Exhibit 99.B.23(e)
UNDERWRITING AGREEMENT
This Agreement, dated as of January 1, 1999, is made by and between McM
Funds, a Delaware business trust (the "Fund") operating as an open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "Act"), McMorgan & Company (the "Company"), a registered
investment advisor duly organized and existing as a corporation under the laws
of the state of California, and First Data Distributors, Inc. ("FDDI"), a
corporation duly organized and existing under the laws of the Commonwealth of
Massachusetts (collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, the Fund is authorized to issue separate series of shares
representing interests in separate investment portfolios (the "Series"), which
Series are identified on Schedule "C" attached hereto, and which Schedule "C"
may be amended from time to time by mutual agreement among the Parties; and
WHEREAS, the Company has been appointed investment advisor to the Fund;
and
WHEREAS, FDDI is a broker-dealer registered with the U.S. Securities
and Exchange Commission (the "SEC") and a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASDR"); and
WHEREAS, the Parties are desirous of entering into an agreement
providing for the distribution by FDDI of the shares of the Fund (the "Shares").
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, and in exchange of good and valuable consideration, the
sufficiency and receipt of which is hereby acknowledged, the Parties hereto,
intending to be legally bound, do hereby agree as follows:
1. Appointment
The Fund hereby appoints FDDI as its principal agent for the
distribution of the Shares, and FDDI hereby accepts such appointment
under the terms of this Agreement. The Fund agrees that it will not
sell any Shares to any person except to fill orders for the Shares
received through FDDI, provided, however, that the foregoing exclusive
right shall not apply to: (a) Shares issued or sold in connection with
the merger or consolidation of any other investment company with the
Fund or the acquisition by purchase of otherwise of all or
substantially all of the assets of any investment company or
substantially all of the outstanding shares of any such company by the
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Fund; (b) Shares which may be offered by the Fund to its stockholders
for reinvestment of cash distributed from capital gains or net
investment income of the Fund; or (c) Shares which may be issued to
shareholders of other funds who exercise any exchange privilege set
forth in the Fund's Prospectus. Notwithstanding any other provision
hereof, the Fund may terminate, suspend, or withdraw the offering of
the Shares whenever, in their sole discretion, they deem such action
to be desirable.
2. Sale and Repurchase of Shares
(a) FDDI is hereby granted the right, as agent for the Fund, to sell
Shares to the public against orders received at the public
offering price as defined in the Fund's Prospectus and Statement
of Additional Information.
(b) FDDI will also have the right to take, as agent for the Fund, all
actions which, in FDDI's judgment, and subject to the Fund's
reasonable approval, are necessary to carry into effect the
distribution of the Shares.
(c) FDDI will act as agent for the Fund in connection with the
repurchase of Shares by the Fund upon the terms set forth in the
Fund's Prospectus and Statement of Additional Information.
(d) The net asset value of the Shares shall be determined in the
manner provided in the then current Prospectus and Statement of
Additional Information relating to the Shares, and when
determined shall be applicable to all transactions as provided in
the Prospectus. The net asset value of the Shares shall be
calculated by the Fund or by another entity on behalf of the
Fund. FDDI shall have no duty to inquire into, or liability for,
the accuracy of the net asset value per Share as calculated.
(e) On every sale, FDDI shall promptly pay to the Fund the applicable
net asset value of the Shares.
(f) Upon receipt of purchase instructions, FDDI will transmit such
instructions to the Fund or its transfer agent for registration
of the Shares purchased.
(g) Nothing in this Agreement shall prevent FDDI or any affiliated
person (as defined in the Act) of FDDI from acting as underwriter
for any other person, firm or corporation (including other
investment companies), or in any way limit or restrict FDDI or
such affiliated person from buying, selling or trading any
securities for its or their own account or for the account of
others for whom it or they may be acting, provided, however, that
FDDI expressly agrees that it will not for its own account
purchase any Shares of the Fund except for investment purposes,
and that it will not for its own account dispose of any such
Shares except by redemption of such Shares with the Fund, and
that it will not undertake in any activities which, in its
judgment, will adversely affect the performance of its
obligations to the Fund under this Agreement.
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3. Rules of Sale of Shares
FDDI does not agree to sell any specific number of Shares and serves
only in the capacity of Statutory Underwriter. The Fund reserves the
right to terminate, suspend or withdraw the sale of its Shares for any
reason deemed adequate by it, and the Fund reserves the right to
refuse at any time or times to sell any of its Shares to any person
for any reason deemed adequate by it.
4. Rules of NASDR, etc.
(a) FDDI will conform tot he Conduct Rules of the NASDR and the
securities laws of any jurisdiction in which it directly or
indirectly sells any Shares.
(b) FDDI will require each dealer with whom FDDI has a selling
agreement to conform to the applicable provisions of the
Prospectus, with respect to the public offering price of the
Shares, and FDDI shall not cause the Fund to withhold the placing
of purchase orders so as to make a profit thereby.
(c) The Fund and the Company agree to furnish FDDI sufficient copies
of any and all: agreements, plans, communications with the public
or other materials which the Fund or the Company intend to use in
connection with any sales of Shares, in adequate time for FDDI to
file and clear such materials with the proper authorities before
they are put in use. FDDI and the Fund or the Company may agree
that any such material does not need to be filed subsequent to
distribution. In addition, the Fund and the Company agree not to
use any such materials until so filed and cleared for use, if
required, by appropriate authorities as well as by FDDI.
(d) FDDI, at its own expense, will qualify as a dealer or broker, or
otherwise, under all applicable state or federal laws required in
order that the Shares may be sold in such states as may be
mutually agreed upon by the Parties.
(e) FDDI shall remain registered with the SEC and a member of the
NASDR for the term of this Agreement.
(f) FDDI shall not, in connection with any sale or solicitation of a
sale of the Shares, make or authorize any representative, service
organization, broker or dealer to make any representations
concerning the Shares, except those contained in the Prospectus
offering the Shares and in communications with the public or
sales materials approved by FDDI as information supplemental to
such Prospectus. Copies of the Prospectus will be supplied by the
Fund or the Company to FDDI in reasonable quantities upon
request.
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(g) FDDI shall only be authorized to make representations in respect
of the Fund consistent with the then current Prospectus,
Statement of Additional Information, and other written
information provided by the Fund or its agents to be used
explicitly with respect to the sale of Shares.
5. Records to be Supplied by the Fund
The Fund shall furnish to FDDI copies of all information, financial
statements and other papers which FDDI may reasonably request for use
in connection with the underwriting of the Shares including, but not
limited to, one certified copy of all financial statements prepared
for the Fund by its independent public accountants.
6. Expenses
(a) The Fund will bear the following expenses:
(i) preparation, setting in type, and printing of sufficient
copies of the Prospectus and Statement of Additional
Information for distribution to shareholders, and the cost
of distribution of same to the shareholders;
(ii) preparation, printing and distribution of reports and other
communications to shareholders;
(iii) registration of the Shares under the federal securities
laws;
(iv) qualification of the Shares for sale in the jurisdictions
as directed by the Fund;
(v) maintaining facilities for the issue and transfer of the
Shares;
(vi) supplying information, prices and other data to be
furnished by the Fund under this Agreement; and
(vii) any original issue taxes or transfer taxes applicable to
the sale or delivery of the Shares or certificates
therefor.
(b) The Company will pay all other expenses incident to the sale and
distribution of the Shares sold hereunder.
(c) FDDI agrees to pay all of its own expenses in performing its
obligations hereunder.
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7. Term and Compensation
(a) The term of this Agreement shall commence on the date on
hereinabove first written (the "Effective Date").
(b) This Agreement shall remain in effect for one (1) year from the
Effective Date. This Agreement shall continue thereafter for
periods not exceeding one (1) year, if approved at least annually
(i) by a vote of a majority of the outstanding voting securities
of each Series, or (ii) by a vote of a majority of the Board
Members of the Fund who are not parties to this Agreement (other
than as Board Members of the Fund) or interested persons of any
such party, cast in person at a meeting called for the purpose of
voting on such approval.
(c) Fees payable to FDDI shall be paid by the Company as set forth in
Schedule "B" attached and shall be fixed for the one (1) year
period commencing on the Effective Date of this Agreement.
Thereafter, the fee schedule will be subject to annual review and
adjustment.
(d) This Agreement (i) may be terminated at any time without the
payment of any penalty, either by a vote of the Trustees of the
Fund or by a vote of a majority of the outstanding voting
securities of each Series with respect to such Series, on sixty
(60) days' written notice to FDDI; and (ii) may be terminated by
FDDI on sixty (60) days' written notice to the Fund with respect
to any Series.
(e) This Agreement shall automatically terminate in the event of its
assignment, as defined in the Act.
8. Indemnification of FDDI by the Company and the Fund
FDDI is responsible for its own conduct and the employment, control,
and conduct of its agents and employees and for injury to such agents
or employees or to others caused by it, its agents or employees.
Notwithstanding the above, the Company and the Fund will indemnify and
hold FDDI harmless for the actions of the Company's employees
registered with the NASDR as registered representatives of FDDI, and
the Company hereby undertakes to cooperate with FDDI to maintain
compliance with all NASDR and SEC rules and regulations concerning any
activities of such employees. FDDI shall have the right, in its sole
discretion, to refuse to register any individual as its
representative.
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9. Liability of FDDI
(a) FDDI, its directors, officers, employees, shareholders and agents
shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Fund in connection with the
performance of this Agreement, except a loss resulting from a
breach of FDDI's obligations pursuant to Section 4 of this
Agreement (Rules of NASDR), a breach of fiduciary duty with
respect to the receipt of compensation for services or a loss
resulting from willful misfeasance, bad faith or negligence on
the part of FDDI in the performance of its obligations and duties
or by reason of its reckless disregard of its obligations and
duties under this Agreement. FDDI agrees to indemnify and hold
harmless the Fund and each person who has been, is, or may
hereafter be a Trustee, officer, or employee of the Fund against
expenses reasonably incurred by any of them in connection with
any claim or in connection with any action, suit, or proceeding
to which any of them may be a party, which arises out of or is
alleged to arise out of any misrepresentation or omission to
state a material fact, on the part of FDDI or any agent of
employee of FDDI or any of the persons for whose acts FDDI is
responsible or is alleged to be responsible unless such
misrepresentation or omission was made in reliance upon written
information furnished to FDDI by the Fund. FDDI also agrees to
indemnify and hold harmless the Fund and each such person in
connection with any claim or in connection with any action, suit,
or proceeding which arises out of or is alleged to arise out of
FDDI's failure to exercise reasonable care and diligence with
respect to its services rendered in connection with the purchase
and sale of Shares. The foregoing rights of indemnification shall
be in addition to any other rights to which the Fund or any such
person shall be entitled to as a matter of law.
(b) The Fund agrees to indemnify and hold harmless FDDI against any
and all liability, loss, damages, costs of expenses (including
reasonable counsel fees) which FDDI may incur or be required to
pay hereafter, in connection with any action, suit or other
proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which FDDI may be involved
as a party or otherwise or with which FDDI may be threatened, by
reason of the offer or sale of the Fund's Shares by persons other
than FDDI or its representatives, (except for actions of FPS
Broker Services, Inc. or its representatives) to the Fund's
indemnification of FDDI for actions prior to the execution of
this Agreement. If a claim is made against FDDI as to which FDDI
may seek indemnity under the Section, FDDI shall notify the Fund
promptly after any written assertion of such claim threatening to
institute an action or proceeding with respect thereto and shall
notify the Fund promptly of any action commenced against FDDI
within 10 days time after FDDI shall have been served with a
summons or other legal process, giving information as to the
nature and basis of the claim. Failure to notify the Fund shall
not, however, relieve the Fund from any liability which it may
have on account of the indemnity under this Section 9(b) if the
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Fund has not been prejudiced in any material respect by such
failure. The Fund shall have the sole right to control the
settlement of any such action, suit or proceeding subject to FDDI
approval, which shall not be unreasonably withheld. FDDI shall
have the right to participate in the defense of an action or
proceeding and to retain its own counsel, and the reasonable fees
and expenses of such counsel shall be borne by the Fund (which
shall pay such fees, costs and expenses at least quarterly) if:
(i) FDDI has received an opinion of counsel stating that
the use of counsel chosen by the Fund to represent
FDDI would present such counsel with a conflict of
interest:
(ii) the defendants in, or targets of, any such action or
proceeding include both FDDI and the Fund, and legal
counsel to FDDI shall have reasonably concluded that
there are legal defenses available to it which are
different from or additional to those available to the
trust or which may be adverse to or inconsistent with
defenses available to the Fund (in which case the Fund
shall not have the right to direct the defense of such
action on behalf of FDDI); or
(iii) the Fund shall authorize FDDI to employ separate
counsel at the expense of the Fund.
(c) Any person, even though also a director, officer, employee,
shareholder or agent of FDDI who may be or become an officer,
director, trustee, employee or agent of the Fund, shall be
deemed, when rendering services to the Fund or acting on any
business of the Fund (other than services or business in
connection with FDDI's duties hereunder), to be rendering such
services to or acting solely for the Fund and not as a director,
officer, employee, shareholder or agent, or one under the control
or direction of FDDI even though receiving a salary from FDDI.
(d) The Fund agrees to indemnify and hold harmless FDDI, and each
person who controls FDDI within the meaning of Section 15 of the
Securities Act of 1933, as amended (the "Securities Act"), or
Section 20 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), against any and all losses, claims, damages
and liabilities, joint or several (including any reasonable
investigative, legal and other expenses incurred in connection
therewith) to which they, or any of them, may become subject
under the Act, the Securities Act, the Exchange Act or other
federal or state law or regulations, at common law or otherwise
insofar as such losses, claims, damages or liabilities (or
actions, suits or proceedings in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement
of a material fact contained in a Prospectus, Statement of
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Additional Information, supplement thereto, sales literature (or
other written information) prepared by the Fund and furnished by
the Fund to FDDI for FDDI's use hereunder, disseminated by the
trust or which arise out of or are based upon any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading.
Such indemnity shall not, however, inure to the benefit of FDDI
(or any person controlling FDDI) on account of any losses,
claims, damages or liabilities (or actions, suits or proceedings
in respect thereof) arising from the sale of the Shares of the
Fund to any person by FDDI (i) if such untrue statement or
omission or alleged untrue statement or omission was made in the
Prospectus, Statement of Additional Information, or supplement,
sales or other literature, in reliance upon and in conformity
with information furnished in writing to the Fund by FDDI
specifically for use therein or (ii) if such losses, claims,
damages or liabilities arise out of or are based upon an untrue
statement or omission or alleged untrue statement or omission
found in any Prospectus, Statement of Additional Information,
supplement, sales or other literature, subsequently corrected,
but negligently distributed by FDDI and a copy of the corrected
Prospectus was not delivered to such person at or before the
confirmation of the sale to such person
(e) FDDI shall not be responsible for any damages, consequential or
otherwise, which the Company or the Fund may experience, due to
the disruption of the distribution of Shares caused by any action
or inaction of any registered representative or affiliate of FDDI
or of FDDI itself.
(f) Notwithstanding anything in this Agreement to the contrary, in no
event shall any party to this Agreement, its affiliates or any of
its or their directors, trustees, officers, employees, agents or
subcontractors be liable for lost profits, exemplary, punitive,
special, incidental, indirect or consequential damages.
10. Amendments
No provision of this Agreement may be amended or modified in any
manner whatsoever, except by a written agreement properly authorized
and executed by the Parties.
11. Section Headings
Section and paragraph headings are for convenience only and shall not
be construed as part of this Agreement.
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12. Reports
FDDI shall prepare reports for the Board of the Fund, on a quarterly
basis, showing such information as, from time to time, shall be
reasonably requested by the Board.
13. Severability
If any part, term or provision of this Agreement is held by any court
to be illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable and not
affected, and the rights and obligations of the Parties shall be
construed and enforced as if the Agreement did not contain the
particular part, term or provision held to be illegal or invalid
provided that the basic agreement is not thereby substantially
impaired.
14. Governing Law
This Agreement shall be governed by the laws of the State of
California and the exclusive venue of any action arising under this
Agreement shall be the City of San Francisco, State of California.
15. Authority to Execute
The Parties represent and warrant to each other that the execution and
delivery of this Agreement by the undersigned officer of each Party
has been duly and validly authorized; and, when duly executed, this
Agreement will constitute a valid and legally binding and enforceable
obligation of each Party.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be signed
by their duly authorized officer, of the day and year first above written.
FIRST DATA DISTRIBUTORS, INC.
/s/ Xxxxxxxxx X. Xxxxx
-----------------------
By: Xxxxxxxxx X. Xxxxx
Title: Chief Legal Officer and Clerk
MCM FUNDS
/s/ Xxxxx X. Xxxxxx
-------------------
By: Xxxxx X. Xxxxxx
Title: Vice President and Secretary
MCMORGAN & COMPANY
/s/Xxxxx X. X'Xxxxx
-------------------
By: Xxxxx X. X'Xxxxx
Title: President
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SCHEDULE A
UNDERWRITER SERVICES
1. Underwriter services include:
A) Preparation and execution of Underwriter and 12b-1 Plan Agreements
o Monitoring accruals
o Monitoring expenses
o Disbursements for expenses and tail commissions
B) Quarterly 12b-1 Reports to Board
C) Literature review, recommendations and submission to the NASDR
D) Initial NASDR Licensing and Transfers of Registered Representatives
o U-4 Form and Fingerprinting Submission to NASDR
o Supplying Series 6 and 63 written study material
o Registration for Exam Preparation classes
o Renewals and Termination of Representatives
E) Written supervisory procedures and manuals for Registered
Representatives
F) Ongoing compliance updates for Representatives regarding sales
practices, written correspondence and other communications with
the public.
G) NASDR Continuing Education Requirement
H) Inbound Teleservicing Services
o Receive and answer directly with the name of the Fund
o Input marketing inquiries on confidential database for Fund
o Fax to Fund daily the names and addresses of prospects
requesting literature
o Fax to Fund daily the names and phone numbers of prospects
requesting verbal information
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SCHEDULE B
FEE SCHEDULE
This Fee Schedule is fixed for a period of one (1) year from the Effective Date
as that term is defined in the Agreement.
1. Statutory Underwriter Services
A) The Fund agrees to pay FDDI $21,000 per annum for the underwriter
services performed under this Agreement.
B) FDDI agrees register certain employees of the Company as its
representatives as follows:
Up to 2 States $1,000 per Representative per Year
3 to 30 States $2,000 per Representative per Year
31 to 50 States $3,000 per Representative per Year
C) The Fund will reimburse FDDI monthly for all out-of-pocket expenses,
including postage, telecommunications (telephone and fax), special reports,
record retention, special transportation costs as incurred.
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SCHEDULE C
IDENTIFICATION OF SERIES
Below are listed the Series and Classes of Shares to which services under this
Agreement are to be performed as of the Effective Date of this Agreement:
Equity Investment Fund
Balanced Fund
Intermediate Fixed Income Fund
Fixed Income Fund
Principal Preservation Fund
S&P 500 Index Fund
This Schedule "C" may be amended from time to time by agreement of the Parties.
Dated: January 1, 1999
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