UNDERWRITING AGREEMENT
This Agreement, dated as of the 1st day of August,
1997, and amended September 29 , 1997, made by and
between The Xxxxx Xxxxxxx Trust a Massachusetts
business trust (the "Trust") operating as an open-end
management investment company registered under the
Investment Company Act of 1940, as amended
(the "Act"); Xxxxx Xxxxxxx Associates, Inc. ("Xxxxx
Xxxxxxx"), a registered investment advisor duly
organized and existing as a corporation under the
laws of the state of Kansas; and FPS Broker Services,
Inc. ("FPSB"), a corporation duly organized and
existing under the laws of the State of Delaware
(collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, the Trust is authorized by its Declaration
of Trust 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, Xxxxx Xxxxxxx has been appointed investment
adviser to the Trust; and
WHEREAS, FPSB is a broker-dealer registered with the
U.S. Securities and Exchange Commission and a
member in good standing of the National
Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, the Parties are desirous of entering into an
agreement providing for the distribution by
FPSB of the shares of the Trust (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 Trust hereby appoints FPSB as its principal
agent for the distribution of the Shares in the
fifty United States of America, the District of
Columbia and Commonwealth of Puerto Rico, and
FPS hereby accepts such appointment under the
terms of this Agreement. The Trust agrees that
it will not sell any shares to any person
except to fill orders for the shares received
through FPSB; provided, however, that the
foregoing exclusive right shall not apply:
(a) to shares issued or sold in connection with
the merger or consolidation of any other
investment company with the Trust or the
acquisition by purchase or 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
Trust; (b) to shares which may be offered by
the Trust to its stockholders for reinvestment
of cash distributed from capital gains or net
investment income of the Trust; or (c) to
shares which may be issued to shareholders of
other funds who exercise any exchange privilege
set forth in the Trust's Prospectus.
Notwithstanding any other provision hereof, the
Trust 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) FPSB is hereby granted the right, as
agent for the Trust, to sell Shares to
the public against orders received at
the public offering price as defined in
the Trust's Prospectus and Statement of
Additional Information.
(b) FPSB will also have the right to take,
as agent for the Trust, all actions
which, in FPSB's judgement, and subject
to the Trust's reasonable approval, are
necessary to carry into effect the
distribution of the Shares.
(c) FPSB will act as agent for the Trust in
connection with the repurchase of
Shares by the Trust upon the terms set
forth in the Trust'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 Trust
or by another entity on behalf of the
Trust. FPSB 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, FPSB shall promptly pay
to the Trust the applicable net asset
value of the Shares.
(f) Upon receipt of purchase instructions,
FPSB will transmit such instructions to
the Trust or its transfer agent for
registration of the Shares purchased.
(g) Nothing in this Agreement shall prevent
FPSB or any affiliated person (as
defined in the Act) of FPSB from acting
as underwriter for any other person,
firm or corporation (including other
investment companies), or in any way
limit or restrict FPSB or such
affiliated person from buying, selling
or trading any securities for its or
their own account or for the accounts
of others for whom it or they may be
acting; provided, however, that FPSB
expressly agrees that it will not for
its own account purchase any Shares of
the Trust 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 Trust, and that it will not
undertake in any activities which, in
its judgement, will adversely affect
the performance of its obligations to
the Trust under this Agreement.
3. Rules of Sale of Shares.
FPSB does not agree to sell any specific number
of Shares and serves only in the capacity of
Statutory Underwriter. The Trust reserves the
right to terminate, suspend or withdraw the
sale of its Shares for any reason deemed
adequate by it, and the Trust 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 NASD, etc.
(a) FPSB will conform to the Conduct Rules
of the NASD and the securities laws of
any jurisdiction in which it directly
or indirectly sells any Shares.
(b) FPSB will require each dealer with whom
FPSB has a selling agreement to conform
to the applicable provisions of the
Prospectus, with respect to the public
offering price of the Shares, and FPSB
shall not cause the Trust to withhold
the placing of purchase orders so as to
make a profit thereby.
(c) The Trust and Xxxxx Xxxxxxx agree to
furnish to FPSB sufficient copies of
any and all: agreements, plans,
communications with the public or other
materials which the Trust or Xxxxx
Xxxxxxx intend to use in connection
with any sales of Shares, in adequate
time for FPSB to file and clear such
materials with the proper authorities
before they are put in use. FPSB and
the Trust or Xxxxx Xxxxxxx may agree
that any such material does not need to
be filed subsequent to distribution.
In addition, the Trust and Xxxxx Xxxxxxx
agree not to use any such materials
until so filed and cleared for use, if
required, by appropriate authorities as
well as by FPSB.
(d) FPSB, 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) FPSB shall remain registered with the
U.S. Securities and Exchange Commission
and a member of the National
Association of Securities Dealers for
the term of this Agreement.
(f) FPSB 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 FPSB as
information supplemental to such
Prospectus. Copies of the Prospectus
will be supplied by the Trust or Xxxxx
Xxxxxxx to FPSB in reasonable
quantities upon request.
(g) FPSB shall only be authorized to make
representations in respect of the Trust
consistent with the then current
Prospectus, Statement of Additional
Information, and other written
information provided by the Trust or
its agents to be used explicitly with
respect to the sale of Shares.
5. Records to be Supplied by the Trust.
The Trust shall furnish to FPSB copies of all
information, financial statements and other
papers which FPSB 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 Trust by its independent
public accountants.
6. Expenses.
(a) The Trust 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 Trust;
(v) maintaining facilities for the
issue and transfer of the
Shares;
(vi) supplying information, prices
and other data to be furnished
by the Trust 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) Xxxxx Xxxxxxx will pay all other
expenses incident to the sale and
distribution of the Shares sold
hereunder.
(c) FPSB agrees to pay all of its own
expenses in performing its obligations
hereunder.
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 Trustees of the Trust
who are not parties to this Agreement
(other than as Trustees of the Trust)
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 FPSB shall be paid by
Xxxxx Xxxxxxx 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 Trust 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 FPSB; and (ii) may be
terminated by FPSB on sixty (60) days'
written notice to the Trust with
respect to any Series.
(e) This Agreement shall automatically
terminate in the event of its
assignment, as defined in the
Investment Company Act of 1940.
8. Indemnification of FPSB by Xxxxx Xxxxxxx and
the Trust.
FPSB 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.
Xxxxx Xxxxxxx and the Trust will indemnify and
hold FPSB harmless for the actions of Xxxxx
Xxxxxxx'x employees registered with the NASD as
registered representatives of FPSB, and Xxxxx
Xxxxxxx hereby undertakes to maintain
compliance with all NASD and U.S. Securities
and Exchange Commission rules and regulations
concerning any activities of such employees.
9. Liability of FPSB.
(a) FPSB, its directors, officers,
employees, shareholders and agents
shall not be liable for any error of
judgement or mistake of law or for any
loss suffered by the Trust in
connection with the performance of this
Agreement, except a loss resulting from
a breach of FPSB's obligations pursuant
to Section 4 of this Agreement (Rules
of NASD), a breach of fiduciary duty
with respect to the receipt of
compensation for services or a loss
resulting from willful misfeasance, bad
faith or gross negligence on the part
of FPSB in the performance of its
obligations and duties or by reason of
its reckless disregard of its
obligations and duties under this
Agreement. FPSB agrees to indemnify
and hold harmless the Trust and each
person who has been, is, or may
hereafter be a Trustee, officer, or
employee of the Trust 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, or out of any alleged
misrepresentation or omission to state
a material fact, on the part of FPSB or
any agent or employee of FPSB or any
other person for whose acts FPSB
is responsible or is alleged to be
responsible unless such
misrepresentation or omission was made
in reliance upon written information
furnished to FPSB by the Trust. FPSB
also agrees to indemnify and hold
harmless the Trust 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 FPSB'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 Trust or any such
person shall be entitled to as a
matter of law.
(b) The Trust agrees to indemnify and hold
harmless FPSB against any and all
liability, loss, damages, costs or
expenses (including reasonable counsel
fees) which FPSB 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 FPSB may be involved as a party
or otherwise or with which FPSB may be
threatened, by reason of the offer or
sale of the Trust's Shares by persons
other than FPSB or its representatives,
prior to the execution of this
Agreement. If a claim is made against
FPSB as to which FPSB may seek
indemnity under this Section, FPSB
shall notify the Trust promptly after
any written assertion of such claim
threatening to institute an action
or proceeding with respect thereto and
shall notify the Trust promptly of any
action commenced against FPSB within 10
days time after FPSB shall have been
served with a summons or other legal
process, giving information as to the
nature and basis of the claim. Failure
to so notify the Trust shall not,
however, relieve the Trust from any
liability which it may have on account
of the indemnity under this Section
9(b) if the Trust has not been
prejudiced in any material respect by
such failure. The Trust shall have the
sole right to control the settlement of
any such action, suit or proceeding
subject to FPSB's approval, which shall
not be unreasonably withheld. FPSB
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 Trust
(which shall pay such fees, costs and
expenses at least quarterly) if:
(i) FPSB has received an opinion of
counsel stating that the use of
counsel chosen by the Trust to
represent FPSB would present
such counsel with a conflict of
interest;
(ii) the defendants in, or targets
of, any such action or
proceeding include both FPSB
and the Trust, and legal
counsel to FPSB 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 Trust
(in which case the Trust shall
not have the right to direct
the defense of such action on
behalf of FPSB); or
(iii) the Trust shall authorize FPSB
to employ separate counsel at
the expense of the Trust.
(c) Any person, even though also a
director, officer, employee,
shareholder or agent of FPSB, who may
be or become an officer, director,
Trustee, employee or agent of the
Trust, shall be deemed, when rendering
services to the Trust or acting on any
business of the Trust (other than
services or business in connection with
FPSB's duties hereunder), to be
rendering such services to or acting
solely for the Trust and not as a
director, officer, employee,
shareholder or agent, or one under the
control or direction of FPSB even
though receiving a salary from FPSB.
(d) The Trust agrees to indemnify and hold
harmless FPSB, and each person who
controls FPSB 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 regulation, 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 Additional Information,
supplement thereto, sales literature
(or other written information) prepared
by the Trust and furnished by the Trust
to FPSB for FPSB'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 FPSB (or any person
controlling FPSB) 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 Trust to any
person by FPSB (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 Trust by
FPSB 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 FPSB 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) FPSB shall not be responsible for any
damages, consequential or otherwise,
which Xxxxx Xxxxxxx or the Trust may
experience, due to the disruption of
the distribution of Shares caused by
any action or inaction of any
registered representative or affiliate
of FPSB or of FPSB itself.
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.
12. Reports.
FPSB shall prepare reports for the Board of
Trustees of the Trust, 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 Commonwealth of Pennsylvania and the
exclusive venue of any action arising under
this Agreement shall be Xxxxxxxxxx County,
Commonwealth of Pennsylvania.
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.
IN WITNESS WHEREOF, the Parties hereto have caused
this Agreement consisting of ten type
written pages, together with Schedule "A",
Schedule "B", and Schedule "C", to be signed by
their duly authorized officers, as of the day
and year first above written.
Xxxxx Xxxxxxx FPS Broker
Associates, Inc. Services, Inc.
By: Xxxxxxx X. Xxxxxx By: Xxxxxxx X. Xxxxx
President & COO President
The Xxxxx Xxxxxxx Trust
By: Xxxxxxx X. Xxxxxx
President
SCHEDULE "A"
UNDERWRITER/SPONSOR SERVICES
FOR
THE XXXXX XXXXXXX TRUST
I. Underwriter/Sponsor services include:
A) Preparation and execution of
Underwriter and 12b-1 Plan
Agreements
-Monitoring accruals
-Monitoring expenses
-Disbursements for expenses and trail
commissions
B) Quarterly 12b-1 Reports to Board of
Trustees
C) Literature review, recommendations and
submission to the NASD
D) Initial NASD Licensing and Transfers of
Registered Representatives
-U-4 Form and Fingerprint Submission to
NASD
-Supplying Series 6 and 63 written
study material
-Registration for Exam Preparation
classes
-Renewals and Terminations 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) NASD Continuing Education Requirement
SCHEDULE "B"
STATUTORY UNDERWRITER SCHEDULE
FOR
THE XXXXX XXXXXXX TRUST
This Fee Schedule is fixed for a period of one (1) year
from the Effective Date as that term is defined in the
Agreement.
I. Statutory Underwriter Services
A) The Trust agrees to pay FPS Broker
Services, Inc. (FPSB) $15,000 for the
services performed under this
Agreement.
B) FPSB agrees register certain employees
of Xxxxx Xxxxxxx Associates, Inc., as
its representatives follows:
Up to 10 States: $2,000 per
Representative
per Year
All 50 States: $4,000 per
Representative
per Year
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:
"The Xxxxx Xxxxxxx Trust"
Xxxxx Xxxxxxx Equity Plus Fund
Xxxxx Xxxxxxx Financial Services Fund
This Schedule "C" may be amended from time to time by
agreement of the Parties, and was amended
October 1, 1997 to reflect the addition of the new
series: The Xxxxx Xxxxxxx Financial Services Fund.
