pursuant to
paragraph 2 of this Agreement, and the Corporation agrees to issue (and upon
request of its shareholders make delivery of certificates for) its shares of
stock or other securities, subject to the provisions of its Articles of
Incorporation, to purchasers thereof and against payment of the consideration to
be received by the Corporation therefor. The Distributor may appoint one or more
independent broker-dealers and the Distributor or any such broker-dealer may
transmit orders to the Corporation at the office of the Corporation's Transfer
Agent in Kansas City, Missouri, for acceptance at its office in New York. Such
shares of beneficial interest shall be registered in such name or names and
amounts as the Distributor or any such broker-dealer may request from time to
time, and all shares of stock when so paid for and issued shall be fully paid
and non-assessable.
2. The Distributor will act as exclusive selling agent for the Corporation
in selling shares of stock.
The Distributor agrees to sell exclusively through independent
broker-dealers, or financial institutions exempt from registration as a
broker-dealer, and agrees to use its best efforts to find purchasers for shares
of stock of the Corporation to be offered; provided however, that the services
of the Distributor under this Agreement are not deemed to be exclusive, and
nothing in this Agreement shall prevent Distributor, or any officer, trustee,
partner, member or
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employee thereof, from providing similar services to other investment companies
and other clients or to engage in other activities.
The sales charge or premium relating to each class of shares of capital
stock of the Corporation shall be determined by the Board of Directors of the
Corporation, but in no event shall the sales charge or premium exceed the
maximum rate permitted under Federal regulations, and the amount to be retained
by the Corporation on any sale of its shares of capital stock shall in each case
be the net asset value thereof (determined as provided in the Articles of the
Corporation). From the premium the Corporation agrees to pay the Distributor a
sales commission. The Distributor may allow concessions from such sales
commissions. In such event the amount of the payment hereunder by the
Corporation to the Distributor shall be the difference between the sales
commission and any concessions which have been allowed in accordance herewith.
The sales commission payable to the Distributor shall not exceed the premium.
Recognizing the need for providing an incentive to sell and providing
necessary and continuing informational and investment services to shareholders
of the Corporation, the Corporation or the Distributor (by agreement) may pay
independent broker-dealers periodic servicing and distribution fees based on
percentages of average annual net asset value of shareholder accounts of such
broker-dealers. The parties hereto incorporate by reference and agree to the
terms and provisions of the 12b-1 Plans of each class of stock of the
Corporation.
3. Notwithstanding anything herein to the contrary, sales and distributions
of the Corporation's capital stock may be upon any special terms as approved by
the Corporation's Board of Directors and discussed in the Corporation's current
prospectus.
4. The independent broker-dealers who sell the Corporation's shares may
also render other services to the Corporation, such as executing purchases and
sales of portfolio securities, providing statistical information, and similar
services. The receipt of compensation for such other services shall in no way
reduce the amount of the sales commissions payable hereunder by the Corporation
to the Distributor or the amount of the commissions, concessions or fees
allowed.
5. The Distributor agrees to act as agent of the Corporation in connection
with the repurchase of shares of beneficial of the Corporation, or in connection
with exchanges of shares between investment companies having the same
Distributor, and the Corporation agrees to advise the Distributor of the net
asset value of its shares of stock as frequently as may be
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mutually agreed, and to accept shares duly tendered to the Distributor. The net
asset value shall be determined as provided in the Articles of the Incorporation
of the Corporation.
6. The Corporation will pay all fees, costs, expenses and charges in
connection with the issuance, federal registration, transfer, redemption and
repurchase of its shares of capital stock, including without limitation, all
fees, costs, expenses and charges of transfer agents and registrars, all taxes
and other Governmental charges, the costs of qualifying or continuing the
qualifications of the Trust as broker-dealer, if required, and of registering
the shares of the Corporation's capital stock under the state blue sky laws, or
similar laws of any jurisdiction (domestic or foreign), costs of preparation and
mailing prospectuses to its shareholders, and any other cost, expense or charge
not expressly assumed by the Distributor hereunder. The Corporation will also
furnish to the Distributor daily such information as may reasonably be requested
by the Distributor in order that it may know all of the facts necessary to sell
shares of beneficial interest of the Corporation's Stock.
7. The Distributor agrees to pay the cost of all sales literature and other
material which it may require or think desirable to use in connection with sale
of such shares, including the cost of reproducing the offering prospectus
furnished to it by the Corporation, although the Distributor may obtain
reimbursement for such expenses through a 12b-1 Plan with respect to each class
of shares of beneficial interest of the Corporation. The Corporation agrees to
use its best efforts to qualify its shares for sale under the laws of such
states of the United States and such other jurisdictions (domestic or foreign)
as the Distributor may reasonably request.
If the Distributor pays for other expenses of the Corporation or furnishes
the Corporation with services, the cost of which is to be borne by the
Corporation under this Agreement, the Distributor shall not be deemed to have
waived its rights under this Agreement to have the Corporation pay for such
expenses or provide such services in the future.
8. The Distributor agrees to use its best efforts to find purchasers for
shares of stock of the Corporation and to make reasonable efforts to sell the
same so long as in the judgement of the Distributor and a substantial
distribution can be obtained by reasonable efforts. The Distributor is not
authorized to act otherwise than in accordance with applicable laws.
9. Neither this Agreement nor any other transaction between the parties
hereto pursuant to this Agreement shall be invalidated or in any way affected by
the fact that any or all of the trustees, officers, shareholders, or other
representatives of the Corporation are or may be interested in the Distributor,
or any successor or assignee thereof, or that any or all of the
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trustees, officers, partners or other representatives of the Distributor are or
may be interested in the Corporation, except as otherwise may be provided in the
Investment Company Act of 1940.
10. The Distributor agrees that it will not sell for its own account to the
Corporation any stocks, bonds or other securities of any kind of character,
except that if it shall own any of the Corporation's shares of stock or other
securities, it may sell them to the Corporation on the same terms as any other
holder might do.
11. Other than to abide by the provisions hereof and render the services
called for hereunder in good faith, the Distributor assumes no responsibility
under this Agreement and, having so acted, the Distributor shall not be held
liable or held accountable for any mistake of law or fact, or for any loss or
damage arising or resulting therefrom suffered by the Corporation or any of the
shareholders, creditors, trustees, or officers of the Corporation; provided,
however, that nothing herein shall be deemed to protect the Distributor against
any liability to the Corporation or its shareholders by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties
hereunder, or by reason of the reckless disregard of its obligations and duties
hereunder.
12. The Distributor agrees that it shall observe and be bound by all the
terms of the Articles of Incorporation, including any amendments thereto, of the
Corporation which shall in any way limit or restrict or prohibit or otherwise
regulate any action of the Distributor.
13. This Agreement shall continue in force for two years from the date
hereof, and its renewable annually thereafter by specific approval of the Board
of Directors of the Corporation or by vote of a majority of the outstanding
voting securities of the Corporation; any such renewal shall be approved by the
vote of a majority of the Directors who are not parties to this Agreement or
interested persons of the Distributor or of the Corporation, cast in person at a
meeting called for the purpose of voting on such renewal.
This Agreement may be terminated without penalty at any time by the Board
of Directors of the Corporation or by vote of a majority of the outstanding
voting securities of the Corporation on 60 days' written notice. This Agreement
shall automatically terminate in the event of its assignment. The terms
"interested persons," "assignment" and "vote of a majority of the outstanding
voting securities" shall have the same meaning as those terms are defined in the
Investment Company Act of 1940.
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IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officers and its corporate seal to be affixed
thereto, and the Distributor has caused this Agreement to be executed by one of
its partners all on the day and year first above written.
LORD XXXXXX AFFILIATED FUND, INC.
BY: /s/ Xxxxxxx X. Xxxxxx
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Vice President
Attest:
/s/Xxxxxx Xxxxx
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Assistant Secretary
LORD XXXXXX DISTRIBUTOR LLC
By: LORD, XXXXXX & CO.
By: /s/ Xxxxxx X. Xxx
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A Partner
Managing Member
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