DISTRIBUTION AGREEMENT
THIS
DISTRIBUTION AGREEMENT (this “Agreement”) is made as of February 17, 2005,
between Alesco
Global Advisors LLC,
a
California limited liability company (“AGA”), as administrator of each series of
Marketocracy Funds, a Delaware statutory trust (the “Trust”), listed on
Schedule
A hereto
(as
amended from time to time) to this Agreement (each the “Fund”), and Xxxxxxxx
Capital Markets, LLC, (“RCM”), a limited liability company organized and
existing under the laws of the State of New York.
WHEREAS
the Trust is registered under the Investment 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 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
AGA in its capacity as administrator of the Fund desires to retain RCM as the
principal underwriter in respect of the Fund in connection with the Fund’s
offering and sale of its shares (the “Shares”); and
WHEREAS
this Agreement between AGA and RCM has been approved by a vote of the Trust’s
board of trustees (the “Board”) and its disinterested trustees in conformity
with Section 15(c) under the 1940 Act; and
WHEREAS
RCM is willing to act as principal underwriter in respect of 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.
AGA in
its capacity as administrator of the Fund hereby appoints RCM to be the Fund’s
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 Agreement. RCM hereby accepts such appointment and agrees to act
hereunder. AGA and the Fund each understands that any solicitation activities
conducted on behalf of the Fund (other than those solicitation activities by
broker-dealers (and their respective representatives) with whom RCM has entered
into dealer agreements pursuant to Section 4 hereof) 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 efforts 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
Trust with respect to 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 AGA or 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 Fund’s most-current Prospectus. The Fund
shall make available to RCM a statement of each computation of net asset value
and the details of entering into such computation.
(f) RCM
at
its 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. AGA and the Fund each 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 materials required
by
law and such other expenses, including printing and mailing expenses, related
to
the Fund’s communication with persons who are shareholders.
2
(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 the Trust’s Registration Statement in respect of
the Fund and any advertisements and sales literature of the Fund (excluding
statements relating to RCM and the services it provides that are based upon
written information furnished by RCM expressly for inclusion therein) 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 not
misleading, and that all statements or information furnished by the Fund 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 AGA or the Fund. In making
agreements with such dealers, RCM shall not 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 AGA, the Fund and RCM.
5. Withdrawal
of Offering.
Each of
AGA and the Fund reserves the right at any time to withdraw all offerings of
any
or all 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 5(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 SAIs; (iii) the preparation and mailing of annual and interim
reports, Prospectuses, SAIs, and proxy materials to shareholders; (iv) such
other expenses related to the 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 Section
3(b) hereof, and the costs and expenses payable to each such jurisdiction for
continuing qualification therein. 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 receipt of a
quarterly invoice, a fee for services as set forth in Schedule
B
to this
Agreement.
9. Share
Certificates.
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.
3
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 a 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 be 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 such 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 other 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, the Trust, AGA and their
respective officers, trustees, managers and members, and any person who controls
the Fund, the Trust or AGA 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 without limitation the cost of investigating or defending
against such claims, demands, or liabilities and any counsel fees incurred
in
connection therewith) that the Fund, the Trust, AGA or their respective
officers, trustees, managers and members 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 or AGA 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 such information required to be stated in
either thereof or necessary to make such information not
misleading.
4
(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 with respect to the parties on the date first
written above and with respect to the Fund on such later date as indicated
in
Schedule
A
hereto
and, unless sooner terminated by 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 who are neither interested persons (as defined in
the 0000 Xxx) of the Trust (“Independent trustees”) or RCM or AGA, cast in
person at a meeting called for the purpose of voting on such approval, and
(ii)
by the Board 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 the payment of any penalty, by AGA, by a vote of the Board, by vote
of a
majority of the Independent trustees, 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
trustees.
14. Limitation
of Liability.
This
Agreement is not binding upon any trustees, officer or shareholder of the Trust
individually nor any series of the Trust other than the Fund, 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.
5
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 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.
IN
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: | ALESCO GLOBAL ADVISORS LLC |
| Administrator of the Fund | |
| ________________________________ | By:_____________________________________ |
| Title:___________________________________ | |
| ATTEST: | XXXXXXXX CAPITAL MARKETS, LLC |
|
________________________________
|
By:_____________________________________ |
| Title:____________________________ |
6
SCHEDULE
A
to
the
between
ALESCO
GLOBAL ADVISORS LLC
and
XXXXXXXX
CAPITAL MARKETS, LLC
FUNDS
Pursuant
to Section 1 of the Distribution Agreement between Alesco Global Advisors LLC
(“AGA”) and Xxxxxxxx Capital Markets, LLC (“RCM”), AGA hereby appoints RCM to be
the principal underwriter with respect to the following series of Marketocracy
Funds (each the “Fund”) :
Series Effective
Date
AGA
Total
Return Realty Fund
__,
2006
Dated________________________________
7
SCHEDULE
B
to
the
between
ALESCO
GLOBAL ADVISORS LLC
and
XXXXXXXX
CAPITAL MARKETS, INC.
DISTRIBUTION
SERVICES FEE SCHEDULE
o
Greater
of the annual minimum of $15,000 for the initial fund and $3,000 per year per
additional portfolio or 1 basis point on assets of the funds.
o
Licensing of Investment Advisor’s staff @ an annual fee of $900 per
person.
o
Advertising Compliance Review and NASD Filing @ $150 per job for the first
ten
pages of an ad piece and $20 per additional page. NASD filing fees will be
billed on an out-of-pocket basis.
o
National Securities Clearing Corporation - Mutual Fund Services Fee Schedule
will apply for Fund/Serv activities on a pass thru basis, if
applicable.
Services
Include:
-----------------
o
Providing access to Fund/Serv as an NSCC member
o
Filing
marketing material with the NASD
o
Providing principal review of marketing materials
o
Executing broker dealer selling agreements
o
Underwriting mutual fund shares
8
