CONSULTING AGREEMENT
AGREEMENT made as of this 1st day of December, 1999 between Xxxxxx Xxxx
Capital Management Corporation ("LKCM"), a Delaware corporation, and First Data
Distributors, Inc. ("FDDI"), a Massachusetts corporation.
WHEREAS, LKCM serves as investment adviser to certain investment
portfolios or series of one or more open-end management investment companies
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as listed on Schedule A, as such Schedule shall automatically be amended
from time to time (each a "Fund" and collectively the "Funds");
WHEREAS, certain employees of LKCM will be registered with the National
Association of Securities Dealers, Inc. ("NASD") as representatives of FDDI
(such persons shall hereinafter be referred to as "Registered Representatives");
WHEREAS, FDDI has entered into a selling agreement with Provident
Distributors, Inc., the distributor of the Fund's shares;
WHEREAS, such Registered Representatives will be wholesaling the Funds'
Shares and will also be actively selling investment advisory services of LKCM, a
registered investment adviser to clients;
WHEREAS, LKCM and FDDI desire to enter into this Agreement pursuant to
which LKCM will perform certain services for FDDI with regard to monitoring the
performance of Registered Representatives and FDDI will perform certain services
for LKCM with respect to Shares of each Fund; and
NOW, THERFFORE, in consideration of the mutual agreements herein
contained, the parties agree as follows:
1. Services Provided by FDDI. FDDI will assist LKCM in providing
services with respect to each Fund as may reasonably be requested by LKCM from
time to time. At the direction of LKCM, specific assignments may include any of
the following:
(a) The forwarding of sales related complaints concerning the Fund to
LKCM;
(b) Coordination of registration of the Fund with the National
Securities Clearing Corporation ("NSCC") and filing of required
Fund/SERV reports with NSCC;
(c) The provision of advice and counsel to the Funds with
respect to regulatory matters, including monitoring
regulatory and legislative developments that may affect
the Funds and assisting the Funds in routine regulatory
examinations or investigations;
(d) Assistance in the Funds' operations and provision of general
consulting services on a day to day, as needed, basis;
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(e) Assistance in the preparation of quarterly board materials with
regard to sales and other distribution related data reasonably
requested by the board;
(f) Preparation of materials for the board supporting the annual renewal
of the Distribution Agreement;
(g) In connection with the foregoing activities, maintenance of an
office facility (which may be in the offices of LKCM or a corporate
affiliate); and
(h) In connection with the foregoing activities, the furnishing of
clerical services and internal executive and administrative
services, stationery and office supplies.
FDDI will keep and maintain all books and records relating to its
services in accordance with Rule 3la-l under the 1940 Act.
2. Services Provided by LKCM. In furtherance of the responsibilities
under this Agreement, LKCM will:
(a) monitor the performance of the Registered Representatives
with respect to compliance with the NASD's Rules of
Conduct, and in particular the NASD's interpretation of
the applicability of Section 3040 of the NASD's Rules of
Conduct to certain activities of persons registered as
representatives with an NASD member and an investment
adviser with the SEC, and who conduct their advisory
activities away from the NASD employer/member as described
in the NASD's Special Notice to Members 94-44;
(b) provide consulting services with regard to such advertising,
marketing and promotional activities as LKCM believes reasonable,
including but not limited to (i) development of information,
analyses and reports, (ii) preparing, printing and distributing
sales literature brochures, letters, training materials and dealer
guides and all similar materials and advertisements as defined
below; (iii) develop and implement audio and video advertising
programs; and (iv) arrange for the printing and distribution of
prospectuses and reports of the Funds to prospective shareholders;
provided that it is understood that FDDI shall have no
responsibility for strategic planning or development with respect
to such matter. For purposes of this Agreement, "sales literature"
and "advertisements" mean brochures, letters, electronic media,
training materials and dealers' guides materials for oral
presentations and all other similar materials, whether transmitted
directly to potential shareholders or published in print or audio
visual media, but does not include generic materials that do not
mention the Funds or the Shares;
(c) submit all consulting related sales literature and
advertisements prepared pursuant to Section 1(d) above to
FDDI for legal/compliance review in advance of use, and
incorporate such changes as FDDI may reasonably request
therein.
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FDDI will file such materials and obtain such approvals for
their use as may be required by the SEC, NASD or state securities
commissioners;
(d) identify persons employed by Xxxxxx Xxxx that will become
Registered Representatives and assist FDDI in ascertaining
that such persons meet all requirements established for
being a Registered Representative by the SEC, NASD and
relevant state securities commissions;
(e) report sales-related complaints to FDDI and consult with FDDI
concerning the manner in which such complaints will be addressed;
(f) to the extent applicable, cause the Funds' transfer agent
to give necessary information for the presentation of
quarterly reports in a form reasonably satisfactory to
FDDI regarding any Rule 12b- 1 fees, front-end sales
loads, back-end sales loads and other data regarding sales
and sales loads as required by the 1940 Act or as
requested by the board of trustees of the applicable
investment companies listed on Schedule A;
(g) to the extent applicable, cause the Funds' transfer agent
to provide FDDI with all necessary historical information
so that FDDI can calculate the maximum sales charges
payable by the Funds pursuant to the Rules of Conduct of
the NASD and the actual sales charges paid by the Funds;
cause the Funds' transfer agent to provide FDDI with all
of the necessary information so that FDDI can calculate
the maximum sales charges payable by the Funds pursuant to
the Rules of Conduct of the NASD and the actual sales
charges paid by the Funds; and cause the Funds' transfer
agent to provide such information in a form satisfactory
to FDDI no less often than monthly for every Fund and on a
daily basis for any Fund for which FDDI determines that
the remaining limit is approaching zero;
(h) support or cause the Funds' transfer agent to support the
servicing of the shareholders; in connection therewith the
Funds' transfer agent or LKCM will provide one or more
persons during normal business hours to respond to
telephone questions concerning the Funds; and
(i) provide FDDI with copies of, or access to, any documents
that FDDI may reasonably request and notify FDDI as soon
as possible of any matter materially affecting FDDI's
performance of services under this Agreement;
3. Delivery of Documents. In order to assist FDDI in the performance of
its duties, LKCM has caused each Fund to furnish FDDI with, or provide FDDI with
access to, each of the following:
(a) Each Fund's most recent Post-Effective Amendment to its
Registration Statement on Form N-1A (the "Registration
Statement") under the Securities Act of 1933, as amended,
and under the 1940 Act as filed with the SEC relating to
each Fund's Shares;
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(b) Each Fund's most recent Prospectus
(c) Each Fund's most recent Statement(s) of Additional Information;
(d) Each Fund's most recent annual and semi-annual financial
statements;
(e) Each Fund's most recent filing pursuant to Rule 24F-2/24e-2 under
the 1940 Act;
(f) Each Fund's most recent SEC examination letter to the
extent that such information contained in the SEC letter
(i) materially affects FDDI's performance under this
Agreement, or (ii) the issues identified in the letter may
result in FDDI incurring any loss, claim, damage or
liability or action in respect thereof; and
(g) The Trust's charter documents and by-laws.
LKCM will furnish FDDI from time to time with copies of, or access to,
all amendments of or supplements to the foregoing. Furthermore, LKCM will
provide FDDI with topics of, or access to, any other documents that FDDI may
reasonably request and will notify FDDI as soon as possible of any matter
materially affecting FDDI's performance of its services under this Agreement.
4. Compensation; Reimbursement of Expenses. LKCM shall pay FDDI for the
services provided under this Agreement the fees set forth in Schedule B to this
Agreement. Compensation under this Agreement shall be calculated and accrued
daily and the amounts of the daily accruals shall be paid monthly in arrears. If
this Agreement becomes effective subsequent to the first day of a month or shall
terminate before the last day of a month, compensation for that part of the
month this Agreement is in effect shall be prorated in a manner consistent with
the calculation of the fees set forth above. In addition, LKCM agrees to
reimburse FDDI for FDDI's reasonable out-of-pocket expenses in providing
services hereunder, as mutually agreed to in writing by the parties from time to
time.
5. Effective Date. This Agreement shall become effective immediately
upon the consummation of the acquisition of First Data Investor Services
Group, Inc. by a subsidiary of PNC Bank Corp., which the parties anticipate to
occur on or about December 1, 1999.
6. Term.
(a) This Agreement shall continue for an initial one year
period and shall continue thereafter for successive one
year terms unless terminated pursuant to the provision of
sub-section (b) of this Section 6.
(b) This Agreement may be terminated with respect to any Fund
at any time without payment of any penalty, upon 60 days'
written notice, by vote of a majority of the Board of
Trustees of a Fund. In any event, the provisions of
Section 8 shall
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survive termination of this Agreement and continue in
fill force and effect. Compensation due FDDI and unpaid
by LKCM upon such termination shall be immediately due and
payable upon and notwithstanding such termination.
7. Standard of Care: Indemnification and Limitation on Consequential
Damages.
(a) LKCM will indemnify and hold FDDI harmless from and
against any losses, claims, damages or liabilities, or
actions in respect thereof, to which FDDI may become
subject, including amounts paid in settlement with the
prior written consent of LKCM, insofar as such losses,
claims, damages or liabilities, or actions is respect
thereof, arise out of or result from:
(i) the failure of LKCM to comply with the terms of this
Agreement; and
(ii) any use of sales materials or advertisements or any
oral or written misrepresentations or any unlawful
sales practices concerning the Shares by a Registered
Representative if such misrepresentations or unlawful
sales practices were the direct result of LKCM's bad
faith, willful misfeasance, negligence or reckless
disregard of their duties and obligations under this
Agreement.
(b) FDDI will indemnify and hold harmless LKCM from and
against any losses, claims, damages or liabilities, or
actions in respect thereof, to which LKCM may become
subject, including amounts paid in settlement with the
prior written consent of FDDI, insofar as such losses,
claims, damages or liabilities, or actions in respect
thereof, arise out of or result from:
(i) the failure of FDDI to comply with the terms of this
Agreement;
(ii) the failure of FDDI to comply with the NASD's Rules of
Conduct; and
(iii) any use of sales materials or advertisements or any
oral or written misrepresentations or any unlawful
sales practices concerning the Shares by a Registered
Representative if such misrepresentations or unlawful
sales practices were the direct result of FDDI's bad
faith, willful misfeasance, negligence or reckless
disregard of their duties and obligations under this
Agreement.
(c) LKCM will reimburse FDDI for reasonable legal or other
expenses reasonably incurred by FDDI in connection with
investigating or defending against any such loss, claims,
damage, liability or action. LKCM shall not be liable to
FDDI for any action taken or omitted by FDDI in bad faith,
with willful misfeasance or negligence or from reckless
disregard by FDDI of its obligations and duties. The
indemnities in this Section shall, upon the same terms and
conditions, extend to and inure to the benefit of each of
the directors and officers of FDDI and any
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person controlling FDDI within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act.
(d) FDDI will reimburse LKCM for reasonable legal or other
expenses reasonably incurred by LKCM in connection with
investigating or defending against any such loss, claims,
damage, liability or action. FDDI shall not be liable to
LKCM for any action taken or omitted by LKCM in bad faith,
with willful misfeasance or negligence or from reckless
disregard by LKCM of its obligations and duties. The
indemnities in this Section shall, upon the same terms and
conditions, extend to and inure to the benefit of each of
the directors and officers of LKCM and any person
controlling LKCM within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act.
(e) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE
CONTRARY, IN NO EVENT SHALL EITHER PARTY, ITS AFFILIATES
OR ANY OF ITS OR THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS OR SUBCONTRACTORS BE LIABLE FOR LOST PROFITS OR
CONSEQUENTIAL DAMAGES.
8. Record Retention and Confidentiality. FDDI shall keep and maintain
on behalf of the Funds all books and records which the Funds and FDDI are, or
may be, required to keep and maintain in connection with the services to be
provided hereunder pursuant to any applicable statutes, rules and regulations,
including without limitation Rules 31a-l and 31a-2 under the 1940 Act. FDDI
further agrees that all such books and records shall be the property of the
Funds and to make such books and records available for inspection by or upon the
request of the Funds, by LKCM, or by the SEC at reasonable times and otherwise
to keep confidential all books and records and other information relative to the
Funds and its shareholders; except when requested to divulge such information by
duly constituted authorities or court process.
9. Rights of Ownership. All computer programs and procedures developed
to perform the services to be provided by FDDI under this Agreement arc the
property of FDDI. All records and other data except such computer programs and
procedures are the exclusive property of the Funds and all such other records
and data will be furnished to LKCM and/or the Funds in appropriate form as soon
as practicable after termination of this Agreement for any reason.
10. Return of Records. FDDI may at its option at any time, and shall
promptly upon the demand of LKCM and/or the Funds, turn over to LKCM and/or the
Funds and cease to retain FDDI's files, records and documents created and
maintained by FDDI pursuant to this Agreement which are no longer needed by FDDI
in the performance of its services or for its legal protection. If not so turned
over to LKCM and/or the Funds, such documents and records will be retained by
FDDI for six years from the year of creation. At the end of such six-year
period, such records and documents will returned over to LKCM and/or the
applicable Fund unless the applicable Fund authorizes in writing the destruction
of such records and documents.
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11. Representations of LKCM. LKCM represents and warrants that this
Agreement has been duly authorized by LKCM and, when executed and delivered by
LKCM, will constitute a legal, valid and binding obligation of LKCM, enforceable
against LKCM in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting the
rights and remedies of creditors and secured parties.
12. Representations of FDDI. (a) FDDI represents and warrants that this
Agreement has been duly authorized by FDDI and, when executed and delivered by
FDDI, will constitute a legal, valid and binding obligation of FDDI, enforceable
against FDDI in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting the
rights and remedies of creditors and secured parties.
(b) FDDI further represents and warrants that it is a member of the
NASD and agrees to abide by al1 of the rules and regulations of the NASD. FDDI
agrees to comply with all applicable federal and state laws, rules and
regulations. FDDI agrees to notify LKCM immediately in the event of its
expulsion or suspension by the NASD). Expulsion of FDDI by the NASD will
automatically terminate this Agreement immediately without notice. Suspension of
FDDI by the NASD will terminate this Agreement effective immediately upon
written notice of termination to FDDI from LKCM.
13. Notices. Any notice provided hereunder shall be sufficiently given
when sent by registered or certified mail to the following:
To LKCM:
Xxxxxx Xxxx Capital Management Corporation
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Chief Operating Officer
To FDDI:
First Data Distributors, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
with a copy to FDDI's Chief Legal Officer
14. Headings. Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
15. Assignment. This Agreement and the rights and duties hereunder
shall not be assignable by either of the parties hereto except by the specific
written consent of the other party.
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16. Governing Law. This Agreement shall be governed by and provisions
shall be construed in accordance with the laws of the Common wealth of
Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
XXXXXX XXXX CAPITAL
MANAGEMENT CORPORATION
By: /s/ J. Xxxxxx Xxxx, Xx.
Name: J. Xxxxxx Xxxx, Xx.
Title: President
FIRST DATA DISTRIBUTORS, INC.
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
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SCHEDULE A
Name of FundsLKCM FUNDS
LKCM Small Cap Equity Fund
LKCM Equity FundLKCM International Fund
LKCM Balanced Fund
LKCM Fixed Income Fund
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SCHEDULE B
Fee Schedule
For the services to be provided under this Agreement, the Company shall pay
the Distributor the following fees:
An annual fee of $24,000, plus
An additional fee based on the average net assets of the Fund as follows:
$250 million to $499 million .001
$500 million to $749 million .0005
$750 million to $1 billion .0004
The foregoing fees are based on the following assumptions:
Ad review - no more than 25 pieces annually;
Rep licensing - no more than 5 annually; and
Third party selling agreement execution - no more than 12 annually.
In the event that the foregoing assumptions are exceeded, the parties
hereto agree to renegotiate the foregoing fees in good faith.
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