EXHIBIT 6
DISTRIBUTION AGREEMENT
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THIS AGREEMENT is made as of this 1st day of January, 1997, by and between
The Purisima Funds, a Delaware business trust (the "Trust") and Sunstone
Distribution Services, LLC, a Wisconsin limited liability company (the
"Distributor").
W I T N E S S E T H :
WHEREAS, the Trust is an open-end investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), and is authorized
to issue shares of beneficial ownership (the "Shares") in separate series with
each such series representing interests in a separate portfolio of securities
and other assets;
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act") and with all states
necessary in order for the Distributor to legally perform its obligations
hereunder, and the Distributor is a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust and Distributor desire to enter into an agreement
pursuant to which Distributor shall be the distributor of the Shares of the
Trust representing the investment portfolios listed on Schedule A hereto and any
additional investment portfolios the Trust and Distributor may agree upon and
include on Schedule A as such Schedule may be amended from time to time (such
investment portfolios and any additional investment portfolios are individually
referred to as a "Fund" and collectively the "Funds").
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
1. APPOINTMENT OF THE DISTRIBUTOR.
The Trust hereby appoints the Distributor as agent for the distribution
of the Shares, on the terms and for the period set forth in this Agreement.
Distributor hereby accepts such appointment as agent for the distribution of the
Shares on the terms and for the period set forth in this Agreement.
2. SERVICES AND DUTIES OF THE DISTRIBUTOR.
2.1 Distributor will act as agent for the distribution of Shares in
accordance with the instructions of the Trust's Board of Trustees and the
registration statement and prospectuses then in effect with respect to the Funds
under the Securities Act of 1933, as amended (the "1933 Act").
2.2 Subject to the terms of Section 4.2, Distributor may finance
appropriate activities which it deems reasonable which are primarily intended to
result in the sale of Shares. Distributor may enter into servicing and/or
selling agreements with qualified broker/dealers and other persons with respect
to the offering of Shares to the public, and if it so chooses Distributor will
act only on its own behalf as principal. The Distributor shall not be obligated
to sell any certain number of Shares of any Fund.
2.3 All Shares of the Funds offered for sale by Distributor shall be
offered for sale to the public at a price per unit (the "offering price") equal
to their net asset value (determined in the manner set forth in the Funds' then
current prospectus).
2.4 Distributor shall act as distributor of the Shares in compliance with
all applicable laws, rules and regulations, including, without limitation, all
rules and regulations made or adopted pursuant to the 1940 Act, by the
Securities and Exchange Commission (the "Commission") and the NASD. Distributor
shall provide to the Trust's Board of Trustees, at least quarterly, a report of
its expenses incurred pursuant to this Agreement.
3. DUTIES AND REPRESENTATIONS OF THE TRUST.
3.1 The Trust represents that it is registered as an open-end management
investment company under the 1940 Act and that it has and will continue to act
in conformity with its Certificate of Trust, Agreement and Declaration of Trust,
By-Laws and its registration statement, as each may be amended from time to
time, and resolutions and other instructions of its Board of Trustees and has
and will continue to comply in all material respects with all applicable laws,
rules and regulations including without limitation the 1933 Act, the 1934 Act,
the 1940 Act, the laws of the states in which shares of the Funds are offered
and sold, and the rules and regulations thereunder.
3.2 The Trust or its agent shall take all necessary action to register and
maintain the registration of the Shares under the 1933 Act for sale as herein
contemplated and the Trust shall pay all costs and expenses in connection with
the registration of Shares under the 1933 Act, and be responsible for all
expenses in connection with maintaining facilities for the issue and transfer of
Shares and for supplying information, prices and other data to be furnished by
the Trust hereunder.
3.3 The Trust shall execute any and all documents and furnish any and all
information and otherwise take all actions which may be reasonably necessary in
connection with the qualification of the Shares for sale in such states as
Distributor and the Trust may approve, and the Trust or its agent upon
instructions from the Trust shall maintain the registration of a sufficient
number or amount of shares thereunder, and the Trust shall pay all expenses
which may be incurred in connection with such qualification.
3.4 The Trust shall furnish Distributor from time to time with such
information with respect to the Trust and the Shares as Distributor may
reasonably request, and the Trust warrants that the statements contained in any
such information shall be true and correct in all material respects. The Trust
also shall furnish Distributor upon request with: (a) annual audited reports of
books and accounts with respect to each of the Funds, audited by independent
public accountants regularly retained by the Trust, (b) semi-annual reports with
respect to each of the Funds, and (c) from time to time such additional
information regarding the Trust's financial condition as Distributor may
reasonably request.
3.5 The Trust represents to Distributor that all registration statements
and prospectuses of the Trust filed or to be filed with the Commission under the
1933 Act with respect to the Shares have been and will be prepared in conformity
in all material respects with the applicable requirements of the 1933 Act, the
1940 Act and the rules and regulations of the Commission thereunder. As used in
this Agreement the terms "registration statement" and "prospectus" shall mean
any registration statement and prospectus (together with the related statement
of additional information) at any time now or hereafter filed with the
Commission with respect to any of the Shares and any amendments and supplements
thereto which at any time shall have been or will be filed with said Commission.
The Trust represents and warrants to Distributor that any registration statement
and prospectus, when such registration statement becomes effective, will contain
all statements required to be stated therein in conformity in all material
respects with the 1933 Act, the 1940 Act and the rules and regulations of the
Commission; that all information contained in the registration statement and
prospectus will be true and correct in all material respects when such
registration statement becomes effective; and that neither the registration
statement nor any prospectus when such registration statement becomes effective
will include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. The Trust agrees to file from time to time such amendments,
supplements, reports and other documents as may be necessary in order to comply
with the 1933 Act and the 1940 Act in all material respects and 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. If the Trust shall not propose an
amendment or amendments and/or supplement or supplements within fifteen days
after receipt by the Trust of a written good faith and reasonable request from
Distributor to do so, Distributor may, at its option, immediately terminate this
Agreement. The Trust shall not file any amendment to the registration statement
or supplement to any prospectus without giving Distributor reasonable notice
thereof in advance; provided, however, that nothing contained in this Agreement
shall in any way limit the Trust's right to file at any time such amendments to
any registration statement and/or supplements to any prospectus, of whatever
character, as the Trust may deem advisable, such right being in all respects
absolute and unconditional.
3.6 Whenever in their judgment such action is warranted by market,
economic or political conditions, or by circumstances of any kind, the Trust's
officers may decline to accept any orders for, or make any sales of, any Shares
until such time as they deem it advisable to accept such orders and to make such
sales and the Trust shall advise Distributor promptly of such determination.
3.7 The Trust agrees to advise the Distributor promptly in writing:
(i) of any request by the Commission for amendments to the
registration statement or prospectuses;
(ii) in the event of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or prospectuses then
in effect or the initiation of any proceeding for that purpose;
(iii) of the happening of any event which makes untrue any statement
of a material fact made in the registration statement or prospectuses or which
requires the making of a change in such registration statement or prospectuses
in order to make the statements therein not materially misleading; and
(iv) of all actions taken by the Commission with respect to any
amendments to any registration statement or prospectus which may from time to
time be filed with the Commission.
4. COMPENSATION.
4.1 Subject to the limitations contained in Section 4.3 below, (i) for
serving as distributor the Funds will pay to the Distributor a fee, payable
monthly in arrears, based on the Fund's aggregate average net assets, at the
annual rate of 0.20 of 1.0% of each Fund's first $50,000,000 of average daily
net assets, 0.10 of 1.0% on each Fund's next $50,000,000 of average daily net
assets, and 0.05 of 1.0% of each Fund's average daily net assets in excess of
$100,000,000; provided, however, that such compensation shall be subject to an
aggregate minimum annual fee of $50,000, and (ii) for marketing, advertising and
call management services, the Funds will pay to the Distributor such fees as may
be agreed to by the Funds and Distributor.
4.2 In addition to the compensation payable pursuant to Section 4.1, the
Funds will reimburse the Distributor or pay directly, at the Distributor's
discretion, the Distributor's (i) out-of-pocket expenses incurred in connection
with activities primarily intended to result in the sale of Shares including,
without limitation, typesetting, printing and distribution of prospectuses and
shareholder reports, production, printing and distribution of sales materials
and forms, placement of media advertising, engagement of designers, free xxxxx
writers and public relation firms, long distance telephone lines, services and
charges, postage, overnight delivery charges, storage of inventory, regulatory
filing fees and travel, lodging and meals, and (ii) amounts paid by Distributor
to dealers or other persons entering into a selling or servicing agreement with
Distributor.
4.3 Subject to and calculated in accordance with the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., if during any
annual period the total of the compensation payable and out-of-pocket
reimbursements under Sections 4.1 and 4.2 to the Distributor exceeds 0.25% of a
Fund's average daily net assets, the Distributor will rebate that portion of its
fee necessary to result in the total of (i) and (ii) above not exceeding 0.25%
of the Fund's average daily net assets. The payment of compensation and
reimbursement of expenditures is authorized pursuant to the Trust's Service and
Distribution Plan under Rule 12b-1 under the 1940 Act.
5. INDEMNIFICATION.
5.1(a) The Trust authorizes Distributor to use the Trust's current
prospectus, in the form furnished to Distributor from time to time, in
connection with the sale of Shares. The Trust shall indemnify, defend and hold
the Distributor, and each of its present or former directors, officers,
employees, representatives and any person who controls or previously controlled
the Distributor within the meaning of Section 15 of the 1933 Act, free and
harmless from and against any and all losses, claims, demands, liabilities,
damages and expenses (including the costs of investigating or defending any
alleged losses, claims, demands, liabilities, damages or expenses and any
counsel fees incurred in connection therewith) which Distributor, each of its
present and former directors, officers, employees or representatives or any such
controlling person, may incur arising out of or based upon (i) any material
breach by the Trust of a material provision of this Agreement, and (ii) any
untrue statement, or alleged untrue statement, of a material fact contained in
the Trust's registration statement or current prospectus, as from time to time
amended or supplemented, or arising out of or 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; provided, however,
that the Trust's obligation to indemnify Distributor and any of the foregoing
indemnitees shall not be deemed to cover any losses, claims, demands,
liabilities, damages or expenses arising out of any untrue statement or alleged
untrue statement or omission or alleged omission made in the registration
statement or prospectus in reliance upon and in conformity with information
relating to the Distributor and furnished to the Trust or its counsel by
Distributor for the purpose of, and used in, the preparation thereof; and
provided further that the Trust's agreement to indemnify Distributor and any of
the foregoing indemnitees shall not be deemed to cover any liability to the
Trust or its shareholders to which Distributor would otherwise be subject by
reason of its willful misfeasance, bad faith or negligence in the performance of
its duties, or by reason of its reckless disregard of its obligations and duties
under this Agreement. The Trust's agreement to indemnify the Distributor, and
any of the foregoing indemnitees, as the case may be, with respect to any
action, is expressly conditioned upon the Trust being notified in reasonable
detail of such action brought against Distributor, or any of the foregoing
indemnitees, within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been served
upon the Distributor, or such person, such notification to be given by letter or
by telegram addressed to the Trust's President, but the failure so to notify the
Trust of any such action shall not relieve the Trust from any liability which
the Trust may have to the person against whom such action is brought by reason
of any such untrue, or alleged untrue, statement or omission, or alleged
omission, otherwise than on account of the Trust's indemnity agreement contained
in this Section 5.1.
5.1(b) 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 such loss, claim, demand, liability, damage or expense, but if the
Trust elects to assume the defense, such defense shall be conducted by counsel
chosen by the Trust and approved by the Distributor, which approval shall not be
unreasonably withheld. In the event the Trust elects to assume the defense of
any such suit and retain such counsel, the indemnified defendant or defendants
in such suit shall bear the fees and expenses of any additional counsel retained
by them. If the Trust does not elect to assume the defense of any such suit, or
in case the Distributor does not, in the exercise of reasonable judgment,
approve of counsel chosen by the Trust, the Trust will reimburse the indemnified
person or persons named as defendant or defendants in such suit, for the fees
and expenses of any counsel retained by Distributor and them. The Trust's
indemnification agreement contained in this Section 5.1 and the Trust's
representations and warranties in this Agreement shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Distributor, and each of its present or former directors, officers,
employees, representatives or any controlling person, and shall survive the
delivery of any Shares and the termination of this Agreement. This Agreement of
indemnity will inure exclusively to the Distributor's benefit, to the benefit of
each of its present or former directors, officers, employees or representatives
and to the benefit of any controlling persons and their successors. The Trust
agrees promptly to notify Distributor of the commencement of any litigation or
proceedings against the Trust or any of its officers or trustees in connection
with the issue and sale of any of the Shares.
5.2(a) Distributor shall indemnify, defend and hold the Trust, and each
of its present or former trustees, officers, employees, representatives, and any
person who controls or previously controlled the Trust within the meaning of
Section 15 of the 1933 Act, free and harmless from and against any and all
losses, claims, demands, liabilities, damages and expenses (including the costs
of investigating or defending any alleged losses, claims, demands, liabilities,
damages or expenses, and any counsel fees incurred in connection therewith)
which the Trust, and each of its present or former trustees, officers,
employees, representatives, or any such controlling person, may incur arising
out of or based upon (i) any material breach by the Distributor of a material
provision of this Agreement, and (ii) any untrue, or alleged untrue, statement
of a material fact contained in the Trust's registration statement or any
prospectus, as from time to time amended or supplemented, or the omission, or
alleged omission, to state therein a material fact required to be stated therein
or necessary to make the statement not misleading, but only if such statement or
omission was made in reliance upon, and in conformity with, information relating
to the Distributor and furnished to the Trust or its counsel by the Distributor
for the purpose of, and used in, the preparation thereof. Distributor's
agreement to indemnify the Trust and any of the foregoing indemnitees shall not
be deemed to cover any liability to Distributor to which the Trust would
otherwise be subject by reason of its willful misfeasance, bad faith or
negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations and duties, under this Agreement. The Distributor's
agreement to indemnify the Trust, and any of the foregoing indemnitees, is
expressly conditioned upon the Distributor's being notified in reasonable detail
of any action brought against the Trust, and any of the foregoing indemnitees,
such notification to be given by letter or telegram addressed to Distributor's
President, within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been served
upon the Trust or such person, but the failure so to notify Distributor of any
such action shall not relieve Distributor from any liability which Distributor
may have to the person against whom such action is brought by reason of any such
untrue, or alleged untrue, statement or omission, otherwise than on account of
Distributor's indemnity agreement contained in this Section 5.2(a).
5.2(b) In case any action shall be brought against the Trust, and each
of its present or former trustees, officers, employees, representatives, or
controlling persons, in respect of which indemnity may be sought against the
Distributor, the Distributor shall have the rights and duties given to the
Trust, and the Trust and each person so indemnified shall have the rights and
duties given to the Distributor by the provisions of Section 5.1(b).
6. OFFERING OF SHARES.
No Shares shall be offered by either Distributor or the Trust under any of
the provisions of this Agreement and no orders for the purchase or sale of such
Shares hereunder shall be accepted by the Trust if and so long as the
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 current prospectuses as required by Section 10 of the
1933 Act, as amended, are not on file with the Commission; provided, however,
that nothing contained in this Paragraph 6 shall in any way restrict or have an
application to or bearing upon the Trust's obligation to repurchase Shares from
any shareholder in accordance with the provisions of the prospectuses or
Agreement and Declaration of Trust.
7. TERM.
7.1 This Agreement shall become effective with respect to each Fund listed
on Schedule A hereof as of the date hereof and, with respect to each Fund not in
existence on that date, on the date an amendment to Schedule A to this Agreement
relating to that Fund is executed. Unless sooner terminated as provided herein,
this Agreement shall continue in effect with respect to each Fund until October
29, 1997. Thereafter, if not terminated, this Agreement shall continue
automatically in effect as to each Fund for successive annual periods, provided
such continuance is specifically approved at least annually by (i) the Trust's
Board of Trustees or (ii) the vote of a majority (as defined in the 0000 Xxx) of
the outstanding voting securities of a Fund, and provided that in either event
the continuance is also approved by the Distributor and a majority of the
Trust's Board of Trustees who are not "interested persons" (as defined in the
0000 Xxx) of any party to this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval.
7.2 This Agreement may be terminated without penalty with respect to a
particular Fund (i) through a failure to renew this Agreement at the end of a
term, (ii) upon mutual consent of the parties, or (iii) on no less than thirty
(30) days' written notice, by the Trust's Board of Trustees, by vote of a
majority (as defined with respect to voting securities in the 1940 Act) of the
outstanding voting securities of a Fund, or by the Distributor (which notice may
be waived by the party entitled to such notice). The terms of this Agreement
shall not be waived, altered, modified, amended or supplemented in any manner
whatsoever except by a written instrument signed by the Distributor and the
Trust. This Agreement will also terminate automatically in the event of its
assignment (as defined in the 1940 Act).
8. MISCELLANEOUS.
8.1 The services of the Distributor rendered to the Funds are not deemed
to be exclusive. The Distributor may render such services and any other
services to others, including other investment companies. The Trust recognizes
that from time to time directors, officers, and employees of the Distributor may
serve as directors, trustees, officers and/or employees of other entities
(including other investment companies), that such other entities may include the
name of the Distributor as part of their name and that the Distributor or its
affiliates may enter into distribution, administration, fund accounting,
transfer agent or other agreements with such other entities.
8.2 Distributor agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Trust all records and other
information relative to the Funds and prior, present or potential shareholders
of the Funds (and clients of said shareholders), and not to use such records and
information for any purpose other than performance of Distributor's
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Trust, which approval shall not be unreasonably
withheld and may not be withheld when the Distributor is subject to regulatory
audit or inspection, when Distributor may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities with proper jurisdiction, or when so
requested by the Trust.
8.3 This Agreement shall be governed by Wisconsin law. To the extent that
the applicable laws of the State of Wisconsin, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter shall
control, and nothing herein shall be construed in a manner inconsistent with the
1940 Act or any rule or order of the Commission thereunder. Any provision of
this Agreement which may be determined by competent authority to be prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.4 Any notice required or to be permitted to be given by either party
to the other shall be in writing and shall be deemed to have been given when
hand delivered or sent by registered or certified mail, postage prepaid, return
receipt requested, as follows: Notice to the Distributor shall be sent to
Sunstone Financial Group, Inc., 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx,
Xxxxxxxxx, 00000, Attention: Xxxxxx X. Xxxxxxx, and notice to the Trust shall
be sent to The Purisima Funds, at 00000 Xxxxxxx Xxxx., Xxxxxxxx, Xxxxxxxxxx
00000, Attention: Xxxxxxx X. Xxxxxx.
8.5 This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original agreement but such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer as of the day and year first above
written.
THE PURISIMA FUNDS
(the "Trust")
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
President
SUNSTONE DISTRIBUTION SERVICES, LLC
("Distributor")
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
President
