Exhibit No. EX-99.e
DISTRIBUTION AGREEMENT
The Xxxxxxx Funds
This DISTRIBUTION AGREEMENT, made as of the 1st day of January 2007, by and
between The Xxxxxxx Funds ("Investment Company"), a Delaware statutory trust,
and Xxxx Xxxxx Investor Services, LLC, a limited liability corporation organized
and existing under the laws of the State of Delaware ("Distributor").
WHEREAS, the Investment Company is registered with the Securities and
Exchange Commission ("SEC") as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"), and has
registered its shares of the series thereof listed on Appendix A ("Shares"), as
it may be amended from time to time by agreement between the Distributor and
Investment Company (each such series thereof, as appropriate, a "Fund"), for
sale to the public under the Securities Act of 1933, as amended (the "1933
Act"), and filed appropriate notices under various state securities laws; and
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act") and under each
state's securities laws, and is also a member of the National Association of
Securities Dealers, Inc. ("NASD"); and
WHEREAS, the Investment Company wishes to retain the Distributor as the
principal underwriter in connection with the offering and sale of the Shares and
to furnish certain other services to the Investment Company as specified in this
Agreement; and
WHEREAS, this Agreement has been approved by separate votes of the
Investment Company's Board of Trustees ("Board") and of those Board members who
are not "interested persons" of the Investment Company or parties to the
Agreement and who have no direct or indirect financial interest in the operation
of a plan of distribution adopted pursuant to Rule 12b-1 under the 1940 Act
("Plan") of the Fund or in any agreements related to such plan ("Independent
Board Members") in conformity with Section 15 of, and Rule 12b-1 under, the 1940
Act; and
WHEREAS, the Distributor is willing and able to furnish such services on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1. (a) The Investment Company hereby appoints the Distributor as principal
underwriter and distributor in connection with the offering and sale of Shares
of the Fund to the public directly and through registered and qualified
securities dealers, banks and other intermediaries (collectively
"Intermediaries"), and the Distributor hereby accepts such appointment, on the
terms and for the period set forth in this Agreement. The Distributor, as agent
for the Investment Company, shall, in accordance with applicable federal and
state law and the organizational documents of the Investment Company and the
registration statement most recently filed by the Investment Company with the
SEC and effective under the 1940 Act and 1933 Act, as such Registration
Statement may be amended or supplemented from time to time ("Registration
Statement"): (i) promote the Fund; (ii) solicit orders for the purchase of the
Shares subject to such terms and conditions as the Investment Company may
specify; and (iii) accept orders for the purchase of the Shares on behalf of the
Investment Company (collectively, "Distribution Services"). The Distributor
shall comply with all applicable federal and state laws and offer the Shares of
the Fund on an agency or "best efforts" basis under which the Investment Company
shall issue only such Shares as are actually sold.
(b) The Distributor may pay for ongoing shareholder liaison services,
including responding to shareholder inquiries, providing shareholders with
information on their investments, and any other services now or hereafter deemed
to be appropriate subjects for the payments of "service fees" under Conduct Rule
2820 or 2830 of the NASD (collectively, "Shareholder Services"), as appropriate.
2. The Distributor may also enter into dealer or similar agreements with
qualified Intermediaries it may select for the performance of Distribution
Services and Shareholder Services. The Distributor may also enter into
agreements with Intermediaries and other qualified entities to perform
recordkeeping, shareholder servicing and sub-accounting services. These
agreements for Distribution Services, Shareholder Services, and record keeping,
shareholder servicing and sub-accounting services shall not be inconsistent with
the provisions and terms of this Agreement. In making such arrangements, the
Distributor shall act only as principal and not as agent for the Investment
Company and shall ensure that the parties with whom it makes such arrangements
agree to carry out their responsibilities in conformance with applicable laws,
rules, regulations, and the provisions of the Fund's Registration Statement to
the extent they are applicable to such parties and their activities. No such
Intermediary is authorized to act as agent for the Investment Company in
connection with the offering or sale of Shares to the public or otherwise,
except for the limited purpose of determining the time as of which transactions
in Shares are deemed to have been received.
3. The public offering price of the Shares of the Fund shall be the net
asset value per share (as determined by the Investment Company) of the
outstanding Shares of the Fund (or class thereof) next determined after receipt
of an order by the Fund or its designated agent plus any applicable sales
charge, as described in the Registration Statement of the Investment Company.
4. As compensation for providing Distribution Services under this
Agreement, the Distributor shall retain the sales charge, if any, on purchases
of Shares or retain deferred sales charges upon redemption of Shares, as set
forth in the Registration Statement. The Distributor is authorized to collect
the gross proceeds derived from the sale of the Shares, remit the net asset
value thereof to the Investment Company upon receipt of the proceeds and retain
the sales charge, if any. The Distributor shall also be entitled to annual fees
of $16,000 from the Fund, one-twelfth of which shall be paid promptly after the
last day of each month. Such fees shall be paid to the Distributor by the Fund
pursuant to its Plan or, if Rule 12b-1 payments are not sufficient to pay such
fees, if the Plan is discontinued, or if the Fund's sponsor, Xxxxxxx Associates,
Inc. otherwise determines that Rule 12b-1 fees shall not, in whole or in part,
be used to pay the Distributor, Xxxxxxx Associates, Inc. shall be responsible
for the payment of the amount of such fees not covered by Rule 12b-1 payments.
The Distributor may reallow any or all of the sales charges that it has received
under this Agreement to such Intermediaries as it may from time to time
determine, consistent with the Registration Statement and applicable law. The
Distributor may pay any or all of the distribution fees and service fees that it
has received under this Agreement attributable to the Fund to such
Intermediaries as it may from time to time determine, consistent with the
Registration Statement and applicable law. The Distributor may securitize or
borrow against amounts to be received by the Distributor under a Plan, in which
case payments of the fees under the Plan by the Fund may be made directly to the
lender, security-holder or an agent thereof pursuant to written instructions of
the Distributor; provided, however, that no such arrangement shall be deemed to
give rise to any obligation on the part of a Fund or the Investment Company, or
its Board, to continue such payments in the face of a determination by the Board
that such payments are not in the best interests of a Fund or its shareholders,
or to create any obligation of a Fund or the Investment Company to the lender.
5. As used in this Agreement, the terms "Prospectus" and "Statement of
Additional Information" shall mean, respectively, the form of prospectus and
statement of additional information with respect to the Fund filed by the
Investment Company as part of the Registration Statement, as they may be amended
or supplemented from time to time.
6. The Distributor shall print and distribute to prospective investors as
required by law current Prospectuses, and shall print and distribute, upon
request, to prospective investors or current shareholders current Statements of
Additional Information, and may print and distribute such other sales
literature, reports, forms and advertisements in connection with the sale and
offers of sale of the Shares as it deems appropriate. In connection with such
sales and offers of sale, the Distributor and any Intermediary shall give only
such information and make only such statements or representations as are
contained in the Fund's Registration Statement (to the extent not supplemented
by a subsequent filing with the SEC), or in information furnished in writing to
the Distributor by the Investment Company and intended for such use or approved
in writing by authorized representatives of the Investment Company or the
Investment Company's investment adviser, and the Investment Company shall not be
responsible in any way for any other information, statements or representations
given or made by the Distributor, or any Intermediary. Except as specifically
provided in this Agreement, the Investment Company shall bear none of the
expenses of the Distributor in connection with its offer and sale of the Shares.
7. The Investment Company agrees at its own expense to register, qualify or
determine the exemption for registration or qualification of the Shares with the
SEC, state and other regulatory bodies, and to prepare and file from time to
time such Registration Statement, amendments thereto, reports and other
documents as may be necessary to maintain the registration or qualification. The
Distributor and Intermediaries shall provide the Investment Company promptly
with all information required for such registration or qualification. Each Fund
shall bear all expenses related to preparing and typesetting such Prospectuses,
Statements of Additional Information, and other materials required by law and
such other expenses, including printing and mailing expenses, related to such
Fund's communications with persons who are shareholders of that Fund.
8. (a) The Distributor shall act as distributor of Shares in compliance
with all applicable laws, rules and regulations, including, without limitation,
all rules and regulations made or adopted (i) pursuant to the 1940 Act; (ii)
pursuant to the 1933 Act; (iii) pursuant to the 1934 Act; and (iv) by any
securities association registered under the 1934 Act, including without
limitation the NASD Conduct Rules or rules of any other applicable
self-regulatory organization. The Distributor shall offer the Shares, and accept
purchases, redemptions and exchanges for Shares, in compliance with the Fund's
Registration Statement and applicable law.
(b) The Distributor shall be responsible for reviewing the Registration
Statement of each Fund for compliance with the requirement of the NASD Conduct
Rules that an Investment Company's prospectus contain disclosure of the details
of any arrangement by which special cash compensation arrangements are made
available to an NASD member distributing the Investment Company's securities
which are not made available on the same terms to all members who distribute the
Investment Company's securities.
(c) The Distributor shall adopt and follow procedures for the confirmation
of sales to investors and Intermediaries, timeliness of orders, the collection
of amounts payable by investors and Intermediaries on such sales, the correction
of errors related to distribution of Shares, the cancellation of unsettled
transactions, and assisting with the solicitation of proxies, and any other
matters governed by Rule 38a-1 under the 1940 Act (as may apply to a principal
underwriter for a registered investment company), each as may be necessary to
comply with the requirements of the NASD, any other self-regulatory
organization, and the federal and state securities laws. The Distributor shall
provide reports or other information to the Investment Company at the Investment
Company's reasonable request, including, without limitation, reports related to
the operation and implementation plan of the Fund's policies related to customer
privacy, safeguarding of customer information, sales and marketing practices or
other policies and procedures of the Investment Company.
(d) The Distributor shall review for regulatory compliance purposes all of
the Fund's proposed advertisements and sales literature and shall file such
materials with regulators, as appropriate, and consult with the Fund regarding
any comments provided by regulators with respect to such materials. Prior to its
public dissemination, Distributor agrees to submit to the Investment Company and
receive the Investment Company's approval for any advertisement or sales
literature related to the Investment Company or any Fund.
(e) The Distributor, consistent with its regulatory obligations and
internal standards and policies shall serve as licensing and regulatory agent
for employees of Xxxxxxx Associates, Inc., the Investment Company's investment
adviser, whose activities relating to the promotion of sales of Fund shares may
require broker-dealer registered representative status, and will maintain the
registrations of those employees with the NASD.
9. The Distributor agrees that it has adopted and implemented an
anti-money-laundering program in compliance with the USA PATRIOT Act of 2001,
the regulations thereunder and NASD Conduct Rules, including without limitation
customer identification program procedures and monitoring for suspicious
activity. The Distributor additionally agrees that it has adopted and
implemented procedures to comply with applicable laws and regulations related to
cash transaction reporting requirements, as well as monitoring and reporting
under FinCEN and other government watch lists.) If the Distributor engages
another entity to act on its behalf with respect to its anti-money laundering
program, (a "Sub-Service Provider"), the Distributor will remain fully
responsible to the Fund for the acts and omissions of the Sub-Service Provider
to the same extent as the Distributor is for its own acts and omissions. The
Distributor consents to provide any government agency having jurisdiction over
the Fund: (i) information and records relating to the Distributor's provision of
anti-money laundering services to the Fund, and (ii) the ability to inspect the
Distributor for purposes of evaluating the Fund's compliance with its anti-money
laundering obligations under applicable law. The Distributor shall provide
reports, certification or other information to the Investment Company, at the
Investment Company's reasonable request, related to the operation and
implementation of any of the Fund's anti-money laundering policies for which the
Distributor is responsible.
10. (a) The Investment Company agrees to indemnify, defend and hold the
Distributor, its officers, directors and employees and any person who controls
the Distributor 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 reasonable cost of investigating or defending such claims,
demands or liabilities and any counsel fees incurred in connection therewith)
which the Distributor, its officers, directors and employees 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 the Registration Statement or arising out of or based
upon any alleged omission to state a material fact required to be stated or
necessary to make the Registration Statement not misleading, provided that in no
event shall anything contained in this Agreement be construed so as to protect
the Distributor or such other parties against any liability to the Investment
Company or its shareholders to which the Distributor or such other parties would
otherwise be subject by reason of willful misfeasance, bad faith, or negligence
in the performance of their duties, or by reason of reckless disregard of their
obligations and duties under this Agreement, and further provided that,
notwithstanding the foregoing, the Investment Company shall not indemnify the
Distributor or such other parties if such indemnification obligation arose,
directly or indirectly, as a result of conduct set forth in paragraph 10(b). The
Distributor agrees that it shall look only to the assets of the applicable Fund,
and not to any other series of the Investment Company, for satisfaction of any
obligation created by this paragraph or otherwise arising under this Agreement.
(b) The Distributor agrees to indemnify, defend and hold the Investment
Company, its several officers and Board members, and any person who controls the
Investment Company 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 the
Investment Company, its officers or Board members, or any such controlling
person may incur, under the 1933 Act or under common law or otherwise, on
account of any act of the Distributor or its directors, officers, employees or
agents constituting willful misfeasance, bad faith, or, negligence or a breach
of this Agreement or arising out of or based upon any alleged untrue statement
of a material fact contained in information furnished in writing by the
Distributor to the Investment Company for use in the Registration Statement or
arising out of or based upon any alleged omission to state a material fact in
connection with such information required to be stated in the Registration
Statement or necessary to make such information not misleading.
(c) Each party agrees to promptly notify the other of the commencement of
any litigation or proceedings involving any indemnified party. The
indemnification provisions of this paragraph 10 shall survive the termination of
this Agreement.
11. The Investment Company reserves the right at any time to withdraw all
offerings of the Shares of any Fund and to recommence offering any time
thereafter by written notice to the Distributor at its principal office.
12. The Distributor may at its sole discretion, directly or through
Intermediaries, repurchase Shares offered for sale by the shareholders or
Intermediaries. Repurchase of Shares by the Distributor shall be at the net
asset value (less any applicable sales, redemption or other charges), as
described in the Fund's Registration Statement, next determined after a
repurchase order has been received. The Distributor will receive no commission
or other remuneration for repurchasing Shares, other than deferred sales
charges, as described in the Fund's Registration Statement. At the end of each
business day, the Distributor shall notify, by means of electronic transmission
(as may be agreed-upon by the parties to this Agreement) or in writing, the
Investment Company and the Investment Company's transfer agent of the orders for
repurchase of Shares received by the Distributor since the last such report, the
amount to be paid for such Shares, and the identity of the shareholders or
Intermediaries offering Shares for repurchase. Upon such notice, the Investment
Company shall pay the Distributor such amounts as are required by the
Distributor to pay for the repurchase of such Shares in cash or in the form of a
credit against moneys due the Investment Company from the Distributor as
proceeds from the sale of Shares. The Investment Company reserves the right to
suspend such repurchase right upon written notice to the Distributor. The
Distributor further agrees to act as agent for the Investment Company to receive
and transmit promptly to the Investment Company's transfer agent shareholder and
Intermediary requests for redemption of Shares.
13. The Distributor is an independent contractor and shall be agent for the
Investment Company only in respect to the sale (but not the advertising, nor
contracting with any Intermediaries for the sale), redemption, and exchange of
the Shares, including for the limited purpose of determining the time as of
which Share transactions are deemed to have been received.
14. The services of the Distributor to the Investment Company under this
Agreement are not to be deemed exclusive, and the Distributor shall be free to
render similar services or other services to others so long as its services
hereunder are not impaired thereby.
15. The Distributor shall prepare reports for the Board on a quarterly
basis, or more frequently as reasonably requested by the Board, showing such
information concerning expenditures related to this Agreement or related to the
operation and implementation of each Fund's Plan.
16. As used in this Agreement, the terms "assignment," "interested person"
and "majority of the outstanding voting securities" shall have the meanings
given to them by Section 2(a) of the 1940 Act, subject to such exemptions as may
be granted by the SEC by any rule, regulation, order, or no-action or
interpretative letter.
17. This Agreement will become effective with respect to a Fund on the date
first written above, provided it is properly approved by the Board and, unless
sooner terminated as provided herein, will continue in effect for two years from
the above written date. Thereafter, if not terminated, this Agreement shall
continue in effect with respect to each Fund for successive annual periods,
provided that such continuance is specifically approved at least annually (i) by
the Board or (ii) by a vote of a majority of the outstanding voting securities
(as defined the in 0000 Xxx) of the Fund, provided that in either event the
continuance is also approved by a majority of the Investment Company's
Independent Board Members, by vote cast in person at a meeting called for the
purpose of voting on such approval.
18. This Agreement is terminable with respect to some or all of the Funds
without penalty by the Board, by vote of a majority of the outstanding voting
securities of the Fund (as defined in the 1940 Act), or by the Distributor, on
not less than 60 days' written notice to the other party, and such notice period
may be waived upon the mutual written consent of the Distributor and the
Investment Company. This Agreement will also automatically and immediately
terminate in the event of its assignment as defined in Section 16 of this
Agreement.
19. Shares of any Fund may have been divided into separate classes, as
described in the applicable Fund's Registration Statement, and may have sales
charges or discounts or waivers available for certain categories of investor.
20. The Fund and the Distributor agree that the information exchanged
hereunder and information about the respective customers and potential customers
of each is confidential and as such shall not be disclosed, sold or used in any
way except to carry out the terms of this Agreement. Notwithstanding the
foregoing, such confidential information may be disclosed on a "need to know"
basis as set forth in applicable privacy rules and regulations. The obligations
regarding confidentiality hereunder shall not apply to any information which is
(i) otherwise publicly available, (ii) already possessed by the entity to whom
the information was disclosed prior to disclosure hereunder, (iii) independently
developed by the entity, or (iv) disclosed pursuant to law, rule, regulation, or
court or administrative order or regulatory request. The Distributor 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 Agreement, provided that such use is consistent with applicable law and the
privacy policies of the Distributor and the Fund. The Distributor further agrees
to take commercially reasonable steps, in accordance with applicable law, to
safeguard customer information. The provisions of this paragraph 20 will survive
termination of this Agreement.
21. From time to time, each Fund may implement policies, procedures or
charges in an effort to avoid the potential adverse effects on the Funds of
short-term trading by market timers. The Distributor agrees to cooperate in good
faith with the Investment Company in the implementation of any such policies,
procedures and/or charges, including the rejection or cancellation of any
purchase or exchange order, particularly when there appears to be a pattern of
market timing or other frequent purchases and sale, and the imposition and
payment over to the Fund of redemption fees specified in the Prospectus. The
Distributor agrees, where appropriate, to make reasonable efforts to obtain the
agreement of Intermediaries to comply with the Funds' frequent trading and other
policies set forth in the Funds' Prospectus or to take alternative actions
reasonably designed to achieve compliance with these policies.
22. No provision of this Agreement may be changed, waived, discharged or
terminated, except by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought. This
Agreement may be executed in multiple counterparts.
23. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware, without regard to conflict of law principles;
provided, however, that nothing herein shall be construed as being inconsistent
with the 1940 Act. Where the effect off a requirement of the 1940 Act reflected
in any provision of this Agreement is altered by a rule, regulation or order of
the SEC, whether of special or general application, such provision shall be
deemed to incorporate the effect of such rule, regulation or order.
24. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
25. Notices shall be provided to each party, as noted below:
To the Distributor:
Xxxxxx Xxxxx, Esq.
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
To the Investment Company:
Xxxxx X. Xxxxxxx
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
26. The Investment Company's Agreement and Declaration of Trust, as amended
from time to time, provides that to the fullest extent permitted by Delaware
law, no Board member or officer of the Investment Company shall be liable for
any act or omission of any agent, employee, investment adviser or principal
underwriter of the Investment Company and that such officers and Board members
shall be indemnified out of the assets of the Investment Company, except to the
extent such exemption from liability or limitation thereof is not permitted by
the 1940 Act.
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be executed
by their officers thereunto duly authorized.
ATTEST: THE XXXXXXX FUNDS
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxx Xxxxx Xxxxxxx, President
ATTEST: XXXX XXXXX INVESTOR SERVICES, LLC
By: /s/ Xxxxx X. Schmultz By: /s/ Xxxxxx Xxxxx
Xxxxx X. Schmultz Xxxxxx Xxxxx, General Counsel and Secretary
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Appendix A
Xxxxxxx Growth Fund
