EXHIBIT 6.2
CONSULTING AGREEMENT
AGREEMENT made as of this ___ day of ________, 1997 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, 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
WHEREAS, LKCM has agreed to enter into this Agreement as consideration
for FDDI entering into the Distribution Agreement;
NOW, THEREFORE, 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 by 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;
(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
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(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 31a-1 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) cause the registration of the Shares under the Securities
Act of 1933 (the "1933 Act") and the qualification for the Shares for
sale in those states that the Funds may designate;
(c) monitor or cause the Funds' transfer agent to monitor
sales of Shares with respect to compliance with applicable state
securities and Blue Sky laws;
(d) 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;
(e) 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. FDDI will file such materials
and obtain such approvals for their use as may be required by the SEC,
NASD or state securities commissioners;
(f) 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;
(g) report sales-related complaints to FDDI and consult with
FDDI concerning the manner in which such complaints will be addressed;
(h) 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;
(i) 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
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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;
(j) 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;
(k) 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;
(l) (i) identify persons to enter into agreements with FDDI
for the solicitation of Fund Shares, such as securities dealers,
financial institutions and other industry professionals such as
investment advisers and estate planning firms (collectively referred to
herein as "Selling Broker Dealers"); (ii) assist FDDI in ascertaining
that such persons meet any requirements established for Selling Broker
Dealers by law, the Funds or FDDI; (iii) request that FDDI enter into
selling agreements with each such Selling Broker Dealer ("Selling
Agreements") using a request form (the "Selling Agent Request Form")
substantially similar to the attached Exhibit B signed by a duly
authorized officer or employee of LKCM (who shall be a person listed on
Exhibit B until such time as LKCM amends or supplements such list) and
LKCM will assist in the performance of the necessary due diligence to
determine the qualification of the prospective Selling Broker Dealer
pursuant to clause (ii) above, (iv) submit such Selling Agent Request
Form and all related due diligence materials that LKCM may have to
FDDI; (v) assist FDDI in coordinating the execution of Selling
Agreements between FDDI and the Selling Broker Dealers; and (vi) use
its best efforts to insure that no sales are executed or processed
prior to obtaining an executed Selling Agreement from the Selling
Broker Dealer making the sale;
(m) provide administrative support (e.g. telemarketing and
fulfillment services) with regard to, and use its best efforts to
monitor the performance of, the Selling Broker Dealers in their
solicitation and execution of sales of the Shares and all activities
related thereto, including compliance with applicable law, the Selling
Agreements and the multi-class procedures;
(n) use reasonable efforts to monitor the Selling Broker
Dealers and the Registered Representatives in their resolution of as of
trades with respect to Shares of the Funds in order to mitigate the
risk of loss to FDDI and the Funds from such trades;
(o) report to FDDI, to the extent that LKCM is aware, any and
all actions or inactions by any Selling Broker Dealer or Registered
Representative that, to a material extent, (i) fail to comply with the
terms of any Selling Agreements; (ii) violate any applicable laws of
any governmental authorities, including the NASD's Rules of Conduct, or
(iii) violate any other agreements or procedures with which such
Selling Broker Dealer is required to comply; and
(p) (i) submit the form of confirmation statement to be used
for the sale of the Shares to FDDI for its approval and provide or
cause to be provided to customers of the Selling Broker Dealers
("Customers") and to Selling Broker Dealers such confirmations of all
transactions in the Shares as may be required by the 1934 Act and the
Selling Agreements; and (ii) use reasonable efforts to monitor the
Fund's transfer agent in its preparation and mailing of such
confirmations regarding the sales of the Shares and report to FDDI any
deficiencies of which LKCM is aware in the transfer agent's performance
of such activities.
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:
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(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;
(b) Each Fund's most recent Prospectus(es);
(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 filings 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 copies 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 an annual fee of $10,000 per Fund payable
in equal monthly installments of the first business day of each month; provided,
however, that in no event shall the annual fee be less than $25,000.
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 with respect
to a Fund as of the date first written above (or, if a particular Fund is nor in
existence on that date, on the date FDDI becomes the distributor of the Shares
of such Fund; Schedule A to this Agreement shall be deemed amended to include
such Fund from and after such date).
6. TERM.
(a) This Agreement shall continue for an initial two 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 shall automatically terminate as it relates
to any Fund upon the termination of the Distribution Agreement between
such Fund and FDDI or 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 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
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(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;
(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;
(iii) the failure of any Selling Broker Dealer (as
referenced in Exhibit C) to have entered into a Selling
Agreement with FDDI prior to the execution of any sale of
Shares of any Fund; and
(iv) the failure of any Selling Broker Dealer to
comply with the terms of any Selling Agreement to which it is
a party if such failure to comply was the direct result of
LKCM's bad faith, willful misfeasance, negligence or reckless
disregard of its 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;
(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; and
(iv) the failure of any Selling Broker Dealer to
comply with the terms of any Selling Agreement to which it is
a party if such failure to comply was the direct result of
FDDI's bad faith, willful misfeasance, negligence or reckless
disregard of its 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 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
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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-1 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 are 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.
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 all 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
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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.
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.
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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:_________________________
Name:_______________________
Title:________________________
FIRST DATA DISTRIBUTORS, INC.
By:_________________________
Name:_______________________
Title:________________________
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SCHEDULE A
NAME OF FUNDS
LKCM FUND
LKCM Small Cap Equity Portfolio
LKCM Equity Portfolio
Exhibit B
SELLING AGREEMENT REQUEST FORM
To: ________________________________
From: ________________________________
Telephone #: ______________ Fax #: __________________
Proposed selling agent name and address:
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Type of agreement (check one):
______ Bank Agreement
______ Bank Affiliated Broker-Dealer Agreement
______ Broker-Dealer Agreement
______ Registered Investment Adviser Agreement
---------------------------------
Authorized LKCM Representative
(Attached hereto as Attachment 1 is a list of Authorized LKCM Representatives)
Attachment 1
AUTHORIZED XXXXXX XXXX REPRESENTATIVES
The following individuals are authorized to request the issuance of
sales agreements to clients and/or potential clients of the LKCM Fund:
Xxxxxx Xxxxxxxxxx
Exhibit C
SELLING AGENTS THAT HAVE ENTERED INTO SELLING
AGREEMENTS WITH FIRST DATA DISTRIBUTORS, INC.
