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Exhibit (l)(2)
OCEAN STATE TAX-EXEMPT FUND
DISTRIBUTION AGREEMENT
AGREEMENT, made as of this 10th day of February, 2000, by and between
OCEAN STATE TAX-EXEMPT FUND (hereinafter called the "Fund"), and XXX XXXX
SECURITIES INC. (hereinafter called the "Distributor").
W I T N E S S E T H:
WHEREAS, the Fund and the Distributor previously entered into a
Distribution Agreement dated as of May 31, 1990;
WHEREAS, on February 10, 2000, the Board of Trustees of the Fund
approved a new Distribution Agreement, to go into effect upon redesignation of
the Shares of the Fund as Class A Shares and Class I Shares; and
WHEREAS, this Agreement is a document substantially similar to and
containing substantially all of the provisions of the old Distribution
Agreement, representing in explicit form the new Distribution Agreement created
thereby;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, it is agreed by and between the parties hereto as follows:
1. The Distributor agrees to act as principal underwriter and
distributor of the Shares of the Fund (the "Shares"). The price at which Shares
of the Fund are issued to the public by the Distributor shall be the public
offering price as computed and effective as set forth in the Prospectus and
Statement of Additional Information of the Fund current as of the time of such
sale (collectively, the "Current Prospectus"). The public offering price for all
orders will be the net asset value per share, determined in accordance with the
Fund's Declaration of Trust and Bylaws, as now in effect or as they may be
amended. The Distributor shall have the right to enter into uniform sales
agreements with broker-dealers, financial institutions and investment advisers
of its choice for the sale of the Fund's Shares provided that the Fund shall
approve the form of the dealer agreement and the dealer concession set forth
therein and shall evidence such approval by filing said form of dealer
agreement, and amendments thereto, as an exhibit to its currently effective
registration statement filed under the Securities Act of 1933. The Distributor
is authorized to determine from time to time (i) any dealer discount paid to
dealers and any agency commissions paid to brokers; and (ii) the terms of any
sales agreement entered into by the Distributor relating to the sale of the
Fund's Shares and the identify of any broker, dealer, financial institution or
investment adviser with which such agreements are entered into. The Fund agrees
that it will promptly amend or supplement the Current Prospectus in connection
with any change in any of the foregoing. The Distributor agrees to administer
the Fund's Distribution Plans, including selecting dealers and making payments
to such selected dealers at a rate not to exceed .25 of 1.0% of the net assets
to cover distribution and sales-related expenses. The Distributor also agrees to
bear (a) the costs of distributing all copies of the Fund's prospectuses and
reports to shareholders which are not sent to the Fund's shareholders, (b) the
costs of preparing, printing and distributing supplemental sales literature and
advertising and (c) all costs in connection with qualification
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of the Distributor as a distributor or broker or dealer under any applicable
federal or state securities laws.
2. The Fund agrees to issue its Shares, subject to the provisions of
its Declaration of Trust and By-Laws, to the Distributor as directed by the
Distributor, but only to the extent that the Distributor shall have received
purchase orders therefor at the times and subject to the conditions set forth in
the Current Prospectus. Certificates for Shares need not be created or delivered
by the Fund in any case in which the purchase is made under terms not calling
for such certificates. Shares issued by the Fund shall be registered in such
name or names and amounts as the Distributor may request from time to time and
all Shares when so paid for and issued shall be fully paid and non-assessable.
3. The Distributor shall act as principal in all matters relating to
promotion of the growth of the Fund and shall enter into all of its Distributor
engagements, agreements and contracts as principal on its account. The title to
Shares of the Fund issued by it through the Distributor shall pass directly from
the Fund to the investor, or shall, if the Distributor so consents, first pass
to the Distributor, as may from time to time be determined by the Board of
Trustees of the Fund.
4. The Fund hereby consents to any arrangements whereby the
Distributor may act as principal underwriter for other investment companies or
as principal underwriter, sponsor or depositor for unit investment trusts and
periodic payment plan certificates issued thereby, or as investment adviser or
subadviser to other investment companies or persons. The Fund also consents to
the Distributor carrying on a business as a broker, dealer and underwriter in
securities and to carrying on any other lawful business.
5. The Fund covenants and agrees that it will not during the term of
this Agreement, without the consent of the Distributor, offer any of its Shares
for distribution directly or through any person or corporation other than the
Distributor excepting only (a) the reinvestment of dividends and/or
distributions, or their declaration in Shares of the Fund, in optional form or
otherwise; (b) the issuance of additional Shares through stock splits or stock
dividends; (c) sales of Shares to another investment or securities holding
company in the process of purchasing all or a portion of its assets; or (d) in
connection with an exchange of the Fund's Shares for Shares of another
investment or securities holding company.
6. The Fund agrees to use its best efforts to register from time to
time under the Securities Act of 1933 (the "Securities Act") adequate amounts of
its Shares for sales by the Distributor to the public and to qualify or to
permit the Distributor to qualify such Shares for offering in such States or
other jurisdictions as may be designated by the Distributor.
7. The Fund agrees to advise the Distributor of the net asset value of
its Shares as often as computed. The Fund will also furnish to the Distributor,
as soon as practicable, 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 the Fund.
8. The Distributor is familiar with the Declaration of Trust and
By-Laws of the Fund, each as presently in effect. Insofar as they are applicable
to the Distributor as distributor of the Fund, it will comply with the
provisions of the Declaration of Trust and
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By-Laws of the Fund and with the provisions of all acts administered by the
Securities and Exchange Commission (the "Commission") and rules thereunder.
9. This amended and restated Agreement shall go into effect on the
date first above written and shall, unless terminated as hereinafter provided,
continue in effect for two years from such effective date and shall continue in
effect from year to year thereafter, but only so long as such continuance is
specifically approved at least annually as provided in the Investment Company
Act of 1940 (the "Act"). This Agreement shall automatically terminate in the
event of its assignment (as defined in the Act) and may be terminated by either
party on sixty (60) days written notice to the other party without further
recourse.
10. The Fund agrees with the Distributor, for the benefit of the
Distributor and each person, if any, who controls the Distributor within the
meaning of Section 15 of the Securities Act and each and all and any of them to
indemnify and hold harmless the Distributor and any such controlling person from
and against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the Securities
Act, under any other statute, at common law or otherwise, and to reimburse the
Distributor and such controlling persons, if any, for any legal or other
expenses (including the cost of any investigation and preparation) reasonably
incurred by them or any of them in connection with any claims or litigation
whether or not resulting in any liability, insofar as such losses, claims,
damages, liabilities or litigation arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or any Prospectus, or any amendment there of or
supplement thereto, or arise out of, or are based upon the mission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statement therein not misleading; provided, however, that
this indemnity agreement shall not apply to amounts paid in settlement of any
such claim or litigation if such settlement is effected without the consent of
the Fund or to any such losses, claims, damages, liabilities or litigation
arising out of, or based upon, any untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement or Prospectus, or any
amendment thereof or supplement thereto, or arising out of, or 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, which
statement or omission was made in reliance upon information furnished in writing
to the Fund by the Distributor for inclusion in any Registration Statement or
any Prospectus or any amendment thereof or supplement thereto. The Distributor
and each such controlling person shall, promptly after the complaint shall have
been served upon the Distributor or such controlling person in any litigation
against the Distributor or such controlling person in respect of which indemnity
may be sought from the Fund on account of its agreement contained in this
paragraph, notify the Fund in writing of the commencement thereof. The omission
of the Distributor or such controlling person so to notify the Fund of any such
litigation shall relieve the Fund from any liability which it may have to the
Distributor or such controlling person on account of the indemnity agreement
contained in this paragraph but shall not relieve the Fund from any liability
which it may have to the Distributor or controlling person otherwise than on
account of the indemnity agreement contained in this paragraph. In case any such
litigation shall be brought against the Distributor or any such controlling
person and notice of the commencement thereof shall have been so given to the
Fund, the Fund shall be entitled to participate in (and, to the extent that it
shall wish, to direct) the defense thereof at its own expense but such defense
shall be conducted by counsel of good standing and satisfactory to
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the Distributor or such controlling person or persons, defendant or defendants
in the litigation. The indemnity agreement of the Fund contained in this
paragraph shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Distributor or any such controlling
person, and shall survive any delivery of Shares of the Fund. The Fund agrees to
notify the Distributor promptly of the commencement of any litigation or
proceeding against it or any of its officers or directors of which it may be
advised in connection with the issue and sale of Shares of the Fund.
11. Anything herein to the contrary notwithstanding, the agreement in
paragraph 10, insofar as it constitutes a basis for reimbursement by the Fund
for liabilities (other than payment by the Fund of expenses incurred or paid in
the successful defense of any action, suit or proceeding) arising under the
Securities Act, shall not extend to the extent of any interest therein of any
person who is an underwriter or a partner or controlling person of an
underwriter within the meaning of Section 15 of the Securities Act or who, at
the date of this Agreement, is a Trustee of the Fund, except to the extent that
an interest of such character shall have been determined by a court of
appropriate jurisdiction as not against public policy as expressed in the
Securities Act. Unless in the opinion of counsel for the Fund the matter has
been adjudicated by controlling precedent, the Fund will, if a claim for such
reimbursement is asserted, submit to a court of appropriate jurisdiction the
question of whether or not such interest is against the public policy as
expressed in the Securities Act.
12. The Distributor agrees to indemnify and hold harmless the Fund and
its Trustees and such officers as shall have signed any Registration Statement
from and against any and all losses, claims, damages or liabilities, joint or
several, to which the Fund or such Trustees or officers may become subject under
the Securities Act, under any other statute, at common law or otherwise, and
will reimburse the Fund or such Trustee or officers for any legal or other
expenses (including the cost of any investigation and preparation) reasonably
incurred by it or them or any of them in connection with any claim or
litigation, whether or not resulting in any liability, insofar as such losses,
claims, damages, liabilities or litigation arise out of, or are based upon, any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus, or any amendment thereof or supplement
thereto, or arising out of, or 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, which statement or omission was made in
reliance upon information furnished in writing to the Fund by the Distributor
for inclusion in any Registration Statement or any Prospectus, or any amendment
thereof or supplement thereto. The Distributor shall not be liable for amounts
paid in settlement of any such litigation if such settlement was effected
without its consent. The Fund and its Trustees and such officers, defendant or
defendants, in any such litigation shall, promptly after the complaint shall
have been served upon the Fund or any such Trustee or officer in respect of
which indemnity may be sought from the Distributor on account of its agreement
contained in this paragraph, notify the Distributor in writing of the
commencement thereof. The omission of the Fund or such Trustee or officer so to
notify the Distributor of any such litigation shall relieve the Distributor from
any liability which it may have to the Fund or such Trustee or officer on
account of the indemnity agreement contained in this paragraph, but shall not
relieve the Distributor from any liability which it may have to the Fund or such
Trustee or officer otherwise than on account of the indemnity agreement
contained in this paragraph. In case any such litigation shall be brought
against the Fund or any such Trustee or officer and notice of the commencement
thereof shall
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have been so given to the Distributor, the Distributor shall be entitled to
participate in (and, to the extent that it shall wish, to direct) the defense
thereof at its own expense, but such defense shall be conducted by counsel of
good standing and satisfactory to the Fund. The indemnity agreement of the
Distributor contained in this paragraph shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of the Fund and
shall survive any delivery of Shares of the Fund. The Distributor agrees to
notify the Fund promptly of the commencement of any litigation or proceeding
against it or any of its officers or directors or against any such controlling
person of which it may be advised, in connection with the issue and sale of the
Fund's Shares.
13. Notwithstanding any provision contained in this Agreement, no party
hereto and no person or persons in control of any party hereto shall be
protected against any liability to the Fund or its shareholders or the
Distributor or its controlling persons to which they would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence, in the
performance of their duties, or by reason of their reckless disregard of their
obligations and duties under this Agreement.
14. The Fund shall immediately advise the Distributor (a) when any
post-effective amendment to its Registration Statement or any further amendment
or supplement thereto or any further Registration Statement or amendment or
supplement thereto becomes effective, (b) of any request by the Commission for
amendments to the Registration Statement or the then effective Prospectus or for
additional information, (c) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement, or the initiation of
any proceedings for that purpose, and (d) of the happening of any event which
makes untrue any material statement made in the Registration Statement or the
then current Prospectus or which in the opinion of counsel for the Fund requires
the making of a change in the Registration Statement or the then current
Prospectus in order to make the statements therein not misleading. In case of
the happening at any time of any event which materially affects the Fund or its
securities and which should be set forth in a supplement to or an amendment of
the then current Prospectus in order to make the statements therein not
misleading the Fund shall prepare and furnish to the Distributor such amendments
or amendments to the then effective Prospectus as will correct the Prospectus so
that is corrected it will not contain, or such supplement or supplements to the
then current Prospectus which when read in conjunction with the then current
Prospectus will make the combined information not contain any untrue statement
of a material fact or any omission to state any material fact necessary in order
to make the statements in the then current Prospectus not misleading. The Fund
shall, if at any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, make every reasonable effort to
obtain the prompt lifting of such order.
15. Except as expressly provided in paragraphs 10 and 12 hereof, the
agreements herein set forth have been made and are made solely for the benefit
of the Fund, the Distributor, and the persons expressly provided for in
paragraphs 10 and 12, their respective heirs, successors, personal
representatives and assigns, and except as so provided, nothing expressed or
mentioned herein is intended or shall be construed to give any person, firm or
corporation, other than the Fund, the Distributor, and the persons expressly
provided for in paragraphs 10 and 12, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any representation, warranty or
agreement herein contained. Except as so
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provided, the term "heirs, successors, personal representatives and assigns"
shall not include any purchaser of Shares merely because of such purchase.
16. The Distributor certifies that it is a member of the National
Association of Securities Dealers, Inc., and agrees to abide by and cause its
representatives to abide by all of its rules and regulations including its
Conduct Rules.
17. This agreement shall be governed by and construed in accordance with
the laws of the State of Rhode Island.
18. The Distributor understands that the obligations of this Agreement
are not binding upon any shareholder of the Fund personally, but bind only the
Fund's property; the Distributor represents that it has notice of the
provisions of the Fund's Declaration of Trust disclaiming shareholder
liability for acts or obligations of the Fund.
19. All notices and other communications required or permitted hereunder
shall be in writing and shall be mailed by first class mail, postage prepaid, or
otherwise delivered by hand or by messenger, addressed (a) if to the Fund, to
Xxx Xxxxxxx Xxxxx, Xxxxx Xxx, Xxxxxxxxxx, Xxxxx Xxxxxx 00000; with a copy to
Xxxxxxxx X. Xxxxxxx, Esq., Xxxxxxxx, Xxxxx & Xxxxxx LLP, 0000 Xxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxx Xxxxxx 00000, or (b) if to the Distributor, to Xxx Xxxxxxx
Xxxxx, Xxxxx Xxx, Xxxxxxxxxx, Xxxxx Xxxxxx 00000.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers and their seals to be
affixed as of the day and year first above written.
ATTEST: OCEAN STATE TAX-EXEMPT FUND
By:
ATTEST: XXX XXXX SECURITIES INC.
By:
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