UNDERWRITING AGREEMENT
BETWEEN
X. XXXX PRICE EQUITY SERIES, INC.
AND
X. XXXX PRICE INVESTMENT SERVICES, INC.
THIS UNDERWRITING AGREEMENT, made as of the 6th day of February, 2002, by
and between X. XXXX PRICE EQUITY SERIES, INC., a corporation organized and
existing under the laws of the State of Maryland (hereinafter called the
^Corporation^), and X. XXXX PRICE INVESTMENT SERVICES, INC., a corporation
organized and existing under the laws of the State of Maryland (hereinafter
called the ^Distributor^).
WITNESSETH:
WHEREAS, the Corporation is engaged in business as an open-end management
investment company and is registered as such under the federal Investment
Company Act of 1940, as amended ("ICA-40"); and
WHEREAS, the Corporation is authorized to issue shares of capital stock
(^Shares^) in separate series, with each such series representing the interests
in a separate portfolio of securities and other assets; and
WHEREAS, the Corporation has issued Shares in six series, including among
others, the X. Xxxx Price Equity Income Portfolio, X. Xxxx Price Blue Chip
Growth Portfolio, X. Xxxx Price Mid-Cap Growth Portfolio and X. Xxxx Price
Health Sciences Portfolio (such series, together with any other series which may
be established later and served by the Distributor hereunder, being herein
referred to collectively as the
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^Funds^ or ^Portfolios^ and individually referred to as a ^Fund^ or
^Portfolio^); and
WHEREAS, the shares of the Equity Income, Blue Chip Growth, Mid-Cap Growth
and Health Sciences Portfolios have been further divided into classes and each
such Portfolio currently is authorized to offer more than one class of Shares;
and
WHEREAS, the Distributor is engaged principally in the business of
distributing shares of the investment companies sponsored and managed by either
X. Xxxx Price Associates, Inc. (^Price Associates^) or X. Xxxx Price
International, Inc. (^Price International^) and is registered as a broker-
dealer under the Securities Exchange Act of 1934, as amended, (^SEA- 34^) and is
a member of the National Association of Securities Dealers, Inc. (^NASD^); and
WHEREAS, the Corporation desires the Distributor to act as the distributor
in the public offering of the Shares of the Funds; and
WHEREAS, the Corporation, on behalf of the Equity Income, Blue Chip Growth,
Mid-Cap Growth and Health Sciences Portfolios, has adopted a plan pursuant to
Rule 12b-1 under the ICA-40 (the ^Plan^) with respect to one or more classes of
Shares (the ^12b-1 Shares^) authorizing payments by each such Portfolio from
such 12b-1 Shares to the Distributor with respect to the distribution and/or
provision of shareholder and administrative services with respect to such 12b-1
Shares.
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the parties hereto agree as follows:
1.
Delivery of Corporate Documents. The Corporation has furnished Distributor with
copies, properly certified or authenticated, of each of the following:
(a) Articles of Incorporation, dated January 31, 1994, as amended.
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(b) By-Laws of the Corporation as in effect on the date hereof.
(c)
Resolutions of the Board of Directors of the Corporation selecting Distributor
as principal underwriter for the Funds and approving this form of agreement.
The Corporation shall furnish the Distributor from time to time with
copies, properly certified or authenticated, of all the amendments of, or
supplements to, the foregoing, if any.
The Corporation shall furnish Distributor promptly with properly certified
or authenticated copies of any registration statements filed by it on behalf of
the Funds with the Securities and Exchange Commission under the Securities Act
of 1933, as amended (^SA-33^) or ICA-40, together with any financial statements
and exhibits included therein, and all amendments or supplements thereto
hereafter filed.
2.
Sale of Shares. Subject to the provisions of Paragraphs 3, 4, and 6 hereof, and
to such minimum purchase requirements as may from time to time be currently
indicated in the Corporation's prospectus, on behalf of the Funds, the
Distributor is authorized to sell, as agent for the Corporation, on behalf of
the Funds, Shares authorized for issuance and registered under SA-33.
Distributor may also sell Shares under offers of exchange between and among the
investment companies for which Price Associates and/or Price International act
as investment advisers (^Price Funds^). Distributor may also purchase as
principal such Shares for resale to the public. Such sale will be made by
Distributor on behalf of the Funds by accepting unconditional orders to purchase
the Shares placed with Distributor by investors and such purchases will be made
by Distributor only after acceptance by Distributor of such orders. The sales
price to the public of such Shares shall be the public offering price as defined
in Paragraph 5 hereof.
3.
Sale of Shares by the Corporation. The rights granted to the Distributor shall
be nonexclusive in that the Corporation, on behalf of the Funds, reserves the
right to sell Shares of the Funds to investors pursuant to applications received
and accepted by the Corporation or
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its transfer agent. Further, the Corporation reserves the right to issue Shares
in connection with the merger or consolidation of any other investment company,
trust or personal holding company with the Corporation or the Corporation's
acquisition by the purchase or otherwise, of all or substantially all of the
assets of an investment company, trust or personal holding company. Any right
granted to Distributor to accept orders for Shares, or to make sales on behalf
of the Funds or to purchase Shares for resale, will not apply to Shares issued
in connection with the merger or consolidation of any other investment company
with the Corporation or its acquisition by purchase or otherwise, of all or
substantially all of the assets of any investment company, trust or personal
holding company, or substantially all of the outstanding shares or interests of
any such entity, and such right shall not apply to Shares that may be offered by
the Corporation to shareholders by virtue of their being shareholders of the
Funds.
4.
Shares Covered by this Agreement. This Agreement relates to the issuance and
sale of Shares that are duly authorized, registered, and available for sale by
the Corporation, on behalf of the Funds, including redeemed or repurchased
Shares if and to the extent that they may be legally sold and if, but only if,
the Corporation authorizes the Distributor to sell them.
5.
Public Offering Price. All Shares sold by the Distributor pursuant to this
Agreement shall be sold at the public offering price. The public offering price
for all accepted subscriptions will be the net asset value per share, as
determined in the manner provided in the Corporation's Articles of
Incorporation, with respect to the Funds, as now in effect, or as they may be
amended (and as reflected in the then current prospectus of the Corporation,
with respect to the Funds), next determined after the order is accepted by the
Distributor. The Distributor will process orders submitted [by brokers] for the
sale of Shares at the public offering price exclusive of any commission charged
by such broker to his customer.
6.
Suspension of Sales. If and whenever the determination of net asset value is
suspended and until such suspension is terminated, no further orders for Shares
shall be accepted by the Distributor except
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such unconditional orders placed with the Distributor before it had knowledge of
the suspension. In addition, the Corporation reserves the right to suspend
sales and Distributor's authority to accept orders for Shares on behalf of the
Funds if, in the judgment of the Board of Directors of the Corporation, it is in
the best interests of the Corporation or Funds to do so, such suspension to
continue for such period as may be determined by the Board of Directors; and in
that event, no orders to purchase Shares shall be processed or accepted by the
Distributor on behalf of the Funds while such suspension remains in effect
except for Shares necessary to cover unconditional orders accepted by
Distributor before it had knowledge of the suspension, unless otherwise directed
by the Board of Directors.
7.Solicitation of Orders. In consideration of the rights granted to the
Distributor under this Agreement, Distributor will use its best efforts (but
only in states in which Distributor may lawfully do so) to obtain from investors
unconditional orders for Shares authorized for issuance by the Corporation, on
behalf of the Funds, and registered under SA-33, provided that Distributor may
in its discretion reject any order to purchase Shares. This does not obligate
the Distributor to register or maintain its registration as a broker or dealer
under the state securities laws of any jurisdiction if, in the discretion of the
Distributor, such registration is not practical or feasible. The Funds shall
make available to the Distributor at the expense of the Distributor such number
of copies of the Funds' currently effective prospectus as the Distributor may
reasonably request. The Funds shall furnish to the Distributor copies of all
information, financial statements and other papers which the Distributor may
reasonably request for use in connection with the distribution of Shares.
8.Authorized Representations. The Corporation is not authorized by the
Distributor to give, on behalf of the Distributor, any information or to make
any representations other than the information and representations contained in
a registration statement or prospectus filed with the SEC under SA-33 and/or
ICA- 40, covering Shares, as such registration statement and prospectus may be
amended or supplemented from time to time.
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Distributor is not authorized by the Corporation to give on behalf of the Funds
any information or to make any representations in connection with the sale of
Shares other than the information and representations contained in a
registration statement or prospectus filed with the Securities and Exchange
Commission (^SEC^) under SA- 33 and/or ICA-40, covering Shares, as such
registration statement and prospectus may be amended or supplemented from time
to time, or contained in shareholder reports or other material that may be
prepared by or on behalf of the Fund for the Distributor's use. This shall not
be construed to prevent the Distributor from preparing and distributing
tombstone ads and sales literature or other material as it may deem appropriate.
No person other than Distributor is authorized to act as principal underwriter
(as such term is defined in ICA-40, as amended) for the Corporation.
9.
Registration and Sale of Additional Shares. The Corporation, on behalf of the
Funds will, from time to time, use its best efforts to register under SA-33,
such Shares of the Funds as Distributor may reasonably be expected to sell on
behalf of the Funds. In connection therewith, the Corporation, on behalf of the
Funds, hereby agrees to register an indefinite number of Shares pursuant to Rule
24f-2 under ICA-40. The Corporation, on behalf of the Funds will, in
cooperation with the Distributor, take such action as may be necessary from time
to time to qualify such Shares (so registered or otherwise qualified for sale
under SA-33), in any state mutually agreeable to the Distributor and the Funds,
and to maintain such qualification.
10A.
Expenses. The Distributor shall pay (or will enter into arrangements providing
that persons other than Distributor shall pay) all fees and expenses:
a. in connection with the preparation, setting in type and filing of any
registration statement and prospectus under SA-33 and/or ICA-40, and any
amendments or supplements that may be made from time to time;
b.
in connection with the registration and qualification of Shares for sale in the
various states in which the Fund shall determine it advisable to qualify such
Shares for sale. (Including register-
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ing the Corporation as a broker or dealer or any officer of the Corporation or
other person as agent or salesman of the Corporation in any state.);
c. of preparing, setting in type, printing and mailing any report or other
communication to shareholders of the Fund in their capacity as such;
d. of preparing, setting in type, printing and mailing prospectuses annually
to existing shareholders;
e. in connection with the issue and transfer of Shares resulting from the
acceptance by Distributor of orders to purchase Shares placed with the
Distributor by investors, including the expenses of confirming such purchase
orders;
f.
of printing and distributing any prospectuses or reports prepared for its use in
connection with the distribution of Shares to the public;
g.
of preparing, setting in type, printing and mailing any other literature used by
the Distributor in connection with the distribution of the Shares to the public;
h.
of advertising in connection with the distribution of such Shares to the public;
i.
incurred in connection with its registration as a broker or dealer or the
registration or qualification of its officers, directors or representatives
under federal and state laws; and
j.
incurred in connection with the sale and offering for sale of Shares which have
not been herein specifically allocated to the Funds.
Notwithstanding the above, the Corporation, on behalf of the Funds, shall
be responsible for interest, taxes, brokerage commissions and other charges
incident to the purchase, sale or lending of the
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Fund's portfolio securities, directors' fees and expenses (including counsel
fees and expenses) and such non-recurring or extraordinary expenses that may
arise, including the costs of actions, suits or proceedings to which the
Corporation or any Fund is a party and the expenses the Corporation or any Fund
may incur as a result of its obligation to provide indemnification to Investment
Services or any other person.
10B. Payment of the Distributor Under the Plan.
a.
Notwithstanding paragraph 10A, the Equity Income, Blue Chip Growth, Mid-Cap
Growth and Health Sciences Portfolios shall each pay a fee from their 12b-1
Shares to the Distributor for distribution, shareholder and/or administrative
servicing expenses with respect to the respective 12b-1 Shares. Such fee shall
be paid under the Plan adopted by the Portfolio and this Agreement.
b.
So long as the Plan or any amendment thereto is in effect, the Distributor shall
inform the Board of the purpose and amount of expenses incurred with respect to
the 12b-1 Shares by the Distributor. So long as a Plan (or any amendment
thereto) is in effect, at the request of the Board or any agent or
representative of the Fund, the Distributor shall provide such additional
information as may reasonably be requested concerning the activities of the
Distributor hereunder and the costs incurred in performing such activities with
respect to the 12b-1 Shares.
11.
Conformity With Law. Distributor agrees that in selling Shares it shall duly
conform in all respects with the laws of the United States and any state in
which such Shares may be offered for sale by Distributor pursuant to this
Agreement and to the rules and regulations of the NASD.
12.
Independent Contractor. Distributor shall be an independent contractor and
neither Distributor, nor any of its officers, directors, employees, or
representatives is or shall be an employee of the Corporation in the performance
of Distributor's duties hereunder. Distributor shall be responsible for its own
conduct and the employment,
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control, and conduct of its agents and employees and for injury to such agents
or employees or to others through its agents or employees. Distributor assumes
full responsibility for its agents and employees under applicable statutes and
agrees to pay all employee taxes thereunder.
13.Indemnification. Distributor agrees to indemnify and hold harmless the
Corporation or Funds, as appropriate, and each of the Corporation's directors,
officers, employees, representatives and each person, if any, who controls the
Corporation or Funds within the meaning of Section 15 of SA-33 against any and
all losses, liabilities, damages, claims or expenses (including the reasonable
costs of investigating or defending any alleged loss, liability, damage, claim
or expense and reasonable legal counsel fees incurred in connection therewith)
to which the Corporation or Funds or such of the Corporation's directors,
officers, employees, representatives or controlling person may become subject
under SA- 33, under any other statute, at common law, or otherwise, arising out
of the acquisition of any Shares by any person which (i) may be based upon any
wrongful act by Distributor or any of Distributor's directors, officers,
employees or representatives, or (ii) may be based upon any untrue statement or
alleged untrue statement of a material fact contained in a registration
statement, prospectus, shareholder report or other information covering Shares
filed or made public by the Corporation, on behalf of the Funds, or any
amendment thereof or supplement thereto, 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 if such statement or omission was made in
reliance upon information furnished to the Corporation by Distributor. In no
case (i) is Distributor's indemnity in favor of the Corporation or Funds, as
appropriate, or any person indemnified to be deemed to protect the Corporation
or Funds, as appropriate, or such indemnified person against any liability to
which the Corporation or Funds, as appropriate, or such person would otherwise
be subject by reason of willful misfeasance, bad faith, or gross negligence in
the performance of his duties or by reason of his reckless disregard of his
obligations and duties under this Agreement or (ii) is Distributor to be liable
under its indemnity agreement contained in this Paragraph with respect to any
claim made against the Corporation or Funds, as appropriate, or any person
indemnified unless the Corporation or Funds,
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as appropriate, or such person, as the case may be, shall have notified
Distributor 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 Corporation or Funds, as appropriate, or
upon such person (or after the Corporation or Fund or such person shall have
received notice of such service on any designated agent). However, failure to
notify Distributor of any such claim shall not relieve Distributor from any
liability which Distributor may have to the Corporation or Fund or any person
against whom such action is brought otherwise than on account of Distributor's
indemnity agreement contained in this Paragraph.
Distributor shall be entitled to participate, at its own expense, in the
defense, or, if Distributor so elects, to assume the defense of any suit brought
to enforce any such claim, but, if Distributor elects to assume the defense,
such defense shall be conducted by legal counsel chosen by Distributor and
satisfactory to the Corporation, on behalf of the Funds, to its directors,
officers, employees or representatives, or to any controlling person or persons,
defendant or defendants, in the suit. In the event that Distributor elects to
assume the defense of any such suit and retain such legal counsel, the
Corporation, its directors, officers, employees, representatives or controlling
person or persons, defendant or defendants in the suit, shall bear the fees and
expenses of any additional legal counsel retained by them. If Distributor does
not elect to assume the defense of any such suit, Distributor will reimburse the
Corporation, on behalf of the Funds, such directors, officers, employees,
representatives or controlling person or persons, defendant or defendants in
such suit for the reasonable fees and expenses of any legal counsel retained by
them. Distributor agrees to promptly notify the Corporation of the commencement
of any litigation or proceedings against it or any of its directors, officers,
employees or representatives in connection with the issue or sale of any Shares.
The Corporation, on behalf of the Funds, agrees to indemnify and hold harmless
Distributor and each of its directors, officers, employees, representatives and
each person, if any, who controls Distributor within the meaning of Section 15
of SA-33 against any and all
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losses, liabilities, damages, claims or expenses (including the reasonable costs
of investigating or defending any alleged loss, liability, damage, claim or
expense and reasonable legal counsel fees incurred in connection therewith) to
which Distributor or such of its directors, officers, employees, representatives
or controlling person may become subject under SA-33, under any other statute,
at common law, or otherwise, arising out of the acquisition of any Shares by any
person which (i) may be based upon any wrongful act by the Corporation or any of
the Corporation's directors, officers, employees or representatives, or (ii) may
be based upon any untrue statement or alleged untrue statement of a material
fact contained in a registration statement, prospectus, shareholder report or
other information covering Shares filed or made public by the Corporation, on
behalf of the Funds, or any amendment thereof or supplement thereto, 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 if
such statement or omission was made in reliance upon information furnished to
Distributor by the Corporation. In no case (i) is the Corporation's indemnity
in favor of the Distributor, or any person indemnified to be deemed to protect
the Distributor or such indemnified person against any liability to which the
Distributor or such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of his duties or
by reason of his reckless disregard of his obligations and duties under this
Agreement, or (ii) is the Corporation, on behalf of the Funds, to be liable
under its indemnity agreement contained in this Paragraph with respect to any
claim made against Distributor, or person indemnified unless Distributor, or
such person, as the case may be, shall have notified the Corporation 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 Distributor or upon such person (or after Distributor or such person
shall have received notice of such service on any designated agent). However,
failure to notify the Corporation of any such claim shall not relieve the
Corporation from any liability which the Corporation may have to Distributor or
any person against whom such action is brought otherwise than on account of the
Corporation's indemnity agreement contained in this Paragraph.
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The Corporation, on behalf of the Funds, shall be entitled to participate, at
its own expense, in the defense, or, if the Corporation, on behalf of the Funds,
so elects, to assume the defense of any suit brought to enforce any such claim,
but, if the Corporation, on behalf of the Funds, elects to assume the defense,
such defense shall be conducted by legal counsel chosen by the Corporation, on
behalf of the Funds, and satisfactory to Distributor, to its directors,
officers, employees or representatives, or to any controlling person or persons,
defendant or defendants, in the suit. In the event that the Corporation, on
behalf of the Funds, elects to assume the defense of any such suit and retain
such legal counsel, Distributor, its directors, officers, employees,
representatives or controlling person or persons, defendant or defendants in the
suit, shall bear the fees and expenses of any additional legal counsel retained
by them. If the Corporation, on behalf of the Funds, does not elect to assume
the defense of any such suit, the Corporation, on behalf of the Funds, will
reimburse Distributor, such directors, officers, employees, representatives or
controlling person or persons, defendant or defendants in such suit for the
reasonable fees and expenses of any legal counsel retained by them. The
Corporation, on behalf of the Funds, agrees to promptly notify Distributor of
the commencement of any litigation or proceedings against it or any of its
directors, officers, employees, or representatives in connection with the issue
or sale of any Shares.
14.
Limitation on Liability of Corporation. The execution and delivery of this
Agreement have been authorized by the directors of the Corporation and signed by
an authorized officer of the Corporation, acting as such.
15.Duration and Termination of This Agreement. This Agreement shall become
effective upon its execution (^effective date^) and, unless terminated as
provided, shall remain in effect through April 30, 2003 and from year to year
thereafter, but only so long as such continuance is specifically approved at
least annually by the vote of a majority of the directors of the Corporation who
are not interested persons of Distributor or of the Corporation, cast in person
at a meeting called for the purpose of voting on such approval, and by vote of
the directors of the Corporation or of a majority of the outstanding voting
securities
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of the Corporation. This Agreement may, on 60 days' written notice, be
terminated at any time, without the payment of any penalty, by the vote of a
majority of the directors of the Corporation who are not interested persons of
Distributor or the Corporation, by a vote of a majority of the outstanding
voting securities of the Corporation, or by Distributor. This Agreement will
automatically terminate in the event of its assignment. In interpreting the
provisions of this Paragraph 14, the definitions contained in Section 2(a) of
ICA-40 (particularly the definitions of ^interested person,^ ^assignment,^ and
^majority of the outstanding securities^) shall be applied.
16.
Amendment of this Agreement. No provisions of this Agreement 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. If the Corporation should at any time deem it
necessary or advisable in the best interests of the Corporation that any
amendment of this Agreement be made in order to comply with the recommendations
or requirements of the SEC or other governmental authority or to obtain any
advantage under state or federal tax laws and notifies Distributor of the form
of such amendment, and the reasons therefor, and if Distributor should decline
to assent to such amendment, the Corporation may terminate this Agreement
forthwith. If Distributor should at any time request that a change be made in
the Corporation's Articles of Incorporation or By-Laws or in its methods of
doing business, in order to comply with any requirements of federal law or
regulations of the SEC, or of a national securities association of which
Distributor is or may be a member relating to the sale of Shares, and the
Corporation, on behalf of the Funds, should not make such necessary change
within a reasonable time, Distributor may terminate this Agreement forthwith.
17.
Additional Funds. In the event that the Corporation establishes one or more
series of Shares in addition to the Funds with respect to which it desires to
have Distributor render services as distributor under the terms hereof, it shall
so notify Distributor in writing, and if Distributor agrees in writing to
provide such services, such series of Shares shall become a Fund hereunder.
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18.
Miscellaneous. It is understood and expressly stipulated that neither the
shareholders of the Funds, nor the directors of the Corporation shall be
personally liable hereunder. 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. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. This Agreement, together with the Plan,
constitutes the entire agreement of the parties with respect to the subject
matter hereof and supersedes all prior agreements, arrangements and
understandings, including without limitation that certain Underwriting Agreement
dated March 1, 1994 between the Corporation and the Distributor insofar as it
relates to the Funds named herein.
19.
Notice. Any notice required or permitted to be given by either party to the
other shall be deemed sufficient if sent by registered or certified mail,
postage prepaid, addressed by the party giving notice to the other party at the
last address furnished by the other party to the party giving notice: if to the
Corporation, 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, and if to the
Distributor, at 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000.
ATTEST: X. XXXX PRICE EQUITY SERIES, INC.
/s/Xxxxxxxx X. Xxxxxxx
_______________________ By: _____________________________
Xxxxxxxx X. Xxxxxxx, President
Secretary
X. XXXX PRICE INVESTMENT SERVICES, INC.
/s/Xxxxx X. Xxxxxxx
By: __________________________________
Xxxxx X. Xxxxxxx, Vice President
