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EXHIBIT 9(c)
Distribution Agreement dated as of December 9, 1997 between
the Registrant and Shay Financial Services, Inc.
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DISTRIBUTION AGREEMENT
This Distribution Agreement is made as of the 9th day of December, 1997,
between M.S.B. FUND, INC., a New York corporation (herein called the
"Fund"), and SHAY FINANCIAL SERVICES, INC., a Florida corporation (herein
called the "Distributor").
WHEREAS, the Fund is an open-end management investment company and is so
registered under the Investment Company Act of 1940; and
WHEREAS, the Fund desires to retain the Distributor as the distributor
for the Fund to provide for the distribution of shares of Class A stock
of the Fund, each such share having a par value of $.001 per share
(herein collectively called "Shares"), and is willing to render such
services;
NOW THEREFORE, in consideration of the premises and mutual covenants set
forth herein the parties hereto agree as follows:
I. DELIVERY OF DOCUMENTS
The Fund has delivered to Distributor copies of each of the following
documents and will deliver to it all future amendments and supplements
thereto, if any:
(a) The Fund's Certificate of Incorporation and all amendments
thereto (such Certificate of Incorporation, as currently in effect and as it
shall from time to time be amended, herein called the Fund's "Certificate of
Incorporation");
(b) The By-Laws of the Fund (such By-Laws, as currently in effect
and as it shall from time to time be amended, herein called the "By-Laws");
(c) Resolutions of the Board of Directors of the Fund authorizing
the execution and delivery of this Agreement;
(d) The most recent amendment to the Fund's Registration Statement
under the Securities Act of 1933, as amended (the "1933 Act"), and the
Investment Company Act of 1940, as amended (the "1940 Act"), on Form N-1A as
filed with the Securities and Exchange Commission (the "Commission"), said
Registration Statement, as presently in effect and as amended or supplemented
from time to time, is herein called the "Registration Statement";
(e) Notification of Registration of the Fund under the 1940 Act on
Form N-8A as filed with the Commission; and
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(f) The current Prospectus and Statement of Additional Information
of the Fund (such prospectus and statement of additional information, as filed
with the Securities and Exchange Commission and as they shall from time to time
be amended and supplemented, herein called the "Prospectus").
II. DISTRIBUTION
1. Appointment of Distributor. The Fund hereby appoints Distributor to
serve as the distributor of the Fund's Shares and Distributor hereby
accepts such appointment and agrees to render the services and duties set
forth in this Section II.
2. Services and Duties.
(a) Except as provided below, the Fund agrees to offer for sale
exclusively through Distributor as agent, from time to time during the term of
this Agreement, Shares of the Fund (whether authorized but unissued or treasury
shares, in the Fund's sole discretion) upon the terms and at the net asset value
as described in the Prospectus. Distributor will act only in its own behalf as
principal in making agreements with selected dealers or others for the sale of
Shares, and shall offer Shares only at the net asset value thereof as set forth
in the Prospectus. Distributor shall devote its best efforts to effect sales of
Shares of the Fund, but shall not be obligated to sell any certain number of
Shares. All subscriptions for Shares solicited by the Distributor shall be
directed to the Fund for acceptance in the ordinary course of business following
the procedures set forth in the Fund's Prospectus as in effect from time to
time. The Fund reserves the right to offer Shares directly to investors,
including offers in connection with (i) the merger or consolidation of the Fund
or its series or classes with any other investment company or series or class
thereof, (ii) the Fund's acquisition by purchase or otherwise of all or
substantially all of the assets or stock of any other investment company or
(iii) reinvestment in Shares by the Fund's stockholders of dividends or other
distributions or any other offering by the Fund of securities to its
stockholders.
(b) In all matters relating to the sale of Shares, Distributor will
act in conformity with the Fund's Certificate of Incorporation, By-Laws, and
Prospectus and with the instructions and directions of the Board of Directors of
the Fund and will conform to and comply with the requirements of the 1933 Act,
and the 1940 Act, the regulations of the National Association of Securities
Dealers, Inc. and all other applicable federal or state laws and regulations.
In connection with such sales, Distributor acknowledges and agrees that it is
not authorized to provide any information or make any representations other than
as contained in the Fund's Registration Statement and Prospectus and any sales
literature specifically approved by the Fund.
(c) Distributor will bear the cost of (i) printing and distributing
the Prospectus and Statement of Additional Information (including any supplement
thereto) to persons who are not either shareholders of, or counsel, independent
accountants or other persons providing similar services to, the Fund, and (ii)
preparing, printing and distributing any literature, advertisement or material
which is primarily intended to result in the sale of the Shares; provided,
however, that
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Distributor shall not be obligated to bear the expenses incurred by the Fund in
connection with the preparation and printing of any amendment to any
Registration Statement or Prospectus necessary for the continued effective
registration of the Shares under the 1933 Act.
(d) All Shares of the Fund offered for sale by Distributor shall be
offered for sale to the public at the net asset value (determined in the manner
set forth in the Fund's Certificate of Incorporation and then current
Prospectus). No broker-dealer or other person who enters into a selling
agreement with Distributor shall be authorized to act as agent for the Fund in
connection with the offering or sale of its Shares to the public or otherwise.
3. Sales of Shares.
(a) The Fund shall pay all costs and expenses in connection with the
registration of the Shares under the 1933 Act, and all expenses in connection
with maintaining facilities for the issue and transfer of the Shares and for
supplying information, prices and other data to be furnished by the Fund
hereunder, and all expenses in connection with preparing, printing and
distributing the Prospectus except as set forth in subsection 2(c) of Section II
hereof.
(b) The Fund shall execute all documents, furnish all information
and otherwise take all actions which may be reasonably necessary in the
discretion of the Fund's officers in connection with the qualification of the
Shares for sale in such states as Distributor may designate to the Fund and the
Fund may approve, and the Fund shall pay all filing fees which may be incurred
in connection with such qualification. Distributor shall pay all expenses
connected with its qualification as a dealer under state or federal laws and,
except as otherwise specifically provided in this Agreement, all other expenses
incurred by Distributor in connection with the sale of the Shares as
contemplated in this Agreement.
(c) The Fund shall have the right to suspend the offering and sale
of Shares of the Fund at any time in the absolute discretion of the Fund in
response to conditions in the securities markets or otherwise, and to suspend
the redemption of Shares of the Fund at any time permitted by the 1940 Act or
the rules of the commission ("Rules"). Upon notice of any such suspension of
the offering and sale of Shares, the Distributor shall cease to offer Shares.
The Distributor shall not make or cause to be made any offers of Shares in any
state or other jurisdiction where such Shares are not then qualified for offer
or sale or exempt from such qualification.
(d) All orders for the Fund's Shares shall be transmitted promptly
to the Fund's transfer agent, unless otherwise directed by the Fund.
(e) The Fund reserves the right to reject any order for Shares.
IIA. COMPENSATION
The Distributor shall be entitled to no compensation or reimbursement of
expenses for the distribution and service activities provided by the
Distributor pursuant to this Agreement. Notwithstanding anything in this
Agreement to the contrary, affiliated persons of the
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Distributor may receive compensation or reimbursement from the Fund with
respect to the provision of management services or service as a director
or officer of the Fund.
III. LIMITATION OF LIABILITY
Distributor shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the matters
to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance
of its duties or from reckless disregard by it of its obligations and
duties under this Agreement.
IV. CONFIDENTIALITY
Distributor will treat confidentially and as proprietary information of
the Fund all records and other information relative to the Fund, to the
Fund's prior or present shareholders and to those persons or entities who
respond to Distributor inquiries concerning investment in the Fund, and,
except as provided below, will not use such records and information for
any purpose other than the performance of its responsibilities and duties
hereunder or the performance of its responsibilities and duties with
regard to sales of the shares of any portfolio which may be added to the
Fund in the future. Any other use by Distributor of the information and
records referred to above may be made only after prior notification to
and approval in writing by the Fund. Such approval shall not be
unreasonably withheld and may not be withheld where (i) Distributor may
be exposed to civil or criminal contempt proceedings for failure to
divulge such information; (ii) Distributor is requested to divulge such
information by duly constituted authorities; or (iii) Distributor is so
requested by the Fund.
V. INDEMNIFICATION
1. Fund Representations. The Fund represents and warrants to Distributor
that at all times the Registration Statement and Prospectus will, in all
material respects, conform to the applicable requirements of the 1933 Act
and the rules thereunder, that the Registration Statement did not contain
at the time it became effective and will not contain at the time any
subsequent amendment thereto becomes effective any untrue statement of
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements contained therein not
misleading and that the Prospectus does not contain and will not contain
at any time when it is authorized for use any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation or warranty in this subsection shall apply to statements
or omissions made in reliance upon and in conformity with written
information furnished to the Fund by or on behalf of or otherwise
approved by and with respect to Distributor or its affiliates expressly
for use in the Registration Statement or Prospectus.
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2. Distributor Representations. Distributor represents and warrants to
the Fund that it is duly incorporated as a Florida corporation and is
registered as a broker-dealer under the Securities Exchange Act of 1934
and the laws of each state where such registration is required for the
distribution of the Fund's Shares and is and at all times will remain
duly authorized and licensed to carry out its services as contemplated
herein.
3. Fund Indemnification. The Fund will indemnify, defend and hold
harmless Distributor, its several directors and officers, and any person
who controls Distributor within the meaning of Section 15 of the 1933
Act, from and against any losses, claims, damages or liabilities, joint
or several, to which any of them may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of, or are based
upon, any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, the Prospectus or in any
application or other document executed by or on behalf of the Fund, or
arise out of, or are based upon, information furnished by or on behalf of
the Fund filed in any state in order to qualify the Shares under the
securities or blue sky laws thereof ("Blue Sky Application"), or arise
out of, or are based upon, 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, and will reimburse
Distributor, its several directors and officers, and any person who
controls Distributor within the meaning of Section 15 of the 1933 Act,
for any legal or other expenses reasonably incurred by any of them in
investigating, defending or preparing to defend any such action,
proceeding or claim; provided, however, that the Fund shall not be liable
in any case to the extent that such loss, claim, damage or liability
arises out of, or is based upon, any untrue statement, alleged untrue
statement, or omission or alleged omission made in the Registration
Statement, the Prospectus, any Blue Sky Application or any application or
other document executed by or on behalf of the Fund in reliance upon and
in conformity with written information furnished to the Fund by or on
behalf of or otherwise approved by and with respect to Distributor or its
affiliates specifically for inclusion therein.
The Fund shall not indemnify any person pursuant to this subsection 3
unless the court or other body before which the proceeding was brought
has rendered a final decision on the merits that such person was not
liable by reason of his willful misfeasance, bad faith or gross
negligence in the performance of his duties, or his reckless disregard of
obligations and duties, under this Agreement ("disabling conduct") or, in
the absence of such a decision, a reasonable determination (based upon a
review of the facts) that such person was not liable by reason of
disabling conduct has been made by the vote of a majority of a quorum of
directors of the Fund who are neither "interested persons" of the Fund
(as defined in the 0000 Xxx) nor parties to the proceeding, or by an
independent legal counsel in a written opinion.
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The Fund shall advance attorneys' fees and other expenses incurred by any
person in defending any claim, demand, action or suit which is the
subject of a claim for indemnification pursuant to this subsection 3, so
long as: (i) such person shall undertake to repay all such advances
unless it is ultimately determined that he is entitled to indemnification
hereunder; and (ii) such person shall provide security for such
undertaking, or the Fund shall be insured against losses arising by
reason of any lawful advances, or a majority of a quorum of the
disinterested, non-party directors of the Fund (or an independent legal
counsel in a written opinion) shall determine based on a review of
readily available facts (as opposed to a full trial-type inquiry) that
there is a reasonable likelihood that such person ultimately will be
found entitled to indemnification hereunder.
4. Distributor Indemnification. Distributor will indemnify, defend and
hold harmless the Fund, the Fund's several officers and directors and any
person who controls the Fund within the meaning of Section 15 of the 1933
Act, from and against any losses, claims, damages or liabilities joint or
several, to which any of them may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect hereof) arise out of, or are based
upon, any breach of its representations and warranties in subsection 2 of
this Section V or its agreements in subsection 2 or 3 of Section II
hereof, or which arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, the Prospectus, any Blue Sky Application or any application or
other document executed by or on behalf of the Fund, 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, which
statement or omission was made in reliance upon or in conformity with
information furnished in writing to the Fund or any of its several
officers and directors by or on behalf of or otherwise approved by and
with respect to Distributor specifically for inclusion therein, and will
reimburse the Fund, the Fund's several officers and directors, and any
person who controls the Fund or any Fund within the meaning of Section 15
of the 1933 Act, for any legal or other expenses reasonably incurred by
any of them in investigating, defending or preparing to defend any such
action, proceeding or claim.
The Distributor shall advance attorneys' fees and other expenses incurred
by any person in defending any claim, demand, action or suit which is the
subject of a claim for indemnification pursuant to this subsection 4, so
long as: (i) such person shall undertake to repay all such advances
unless it is ultimately determined that he is entitled to indemnification
hereunder; and (ii) such person shall provide security for such
undertaking, or the Fund shall be insured against losses arising by
reason of any lawful advances, or a majority of a quorum of the
disinterested, non-party directors of the Fund (or an independent legal
counsel in a written opinion) shall determine based on a review of
readily available facts (as opposed to a full trial-type inquiry) that
there is a reasonable
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likelihood that such person ultimately will be found entitled to
indemnification hereunder.
5. General Indemnity Provisions. No indemnifying party shall be liable
under its indemnity agreement contained in subsection 3 or 4 hereof with
respect to any claim made against such indemnifying party unless the
indemnified party shall have notified the indemnifying party in writing
within twenty (20) days after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
the indemnified party (or after the indemnified party shall have received
notice of such service on any designated agent), but failure to notify
the indemnifying party of any such claim shall not relieve it from any
liability which it may otherwise have to the indemnified party. The
indemnifying party will be entitled to participate at its own expense in
the defense or, if it so elects, to assume the defense of any suit
brought to enforce any such liability, and if the indemnifying party
elects to assume the defense, such defense shall be conducted by counsel
chosen by it and reasonably satisfactory to the indemnified party. In
the event the indemnifying party elects to assume the defense of any such
suit and retain such counsel, the indemnified party shall bear the fees
and expenses of any additional counsel retained by the indemnified party.
6. Indemnity in Connection with the Acceptance of Orders to Purchase Fund
Shares prior to Receipt of Payment (Next Day Settlement). The Prospectus
of the Fund, as amended or supplemented from time to time, may authorize
the Fund to accept orders to purchase shares of the Fund prior to receipt
of payment therefor in Federal funds. The parties recognize that in the
event any such purchase order is canceled as a result of the failure of
the investor to make timely payment for such shares, the Fund may suffer
dilution in the event the net asset value per share of the Fund
applicable on the date such purchase order is canceled is less than the
purchase price per share applicable to such purchase order and that the
Fund may incur fees and other losses and expenses in connection with the
processing and cancellation of such purchase order. In the event of any
such cancellation of any such purchase order, the Distributor will (i)
pay to the Fund an amount equal to the decline in the price of the shares
from price applicable at the time the purchase order was accepted (i.e.
the net asset value per share of the Fund next determined after the
acceptance of such purchase order) to the price applicable at the time
the purchase order was canceled (i.e. the net asset value per share of
the Fund next determined after the cancellation of such purchase order),
less the net amount, if any, of any Gain on Canceled Shares (as defined
below) accrued from the beginning of the fiscal year of the Fund in which
the cancellation takes place to the date of such cancellation, (ii)
reimburse the Fund for any and all fees and other losses and expenses
incurred in connection with the processing and cancellation of such
purchase order and (iii) pay all legal fees incurred in connection with
any legal action taken against an investor for nonpayment or taken by an
investor against the Fund as a result of the cancellation. As used
herein, "Gain on Canceled Shares" shall mean the amount, if any, by which
the aggregate purchase price applicable to all orders to purchase shares
of the Fund that are
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accepted but subsequently canceled for nonpayment (measured by the
respective net asset values per share of the Fund next determined after
the acceptance of such purchase orders) exceeds the aggregate value of
such shares at the time of cancellation (measured by the respective net
asset values per share of the Fund next determined after the cancellation
of such purchase orders).
VI. DURATION AND TERMINATION
This Agreement shall become effective as of the date first above written,
and, unless sooner terminated as provided herein, shall remain in effect
until May 30, 1998. Thereafter, if not terminated, this Agreement shall
continue automatically for successive terms of one year expiring on May
30 of each year, provided that such continuance is specifically approved
at least annually (a) by a majority of those members of the Board of
Directors of the Fund who are not "interested persons" of the Fund and
who have no direct or indirect financial interest in the operation of
this Distribution Agreement (the "Disinterested Directors"), pursuant to
a vote cast in person at a meeting called for the purpose of voting on
such approval, and (b) by the Board of Directors of the Fund or by vote
of a majority of the outstanding voting securities of the Fund; provided,
however, that this Agreement shall automatically terminate in the event
of its assignment and may be terminated by the Fund at any time, without
the payment of any penalty, by vote of a majority of the Disinterested
Directors or by a vote of a majority of the outstanding voting securities
on 60 days' written notice to, or by the Distributor at any time, without
the payment of any penalty, on 60 days' written notice to the Fund. The
terms "assignment" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the 1940 Act and the
rules and regulations thereunder.
VII. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived, discharged or
terminated except by an instrument in writing signed by the party against
which an enforcement of the change, waiver, discharge or termination is
sought.
VIII. NOTICES
Notice of any kind to be given to the Distributor by the Fund shall be in
writing and shall be duly given if mailed or delivered to the Distributor
at 000 Xxxx Xxxxxx Xx., Xxxxxxx, XX 00000, Attention: Executive Vice
President, or at such other address or to such other individual as shall
be specified by the Distributor to the Fund in accordance with this
Section VIII. Notices of any kind to be given to the Fund by the
Distributor shall be in writing and shall be duly given if mailed or
delivered to the Fund at its address set forth in the then-current
Prospectus, Attention: President, or at such other address or to such
other individual as shall be specified by the Fund to the Distributor in
accordance with this Section, with copies to each of the Fund's Directors
at their respective addresses set forth in the Fund's Registration
Statement and to the legal counsel to the Fund.
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IX. CONSTRUCTION; GOVERNING LAW
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. If any provision 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. Subject to the provisions of Section VI hereof, this Agreement
shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and shall be governed by New York
law; provided, however, that nothing herein shall be construed in a
manner inconsistent with the 1940 Act or any rule or regulation of the
Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their officers designated below as of the day and year first above
written.
M.S.B. FUND, INC.
By /s/ XXXXXX X. XXXXXXXX
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Xxxxxx X. Xxxxxxxx
President
SHAY FINANCIAL SERVICES, INC.
By: /s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
Vice President
