DISTRIBUTION AGREEMENT
Exhibit (e)
THIS AGREEMENT is made as of November 1, 2002 by and between FBR Fund for Government Investors, FBR Fund for Tax-Free Investors, Inc., and The FBR Rushmore Fund, Inc. (the "Funds"), and FBR Investment Services, Inc. (the "Distributor").
In consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows.
FIRST: The Funds on behalf of each series of the Funds and any new series to be created hereby appoints the Distributor as a non-exclusive underwriter to promote and arrange for the sales of shares of each series of the Funds in jurisdictions wherein shares may legally be offered for sale. The Funds shall notify the Distributor in writing of all states in which its shares are qualified for offer and sale, including any limitations with respect to offers or sales in such states. The Distributor may receive payment from Money Management Advisers, Inc., the Funds' Adviser, and FBR National Bank & Trust, the Funds' administrator, for certain distribution expenses.
SECOND: The Funds hereby authorize the Distributor, subject to the Funds' Articles of Incorporation or Declaration of Trust, as the case may be, and applicable law, to accept orders for the purchase of shares, satisfactory to the Distributor, as of the time of receipt of such orders or as otherwise described in the then current Prospectuses and Statements of Additional Information of the Funds. As used in this Agreement, the term "Prospectuses" and "Statements of Additional Information" shall mean for the purposes of this Agreement the form of the then current Prospectuses and Statements of Additional Information for each series authorized by the Funds for use by the Distributor and by dealers.
THIRD: The price at which the shares of the Funds may be sold (the "offering price") shall be the net asset value per share. For the purpose of computing the offering price, the net asset value per share shall be determined in the manner provided in the Registration Statement of the Funds, as amended from time to time.
SIXTH: The Distributor as agent of the Funds, and any Selected Dealer entering into a Selected Dealer Agreement with the Distributor are authorized, subject to the direction of the Funds, to accept shares of the Funds for redemption at their net asset value determined as prescribed in the then current Prospectuses and Statements of Additional Information of the Funds.
SEVENTH: The Funds shall cause to be delivered to the Distributor all books, records, and other documents and papers relating to the federal and state registration of the Funds' shares, as well as all books, records and other documents and papers relating in any way to the distribution of the Funds' shares.
EIGHTH: The Funds shall bear:
(A) The costs and expenses incurred in connection with the registration of the shares of each series of the Funds under the 1933 Act (including and amendment to any Registration Statement or Prospectus or Statement of Additional Information), and all expenses in connection with preparing, printing, and distributing the Prospectuses or Statements of Additional Information except as set forth in paragraph NINTH hereof. As used in this Agreement, the term "Registration Statement" shall mean the Registration Statement most recently filed by the Funds with the Securities and Exchange Commission and effective under the 1933 Act, as such Registration Statement is amended at such time;
(B) the expenses of qualification of the shares of the Funds for sale in connection with such public offerings in such states as shall be selected by the Distributor and of continuing the qualification therein until the Distributor notifies the Funds that it does not wish such qualifications continued,
(C) all costs and expenses incurred in connection with preparing, printing, filing and distributing advertising and promotional materials, and;
(D) all legal expenses in connection with the foregoing.
NINTH: The Distributor shall provide certain distribution services including making all required filings of advertising and promotional materials with the National Association of Securities Dealers, Inc. ("NASD"); and
(A) The Funds and the Distributor shall each comply with all applicable provisions of the 1940 Act, the 1933 Act and the rules and regulations of the NASD and all other Federal and state laws, rules and regulations governing the issuance and sale of shares of the Funds.
(B) The Distributor shall not be liable for any error of judgement or mistake of law or for any loss suffered by the Funds in connection with the matter to which this Agreement relates, except a loss resulting from willful misfeasance, bad faith or negligence on the Distributor's part in the performance of its duties under this Agreement.
(C) In the absence of willful misfeasance, bad faith, negligence or reckless disregard of obligations or duties hereunder on the part of the Distributor or any of its officers, directors or employees, the Funds agree to indemnify the Distributor and any controlling person of the Distributor against any and all claims, demands, liabilities, and expenses (including reasonable attorney's fees) which the Distributor may incur (i) based on any act or omission in the course of, or connected with, rendering services hereunder, (ii) based on any representations made herein by the Funds; (iii) based on any act or omission of any prior distributor (in its capacity as distributor), administrator or adviser to the Funds, including the registration or failure to register any shares of the Funds in accordance with state or federal laws or resulting from or relating to any books or records delivered to the Distributor in connection with its responsibilities under this Agreement and occurring prior to the date of this Agreement; and (iv) under the 1933 Act, or common law or otherwise, arising out of or based upon any alleged untrue statement of a material fact contained in any Registration Statement, Statements of Additional Information or Prospectuses of the Funds, or any omission to state a material fact therein, the omission of which makes any statement contained therein misleading, unless such statement or omission was made in reliance upon, and in conformity with written information furnished to the Funds in connection therewith by or on behalf of the Distributor.
(D) The Distributor shall indemnify the Funds against any and all claims, demands, liabilities and expenses which the Funds may incur under the 1933 Act, or common law or otherwise, arising out of or based upon any alleged untrue statement in any Registration Statement, Statements of Additional Information or Prospectuses of the Funds, or any omission to state a material fact therein if such statement or omission was made in reliance upon, and in conformity with, written information furnished to the Funds in connection therewith by the Distributor.
FIFTEENTH:
(A) This Agreement shall go into effect at the close of business on the date hereof, and, unless terminated as hereinafter provided, shall continue in effect for one year and from year to year thereafter, but only so long as such continuance is specifically approved at least annually by the Funds' Boards of Directors/Trustees ("Directors"), including a vote of the majority of the Funds' Directors who are not parties to this Agreement or "interested persons" (as defined in the 0000 Xxx) of any such party cast in person at a meeting called for the purpose of voting on such approval, or by the vote of the holders of a "majority" (as so defined) of the outstanding voting securities of the applicable Funds and by such vote of the Directors.
(B) This Agreement may be terminated by the Distributor at any time without penalty upon giving the Directors of the Funds sixty (60) days' written notice (which notice may be waived by the Funds) and may be terminated by the Directors at any time without penalty upon giving the Distributor sixty (60) days' written notice (which may be waived by the Distributor), provided that such termination by the Directors of the Funds shall be directed or approved by the vote of a majority of the Funds' Directors in office at the time, including a majority of the Directors who are not interested persons (as defined in the 0000 Xxx) of the Funds, or by the vote of the holders of a majority (as defined in the 0000 Xxx) of the voting securities of each of the Funds at the time outstanding and entitled to vote. This Agreement shall automatically terminate in the event of its assignment, the term "assignment" for this purpose having meaning defined in Section 2(a)(4) of the 1940 Act.
SIXTEENTH: Anti-money laundering program. Each of Distributor and the Funds acknowledges that it is a financial institution subject to the USA PATRIOT Act of 2001 and the Bank Secrecy Act (collectively, the "AML Acts"), which require among other things, that financial institutions adopt compliance programs to guard against money laundering. Each of Distributor and the Funds agrees that it will take such further steps, and cooperate with the other to facilitate such compliance. The Distributor acknowledges that it is a "Covered Service Provider" as defined in the Funds' Anti-Money Laundering Program (Fund AML Program) and shall assume responsibility for the implementation of the requirements of the Fund AML Program with respect to the services provided under this Agreement. Among other things, the Distributor shall assess the money laundering risks of the various distribution and service platforms through which shares of the Funds are sold. The Distributor represents and warrants that it has adopted policies and procedures reasonably designed to detect and prevent money laundering activities in compliance with applicable laws, regulations and regulatory interpretations. The Distributor undertakes that it shall (a) conduct its operations in accordance with the provisions of the Fund AML Program and applicable laws, regulations and regulatory interpretations; (b) provide access to its books, records and operations relating to its anti-money laundering compliance only with respect to the Funds, by appropriate regulatory authorities, the Funds, and the Funds' anti-money laundering Compliance Officer (the Funds' Compliance Officer shall have no access to any of Distributor's anti-money laundering operations, books or records pertaining to other clients of Distributor); (c) certify, in writing, no less frequently than annually, that it is in compliance with applicable anti-money laundering laws, rules, regulations and regulatory interpretations with respect to the services provided under this Agreement; (d) upon request, provide a copy of its anti-money laundering program (or a summary of its program) to the Funds' anti-money laundering Compliance Officer; (e) provide periodic reports to the Funds' Board of Directors/Trustees concerning anti-money laundering activities and compliance exceptions, as the parties may agree from time to time; and (f) ensure that selling group agreements require selling group members to adopt, as applicable, reasonable anti-money laundering procedures and otherwise comply with applicable anti-money laundering regulations and regulatory interpretations with respect to the sale and redemption of Fund shares. The Funds represent and warrant that each will conduct its operations in accordance with the provisions of the Fund AML Program and applicable laws, regulations and regulatory interpretations
SEVENTEENTH: The Distributor may at any time or times in its discretion and at its own expense appoint (and may at any time remove) an agent to carry out such of the provisions of Article NINTH herein as the Distributor may from time to time direct; provided, however, that the appointment of any agent shall not relieve the Distributor of its responsibilities or liabilities hereunder.
NINETEENTH: Copies of the corporate documents of the Funds are on file with the state in which each Fund is domiciled, and notice is hereby given that each corporate document executed on behalf of the Directors of the Funds as Directors and not individually, and that the obligations of this instrument are not binding upon any of the Directors or shareholders individually but are binding only upon the asset and property of the Funds, and all persons dealing with any class of shares of the Funds must look solely to the Funds' property belonging to such class for the enforcement of any claims against the Funds.
TWENTY FIRST: This Agreement may be amended in writing at any time by the parties hereto. This Agreement shall be governed in accordance with the laws of the State of Maryland. Each party hereto waives all right to trial by jury and any proceeding arising under or related to this Agreement.
| FBR Fund for Government Investors | ||
| The FBR Rushmore Fund, Inc. | ||
| FBR Fund for Tax-Free Investors, Inc. | ||
| WITNESS: | ||
| /s/ Xxxxx X. Xxxxx | ||
| Xxxxx X. Xxxxx | By: /s/ Xxxx X. Xxxxx, XX | |
| Xxxx X. Xxxxx, XX | ||
| FBR Investment Services, Inc. | ||
| WITNESS: | ||
| /s/ Xxxxx X. Xxxxxxxx | By: /s/ Xxxxxxx Xxxx | |
| Xxxxx X. Xxxxxxxx | Xxxxxxx Xxxx |
