DISTRIBUTION AGREEMENT This Agreement made this 1st day of October, 1997 by
and between FREMONT MUTUAL FUNDS, a Maryland Corporation (the "Funds"), and
FIRST FUND DISTRIBUTORS, INC., a Delaware corporation (the "Distributor").
W I T N E S S E T H:
--------------------
WHEREAS, the Funds are registered as an open-end management investment
company under the Investment Company Act of 1940 (the "1940 Act"), with shares
of common stock organized into separate series ("series" or "portfolios"), and
it is in the interest of the Funds to offer the shares of common stock of the
series 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 Funds and the Distributor wish to enter into an agreement with
each other with respect to the continuous offering of the shares of common stock
of each series of the Trust (the "Shares");
NOW, THEREFORE, the parties agree as follows:
1. Appointment of Distributor. The Funds hereby appoint the Distributor as
exclusive 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
Funds transfer agent in the manner set forth in the Prospectuses (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 Funds, 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 Funds' Registration Statement, as such prospectus and statement of
additional information may be amended or supplemented from time to time, and the
term "Registration Statement" shall mean the Registration Statement most
recently filed from time to time by the Funds 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) Upon commencement of operations of the series, 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 Funds' 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 series' Prospectuses.
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, (determined as set forth in the Prospectuses).
The Funds shall furnish the Distributor, with all possible promptness, an advice
of each computation of net asset value and offering price.
(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 Prospectuses. 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 Funds.
(a) Maintenance of Federal Registration. The Funds shall, at
their 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 Funds agree 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 Funds shall,
at their expense, use their best efforts to qualify and maintain the
qualification of an appropriate number of Shares for sale under the securities
laws of such states as the Distributor and the Funds may approve, and, if
necessary or appropriate in connection therewith, to qualify and maintain the
qualification of the Funds in such states; provided that the Funds shall not be
required to amend their 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 Prospectuses, 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 Funds in
connection with such qualifications.
(c) Copies of Reports and Prospectuses. The Funds shall, at
their expense, keep the Distributor fully informed with regard to their 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 NASD regulation.
5. Independent Contractor. In performing its duties hereunder, the
Distributor shall be an independent contractor and neither the Distributor, nor
any of its officers, directors, employees, or representatives is or shall be an
employee of the Funds in the performance of the Distributor's duties hereunder.
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.
6. Indemnification.
(a) Indemnification of Funds . The Distributor agrees to
indemnify and hold harmless the Funds and each of their present or former
Directors, officers, employees, representatives and each person, if any, who
controls or previously controlled the Funds 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, claims or expense and reasonable legal counsel
fees incurred in connection therewith) to which the Funds 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 Funds 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 Funds by the
Distributor. In no case (i) is the Distributor's indemnity in favor of the
Funds, or any person indemnified to be deemed to protect the Funds or such
indemnified person against any liability to which the Funds or such person would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of the Funds' or such person's duties or by reason
of reckless disregard of the Funds' 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
Funds or any person indemnified unless the Funds 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 Funds or
upon such person (or after the Funds 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 Funds 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 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 Funds, 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 Funds,
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 Funds 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 Distributor agrees to promptly notify the Funds of
the commencement of any litigation of proceedings against them or any of their
officers, employees or representatives in connection with the issue or sale of
any Shares.
(b) Indemnification of the Distributor. The Funds agree to
indemnify and hold harmless the Distributor and each of its present or former
directors, officers, employees, representatives 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 Funds or any of the Funds'
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 Funds 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 Funds by the
Distributor. In no case (i) is the Funds' 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)
are the Funds 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 Funds 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 Funds of any such claim
shall not relieve the Funds from any liability which the Funds may have to the
Distributor or any person against whom such action is brought otherwise than on
account of the Funds' indemnity agreement contained in this Paragraph.
The Funds shall be entitled to participate, at their own expense, in the
defense, or, if the Funds so elect, to assume the defense of any suit brought to
enforce any such claim, but if the Funds elect to assume the defense, such
defense shall be conducted by legal counsel chosen by the Funds and satisfactory
to the Distributor and to the persons indemnified as defendant or defendants, in
the suit. In the event that the Funds elect 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 Funds do not elect to assume
the defense of any such suit, the Funds 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 Funds agree to
promptly notify the Distributor of the commencement of any litigation or
proceedings against it or any of their 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
Funds to give on behalf of the Funds 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 Funds 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 Funds.
8. 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 outstanding voting securities of each investment
portfolio of the Funds 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 Funds who are not parties to this Agreement or interested persons of any
such party. The Distributor shall furnish to the Funds, promptly upon their
request, such information as may reasonably be necessary to evaluate the terms
of this Agreement or any extension, renewal or amendment hereof.
9. Compensation. As compensation for services rendered by the Distributor
during the term of this Agreement, Fremont Investment Advisors, Inc. will pay to
the Distributor a quarterly fee at the annual rate of $50,000 plus out of pocket
expenses (e.g., NASD advertising filing fees, annual agent registration fees,
etc.).
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 more than upon 60 days'
nor less than 30 days' prior notice in writing to the other party; provided,
that in the case of termination by the Funds such action shall have been
authorized by resolution of a majority of the Directors of the Funds 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 Funds.
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 Funds to take any
action contrary to their Articles of Incorporation or By-Laws, or any applicable
statutory or regulatory requirement to which they are subject or by which they
are bound, or to relieve or deprive the Board of Directors of the Funds of
responsibility for and control of the conduct of the affairs of the Funds.
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
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 Funds represents that they are
registered as an open-end management investment company under the 1940 Act, and
agree that they will comply with all the provisions of the 1940 Act and of the
rules and regulations thereunder. The Funds 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, XX
00000 or to the Funds at 000 Xxxxxx Xxxxxx, Xxx 0000, Xxx Xxxxxxxxx, XX 00000.
16. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of California
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the date first written above.
FREMONT MUTUAL FUNDS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Name:
Title:
FIRST FUND DISTRIBUTORS, INC.
By: /s/ Xxxx Xxxxxxx
-------------------------------
Name:
Title:
