DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of December 13, 2000, between Marketocracy
Capital Management LLC, a Delaware limited liability company ("MCM"), as
investment advisor of Marketocracy Funds, a Delaware business trust ("Trust"),
and Xxxxxxxx Capital Markets, Inc., a corporation organized and existing under
the laws of the State of New York ("RCM").
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
("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 MCM desires to retain RCM as principal underwriter on behalf of the
Trust 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 Trust's board of
trustees or directors ("Board") and its disinterested trustees/directors in
conformity with Section 15(c) under the 1940 Act; and
WHEREAS RCM is willing to act as principal underwriter for the Trust 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 Trust 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 Trust, subject to the terms and for the period set forth
in this Agreement. RCM hereby accepts such appointment and agrees to act
hereunder. The Trust understands that any solicitation activities conducted on
behalf of the Trust will be conducted primarily, if not exclusively, by
employees of the Trust'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 Trust 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, 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 Trust. 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 Trust'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 Trust as the Trust shall provide or approve. RCM shall
review and file all proposed advertisements and sales literature with
appropriate regulators and consult with the Trust 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 Trust 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
Trust 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 Trust reserves
the right to suspend such repurchase right upon written notice to RCM. RCM
further agrees to act as agent for the Trust to receive and transmit promptly to
the Trust'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 Trust.
(a) The Trust 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 Trust 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 Trust shall fully cooperate in the
efforts of RCM to sell and arrange for the sale of Shares.
(b) The Trust 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 Trust 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 Trust 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 Trust's communication with persons who are
shareholders.
(c) The Trust 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 Trust represents and warrants that its Registration Statement and
any advertisements and sales literature (excluding statements relating to RCM
and the services it provides that are based upon written information furnished
by RCM expressly for inclusion therein) of the Trust 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 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 Trust. In making agreements with such dealers, RCM shall not
act only as principal and not as agent for the Trust. The form of any such
dealer agreement shall be mutually agreed upon and approved by the Trust and
RCM.
5. Withdrawal of Offering. The Trust 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 Trust under
any provisions of this Agreement and no orders for the purchase or Sale of
Shares hereunder shall be accepted by the Trust 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 Trust. The Trust 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 Trust
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 Trust; and (v)the qualifications of Shares
for sale under the securities laws of such jurisdictions as shall be selected by
the Trust pursuant to Paragraph 3(b) hereof, and the costs and expenses payable
to each such jurisdiction for continuing qualification therein. In addition, the
Trust shall bear all costs of preparing, printing, mailing and filing any
advertisements and sales literature. RCM does not assume responsibility for any
expenses ngt 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 Trust 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 Trust shall not issue certificates representing
Shares unless requested to do so by a shareholder. If such request is
transmitted through RCM, the Trust 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 Trust only with respect to the sale and redemption of Shares.
11. Indemnification.
(a) The Trust 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
Trust 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 Trust 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 Trust 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 Trust 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 Trust of any claim shall not relieve the
Trust 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 Trust 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 Trust elects to assume the
defense of any such claim, the defense shall be conducted by counsel chosen by
the Trust and satisfactory to indemnified defendants in the suit whose approval
shall not be unreasonably withheld. In the event that the Trust 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
Trust 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 Trust 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 Trust, its officers and
trustees, and any person who controls the Trust 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
against such claims, demands, or liabilities and any counsel fees incurred in
connection therewith) that the Trust, its trustees 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 Trust
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.
(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 Trust's Board who
are neither interested persons (as defined in the 0000 Xxx) of the Trust
("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 or by vote of
a majority of the outstanding voting securities of the Trust.
(b) Notwithstanding the foregoing, this Agreement may be terminated in its
entirety at any time, without the 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 Trust. 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 Trust; provided, that in either case, such amendment also shall be approved
by a majority of the Independent trustees/directors.
14. Limitation of Liability. The Board and shareholders of the Trust shall
not be personally liable for obligations of the Trust in connection with any
matter arising from or in connection with this Agreement. If the Trust is a
Massachusetts business trust, this Agreement is not binding upon any trustees,
officer or shareholder of the Trust 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 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: MARKETOCRACY CAPITAL MANAGEMENT LLC
___________________________ By: /s/Xxxxxxxx X. Xxx
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Title: President
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ATTEST: XXXXXXXX CAPITAL MARKETS, INC.
___________________________ By: /s/Xxxxxx X. Xxxxxxxxx
----------------------
Title: President
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SCHEDULE A
to the
DISTRIBUTION AGREEMENT
between
MARKETOCRACY CAPITAL MANAGEMENT LLC
and
XXXXXXXX CAPITAL MARKETS, INC.
Pursuant to Section 1 of the Distribution Agreement between Marketocracy
Capital Management LLC (the "Adviser"), on behalf of Marketocracy Funds (the
"Trust"), and Xxxxxxxx Capital Markets, Inc. ("RCM"), the Adviser hereby
appoints RCM as its agent to be the principal underwriter of the Trust with
respect to its following series:
The Technology Plus Fund
The Masters 100SM Fund
Dated November 9, 2001
SCHEDULE B
to the
DISTRIBUTION AGREEMENT
between
MARKETOCRACY CAPITAL MANAGEMENT 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
