Exhibit 3 - DISTRIBUTION AGREEMENT
FORM OF
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of November 1, 1998, between Texas Capital
Value Funds, Inc. ("Fund"), a corporation, and Xxxxxxxx Capital Markets, Inc.
("RCM"), a corporation organized and existing under the laws of the State of New
York.
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
registered one or more distinct series of shares of beneficial interest
("Shares") for sale to the public under the Securities Act of 1933, as amended
("1933 Act"), and has qualified its shares for sale to the public under various
state securities laws; and
WHEREAS the Fund desires to retain RCM as principal underwriter in
connection with the offering and sale of the Shares of each series listed on
Schedule A (as amended from time to time) to this Agreement; and
WHEREAS this Agreement has been approved by a vote of the Fund's board of
trustees or directors ("Board") and its distinterested trustees/directors in
conformity with Section 15(c) under the 1940 Act; and
WHEREAS RCM is willing to act as principal underwriter for the Fund on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints RCM as its agent to be the principal
underwriter so as to hold itself out as available to receive and accept orders
for the purchase and redemption of the Shares and redemption of Shares on behalf
of the Fund, subject to the terms and for the period set forth in this in this
Agreement. RCM hereby accepts such appointment and agrees to act hereunder.
The Fund understands that any solicitation activities conducted on behalf of the
Fund will be conducted primarily, if not exclusively, by employees of the Fund's
sponsor who shall become registered representatives of RCM.
2. Services and Duties of RCM.
(a) RCM agrees to sell Shares on a best effort basis from time to time during
the term of this Agreement as agent for the Fund and upon the terms described in
the Registration Statement. As used in this Agreement, the term "Registration
Statement" shall mean the currently effective registration statement of the
Fund, and any supplements thereto, under the 1933 Act and the 0000 Xxx.
(b) RCM will hold itself available to receive purchase and redemption orders
satisfactory to RCM for Shares and will accept such orders on behalf of the
Fund. Such purchase orders shall be deemed effective at the time and in the
manner set forth in the Registration Statement.
(c) RCM, with the operational assistance of the Fund's transfer agent, shall
make Shares available through the National Securities Clearing Corporation's
Fund/SERV System.
(d) RCM shall provide to investors and potential investors only such information
regarding the Fund as the Fund shall provide or approve. RCM shall review and
file all proposed advertisements and sales literature with appropriate
regulators and consult with the Fund regarding any comments provided by
regulators with respect to such materials.
(e) The offering price of the Shares shall be the price determined in accordance
with, and in the manner set forth in, the most-current Prospectus. The Fund
shall make available to RCM a statement of each computation of net asset value
and the details of entering in such computation.
(f) RCM at is sole discretion may repurchase Shares offered for sale by the
shareholders. Repurchase of Shares by RCM shall be at the price determined in
accordance with, and in the manner set forth in, the most-current Prospectus.
At the end of each business day, RCM shall notify, by any appropriate means, the
Fund and its transfer agent of the orders for repurchase of Shares received by
RCM since the last report, the amount to be paid for such Shares, and the
identity of the shareholders offering Shares for repurchase. The Fund reserves
the right to suspend such repurchase right upon written notice to RCM. RCM
further agrees to act as agent for the Fund to receive and transmit promptly to
the Fund's transfer agent shareholder requests for redemption of Shares.
(g) RCM shall not be obligated to sell any certain number of Shares.
(h) RCM shall prepare reports for the Board regarding its activities under this
Agreement as from time to time shall be reasonably requested by the Board.
3. Duties of the Fund.
(a) The Fund shall keep RCM fully informed of its affairs and shall provide to
RCM from time to time copies of all information, financial statements, and other
papers that RCM 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 ("SAI"), and annual and interim reports as RCM may
request, and the Fund shall fully cooperate in the efforts of RCM to sell and
arrange for the sale of Shares.
(b) The Fund shall maintain a currently effective Registration Statement on Form
N-1A with the Securities and Exchange Commission (the "SEC"), maintain
qualification with applicable states and file such reports and other documents
as may be required under applicable federal and state laws. The Fund shall
notify RCM in writing of the states in which the Shares may be sold and shall
notify RCM in writing of any changes to such information. The Fund shall bear
all expenses related to preparing and typesetting such Prospectuses, SAI and
other material required by law and such other expenses, including printing and
mailing expenses, related to the Fund's communication with persons who are
shareholders.
(c) The Fund shall not use any advertisements or other sales materials that have
not been (i.) submitted to RCM for its review and approval, and (ii.) filed with
the appropriate regulators.
(d) The Fund represents and warrants that its Registration Statement and any
advertisements and sales literature (excluding statements relating to RCM and
the services it provided that are based upon written information furnished by
RCM expressly for inclusion therein) of the Fund shall not contain any untrue
statement of material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein no misleading, and
that all statements or information furnished to RCM, pursuant to Section 3(a)
hereof, shall be true and correct in all material respects.
4. Other Broker-Dealers. RCM in its discretion may enter into agreements to
sell Shares to such registered and qualified retail dealers, as reasonably
requested by the Fund. In making agreements with such dealers, RCM shall act
only as principal and not as agent for the Fund. The form of any such dealer
agreement shall be mutually agreed upon and approved by the Fund and RCM.
5. Withdrawal of Offering. The Fund reserves the right at any time to withdraw
all offerings of any Shares by written notice to RCM at its principal office.
No Shares shall be offered by either RCM or the Fund under any provisions of
this Agreement and no orders for the purchase or sale of Shares hereunder shall
be accepted by the Fund if and so long as effectiveness of the Registration
Statement then in effect or any necessary amendments thereto shall be suspended
under any of the provisions of the 1933 Act, or if and so long as a current
prospectus as required by Section 3(b)(2) of the 1933 Act is not on file with
the SEC.
6. Services Not Exclusive. The services furnished by RCM hereunder are not to
be deemed exclusive and RCM shall be free to furnish similar services to others
so long as its services under this Agreement are not impaired thereby.
7. Expenses of the Fund. The Fund shall bear all costs and expenses of
registering the Shares with the SEC and state and other regulatory bodies, and
shall assume expenses related to communications with shareholders of the Fund
including, but not limited to, (i.) fees and disbursements of its counsel and
independent public accountant; (ii) the preparation, filing, and printing of
Registration Statements and/or Prospectuses or SAI's; (iii) the preparation and
mailing of annual and interim reports, Prospectuses, SAI's and proxy materials
to shareholders; (iv) such other expenses related to communications with persons
who are shareholders of the Fund; and (v) the qualifications of Shares for sale
under the securities laws of such jurisdictions as shall be selected by the Fund
pursuant to Paragraph 3(b) hereof, and the costs and expenses payable to each
such jurisdiction for continuing qualification herein. In addition, the Fund
shall bear all costs of preparing, printing, mailing and filing any
advertisements and sales literature. RCM does not assume responsibility for any
expenses not assumed hereunder.
8. Compensation. As compensation for the services performed and the expenses
assumed by RCM under this Agreement including, but not limited to, any
commissions paid for sales of Shares, the Fund shall pay RCM, as promptly as
possible after the last day of each month, a fee as set forth in Schedule B to
this Agreement.
9. Share Certification. The Fund shall not issue certificates representing
Shares unless requested to do so by a shareholder. If such request is
transmitted through RCM, the Fund will cause certificates evidencing the Shares
owned to be issued in such names and denominations as RCM shall from time to
time direct.
10. Status of RCM. RCM is an independent contractor and shall be agent of the
Fund only with respect to the sale and redemption of Shares.
11. Indemnification.
(a) The Fund agrees to indemnify, defend, and hold RCM, its officers and
directors, and any person who controls RCM 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) that RCM, its officers, directors, or any such controlling person may
incur under the 1933 Act, or under common law or otherwise, arising out of or
based upon any (i.) alleged untrue statement of material fact contained in the
Registration Statement, Prospectus, SAI or sales literature, (ii) alleged
omission to state a material fact required to be stated in the either thereof or
necessary to make the statements therein not misleading, or (iii) failure by the
Fund to comply with the terms of the Agreement; provided that in no event shall
anything contained herein by so construed as to protect RCM against any
liability to the Fund or its shareholders to which RCM would otherwise be
subject by 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 Agreement.
(b) The Fund shall not be liable to RCM under this Agreement with respect to any
claim made against RCM on any person indemnified unless RCM or other 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 RCM or such other person (or
after RCM 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 that it may have to RCM or any person against whom such
action is brought otherwise than on account of this Agreement.
(c) 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 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 indemnified defendants in the suit whose approval shall not be
unreasonably withheld. 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 promptly notify RCM of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of any of its Shares.
(d) RCM agrees to indemnify, defend, and hold the Fund, its officers and
directors, and any person who controls the Fund within the meaning of Section 15
of the 1933 Act, fee 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) that the Fund, its directors or officers, or any such
controlling person may incur under the 1933 Act, or under common law or
otherwise, resulting from RCM's willful misfeasance, bad faith or gross
negligence in the performance of its obligations and duties under this
Agreement, or arising out of or based upon any alleged untrue statement of a
material fact contained in information furnished in writing by RCM to the Fund
for use in the Registration Statement, Prospectus or SAI arising out of or based
upon any alleged omission to state a material fact in connection with ushc
information required to be stated in either thereof or necessary to make such
information not misleading.
(e) RCM 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 the claim,
but if RCM elects to assume the defense, the defense shall be conducted by
counsel chosen by RCM and satisfactory to the indemnified defendants whose
approval shall not be unreasonably withheld. In the event that RCM 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
RCM 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.
12. DURATION AND TERMINATION
(a) This agreement shall become effective on the date first written above or
such later date as indicated in Schedule A 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 for
successive annual periods, provided that such continuance is specifically
approved at least annually
(i)by a vote of a majority of the Fund's Board of Directors who are neither
interested persons (as defined in the 0000 Xxx) of the Fund ("Independent
trustees/directors") or RCM, cast in person at a meeting called for the purpose
of voting on such approval, and
(ii)by the Board of Directors or by vote of a majority of the outstanding
voting securities of the Fund.
(b) Notwithstanding the foregoing, this Agreement may be terminated in its
entirety at any time, without payment of any penalty, by vote of the Board, by
vote of a majority of the Independent trustees/directors, or by vote of a
majority of the outstanding voting securities of the Fund on sixty days written
notice to RCM or by RCM at any time, without the payment of any penalty, on
sixty days written notice to the Fund. This Agreement will automatically
terminate in the event of its assignment.
13. AMENDMENT OF THIS AGREEMENT
No provision 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. This
Agreement may be amended with the approval of the Board or of a majority of the
outstanding voting securities of the Fund; provided, that in either case, such
amendment also shall be approved by a majority of the Independent Directors.
14. LIMITATION OF LIABILITY
The Board and shareholders of the Fund shall not be personally liable for
obligations of the Fund in connection with any matter arising from or in
connection with this Agreement. If the Fund is a Massachusetts business trust,
this Agreement is not binding upon any trustees, officer or shareholder of the
Fund individually, and no such person shall be individually liable with respect
to any action or inaction resulting from this Agreement.
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 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. 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. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors. As used in this Agreement, 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.
17. GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State of
New York and the 1940 Act. To the extent that the applicable laws of the State
of New York conflict with the applicable provisions of the 1940 Act, the latter
shall control.
IIN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated as of the day and year first above
written.
ATTEST:
BY:
Texas Capital Value Funds, Inc.
ATTEST:
BY:
Xxxxxxxx Capital Markets, Inc.
SCHEDULE A
Pursuant to section 1 of the Distribution Agreement among the Texas Capital
Value Funds, Inc. ("Fund") and Xxxxxxxx Capital Markets, Inc. ("RCM"), the Fund
hereby appoints RCM as its agent to be the principal underwriter of the Fund
with respect to its following series:
TEXAS CAPITAL VALUE & GROWTH
TEXAS CAPITAL MID-CAP FOCUS
Dated: 11/1/98
SCHEDULE B
To the
DISTRIBUTION AGREEMENT
Between
Texas Capital Value Funds, Inc.
And
XXXXXXXX CAPITAL MARKETS, INC.
As compensation pursuant to section 8 of the Distribution Agreement
between Texas Capital Value Funds, Inc. (the "Fund") and Xxxxxxxx Capital
Markets, Inc. ("RCM"), the Fund shall pay to RCM the sum of:
1. an annual fee of $15,000 for the first series of the Fund and $3,000 for
each series thereafter excluding different classes of a series or .01% of the
average daily net assets of each series, computed daily and paid quarterly,
whichever is greater;
2. the ongoing licensing fees and incidental costs of those wholesalers of First
Austin Capital Management, Inc. who are designated by Xxxx X. Xxxxxxx to become
registered representatives of RCM;
3. the compensation paid by RCM to such registered representatives in accordance
with compensation schedules, as agreed upon by RCM and the Fund from time to
time;
4. the reasonable fees associated with listing and maintaining shares on the
National Securities Clearing Corporation's Fund/SERV System, as agreed upon by
RCM and Fund;
5. incidental expenses associated with printing and distributing advertising and
sales literature, such as filings with the National Association of Securities
Dealers, Inc.;
6. Not-withstanding the above, the compensation payable to RCM pursuant to
paragraphs 1 through 5 hereof shall be reduced by any amounts received by RCM,
as broker of record for Fund investors not purchasing through another broker-
dealer. Such amounts shall include the sum of the following:
a. Rule 12b-1 fees payable to RCM as broker of record;
b. Sales commissions payable to RCM as broker of record; and
c. The differential between Sales commissions charged to investors by other
broker-dealers and the amounts paid to other broker-dealers for selling such
shares.
In the event that the amounts available under paragraph 6 to reduce payments to
RCM exceed costs payable to RCM as enumerated in paragraphs 1 through 5 above
plus any additional costs related to distribution of Fund shares as determined
by the Fund, the Fund may designate an additional broker of record with respect
to Fund investors not purchasing through another broker-dealer. Such additional
broker shall be added by RCM as a registered representative and shall receive
all amounts payable under paragraph 6 hereof in excess of RCM's costs hereunder.
Additionally, the pricing in this Distribution Agreement shall not be
increased by RCM before two years from the date of this agreement; and RCM shall
maintain the appropriate registrations at its own cost to sell Fund shares in
all 00 xxxxxx xx xxx Xxxxxx Xxxxxx.
All transactions and money transfers between RCM and the Fund shall be
handled by the Fund's Transfer Agent.
