PAINEWEBBER/XXXXXX, XXXXXXX CALIFORNIA TAX EXEMPT MONEY FUND
DISTRIBUTION CONTRACT
CONTRACT made as of January 30, 0000, xxxxxxx XXXXXXXXXXX/XXXXXX, XXXXXXX
XXXXXXXXXX TAX EXEMPT MONEY FUND, a Massachusetts business trust, ('Fund'), and
PAINEWEBBER INCORPORATED, a Delaware corporation ('PaineWebber').
WHEREAS the Fund is registered under the Investment Company Act of 1940, as
amended ('1940 Act'), as an open-end management investment company and has one
series of shares of beneficial interest ('Shares'); and
WHEREAS the Fund's board of trustees ('Board') has established an unlimited
number of Shares; and
WHEREAS PaineWebber is willing to act as principal distributor for the Fund
on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints PaineWebber as its exclusive agent
to be the principal distributor to sell and to arrange for the sale of the
Shares on the terms and for the period set forth in this Contract. PaineWebber
hereby accepts such appointment and agrees to act hereunder.
2. Services and Duties of PaineWebber.
(a) PaineWebber agrees to solicit orders for the sale of Shares and to
undertake advertising and promotion that it believes reasonable in connection
with such solicitation as agent for the Fund and upon the terms described in the
Registration Statement. As used in this Contract, the term 'Registration
Statement' shall mean the currently effective registration statement of the
Fund, and any supplements thereto, under the Securities Act of 1933, as amended
('1933 Act'), and the 0000 Xxx.
(b) Upon the later of the date of this Contract or the initial offering of
the Shares to the public by the Fund,
PaineWebber will hold itself available to receive purchase orders, satisfactory
to PaineWebber, for Shares and will accept such orders on behalf of the Fund as
of the time of receipt of such orders and promptly transmit such orders as are
accepted to the Fund's transfer agent. Purchase orders shall be deemed effective
at the time and in the manner set forth in the Registration Statement.
(b) PaineWebber in its discretion may enter into agreements to sell Shares
to such registered and qualified retail dealers, including but not limited to
Xxxxxxxx Xxxxxxxx Asset Management Inc. ('Xxxxxxxx Xxxxxxxx'), as it may select.
In making agreements with such dealers, PaineWebber shall act only as principal
and not as agent for the Fund.
(c) The offering price of the Shares shall be the net asset value per Share
as next determined by the Fund following receipt of an order at PaineWebber's
principal office. The Fund shall promptly furnish PaineWebber with a statement
of each computation of net asset value.
(d) PaineWebber shall not be obligated to sell any certain number of
Shares.
(e) To facilitate redemption of Shares by shareholders directly or through
dealers, PaineWebber is authorized but not required on behalf of the Fund to
repurchase Shares presented to it by shareholders and dealers at the price
determined in accordance with, and in the manner set forth in, the Registration
Statement.
(f) PaineWebber shall provide ongoing shareholder services, which include
responding to shareholder inquiries, providing shareholders with information on
their investments in the Shares and any other services now or hereafter deemed
to be appropriate subjects for the payments of 'service fees' under Section
26(d) of the National Association of Securities Dealers, Inc. ('NASD') Rules of
Fair Practice (collectively, 'service activities').
(g) PaineWebber shall have the right to use any list of shareholders of the
Fund or any other list of investors which it obtains in connection with its
provision of services under this Contract; provided, however, that PaineWebber
shall not sell or knowingly provide such list or lists to any unaffiliated
person.
3. Authorization to Enter into Exclusive Dealer Agreements and to Delegate
Duties as Distributor. With respect to the Shares of the Fund, PaineWebber may
enter into an exclusive dealer agreement with Xxxxxxxx Xxxxxxxx or any other
registered and qualified dealer with respect to sales of the Shares or the
2
provision of service activities. In a separate contract or as part of any such
exclusive dealer agreement, PaineWebber also may delegate to Xxxxxxxx Xxxxxxxx
or another registered and qualified dealer ('sub-distributor') any or all of its
duties specified in this Contract, provided that such separate contract or
exclusive dealer agreement imposes on the sub-distributor bound thereby all
applicable duties and conditions to which PaineWebber is subject under this
Contract, and further provided that such separate contract or exclusive dealer
agreement meets all requirements of the 1940 Act and rules thereunder.
4. Services Not Exclusive. The services furnished by PaineWebber hereunder
are not to be deemed exclusive and PaineWebber shall be free to furnish similar
services to others so long as its services under this Contract are not impaired
thereby. Nothing in this Contract shall limit or restrict the right of any
director, officer or employee of PaineWebber, who may also be a trustee, officer
or employee of the Fund, to engage in any other business or to devote his or her
time and attention in part to the management or other aspects of any other
business, whether of a similar or a dissimilar nature.
5. Compensation.
(a) As compensation for its service activities under this Contract,
PaineWebber shall receive from the Fund a service fee at the rate and under the
terms and conditions of the Plan of Distribution pursuant to Rule 12b-1 under
the 1940 Act ('Plan') adopted by the Fund, as such Plan is amended from time to
time, and subject to any further limitations on such fee as the board of
trustees ('Board') may impose.
(b) PaineWebber may reallow any or all of the service fees which it is paid
under this Contract to such dealers as PaineWebber may from time to time
determine.
6. Duties of the Fund.
(a) The Fund reserves the right at any time to withdraw offering Shares of
the Fund by written notice to PaineWebber at its principal office.
(b) The Fund shall determine in its sole discretion whether certificates
shall be issued with respect to the Shares. If the Fund has determined that
certificates shall be issued, the Fund will not cause certificates representing
Shares to be issued unless so requested by shareholders. If such request is
transmitted by PaineWebber, the Fund will cause certificates evidencing Shares
to be issued in such names and denominations as PaineWebber shall from time to
time direct.
3
(c) The Fund shall keep PaineWebber fully informed of its affairs and shall
make available to PaineWebber copies of all information, financial statements,
and other papers which PaineWebber may reasonably request for use in connection
with the distribution of Shares, including, without limitation, certified copies
of any financial statements prepared for the Fund by its independent public
accountant and such reasonable number of copies of the most current prospectus,
statement of additional information, and annual and interim reports of the Fund,
and the Fund shall cooperate fully in the efforts of PaineWebber to sell and
arrange for the sale of the Shares and in the performance of PaineWebber under
this Contract.
(d) The Fund shall take, from time to time, all necessary action, including
payment of the related filing fee, as may be necessary to register the Shares
under the 1933 Act to the end that there will be available for sale such number
of Shares as PaineWebber may be expected to sell. The Fund agrees to file, from
time to time, such amendments, reports and other documents as may be necessary
in order that there will be no untrue statement of a material fact in the
Registration Statement, nor any omission of a material fact which omission would
make the statements therein misleading.
(e) The Fund shall use its best efforts to qualify and maintain the
qualification of an appropriate number of Shares for sale under the securities
laws of such states or other jurisdictions as PaineWebber and the Fund may
approve, and, if necessary or appropriate in connection therewith, to qualify
and maintain the qualification of the Fund as a broker or dealer in such
jurisdictions; provided that the Fund shall not be required to execute a general
consent to the service of process in any state. PaineWebber shall furnish such
information and other material relating to its affairs and activities as may be
required by the Fund in connection with such qualifications.
7. Expenses of the Fund. The Fund shall bear all costs and expenses of
registering the Shares with the Securities and Exchange Commission and state and
other regulatory bodies, and shall assume expenses related to communications
with shareholders of the Fund, including (i) fees and disbursements of its
counsel and independent public accountant; (ii) the preparation, filing and
printing of registration statements and/or prospectuses or statements of
additional information required under the federal securities laws; (iii) the
preparation and mailing of annual and interim reports, prospectuses, statements
of additional information and proxy materials to shareholders; and (iv) the
qualifications of Shares for sale and of the Fund as a broker or dealer under
the securities laws of such jurisdictions as shall be selected by the Fund and
PaineWebber pursuant to Paragraph 6(e) hereof, and the costs and expenses
payable to each such jurisdiction for continuing qualification therein.
4
8. Expenses of PaineWebber. PaineWebber shall bear all costs and expenses
of (i) preparing, printing and distributing any materials not prepared by the
Fund and other materials used by PaineWebber in connection with the sale of
Shares under this Contract, including the additional cost of printing copies of
prospectuses, statements of additional information, and annual and interim
shareholder reports other than copies thereof required for distribution to
existing shareholders or for filing with any federal or state securities
authorities; (ii) any expenses of advertising incurred by PaineWebber in
connection with such offering; (iii) the expenses of registration or
qualification of PaineWebber as a broker or dealer under federal or state laws
and the expenses of continuing such registration or qualification; and (iv) all
compensation paid to PaineWebber's employees and others for selling Shares, and
all expenses of PaineWebber, its employees and others who engage in or support
the sale of Shares as may be incurred in connection with their sales efforts.
9. Indemnification.
(a) The Fund agrees to indemnify, defend and hold PaineWebber, its officers
and trustees, and any person who controls PaineWebber within the meaning of
Section 15 of the 1933 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 PaineWebber, its officers, trustees or any such
controlling person may incur under the 1933 Act, or under common law or
otherwise, arising out of or based upon any untrue statement, or alleged untrue
statement, of a material fact contained in the Registration Statement or any
related prospectus ('Prospectus') 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 or Prospectus or necessary to make the statements therein
not misleading, except insofar as such claims, demands, liabilities or expenses
arise out of or are based upon any such untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
information furnished in writing by PaineWebber to the Fund for use in the
Registration Statement or Prospectus; provided, however, that this indemnity
agreement shall not inure to the benefit of any person who is also an officer or
trustee of the Fund or who controls the Fund within the meaning of Section 15 of
the 1933 Act, unless a court of competent jurisdiction shall determine, or it
shall have been determined by controlling precedent, that such result would not
be against public policy as expressed in the 1933 Act; and further provided,
that in no event shall anything contained herein be so construed as to protect
PaineWebber against any liability to the Fund or to the shareholders to which
PaineWebber would otherwise be subject by
5
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 under
this Contract. The Fund shall not be liable to PaineWebber under this indemnity
agreement with respect to any claim made against PaineWebber or any person
indemnified unless PaineWebber or other such person shall have notified the Fund
in writing of the claim within a reasonable time after the summons or other
first written notification giving information of the nature of the claim shall
have been served upon PaineWebber or such other person (or after PaineWebber or
the person shall have received notice of service on any designated agent).
However, failure to notify the Fund of any claim shall not relieve the Fund from
any liability which it may have to PaineWebber or any person against whom such
action is brought otherwise than on account of this indemnity agreement. The
Fund shall 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 claims
subject to this indemnity agreement. If the Fund elects to assume the defense of
any such claim, the defense shall be conducted by counsel chosen by the Fund and
satisfactory to the indemnified defendants in the suit. In the event that the
Fund elects to assume the defense of any suit and retain counsel, the
indemnified defendants shall bear the fees and expenses of any additional
counsel retained by them. If the Fund does not elect to assume the defense of a
suit, it will reimburse the indemnified defendants for the reasonable fees and
expenses of any counsel retained by the indemnified defendants. The Fund agrees
to notify PaineWebber promptly of the commencement of any litigation or
proceedings against it or any of its officers or trustees in connection with the
issuance or sale of any of its Shares.
(b) The Fund's indemnification agreement contained in this Section 9 will
remain operative and in full force and effect regardless of any investigation
made by or on behalf of PaineWebber, its officers and trustees, or any
controlling person, and will survive the delivery of any shares of the Fund.
(c) PaineWebber agrees to indemnify, defend, and hold the Fund, its
officers and trustees and any person who controls the Fund within the meaning of
Section 15 of the 1933 Act, free and harmless from and against any and all
claims, demands, liabilities and expenses (including the cost of investigating
or defending against such claims, demands or liabilities and any counsel fees
incurred in connection therewith) which the Fund, its trustees or officers, or
any such controlling person may incur under the 1933 Act or under common law or
otherwise arising out of or based upon any alleged untrue statement of a
material fact contained in information furnished in writing by PaineWebber to
the Fund for use in the Registration Statement, or arising out of or based upon
any alleged omission to state a material fact in
6
connection with such information required to be stated in the Registration
Statement necessary to make such information not misleading, or in the event
that Shares of the Fund are offered to eligible participants in the
PaineWebber/Xxxxxx, Xxxxxxx Premium Account program ('PW/KPPA'), losses or costs
in connection with the redemption of Shares due to unauthorized use of a Visa
card or Visa checks or due to any error, fault or breakdown of the PW/KPPA
computer programs or operating procedures. PaineWebber shall have the right to
control the defense of any action contemplated by this Section 9(c), with
counsel of its own choosing, satisfactory to the Fund, unless the action is not
based solely upon an alleged misstatement or omission on PaineWebber's part. In
such event, the Fund, its officers or trustees or controlling persons will each
have the right to participate in the defense or preparation of the defense of
the action. In the event that PaineWebber elects to assume the defense of any
suit and retain counsel, the defendants in the suit shall bear the fees and
expenses of any additional counsel retained by them. If PaineWebber does not
elect to assume the defense of any suit, it will reimburse the indemnified
defendants in the suit for the reasonable fees and expenses of any counsel
retained by them.
(d) PaineWebber shall not be liable to the Fund under this indemnity
agreement with respect to any claim made against the Fund or any person
indemnified unless the Fund or other such person shall have notified PaineWebber
in writing of the claim within a reasonable time after the summons or other
first written notification giving information of the nature of the claim shall
have been served upon the Fund or such other person (or after the Fund shall
have received notice of service on any designated agent). PaineWebber will not
be obligated to indemnify any entity or person against any liability to which
the Fund, its officers and trustees, or any controlling person would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
performance of, or reckless disregard of, the obligations and duties set forth
in this Agreement.
10. Limitation of Liability of the Trustees and Shareholders of the Fund.
The trustees and shareholders of the Fund shall not be liable for any
obligations of the Fund under this Contract, and PaineWebber agrees that, in
asserting any rights or claims under this Contract, it shall look only to the
assets and property of the Fund in settlement of such right or claims, and not
to such trustees or shareholders. The Fund represents that a copy of the
Declaration of Trust is on file with the Secretary of the Commonwealth of
Massachusetts and with the Boston City Clerk.
11. Services Provided to the Fund by Employees of PaineWebber. Any person,
even though also an officer, director, employee or agent of PaineWebber, who may
be or become an
7
officer, trustee, employee or agent of the Fund, shall be deemed, when rendering
services to the Fund or acting in any business of the Fund, to be rendering such
services to or acting solely for the Fund and not as an officer, trustee,
employee or agent or one under the control or direction of PaineWebber even
though paid by PaineWebber.
12. Duration and Termination.
(a) This Contract shall become effective upon the date hereabove written,
provided that this Contract shall not take effect unless such action has first
been approved by vote of a majority of the Board and by vote of a majority of
those trustees of the Fund who are not interested persons of the Fund, and have
no direct or indirect financial interest in the operation of the Plan relating
to the Shares or in any agreements related thereto (all such trustees
collectively being referred to herein as the 'Independent Trustees') cast in
person at a meeting called for the purpose of voting on such action.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for one year from the above written date. Thereafter, if not
terminated, this Contract shall continue automatically for successive periods of
twelve months each, provided that such continuance is specifically approved at
least annually (i) by a vote of a majority of the Independent Trustees, cast in
person at a meeting called for the purpose of voting on such approval, and (ii)
by the Board or by vote of a majority of the outstanding voting securities of
the Fund.
(c) Notwithstanding the foregoing, this Contract may be terminated at any
time, without the payment of any penalty, by vote of the Board, by vote of a
majority of the Independent Trustees or by vote of a majority of the outstanding
voting securities of the Fund on sixty days' written notice to PaineWebber or by
PaineWebber at any time, without the payment of any penalty, on sixty days'
written notice to the Fund. This Contract will automatically terminate in the
event of its assignment.
13. Amendment of this Contract. No provision of this Contract may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
14. Governing Law. This Contract shall be construed in accordance with the
laws of the State of Delaware and the 1940 Act, provided, however, that Section
10 above will be construed in accordance with the laws of the Commonwealth of
Massachusetts. To the extent that the applicable laws of the State of Delaware
or the Commonwealth of Massachusetts conflict with the applicable
8
provisions of the 1940 Act, the latter shall control.
15. Notice. Any notice required or permitted to be given by either party to
the other shall be deemed sufficient upon receipt in writing at the other
party's principal offices.
16. Miscellaneous. The captions in this Contract 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 Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors. As used in this Contract,
the terms 'majority of the outstanding voting securities,' 'interested person'
and 'assignment' shall have the same meaning as such terms have in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be
executed by their officers designated as of the day and year first above
written.
PAINEWEBBER/XXXXXX, XXXXXXX
ATTEST: CALIFORNIA TAX EXEMPT MONEY FUND
/s/ XXXXX XXXXX By: /s/ XXXXXX X. X'XXXXXXX
----------------------------- -----------------------
ATTEST: PAINEWEBBER INCORPORATED
/s/ XXXXX XXXXX By: /s/ XXXXXX XXXXXX
----------------------------- -----------------------
9
