DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT ("Agreement") made this 27 day of
March, 1996, by and between THE XXX XXXXXXX TRUST, a Delaware Business
Trust (the "Trust"), and HCM INVESTMENTS, INC., a Delaware corporation (the
"Distributor").
W I T N E S S E T H:
WHEREAS, the Trust intends to engage in business as an open-end
management investment company of the series type and register as such under
the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial
interest (the "Shares"), in separately designated series each with its own
investment objective, investment program, policies, and restrictions, and
currently offers shares in one series, the Growth Fund (the "Fund"); and
WHEREAS, the Trust has registered the Shares of the Fund under the
Securities Act of 1933, as amended (the "1933 Act"), pursuant to a
registration statement on Form N-1A (the "Registration Statement"), including
a prospectus ("Prospectus") and a statement of additional information
("Statement of Additional Information"); and
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"); and
WHEREAS, the Trust wishes to engage the services of the Distributor
as distributor of the Shares of the Fund and the Distributor is willing to
serve in that capacity;
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements hereinafter set forth, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. APPOINTMENT OF DISTRIBUTOR. (a) The Trust hereby appoints the
Distributor as principal underwriter and distributor of the Trust to service
the Shares of the Fund in jurisdictions wherein the Shares may be legally
offered for sale. The Distributor shall be the exclusive agent for the
servicing of Shares of the Fund; provided, however, that the Trust in its
absolute discretion may issue Shares of the Fund otherwise than through the
Distributor in connection with (i) the payment or reinvestment of dividends or
distributions, (ii) any merger or consolidation of the Trust or the Fund with
any other investment company or trust or any personal holding company, or the
acquisition of the assets of any such entity or another series
of the Trust, (iii) any offer of exchange authorized by the Board of Trustees
of the Trust, (iv) any sales of Shares to Trustees and officers of the Trust
or to the Distributor or such other persons identified in the current
Prospectus and Statement of Additional Information of the Trust, or (v) the
issuance of such Shares to a unit investment trust if such unit investment
trust has elected to use Shares as an underlying investment. Notwithstanding
any other provision hereof, the Trust may terminate, suspend, or withdraw the
offering of the Shares of the Fund whenever, in its sole discretion, it deems
such action to be desirable.
(b) The Distributor hereby accepts such appointment as principal
underwriter and distributor of the Trust and agrees that it will use its best
efforts to promote the Fund and to solicit orders for the purchase of Shares.
The Distributor shall service Shares of the Fund as agent for the Corporation
at prices determined as hereinafter provided and on the terms set forth
herein, all according to applicable federal and state laws and regulations and
the Declaration of Trust and By-Laws of the Trust. The Distributor may service
Shares of the Fund to or through qualified brokers, dealers or others and
shall require each such person to conform to the provisions hereof, the
Registration Statement, the current Prospectus and Statement of Additional
Information, and applicable law. Neither the Distributor nor any such person
shall withhold the placing of purchase orders for Shares so as to make a
profit thereby.
(c) The Distributor shall order Shares of the Fund from the Trust
only to the extent that it shall have received purchase orders therefor. The
Distributor will not make, or authorize any brokers, dealers, or others to
make, (i) any short sales of Shares or (ii) any sales of Shares to any Trustee
or officer of the Trust, the Distributor, or any corporation or association
furnishing investment advisory, managerial, or supervisory services to the
Trust, or to any such corporation or association, unless such sales are made
in accordance with the then current Prospectus and Statement of Additional
Information.
(d) The Distributor is not authorized by the Trust to give any
information or to make any representation other than those contained in the
current Prospectus, Statement of Additional Information, and shareholder
reports, or in supplementary materials specifically approved by the Trust.
2. OFFERING PRICE OF SHARES. All Shares of the Fund serviced under
this Agreement shall be sold at the public offering price per Share in effect
at the time of the sale as described in the then current Prospectus and
Statement of Additional Information; provided, however, that any public
offering price for the Shares shall be the net asset value per Share, as
determined in the manner described in the Trust's current Prospectus and/or
Statement of Additional Information. At no time shall the Trust receive less
than the full net asset value of the Shares, determined in the manner set
forth in the then current Prospectus and Statement of Additional Information.
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3. PAYMENT OF EXPENSES. (a) Except as otherwise provided herein, the
Distributor shall pay, or arrange for others to pay, all its expenses,
including the following: (i) payments to representatives of the Distributor
and to qualified brokers, dealers and others in respect of the servicing
Shares of the Fund; (ii) compensation and expenses of employees of the
Distributor who engage in or support the servicing of Shares of the Fund or
render shareholder support services not otherwise provided by the
Corporation's transfer and shareholder servicing agent; (iii) formulation and
implementation of marketing and promotional activities; (iv) preparation,
printing, and distribution of supplementary materials and the printing and
distribution of Prospectuses, Statements of Additional Information, and
shareholder reports for recipients other than existing shareholders of the
Fund; (v) qualification of the Trust as a broker or dealer under state law as
well as qualification of the Trust as an entity authorized to do business in
certain states; and (vi) obtaining such information, analyses, and reports
with respect to marketing and promotional activities as the Trust may from
time to time reasonably request.
(b) The Trust shall pay or arrange for others to pay the following
expenses: (i) preparation, printing, and distribution to shareholders of
Prospectuses and Statements of Additional Information; (ii) preparation,
printing, and distribution of shareholder reports and other communications to
shareholders; (iii) registration of the Shares of the Fund under the federal
securities laws; (iv) qualification of the Shares of the Fund for sale in such
states as the Distributor and the Trust may approve; (v) maintaining
facilities for the issue and transfer of Shares; (vi) supplying information,
prices, and other data to be furnished by the Trust under this Agreement; and
(vii) taxes applicable to the sale or delivery of the Shares of the Fund or
certificates therefor.
4. FURNISHING OF INFORMATION. The Trust shall furnish to the
Distributor for use in connection with the servicing of Shares of the Fund
such information, financial statements, and other documents as the Distributor
may reasonably request. The Trust shall also make available such number of
copies of the current Prospectus, Statement of Additional Information, and
shareholder reports as the Distributor shall reasonably request.
5. REPURCHASE OF SHARES. The Distributor as agent and for the account
of the Trust may repurchase Shares of the Fund offered for resale to it and
redeem such Shares at their net asset value determined as set forth in the
Prospectus and Statement of Additional Information.
6. INDEMNIFICATION. (a) The Trust agrees to indemnify and hold
harmless the Distributor and each person, if any, who controls the Distributor
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act, against any losses, claims, damages, or liabilities to which the
Distributor or such controlling person may become subject under the 1933 Act
or otherwise, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon:
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(i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any
amendment thereto or the Prospectus (other than an omitting
prospectus prepared pursuant to Rule 482 under the 1933 Act unless
such omitting prospectus has been specifically approved by the Trust)
or the Statement of Additional Information or any amendment or
supplement thereto or an annual or interim report to shareholders; or
(ii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto or the Prospectus
(other than an omitting prospectus prepared pursuant to Rule 482
under the 1933 Act unless such omitting prospectus has been
specifically approved by the Trust) or the Statement of Additional
Information or any amendment or supplement thereto or an annual or
interim report to shareholders, a material fact required to be stated
therein or necessary to make the statements therein not misleading;
and shall reimburse, as incurred, the Distributor and each such controlling
person for any legal or other expenses reasonably incurred by the Distributor
or such controlling person in connection with investigating, defending
against, or appearing as a third-party witness in connection with any such
loss, claim, damage, liability, or action; provided, however, that the Trust
shall not be liable in any such case to the extent that any such loss, claim,
damage, or liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement or any amendment thereto, or the Prospectus or
Statement of Additional Information or any amendment or supplement thereto, or
in an annual or interim report to shareholders, in reliance upon and in
conformity with written information furnished to the Trust by the Distributor
specifically for use therein; and provided further, that this indemnity
agreement shall not protect the Distributor or any such controlling person
against any liability to which it would otherwise be subject by reason of
willful misfeasance, bad faith, or negligence in the performance of its
duties, or by reason of its failure to exercise due care in rendering services
hereunder. This indemnity agreement shall be in addition to any liability
which the Trust may otherwise have.
(b) The Distributor agrees to indemnify and hold harmless the Trust,
each of the Trust's Trustees, each of the Trust's officers who signed the
Registration Statement, and each person, if any, who controls the Trust within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
against any losses, claims, damages or liabilities to which the Trust or any
such Trustee, officer, or controlling person may become subject under the 1933
Act or otherwise, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any
amendment thereto or the Prospectus or Statement of Additional
Information, or any amendment or supplement thereto, or the omission
or alleged omission to state in the Registration Statement or any
amendment thereto, or the Prospectus or Statement of Additional
Information or any amendment or supplement
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thereto, a material fact required to be stated therein or necessary
to make the statements therein not misleading, in each case to the
extent that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Trust by the
Distributor specifically for use therein; or
(ii) any untrue statement or alleged untrue statement of a
material fact contained in any unauthorized supplementary materials
or omitting prospectus prepared pursuant to Rule 482 under the 1933
Act, or the omission or alleged omission to state in any such
materials or prospectus, a material fact required to be stated
therein or necessary to make the statements therein not misleading;
or
(iii) any act or deed of the Distributor, its employees, or
its representatives which has not been authorized by the Trust in any
Prospectus or Statement of Additional Information or by this
Agreement;
and shall reimburse, as incurred, any legal or other expenses reasonably
incurred by the Trust or any such Trustee , officer, or controlling person in
connection with investigating, defending against, or appearing as a
third-party witness in connection with any such loss, claim, damage, liability
or action; provided, however, that this indemnity agreement shall not protect
any Trustee or officer of the Trust against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office. This indemnity agreement shall be in addition to any liability which
the Distributor may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
6 of notice of the commencement of any action, such indemnified party shall,
if a claim in respect thereof is to be made against the indemnifying party
under this Section 6, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 6. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it may wish, to assume the defense thereof,
with counsel satisfactory to such indemnified party; provided, however, that
if the defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably
concluded that there may be one or more legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party shall not be liable to such indemnified party under this Section 6 for
any legal or other expense, other than reasonable costs
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of investigation, subsequently incurred by such indemnified party in
connection with the defense thereof, unless (i) the indemnified party shall
have employed separate counsel in accordance with the proviso to the next
preceding sentence or (ii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party. After such notice from the indemnifying party to such
indemnified party, the indemnifying party shall not be liable for the costs
and expenses of any settlement of such action effected by such indemnified
party without the consent of the indemnifying party, unless such indemnifying
party waived its rights under this Section 6 in which case the indemnified
party may effect such a settlement without such consent.
7. TERM AND TERMINATION. (a) This Agreement shall become effective as
of the date hereof. Unless sooner terminated as herein provided, this
Agreement shall remain in full force and effect for a period of one year, and
thereafter may be continued for successive periods of one year, but only so
long as each such continuance is specifically approved at least annually (i)
by the Board of Trustees of the Trust, and (ii) by vote of a majority of the
Trustees of the Trust who are not "interested persons" of the Trust, as that
term is defined in Section 2(a)(19) of the 1940 Act (the "Disinterested
Trustees"), cast in person at a meeting called for the purpose of voting on
such approval.
(b) This Agreement may be terminated at any time, without the payment
of any penalty, by the Board of Trustees of the Trust or a majority of the
Disinterested Trustees, by vote of a majority of the outstanding voting
securities of the Trust, or by the Distributor, on not more than 60 days' nor
less than 30 days' written notice to the other party or upon such shorter
notice as may be mutually agreed upon.
(c) This Agreement shall automatically terminate in the event of its
assignment.
(d) The reimbursement and indemnification provisions contained in
Section 6 of this Agreement shall remain in full force and effect regardless
of any termination of this Agreement.
8. DEFINITION OF CERTAIN TERMS. For purposes of this Agreement the
terms "assignment," "interested person," "majority of the outstanding voting
securities," and "principal underwriter" shall have their respective meanings
defined in the 1940 Act and the rules and regulations thereunder, subject,
however, to such exemptions as may be granted to either the Distributor or the
Trust by the Securities and Exchange Commission, or such interpretative
positions as may be taken by the Commission or its staff under the 1940 Act.
9. NOTICE. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid (a) if to the Distributor, to HCM
Investments, Inc., Suite 3260, 00 Xxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000;
and (b) if to the Trust, to The Xxx Xxxxxxx Trust, Suite 3260, 00 Xxxx Xxxxxx
Xxxxx, Xxxxxxx, Xxxxxxxx 00000.
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10. CAPTIONS. The captions in this Agreement are included for
convenience of reference only and in no other way define or delineate any of
the provisions hereof or otherwise affect their construction or effect.
11. INTERPRETATION. Nothing herein contained shall be deemed to
require the Trust to take any action contrary to its Declaration of Trust or
By-Laws, or any applicable statutory or regulatory requirement to which it is
subject or by which it is bound, or to relieve or deprive the Board of
Trustees of its responsibility for and control of the conduct of the affairs
of the Trust.
12. GOVERNING LAW. Except insofar as the 1940 Act or other federal
laws and regulations may be controlling, this Agreement shall be governed by,
and construed and enforced in accordance with the laws of the State of
Illinois.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their respective officers thereunto duly authorized and their
respective corporate seals to be hereunto affixed, as of the day and year
first above written.
ATTEST: THE XXX XXXXXXX TRUST
/S/ XXXXXX X. XXXXXX /S/ XXXXX X. XXXXXXX
_________________________ By:____________________________________
Title: President, Trustee and Chairman of
the Board of Trustees
ATTEST: HCM INVESTMENTS, INC.
/S/ XXXXXX X. XXXXXX /S/ XXXXX X. XXXXXXX
_________________________ By:____________________________________
Title: President, Treasurer and Director
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