DISTRIBUTION AGREEMENT
This Agreement made this 1st day of November, 1999 by and between BUILDERS
FIXED INCOME FUND, INC., a Maryland corporation (the "Fund"), and FIRST FUND
DISTRIBUTORS, INC., a Delaware corporation (the "Distributor").
W I T N E S S E T H:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940 (the "1940 Act"); and it is in
the interest of the Fund to offer its shares for sale continuously; and
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934 (the "1934 Act") and is a member in good
standing of the National Association of Securities Dealers, Inc. (the "NASD");
and
WHEREAS, the Fund and the Distributor wish to enter into an agreement with
each other with respect to the continuous offering of the shares of each
existing and future series (the "Shares") of the Fund;
NOW, THEREFORE, the parties agree as follows:
1. APPOINTMENT OF DISTRIBUTOR. The Fund hereby appoints the Distributor as
agent to sell and to arrange for the sale of the Shares, on the terms and for
the period set forth in this Agreement, and the Distributor hereby accepts such
appointment and agrees to act hereunder directly and/or through the Fund's
transfer agent in the manner set forth in the Prospectus (as defined below). It
is understood and agreed that the services of the Distributor hereunder are not
exclusive, and the Distributor may act as principal underwriter for the shares
of any other registered investment company.
2. SERVICES AND DUTIES OF THE DISTRIBUTOR.
(a) The Distributor agrees to sell the Shares, as agent for the Fund,
from time to time during the term of this Agreement upon the terms described in
a Prospectus. As used in this Agreement, the term "Prospectus" shall mean a
prospectus and statement of additional information included as part of the
Fund's Registration Statement, as such prospectus and statement of additional
information may be amended or supplemented from time to time, and the term
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"Registration Statement" shall mean the Registration Statement most recently
filed from time to time by the Fund with the Securities and Exchange Commission
("SEC") and effective under the Securities Act of 1933 (the "1933 Act") and the
1940 Act, as such Registration Statement is amended by any amendments thereto at
the time in effect. The Distributor shall not be obligated to sell any certain
number of Shares.
(b) The Distributor will hold itself available to receive orders,
satisfactory to the Distributor, for the purchase of the Shares and will accept
such orders and will transmit such orders and funds received by it in payment
for such Shares as are so accepted to the Fund's transfer agent or custodian, as
appropriate, as promptly as practicable. Purchase orders shall be deemed
accepted and shall be effective at the time and in the manner set forth in the
Fund's Prospectus. The Distributor shall not make any short sales of Shares.
(c) The offering price of the Shares shall be the net asset value per
share of the Shares, plus the sales charge, if any, (determined as set forth in
the Prospectus). The Fund shall furnish the Distributor with a quotation of the
public offering price on each business day.
(d) The Distributor shall have the right to enter into selected dealer
agreements with securities dealers of its choice ("selected dealers") for the
sale of Shares. Shares sold to selected dealers shall be for resale by such
dealers only at the offering price of the Shares as set forth in the Prospectus.
The Distributor shall offer and sell Shares only to such selected dealers as are
members in good standing of the NASD.
3. DUTIES OF THE FUND.
(a) MAINTENANCE OF FEDERAL REGISTRATION. The Fund shall, at its
expense, take, from time to time, all necessary action and such steps, including
payment of the related filing fees, as may be necessary to register and maintain
registration of a sufficient number of Shares under the 0000 Xxx. The Fund
agrees to file from time to time such amendments, reports and other documents as
may be necessary in order that there may be no untrue statement of a material
fact in a Registration Statement or Prospectus, or necessary in order that there
may be no omission to state a material fact in the Registration Statement or
Prospectus which omission would make the statements therein misleading.
(b) MAINTENANCE OF "BLUE SKY" QUALIFICATIONS. The Fund shall, at its
expense, use its best efforts to qualify and maintain the qualification of an
appropriate number of Shares for sale under the securities laws of such states
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as the Distributor and the Fund may approve; provided that the Fund shall not be
required to amend its Articles of Incorporation or By-Laws to comply with the
laws of any state, to maintain an office in any state, to change the terms of
the offering of the Shares in any state, to change the terms of the offering of
the Shares in any state from the terms set forth in Prospectus, to qualify as a
foreign corporation in any state or to consent to service of process in any
state other than with respect to claims arising out of the offering and sale of
the Shares. The Distributor shall furnish such information and other material
relating to its affairs and activities as may be required by the Fund in
connection with such qualifications.
(c) COPIES OF REPORTS AND PROSPECTUSES. The Fund shall, at its
expense, keep the Distributor fully informed with regard to its affairs and in
connection therewith shall furnish to the Distributor copies of all information,
financial statements and other papers which the Distributor may reasonably
request for use in connection with the distribution of Shares, including such
reasonable number of copies of Prospectuses and annual and interim reports as
the Distributor may request and shall cooperate fully in the efforts of the
Distributor to sell and arrange for the sale of the Shares and in the
performance of the Distributor under this Agreement.
4. CONFORMITY WITH APPLICABLE LAW AND RULES. The Distributor agrees that in
selling Shares hereunder it shall conform in all respects with the laws of the
United States and of any state in which Shares may be offered, and with
applicable rules and regulations of the NASD.
5. INDEPENDENT CONTRACTOR. In performing its duties hereunder, the
Distributor shall be an independent contractor. The Distributor shall be
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
through its agents or employees. The Distributor assumes full responsibility for
its agents and employees under applicable statutes and agrees to pay all
employee taxes thereunder. The Distributor agrees to register any officers or
employees of the Fund's investment manager who engage in sales activities on
behalf of the Fund as agents of the Distributor as may be required under
applicable securities laws.
6. INDEMNIFICATION.
(a) INDEMNIFICATION OF FUND. The Distributor agrees to indemnify and
hold harmless the Fund and each of its present or former Directors, officers,
employees, representatives and each person, if any, who controls or previously
controlled the Fund within the meaning of Section 15 of the 1933 Act against any
and all losses, liabilities, damages, claims or expenses (including the
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reasonable costs of investigating or defending any alleged loss, liability,
damage, claims or expense and reasonable legal counsel fees incurred in
connection therewith) to which the Fund or any such person may become subject
under the 1933 Act, under any other statute, at common law, or otherwise,
arising out of the acquisition of any Shares by any person which (i) may be
based upon any wrongful act by the Distributor or any of the Distributor's
directors, officers, employees or representatives, or (ii) may be based upon any
untrue statement or alleged untrue statement of a material fact contained in a
Registration Statement, Prospectus, shareholder report or other information
covering Shares filed or made public by the Fund or any amendment thereof or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in reliance upon
and in conformity with information furnished to the Fund by the Distributor. In
no case (i) is the Distributor's indemnity in favor of the Fund, or any person
indemnified to be deemed to protect the Fund or such indemnified person against
any liability to which the Fund or such person would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of the Fund's or such person's duties or by reason of reckless disregard of the
Fund's or such person's obligations and duties under this Agreement or (ii) is
the Distributor to be liable under its indemnity agreement contained in this
Paragraph with respect to any claim made against the Fund or any person
indemnified unless the Fund or such person, as the case may be, shall have
notified the Distributor 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 the Fund or upon such person (or after
the Fund or such person shall have received notice of such service on any
designated agent). However, failure to notify the Distributor of any such claim
shall not relieve the Distributor from any liability which the Distributor may
have to the Fund or any person against whom such action is brought otherwise
than on account of the Distributor's indemnity agreement contained in this
Paragraph.
The Distributor and any other indemnified party shall be entitled to
participate, at its own expense, in the defense, or, if the Distributor so
elects, to assume the defense of any suit brought to enforce any such claim,
but, if the Distributor elects to assume the defense, such defense shall be
conducted by legal counsel chosen by the Distributor and satisfactory to the
Fund, and to the persons indemnified as defendant or defendants, in the suit. In
the event that the Distributor elects to assume the defense of any such suit and
retain such legal counsel, the Fund, and the persons indemnified as defendant or
defendants in the suit, shall bear the fees and expenses of any additional legal
counsel retained by them. If the Distributor does not elect to assume the
defense of any such suit, the Distributor will reimburse the Fund and the
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persons indemnified defendant or defendants in such suit for the reasonable fees
and expenses of any legal counsel retained by them. The Distributor agrees to
promptly notify the Fund of the commencement of any litigation of proceedings
against it or any of its officers, employees or representatives in connection
with the issue or sale of any Shares.
(b) INDEMNIFICATION OF THE DISTRIBUTOR. The Fund agrees to indemnify
and hold harmless the Distributor and each of its present or former directors,
officers, employees, representatives or agents and each person, if any, who
controls or previously controlled the Distributor within the meaning of Section
15 of the 1933 Act against any and all losses, liabilities, damages, claims or
expenses (including the reasonable costs of investigating or defending any
alleged loss, liability, damage, claim or expense and reasonable legal counsel
fees incurred in connection therewith) to which the Distributor or any such
person may become subject under the 1933 Act, under any other statute, at common
law, or otherwise, arising out of the acquisition of any Shares by any person
which (i) may be based upon any wrongful act by the Fund or any of the Fund's
Directors, officers, employees or representatives, or (ii) may be based upon any
untrue statement or alleged untrue statement of a material fact contained in a
Registration Statement, Prospectus, shareholder report or other information
covering Shares filed or made public by the Fund or any amendment thereof or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading unless such statement or omission was made in reliance
upon and in conformity with information furnished to the Fund by the
Distributor. In no case (i) is the Fund's indemnity in favor of the Distributor,
or any person indemnified to be deemed to protect the Distributor or such
indemnified person against any liability to which the Distributor or such person
would otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of such person's duties or by reason of reckless
disregard of such person's obligations and duties under this Agreement or (ii)
is the Fund to be liable under their indemnity agreement contained in this
Paragraph with respect to any claim made against Distributor, or person
indemnified unless the Distributor, or such person, as the case may be, 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 the Distributor or upon such person (or
after the Distributor or such person shall have received notice of such service
on any designated agent). However, failure to notify the Fund of any such claim
shall not relieve the Fund from any liability which the Fund may have to the
Distributor or any person against whom such action is brought otherwise than on
account of the Fund's indemnity agreement contained in this Paragraph.
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The Fund and any other indemnified party shall be entitled to participate,
at its own expense, in the defense, or, if the Fund so elects, to assume the
defense of any suit brought to enforce any such claim, but if the Fund elects to
assume the defense, such defense shall be conducted by legal counsel chosen by
the Fund and satisfactory to the Distributor and to the persons indemnified as
defendant or defendants, in the suit. In the event that the Fund elects to
assume the defense of any such suit and retain such legal counsel, the
Distributor, the persons indemnified as defendant or defendants in the suit,
shall bear the fees and expenses of any additional legal counsel retained by
them. If the Fund does not elect to assume the defense of any such suit, the
Fund will reimburse the Distributor and the persons indemnified as defendant or
defendants in such suit for the reasonable fees and expenses of any legal
counsel retained by them. The Fund agrees to promptly notify the Distributor of
the commencement of any litigation or proceedings against it or any of its
Directors, officers, employees or representatives in connection with the issue
or sale of any Shares.
7. AUTHORIZED REPRESENTATIONS. The Distributor is not authorized by the
Fund to give on behalf of the Fund any information or to make any
representations in connection with the sale of Shares other than the information
and representations contained in a Registration Statement or Prospectus filed
with the SEC under the 1933 Act and/or the 1940 Act, covering Shares, as such
Registration Statement and Prospectus may be amended or supplemented from time
to time, or contained in shareholder reports or other material that may be
prepared by or on behalf of the Fund for the Distributor's use. This shall not
be construed to prevent the Distributor from preparing and distributing
tombstone ads and sales literature or other material as it may deem appropriate.
No person other than the Distributor is authorized to act as principal
underwriter (as such term is defined in the 0000 Xxx) for the Fund.
8. COMPENSATION. As compensation for services rendered by the Distributor
during the term of this Agreement, the Fund's manager, Capital Mortgage
Management, Inc., shall pay to the Distributor an annual fee at the rate of
$20,000, plus NASD advertising filing fees and annual agent registration fees
incurred on behalf of the Fund.
9. TERM OF AGREEMENT. The term of this Agreement shall begin on the date
first above written, and unless sooner terminated as hereinafter provided, this
Agreement shall remain in effect for a period of two years from the date first
above written. Thereafter, this Agreement shall continue in effect from year to
year, subject to the termination provisions and all other terms and conditions
thereof, so long as such continuation shall be specifically approved at least
annually by (i) the Board of Directors or by vote of a majority of the
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outstanding voting securities of each series of the Fund and, (ii) by the vote,
cast in person at a meeting called for the purpose of voting on such approval,
of a majority of the Directors of the Fund who are not parties to this Agreement
or interested persons of any such party. The Distributor shall furnish to the
Fund, promptly upon its request, such information as may reasonably be necessary
to evaluate the terms of this Agreement or any extension, renewal or amendment
hereof.
10. AMENDMENT OR ASSIGNMENT OF AGREEMENT. This Agreement may not be amended
or assigned except as permitted by the 1940 Act, and this Agreement shall
automatically and immediately terminate in the event of its assignment.
11. TERMINATION OF AGREEMENT. This Agreement may be terminated by either
party hereto, without the payment of any penalty, on not less than upon 60 days'
prior notice in writing to the other party; provided, that in the case of
termination by the Fund such action shall have been authorized by resolution of
a majority of the Directors of the Fund who are not parties to this Agreement or
interested persons of any such party, or by vote of a majority of the
outstanding voting securities of each series of the Fund.
12. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Nothing herein contained shall be deemed to require the Fund to take any
action contrary to its Articles of Incorporation 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 Directors of the Fund of
responsibility for and control of the conduct of the affairs of the Fund.
13. DEFINITION OF TERMS. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretation thereof, if any, by the United
States courts or, in the absence of any controlling decision of any such court,
by rules, regulations or orders of the SEC validly issued pursuant to the 1940
Act. Specifically, the terms "vote of a majority of the outstanding voting
securities", "interested persons," "assignment," and "affiliated person," as
used in Paragraphs 8, 9 and 10 hereof, shall have the meanings assigned to them
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by Section 2(a) of the 1940 Act. In addition, where the effect of a requirement
of the 1940 Act reflected in any provision of this Agreement is relaxed by a
rule, regulation or order of the SEC, whether of special or of general
application, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
14. COMPLIANCE WITH SECURITIES LAWS. The Fund represents that it is
registered as an open-end management investment company under the 1940 Act, and
agrees that it will comply with all the provisions of the 1940 Act and of the
rules and regulations thereunder. The Fund and the Distributor each agree to
comply with all of the applicable terms and provisions of the 1940 Act, the 1933
Act and, subject to the provisions of Section 4(d), all applicable "Blue Sky"
laws. The Distributor agrees to comply with all of the applicable terms and
provisions of the 1934 Act.
15. NOTICES. Any notice required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by registered mail, postage
prepaid, to the Distributor at 0000 X. Xxxxxxxxx Xxxx, Xxxxx 000X, Xxxxxxx,
Xxxxxxx 00000 or to the Fund at 0000 Xxxxx Xxxxx Xxxx, Xxxxx 000, Xx. Xxxxx,
Xxxxxxxx 00000.
16. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the date first written above.
BUILDERS FIXED INCOME FUND, INC.
By:
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Name: Xxxx X. Xxxxxxx
Title: President
FIRST FUND DISTRIBUTORS, INC.
By:
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Name:
Title:
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