DISTRIBUTION AGREEMENT
ORBITEX LIFE SCIENCES & BIOTECHNOLOGY FUND, INC.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
August 1, 2000
Funds Distributor, Inc.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Dear Sirs:
This is to confirm that, in consideration of the agreements hereinafter
contained, the above-named investment company (the "Fund") has agreed that Funds
Distributor, Inc. ("FDI") shall be, for the period of this Agreement, the
distributor of shares of common stock (the "Shares") of the Fund.
1. Services as Distributor
1.1 FDI will act as agent for the distribution of the Shares covered by,
and in accordance with, the Fund's Registration Statement on Form N-2, as may be
amended or supplemented from time to time (the "Registration Statement"), under
the Securities Act of 1933, as amended, upon the terms and conditions herein set
forth.
1.2 Commencing on the effective date of the Fund's Registration Statement,
it is contemplated that Selected Dealers (as hereinafter defined) having
agreements with FDI will solicit subscriptions for the Shares during a
subscription period (the "Subscription Period") which shall last for such period
as may be agreed upon by the Fund and FDI. The subscriptions will be payable on
the business day following the termination of the Subscription Period (the
"Closing Date"), at which time the Fund will commence operations. In addition,
during the 90 day period following the Closing Date or such other period of time
as may be determined by the Fund in its sole discretion (the "Continuous
Offering Period"), the Fund will continuously offer the Shares and each Selected
Dealer shall have the right to buy from the Fund the Shares needed, but not more
than the Shares needed (except for clerical errors in transmission) to fill
unconditional orders for Shares placed with the Fund by the Selected Dealer.
During the Subscription Period, the price which each Selected Dealer shall pay
for the Shares so subscribed shall be $25.00 per share. During the Continuous
Offering Period, the price which each Selected Dealer shall pay for the Shares
so purchased from the Fund shall be the Fund's then current net asset value per
share, determined by the Fund or any agent of the Fund in accordance with the
method set forth in the Fund's prospectus (the "Prospectus") and statement of
additional information (the "Statement of Additional Information") contained in
the Fund's Registration Statement.
1.3 FDI shall devote reasonable time and effort to effect sales of the
Shares but shall not be obligated to sell any specific number of Shares or to
expend any specific or minimum amount of its own funds. FDI shall act as
distributor of the Shares in compliance with all applicable laws, rules and
regulations, including, without limitations, the Investment Company Act of 1940,
as amended, the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, and the National Association of Securities Dealers, Inc.'s
(the "NASD") Conduct Rules, Constitution and By-Laws. FDI represents and
warrants that it is a broker-dealer registered with the Securities and Exchange
Commission and that it is registered with the relevant securities regulatory
agencies in all fifty states, the District of
Columbia and Puerto Rico FDI also represents and warrants that it is a member in
good standing of the NASD and that it will maintain registration and membership
for the life of this Agreement.
1.4 FDI shall file Fund advertisements, sales literature and other
marketing and sales related materials with the appropriate regulatory agencies
and shall use commercially reasonable efforts to obtain such approvals for their
use as may be required by the Securities and Exchange Commission, the National
Association of Securities Dealers, Inc. and/or state securities administrators.
FDI shall not, however, be responsible for the preparation of such materials,
nor will FDI be responsible for ensuring such materials will be acceptable to
the regulatory agencies.
1.5 Whenever in its judgment such action is warranted by unusual market,
economic or political conditions, or by abnormal circumstances of any kind
deemed by any of the parties hereto to render sales of the Shares not in the
best interest of the Fund, any of the parties hereto may decline to accept any
orders for, or make any sales of, any Shares until such time as those parties
deem it advisable to accept such orders and to make such sales and the party
making such determination shall advise promptly the other parties of any such
determination.
1.6 The Fund agrees to pay all costs and expenses in connection with the
registration of the Shares under the Securities Act of 1933, as amended, and all
expenses in connection with maintaining facilities for the issue and transfer of
Shares and for supplying information, prices and other data to be furnished by
the Fund hereunder, and all expenses in connection with the preparation and
printing of the Fund's Prospectus and Statement of Additional Information for
regulatory purposes and for distribution to shareholders; provided, however,
that the Fund shall not pay any of the costs of advertising or promotion for the
sale of the Shares.
1.7 The Fund agrees to execute any and all documents and to furnish any and
all information and otherwise to take all actions which may be reasonably
necessary in the discretion of the Fund's officers in connection with the
qualification of, or notification filings with respect to, the Shares for sale
in such states as you may designate to the Fund and the Fund may approve, and
the Fund agrees to pay all reasonable fees and expenses which may be incurred in
connection with such qualification. FDI shall pay all expenses connected with
its own qualification as a dealer under state or Federal laws and, except as
otherwise specifically provided in this Agreement, all other expenses incurred
by it in connection with the sale of Shares as contemplated in this Agreement.
1.8 The Fund shall furnish FDI from time to time, for use in connection
with the sale of Shares, such information with respect to the Fund and the
Shares as FDI may reasonably request, all of which shall be signed by one or
more of the Fund's duly authorized officers; and the Fund warrants that the
statements contained in any such information, when so signed by the Fund's
officers, shall be true and correct.
1.9 The Fund represents to FDI that all Registration Statements filed by
the Fund with the Securities and Exchange Commission under the Securities Act of
1933, as amended, and under the Investment Company Act of 1940, as amended, with
respect to the Shares and the Fund have been carefully prepared in conformity
with the requirements of said Acts and rules and regulations of the Securities
and Exchange Commission thereunder. As used in this Agreement the term
"Registration Statement shall mean any Registration Statement filed with the
Securities and Exchange Commission and any amendments and supplements thereto
which at any time shall have been filed with said Commission. The Fund
represents and warrants to FDI that the Registration Statement, when such
Registration Statement becomes effective, will contain all statements required
to be stated therein in conformity with said Acts and the rules and regulations
of said Commission; that all statements of fact contained in such Registration
Statement will be true and correct when such Registration Statement becomes
effective; and
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that such Registration Statement, when it becomes effective, will not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
1.10 The Fund authorizes FDI and any Selected Dealers with whom FDI has
entered into Selected Dealer Agreements to use the Fund's Prospectus in the form
furnished by the Fund in connection with the sale of Shares. The Fund agrees to
indemnify, defend and hold FDI, the several officers and directors of FDI, and
any person who controls FDI within the meaning of Section 15 of the Securities
Act of 1933, as amended (collectively, the "Indemnified Parties"), free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the reasonable costs of investigating or defending such claims,
demands or liabilities and any reasonable counsel fees incurred in connection
therewith) which the Indemnified Parties may incur under the Securities Act of
1933, as amended, the Investment Company Act of 1940, as amended, or common law
or otherwise, arising out of or on the basis of any untrue statement, or alleged
untrue statement, of a material fact required to be stated in the Registration
Statement, the Prospectus or the Statement of Additional Information or arising
out of or based upon any omission, or alleged omission, to state a material fact
required to be stated in the Registration Statement, the Prospectus or the
Statement of Additional Information or necessary to make the statement in any of
them not misleading, except that the Fund's agreement to indemnify the
Indemnified Parties will not be deemed to cover any such claim, demand,
liability or expense to the extent that it arises out of or is based upon any
such untrue statement, or alleged untrue statement, contained in information
furnished in writing by FDI to the Fund specifically for use in the Fund's
Registration Statement and used in the answers to any of the items of the
Registration Statement or in the corresponding statements made in the Prospectus
or Statement of Additional Information, or arises out of or is based upon any
omission, or alleged omission, to state a material fact in connection with such
information furnished in writing by FDI to the Fund and required to be stated in
such answers or necessary to make such information not misleading, and except
that the Fund's agreement to indemnify FDI and the Fund's representations and
warranties set out in paragraph 1.9 of this Agreement will not be deemed to
cover any liability to the Fund or their shareholders to which FDI 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 and duties under this Agreement ("Disqualifying
Conduct"). The Fund's agreement to indemnify the Indemnified Parties, as
aforesaid, is expressly conditioned upon the Fund's being notified of any action
brought against an Indemnified Party, such notification to be given by letter,
by facsimile or by telegram addressed to the Fund at its address set forth above
within a reasonable period of time after the summons or other first legal
process shall have been served. The failure so to notify the Fund of any such
action shall not relieve the Fund from any liability which the Fund may have to
the person against whom such action is brought by reason of any such untrue, or
alleged untrue, statement or omission, or alleged omission, otherwise than on
account of the Fund's indemnity agreement contained in this paragraph 1.10. The
Fund will be entitled to assume the defense of any suit brought to enforce any
such claim, demand or liability, but, in such case, such defense shall be
conducted by counsel of good standing chosen by the Fund and approved by FDI. In
the event the Fund elects to assume the defense of any such suit and retain
counsel of good standing approved by FDI, the defendant or defendants in such
suit shall bear the fees and expenses of any additional counsel retained by any
of them; but in case the Fund does not elect to assume the defense of any such
suit, the Fund will reimburse the Indemnified Parties named as defendants in
such suit, for the reasonable fees and expenses of any counsel retained by such
Indemnified Parties. The Fund's indemnification agreement contained in this
paragraph 1.10 and the Fund's representations and warranties in this Agreement
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of an Indemnified Party, and shall survive
the delivery of any Shares. This agreement of indemnity will inure exclusively
to the benefit of, to the benefit of their respective several officers and
directors, and their respective estates, and to the benefit of any controlling
person of FDI and their successors. The Fund agrees promptly to notify FDI of
the
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commencement of any litigation or proceedings against the Fund or any of its
officers or Board members in connection with the issue and sale of the Shares.
1.11 FDI agrees to indemnify, defend and hold the Fund, its several
officers and Board members, and any person who controls the Fund within the
meaning of Section 15 of the Securities Act of 1933, as amended, free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the reasonable cost of investigating or defending such claims,
demands or liabilities and any reasonable counsel fees incurred in connection
therewith) which the Fund, its officers or Board members, or any such
controlling person, may incur under the Securities Act of 1933, as amended, the
Investment Company Act of 1940, as amended, or under common law or otherwise,
but only to the extent that such liability or expense incurred by the Fund, its
officers or Board members, or such controlling person resulting from such claims
or demands, (a) shall arise out of or be based upon any unauthorized sales
literature, advertisements, or offering materials not authorized by the Fund, or
any Disqualifying Conduct, in connection with the offering and sale of any
Shares, or (b) shall arise out or be based upon any untrue, or alleged untrue,
statement of a material fact contained in information furnished in writing by
FDI, as the case may be, to the Fund specifically for use in the Fund's
Registration Statement and used in the answers to any of the items of the
Registration Statement or in the corresponding statements made in the Prospectus
or Statement of Additional Information, or shall arise out of or be based upon
any omission, or alleged omission, to state a material fact in connection with
such information furnished in writing by FDI, as the case may be, to the Fund
and required to be stated in such answers or necessary to make such information
not misleading. FDI's agreement to indemnify the Fund, its officers and Board
members, and any such controlling person, as aforesaid, is expressly conditioned
upon their being notified of any action brought against the Fund, its officers
or Board members, or any such controlling person, such notification to be given
by letter, by facsimile or by telegram addressed to FDI at the addresses set
forth above within a reasonable period of time after the summons or other first
legal process shall have been served. The failure so to notify FDI of any such
action shall not relieve FDI from any liability which it may have to the person
against whom such action is brought by reason of any such untrue, or alleged
untrue, statement or omission, or alleged omissions, otherwise than on account
of the indemnity agreement contained in this paragraph 1.11. FDI, as the case
may be, will be entitled to assume the defense of any suit brought to enforce
any such claim, demand or liability, but, in such case, such defense shall be
conducted by counsel of good standing chosen by FDI, as the case may be, and
approved by the Fund. In the event FDI, as the case may be, elects to assume the
defense of any such suit and retains counsel of good standing approved by the
Fund, the defendant or defendants in such suit shall bear the fees and expenses
of any additional counsel retained by any of them; but in the case FDI, as the
case may be, does not elect to assume the defense of any such suit, FDI, as the
case may be, will reimburse the Fund, the Fund's officers and directors, or the
controlling person or persons named as defendant or defendants in such suit, for
the reasonable fees and expenses of any counsel retained by the Fund or them.
The indemnification agreement contained in this paragraph 1.11 and FDI's
representations and warranties in this Agreement shall remain operative and in
full force and effect regardless of any investigation made by the Fund or on
behalf of the Fund, its officers and directors, or any controlling person, and
shall survive the delivery of any Shares. This agreement of indemnity will inure
exclusively to the Fund's benefit, to the benefit of the Fund's officers and
Board members, and their respective estates, and to the benefit of any
controlling persons and their successors. FDI agrees promptly to notify the Fund
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 the Shares.
1.12 No Shares shall be offered by FDI or the Fund under any of the
provisions of this Agreement and no orders for the purchase or sale of such
Shares hereunder shall be accepted by the Fund if and so long as the
effectiveness of the Registration Statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
Securities Act of 1933, as amended, or if and so long as a current Prospectus as
required by Section 10 of said Act, as amended, is
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not on file with the Securities and Exchange Commission; provided, however, that
nothing contained in this paragraph 1.12 shall in any way restrict or have an
application to or bearing upon the Fund's obligation to repurchase any Shares
from any shareholder in accordance with the provisions of the Fund's Prospectus
or charter documents.
1.13 The Fund agrees to advise FDI immediately in writing:
(a) of any request by the Securities and Exchange Commission for
amendments to the Registration Statement or Prospectus then in effect 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
Registration Statement or Prospectus then in effect or the initiation of
any proceeding for that purpose;
(c) of the happening of any event which makes untrue any statement of
a material fact made in the Registration Statement or Prospectus then in
effect or which requires the making of a change in such Registration
Statement or Prospectus in order to make the statements therein not
misleading; and
(d) of all actions of the Securities and Exchange Commission with
respect to any amendments to the Registration Statement or Prospectus which
may from time be filed with the Securities and Exchange Commission.
2. Offering Price to Investors
(a) During the Subscription Period, the public offering price of the
Shares (i.e., the price per share at which Selected Dealers may sell Shares
to investors) shall be $25.00 plus a sales charge (the "Sales Charge")
equal to 4% of $25.00 (4.16% of the net amount invested); provided,
however, that Shares may be sold to certain directors, officers and
employees of Orbitex Management, Inc. or its affiliates, and to certain
other persons described in the Fund's Prospectus and Statement of
Additional Information without the Sales Charge, upon the terms and
conditions set forth in the Prospectus and Statement of Additional
Information. Such public offering price, if not an exact multiple of one
cent, shall be adjusted to the nearest cent. Any payments to Selected
Dealers in connection with such sales shall be governed by the Selected
Dealer Agreement between FDI and such dealer and the Fund's Prospectus.
(b) During the Continuous Offering Period, the public offering price
of the Shares (i.e., the price per share at which Selected Dealers may sell
Shares to investors) shall be the Fund's then current net asset value per
share, as determined by the Fund or any agent of the Fund in accordance
with the method set forth in the Fund's Prospectus and Statement of
Additional Information, plus the Sales Charge; provided, however, that
Shares may be sold to certain directors, officers and employees of Orbitex
Management, Inc. or its affiliates, and to certain other persons described
in the Fund's Prospectus and Statement of Additional Information without
the Sales Charge, upon the terms and conditions set forth in the Prospectus
and Statement of Additional Information. Such public offering price, if not
an exact multiple of one cent, shall be adjusted to the nearest cent. Any
payments to Selected Dealers in connection with such sales shall be
governed by the Selected Dealer Agreement between FDI and such dealer and
the Fund's Prospectus.
3. Selected Dealer Agreements
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FDI shall have the right to enter into Selected Dealer Agreements with
securities dealers of our choice ("Selected Dealers") for the sale of Shares
during the Subscription Period and the Offering Period and fix therein the
portion of the Sales Charge which may be retained by the Selected Dealers;
provided that the Fund shall approve the form of Selected Dealer Agreement and
the compensation to the Selected Dealers set forth therein; provided further,
that FDI shall have complete discretion to reject any securities dealer chosen
by us or, if accepted by FDI, to subsequently terminate any Selected Dealer
Agreement with any such dealer.
4. Compensation
In consideration for FDI's services pursuant to this Agreement, ORBITEX
Management, Inc. agrees to pay FDI an annual fee of $40,000, payable in equal
monthly installments within 10 days after the end of each month.
5. Term
This Agreement shall become effective with respect to the Fund as of the
date hereof and will continue for an initial one-year term and will continue
thereafter so long as such continuance is specifically approved at least
annually (i) by the Fund's Board or (ii) by a vote of a majority of the Shares
of the Fund, as the case may be, provided that in either event its continuance
also is approved by a majority of the Board members who are not "interested
persons" of any party to this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval. This Agreement is terminable,
without penalty, on not less than sixty days' notice, by the Fund's Board of
Directors, by vote of a majority of the outstanding voting securities of the
Fund. This Agreement will automatically and immediately terminate in the event
of its "assignment." (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested person" and "assignment" shall have
the same meanings as such terms have in the Investment Company Act of 1940, as
amended). FDI agrees to notify the Fund immediately upon the event of its
expulsion or suspension by the NASD. This Agreement will automatically and
immediately terminate in the event of FDI's expulsion or suspension by the NASD.
6. Miscellaneous
6.1 The Fund recognizes that, except to the extent otherwise agreed to by
the parties hereto, the directors, officers and employees of each of FDI may
from time to time serve as directors, trustees, officers and employees of
corporations and business trusts (including other investment companies), and
that FDI or its affiliates may enter into distribution or other agreements with
such other corporations or trusts.
6.2 No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which an enforcement of the change, waiver, discharge or termination is
sought.
6.3 This Agreement shall be governed by the internal laws of the State of
New York without giving effect to principles of conflicts of laws.
6.4 If any provisions of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
Please confirm that the foregoing is in accordance with your understanding
and indicate your acceptance hereof by signing below, whereupon it shall become
a binding Agreement among us.
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Very truly yours,
ORBITEX LIFE SCIENCES &
BIOTECHNOLOGY FUND, INC.
By: ____________________________
Name: M. Fyzul Khan
Title: Vice President
Accepted and Agreed To:
FUNDS DISTRIBUTOR, INC.
By: ______________________________
Name: ____________________________
Title: ___________________________
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