EXHIBIT 99.E
--------------------------------------------------------------------------------
UNDERWRITING AGREEMENT
BETWEEN
NEW RIVER FUNDS
AND
AQUARIUS FUND DISTRIBUTORS, INC.
--------------------------------------------------------------------------------
INDEX
1. DEFINITIONS 4
-- -----------------------------------------------------------------------------
2. APPOINTMENT OF AFD AND DELIVERY OF DOCUMENTS 5
-- -----------------------------------------------------------------------------
3. EXCLUSIVE NATURE OF DUTIES 5
-- -----------------------------------------------------------------------------
4. OFFERING OF SHARES 6
-- -----------------------------------------------------------------------------
5. REPURCHASE OR REDEMPTION OF SHARES BY THE TRUST 7
-- -----------------------------------------------------------------------------
6. DUTIES AND REPRESENTATIONS OF AFD 7
-- -----------------------------------------------------------------------------
7. DUTIES AND REPRESENTATIONS OF THE TRUST 9
-- -----------------------------------------------------------------------------
8. INDEMNIFICATION OF AFD BY THE TRUST 11
-- -----------------------------------------------------------------------------
9. INDEMNIFICATION OF THE TRUST BY AFD 12
-- -----------------------------------------------------------------------------
10. NOTIFICATION BY THE TRUST 13
-- -----------------------------------------------------------------------------
11. FEES AND EXPENSES 14
-- -----------------------------------------------------------------------------
12.SELECTED DEALER AND SELECTED AGENT AGREEMENTS 15
--------------------------------------------------------------------------------
13. CONFIDENTIALITY 15
-- -----------------------------------------------------------------------------
14. EFFECTIVENESS AND DURATION 16
-- -----------------------------------------------------------------------------
15. DISASTER RECOVERY 16
-- -----------------------------------------------------------------------------
16. MISCELLANEOUS 17
-- -----------------------------------------------------------------------------
SCHEDULE A - FUNDS TO BE SERVICED 19
--------------------------------------------------------------------------------
SCHEDULE B - FEES AND EXPENSES 20
--------------------------------------------------------------------------------
Page 2 of 20
UNDERWRITING AGREEMENT
AGREEMENT made this ____ day of September 2003, by and between NEW
RIVER FUNDS, a Delaware statutory trust, having its principal office and place
of business at 0000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 (the "Trust"), and
AQUARIUS FUND DISTRIBUTORS, INC., a Nebraska corporation having its principal
office and place of business at 0000 Xxxxx 000xx Xxxxxx, Xxxxx, Xxxxxxxx 00000
("AFD").
WHEREAS, the Trust proposes to offer shares of beneficial interest
(the "Shares") in separate investment portfolios as set forth on SCHEDULE A
(each a "Fund"), each a series of the New River Funds;
WHEREAS, the Trust is an open-end management investment company
registered with the United States Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, AFD is registered under the Securities Exchange Act of 1934,
as amended, as a broker-dealer and is engaged in the business of selling shares
of registered investment companies either directly to purchasers or through
other financial intermediaries; and
WHEREAS, the Trust desires that AFD offer, as principal underwriter,
the Shares of the Funds to the public and AFD is willing to provide those
services on the terms and conditions set forth in this Agreement in order to
promote the growth of the Funds and facilitate the distribution of the Shares;
NOW THEREFORE, for and in consideration of the premises and mutual
covenants contained herein, the Trust and AFD hereby agree as follows:
Page 3 of 20
1. DEFINITIONS
As used in this Agreement, the following terms shall have the meaning
set forth below:
(a) "Board" means the Board of Trustees of the Trust.
(b) "Designated Agent" means Gemini Fund Services, LLC.
(c) "Fund Business Day" means any day on which the NAV of Shares of
each Fund is determined as stated in the Prospectus.
(d) "NASD Rules" means the Constitution, By-Laws, and Rules of Fair
Practice of the National Association of Securities Dealers, Inc. (the "NASD")
and any interpretations thereof.
(e) "NAV" means the net asset value per Share of each Fund as
determined by the Fund, or the Designated Agent, in accordance with and at the
times indicated in the applicable Prospectus of the Fund on each Fund Business
Day in accordance with the method set forth in the Prospectus and guidelines
established by the Board.
(f) "Public Offering Price" means the price per Share of the Fund at
which AFD or selected dealers or selected agents may sell Shares to the public
or to those persons eligible to invest in Shares as described in the Prospectus
of the Funds, determined in accordance with such Prospectus under the Securities
Act relating to such Shares.
(g) "Prospectus" means the current prospectus and statement of
additional information of the Fund, as currently in effect and as amended or
supplemented.
(h) "Registration Statement" means the Fund's Registration Statement
on Form N-1A and all amendments thereto filed with the SEC.
(i) "SEC" means the U.S. Securities and Exchange Commission.
(j) "Securities Act" means the Securities Act of 1933, as amended.
(k) "Securities Exchange Act" means the Securities Exchange Act of
1934, as amended.
(l) "1940 Act" means the Investment Company Act of 1940, as amended.
The terms "majority of the outstanding voting securities," "interested person"
and "assignment" shall have the same meanings as such terms have in the 1940
Act.
Page 4 of 20
2. APPOINTMENT OF AFD AND DELIVERY OF DOCUMENTS
(a) The Trust hereby appoints AFD, and AFD hereby agrees, to act as
distributor of the Shares of the Funds for the period and on the terms set forth
in this Agreement. In connection therewith, the Trust has delivered to AFD
copies of:
(i) the Trust's Agreement and Declaration of Trust and
By-laws;
(ii) the Trust's Registration Statement;
(iii) the Trust's notification of registration under the 1940
Act on Form N-8A as filed with the SEC;
(iv) the Trust's Prospectus;
(v) the current plan of distribution or similar document
adopted by the Funds under Rule 12b-1 under the 1940 Act and, will deliver each
shareholder service plan or similar document adopted by the Trust ("Service
Plan"), provided the Trust has adopted such Service Plan.
(b) The Trust shall promptly furnish AFD with:
(i) all amendments of or supplements to the foregoing; and
(ii) a copy of the resolution of the Board appointing AFD and
authorizing the execution and delivery of this Agreement.
3. EXCLUSIVE NATURE OF DUTIES
(a) AFD shall be the exclusive representative of the Funds to act as
distributor of the Funds, except that the rights given under this Agreement to
AFD shall not apply to: (i) Shares issued in connection with the merger,
consolidation or reorganization of any other investment company or series or
class thereof with a Fund or class thereof; (ii) the Trust's acquisition by
purchase or otherwise of all or substantially all of the assets or stock of any
other investment company or series or class thereof; (iii) the reinvestment in
Shares by the Funds' shareholders of dividends or other distributions; or (iv)
any other offering by the Funds of securities to its shareholders (collectively
"exempt transactions").
(b) Notwithstanding the foregoing, AFD is and may in the future
distribute shares of other investment companies including investment companies
having investment objectives similar to those of the Funds. The Funds further
understand that existing and future investors in the Funds may invest in shares
of such other investment companies. The Funds agree that the services that AFD
provides to such other investment companies shall not be deemed in conflict with
its duties to the Funds under this Agreement.
Page 5 of 20
4. OFFERING OF SHARES
(a) AFD shall have the right to buy from the Funds the Shares needed
to fill orders for Shares of the Funds placed with AFD by investors or selected
dealers or selected agents (each as defined in Section 12 hereof) acting as
agent for their customers' or on their own behalf. Alternatively, AFD may act as
the Funds' agent, to offer, and to solicit offers to subscribe to, Shares of the
Funds.
(b) The price that AFD shall pay for Shares purchased from the Funds
shall be the NAV used in determining the Public Offering Price on which the
orders are based. Shares purchased by AFD are to be resold by AFD to investors
at the respective Public Offering Price(s), or to selected dealers or selected
agents acting in accordance with the terms of selected dealer or selected agent
agreements described in Section 12 of this Agreement. The Trust or the
Designated Agent will advise AFD of the NAV(s) each time that it is determined
by the Funds, or the Designated Agent, and at such other times as AFD may
reasonably request.
(c) AFD will promptly forward all orders and subscriptions to the
Funds or the Designated Agent. All orders and all subscriptions shall be
directed to the Funds for acceptance and shall not be binding until accepted by
the Funds. Any order or subscription may be rejected by the Funds. The Funds or
the Designated Agent will confirm orders and subscriptions upon their receipt,
will make appropriate book entries and, upon receipt by the Funds or its
Designated Agent of payment therefore, will issue such Shares in uncertificated
form pursuant to the instructions of AFD. AFD agrees to promptly deliver such
instructions to the Funds' Designated Agent and to promptly pay to the Funds the
applicable net asset value of the Shares.
(d) The Funds reserve the right to terminate, suspend or withdraw the
offering of Shares of the Funds at any time in the absolute discretion of the
Board. AFD shall cease to offer Shares of the Funds at such time. The Funds
reserve the right to refuse at any time or times to sell any of their Shares to
any person for any reason deemed adequate by them.
(e) No Shares shall be offered by either AFD or the Funds under any
of the provisions of this Agreement and no orders for the purchase or sale of
Shares hereunder shall be accepted by the Funds 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
Securities Act, or if and so long as a Prospectus is not on file with the SEC.
Page 6 of 20
5. REPURCHASE OR REDEMPTION OF SHARES BY THE TRUST
(a) Any of the outstanding Shares of the Funds may be tendered for
redemption at any time, and the Funds agree to redeem or repurchase the Shares
so tendered in accordance with its obligations as set forth in the Prospectus
relating to the Shares.
(b) The appropriate Fund shall pay the total amount of the redemption
price consisting of the NAV less any applicable redemption fee to the redeeming
shareholder or its agent.
(c) Redemption of Shares or payment therefore may be suspended at
times when the New York Stock Exchange is closed for any reason other than its
customary weekend or holiday closings, when trading thereon is restricted, when
an emergency exists as a result of which disposal by the Funds of securities
owned by the Funds is not reasonably practicable or it is not reasonably
practicable for the Funds or the Designated Agent fairly to determine the value
of the Funds' net assets, or during any other period when the SEC so requires or
permits.
6. DUTIES AND REPRESENTATIONS OF AFD
(a) AFD shall sell Shares of the Funds upon the terms and conditions
contained herein and in the Prospectus. AFD shall devote reasonable time and
effort to effect sales of Shares but shall not be obligated to sell any specific
number of Shares.
(b) AFD will execute and deliver agreements with broker/dealers,
financial institutions and other industry professionals based on forms of
agreement approved by the Board with respect to shares of the Funds, including
but not limited to forms of sales support agreements and shareholder servicing
agreements approved in connection with any distribution and/or servicing plan
approved in accordance with Rule 12b-1 under the 1940 Act.
(c) AFD shall be responsible for reviewing and providing advice and
counsel on, and filing with the NASD, all sales literature (e.g.,
advertisements, brochures and shareholder communications, including the Fund's
website) with respect to the Funds. AFD will forward all NASD comments on
marketing materials to the Trust for incorporation into such materials and the
sole responsibility for incorporation of such comments shall remain with the
Trust; provided, however, that the Trust shall provide all factual content,
opinion, and other content for such materials and AFD shall not be responsible
for the accuracy of the content of such materials, when used thereafter by the
Trust or any person authorized by the Trust to use such material; nor shall AFD
be responsible for the filing or content of any such materials used by third
parties without the authorization of AFD; and provided further that AFD shall
not be responsible for filing any materials that fall within the definition of
advertising and sales literature if such materials are not provided to AFD in a
form suitable for filing in a timely manner. In addition, AFD will provide one
or more persons, during normal business hours, to respond to telephone questions
with respect to the Funds.
Page 7 of 20
(d) AFD will promptly forward all sales related complaints concerning
the Funds to the Trust and the Trust's investment adviser.
(e) AFD will provide assistance in the preparation of quarterly board
materials with regard to sales and other distribution related data requested by
the Board.
(f) All activities by AFD and its agents and employees as distributor
of Shares shall comply with all applicable laws, rules and regulations,
including, without limitation, the 1940 Act, the Securities Act, the Securities
Exchange Act, and the NASD Rules, all rules and regulations made or adopted
pursuant to the 1940 Act by the SEC or any securities association registered
under the Securities Exchange Act.
(g) In selling Shares of the Funds, AFD shall comply with the
requirements of all federal and state laws relating to the sale of the Shares.
None of AFD, any selected dealer, any selected agent or any other person is
authorized by the Funds to give any information or to make any representations
other than as is contained in a Funds' Prospectus or any advertising materials
or sales literature specifically approved in writing by the Funds or their
agents.
(h) AFD shall adopt and follow procedures for the confirmation of
sales to investors and selected dealers or selected agents, the collection of
amounts payable by investors and selected dealers or selected agents on such
sales, the cut-off times for the placement of purchase, redemption and exchange
orders, and the cancellation of unsettled transactions, as may be necessary to
comply with the requirements of the 1940 Act and NASD Rules.
(i) AFD will require each dealer with whom AFD has a selling
agreement to conform to the applicable provisions of the Prospectus, with
respect to the public offering price of the Shares, and AFD shall not cause the
Funds to withhold the placing of purchase orders so as to make a profit thereby.
(j) AFD represents and warrants to the Trust that:
(i) It is a corporation duly organized and existing and in
good standing under the laws of the State of Nebraska and it is duly qualified
to carry on its business in the State of Nebraska;
(ii) It is empowered under applicable laws and by its Articles
of Incorporation to enter into and perform this Agreement;
(iii) All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement;
Page 8 of 20
(iv) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement;
(v) This Agreement, when executed and delivered, will
constitute a legal, valid and binding obligation of AFD, enforceable against AFD
in accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the rights and
remedies of creditors and secured parties; and
(vi) It is registered under the Securities Exchange Act with
the SEC as a broker-dealer, it is a member in good standing of the NASD, it will
abide by the NASD Rules, and it will notify promptly the Funds if its membership
in the NASD is terminated or suspended.
(vii) The performance by AFD of its obligations hereunder does
not and will not contravene any provision of its Articles of Incorporation and
By-Laws.
(k) Notwithstanding anything in this Agreement, including the
Schedules, to the contrary, AFD makes no warranty or representation as to the
number of selected dealers or selected agents with which it has entered into
agreements in accordance with Section 12 hereof, as to the availability of any
Shares to be sold through any selected dealer, selected agent or other
intermediary or as to any other matter not specifically set forth herein.
7. DUTIES AND REPRESENTATIONS OF THE TRUST
(a) The Trust shall, or cause the Designated Agent to, furnish to AFD
copies of all financial statements and other documents to be delivered to
shareholders or investors, copies of all other financial statements, documents
and other papers or information which AFD may reasonably request for use in
connection with the distribution of Shares. The Trust shall make available to
AFD the number of copies of the Prospectuses as AFD shall reasonably request.
(b) The Trust or the Designated Agent shall take, from time to time,
subject to the approval of the Board and any required approval of the
shareholders of the Funds, all actions necessary to register the Shares under
the Securities Act, to the end that there will be available for sale the number
of Shares as reasonably may be expected to be sold pursuant to this Agreement.
(c) The Trust or the Designated Agent will execute any and all
documents, furnish any and all information and otherwise take all actions that
may be reasonably necessary to register or qualify Shares for sale in such
states as AFD may designate to the Funds and the Funds may approve, and the
Funds shall pay all fees and other expenses incurred in connection with such
registration or qualification; provided that AFD shall not be required to
register as a broker-dealer or file a consent to service of process in any State
and the Funds shall not be required to qualify as a foreign corporation, Fund or
association in any State. Any registration or qualification may be withheld,
terminated or withdrawn by the Funds at any time in its discretion. AFD shall
furnish such information and other material relating to its affairs and
activities as the Funds require in connection with such registration or
qualification.
Page 9 of 20
(d) The Trust represents and warrants to AFD that:
(i) It is a statutory trust duly organized and existing and in
good standing under the laws of the State of Delaware;
(ii) It is empowered under applicable laws and by its
Agreement and Declaration of Trust and By-Laws to enter into and perform this
Agreement;
(iii) All proceedings required by its Agreement and
Declaration of Trust and By-Laws have been taken to authorize it to enter into
and perform its duties under this Agreement;
(iv) It is an open-end management investment company
registered with the SEC under the 1940 Act;
(v) All Shares, when issued, shall be validly issued, fully
paid and non-assessable;
(vi) This Agreement, when executed and delivered, will
constitute a legal, valid and binding obligation of the Trust, enforceable
against the Trust in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties;
(vii) The performance by the Trust of its obligations
hereunder does not and will not contravene any provision of its Agreement and
Declaration of Trust and By-Laws;
(viii) The Registration Statement will be effective prior to
the Shares of the Funds being offered for sale;
(ix) The Registration Statement, including the Prospectus
contains or will contain all statements required to be stated therein in
accordance with the Securities Act and the rules and regulations thereunder; all
statements of fact contained or to be contained in the Registration Statement or
Prospectus are or will be true and correct at the time indicated or on the
effective date as the case may be; and neither the Registration Statement nor
any Prospectus, when they shall become effective or be authorized for use, 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 to a purchaser of Shares;
Page 10 of 20
(x) It will from time to time file such amendment or
amendments to the Registration Statement and Prospectus as, in the light of
then-current and then-prospective developments, shall, in the opinion of its
counsel, be necessary in order to have the Registration Statement and Prospectus
at all times contain all material facts required to be stated therein or
necessary to make any statements therein not misleading to a purchaser of Shares
("Required Amendments").
8. INDEMNIFICATION OF AFD BY THE TRUST
(a) The Trust agrees to indemnify, defend and hold AFD, its several
officers and directors, and any person who controls AFD within the meaning of
Section 15 of the Securities Act, free and harmless from and against any and all
claims, demands, liabilities and expenses (including the reasonable cost of
investigating or defending such claims, demands or liabilities and any
reasonable counsel fees incurred in connection therewith) which AFD, its
officers and directors, or any such controlling persons, may incur under the
Securities Act, the 1940 Act, or common law or otherwise, arising out of or
based upon:
(i) any untrue statement, or alleged untrue statement, of a
material fact required to be stated in either any Registration Statement or any
Prospectus,
(ii) any omission, or alleged omission, to state a material
fact required to be stated in any Registration Statement or any Prospectus or
necessary to make the statements in any of them not misleading,
(iii) the Trust's failure to maintain an effective
Registration Statement and Prospectus with respect to Shares of the Funds that
are the subject of the claim or demand, or
(iv) the Trust's failure to provide AFD with advertising or
sales materials to be filed with the NASD on a timely basis.
(b) The Trust's agreement to indemnify AFD, its officers or
directors, and any such controlling person will not be deemed to cover any such
claim, demand, liability or expense to the extent that it arises out of or is
based upon:
(i) any such untrue statement, alleged untrue statement,
omission or alleged omission made in any Registration Statement or any
Prospectus in reliance upon information furnished by AFD or any of its
affiliates, their officers, directors or any such controlling person to the Fund
or its representatives for use in the preparation thereof, or
(ii) willful misfeasance, bad faith or gross negligence in the
performance of AFD's or its affiliates' duties, or by reason of AFD's or its
affiliates' reckless disregard of its obligations and duties under this
Agreement ("Disqualifying Conduct").
Page 11 of 20
(c) The Trust's agreement to indemnify AFD, its officers and
directors, and any such controlling person, as aforesaid, is expressly
conditioned upon the Trust's being notified of any action brought against AFD,
its officers or directors, or any such controlling person, such notification to
be given by letter, by facsimile or by telegram addressed to the Funds at the
address set forth below within a reasonable period of time after the summons or
other first legal process shall have been served.
9. INDEMNIFICATION OF THE TRUST BY AFD
(a) AFD agrees to indemnify, defend and hold the Trust, its several
officers and Board members, and any person who controls the Trust within the
meaning of Section 15 of the Securities Act, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the reasonable
cost of investigating or defending such claims, demands or liabilities and any
reasonable counsel fees incurred in connection therewith) which the Trust, its
officers or Board members, or any such controlling person may incur under the
Securities Act, the 1940 Act, or under common law or otherwise arising out of or
based upon:
(i) any sales literature, advertisements, information,
statements or representations made by AFD and unauthorized by the Trust or any
Disqualifying Conduct in connection with the offering and sale of any Shares,
(ii) any untrue, or alleged untrue, statement of a material
fact contained in information furnished in writing by AFD to the Fund
specifically for use in the Registration Statement and used in the answers to
any of the items of the Registration Statement or in the corresponding
statements made in the Prospectus, or shall arise out of or be based upon any
omission, or alleged omission, to state a material fact in connection with such
information furnished in writing by AFD to the Trust and required to be stated
in such answers or necessary to make such information not misleading or
(iii) AFD's failure to timely file advertising or sales
material with the NASD.
(b) AFD's agreement to indemnify the Trust, its officers or
directors, and any such controlling person will not be deemed to cover any such
claim, demand, liability or expense to the extent that it arises out of or is
based upon:
(i) any such untrue statement, alleged untrue statement,
omission or alleged omission made in any Registration Statement or any
Prospectus in reliance upon information furnished by the Trust or any of its
affiliates, their officers, directors or any such controlling person of the Fund
or its representatives for use in the preparation thereof, or
Page 12 of 20
(ii) willful misfeasance, bad faith or gross negligence in the
performance of the Trust's or its affiliates' duties, or by reason of the
Trust's or its affiliates' reckless disregard of its obligations and duties
under this Agreement ("Disqualifying Conduct").
(c) AFD's agreement to indemnify the Trust, its officers and
Trustees, and any such controlling person, as aforesaid, is expressly
conditioned upon AFD's being notified of any action brought against the Trust,
its officers or Trustees, or any such controlling person, such notification to
be given by letter, by facsimile or by telegram addressed to AFD at its address
set forth below within a reasonable period of time after the summons or other
first legal process shall have been served.
10. NOTIFICATION BY THE TRUST
(a) The Trust agrees to advise AFD as soon as reasonably practical:
(i) of any request by the SEC for amendments to the
Registration Statement or any Prospectus then in effect;
(ii) of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement or any Prospectus then in effect
or of the initiation of any proceeding for that purpose;
(iii) of the happening of any event that makes untrue any
statement of a material fact made in the Registration Statement or any
Prospectus then in effect or which requires the making of a change in such
Registration Statement or Prospectus in order to make the statements therein not
misleading;
(iv) of all actions of the SEC with respect to any amendment
to any Registration Statement or any Prospectus which may from time to time be
filed with the SEC;
(v) if a current Prospectus is not on file with the SEC; and
(vi) of all advertising, sales materials and other
communications with the public required to be filed with the NASD. This
obligation shall extend to all revisions of such communications.
For purposes of this section, informal requests by or acts of the
Staff of the SEC shall not be deemed actions of or requests by the SEC or NASD.
Page 13 of 20
11. FEES AND EXPENSES
(a) In consideration of AFD's services in connection with the
distribution of Shares of the Funds, the Trust, on behalf of each Fund, agrees
to pay AFD the fees set forth in SCHEDULE B hereto. Fees will begin to accrue
for each Fund on the latter of the date of this Agreement or the date AFD begins
providing services to the Funds. For the purpose of determining fees calculated
as a function of the Trust's assets, the value of the Trust's assets and net
assets shall be computed as required by its currently effective Prospectus,
generally accepted accounting principles, and resolutions of the Board. AFD will
render, after the close of each month in which services have been furnished, a
statement reflecting all of the charges for such month; and AFD's fee shall not
be subject to pro ration.
(b) AFD will bear its own expenses in connection with the performance
of the services under this Agreement, except as provided herein or as agreed to
by the parties. In addition to the fees paid under subsection (a), the Trust
agrees to reimburse AFD for out-of-pocket expenses or advances incurred by AFD
for the items set out in Schedule B and any other expenses incurred by AFD at
the written request or with the consent of the Trust. Generally, out-of-pocket
expenses shall be considered and approved in accordance with Expense Approval
Guidelines as mutually agreed upon by the parties hereto from time to time.
(c) The fees, out-of-pocket expenses and advances identified in
subsection (a) and (b) above may be changes from time to time subject to written
agreement between the Trust and AFD.
(d) The fees, out-of-pocket expenses and advances identified in
subsection (a) and (b) above shall be paid to AFD by the respective Fund
pursuant to the Rule 12b-1 plan adopted by the Trust or, if Rule 12b-1 payments
are not sufficient to pay such fees and expenses, or if the Rule 12b-1 plan is
discontinued, or the Adviser otherwise determines that Rule 12b-1 fees shall
not, in whole or in part, be used to pay AFD, the Adviser shall be responsible
for the payment of the amount of such fees not covered by Rule 12b-1 payments.
(e) All fees under subsection (a) above are due and payable within
ten (10) days of receipt of invoice. All expenses under subsection (b) above are
due and payable within fifteen (15) days of receipt of invoice.
(f) In the event of a dispute, the Trust may only withhold that
portion of the fee or expense subject to the good faith dispute. The Trust shall
notify AFD in writing within twenty-one (21) calendar days following the receipt
of each billing notice if the Trust is disputing any amounts in good faith. If
the Trust does not provide such notice of dispute within the required time, the
billing notice will be deemed accepted by the Trust. The Trust shall settle such
disputed amounts within five (5) days of the day on which the parties agree on
the amount to be paid by payment of the agreed amount. If no agreement is
reached, then such disputed amounts shall be settled as may be required by law
or legal process. The Trust agrees that interest at the rate of eighteen (18)
percent per year, can be charged if invoices remain outstanding greater than
twenty (20) days.
Page 14 of 20
(g) The Trust shall be responsible and assumes the obligation for
payment of all the expenses of the Trust, including fees and disbursements of
its counsel and auditors, in connection with the preparation and filing of the
Registration Statement and Prospectus (including but not limited to the expense
of setting in type the Registration Statement and Prospectus and printing
sufficient quantities for internal compliance, regulatory purposes and for
distribution to current shareholders).
(h) The Trust shall bear the cost and expenses (i) of the
registration of the Shares for sale under the Securities Act; (ii) of the
registration or qualification of the Shares for sale under the securities laws
of the various States; (iii) if necessary or advisable in connection therewith,
of qualifying the Funds (but not AFD), as an issuer or as a broker or dealer, in
such States as shall be selected by the Trust and AFD pursuant to Section 6(c)
hereof; and (iv) payable to each State for continuing registration or
qualification therein until the Funds decide to discontinue registration or
qualification pursuant to Section 6(c) hereof. AFD shall pay all expenses
relating to AFD's broker-dealer qualification.
12. SELECTED DEALER AND SELECTED AGENT AGREEMENTS
AFD shall have the right to enter into selected dealer agreements
with securities dealers of its choice ("selected dealers") and selected agent
agreements with depository institutions and other financial intermediaries of
its choice ("selected agents") for the sale of Shares and to fix therein the
portion of the sales charge, if any, that may be allocated to the selected
dealers or selected agents; provided, that the Trust shall approve the forms of
agreements with selected dealers or selected agents and shall review the
compensation set forth therein. Selected dealers and selected agents shall
resell Shares of the Funds at the public offering price(s) set forth in the
Prospectus relating to the Shares. Within the United States, AFD shall offer and
sell Shares of the Funds only to selected dealers that are members in good
standing of the NASD. The Funds reserve the right to direct AFD to terminate a
selected dealer agreement with a selected dealer at any time in the absolute
discretion of the Board.
13. CONFIDENTIALITY
AFD agrees to treat all records and other information related to the
Trust as proprietary information of the Trust and, on behalf of itself and its
employees, to keep confidential all such information, except that AFD may,
provided it first notifies the Trust:
(a) Prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the SEC;
Page 15 of 20
(b) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(c) release such other information as approved in writing by the
Trust, which approval shall not be unreasonably withheld.
AFD may release any information regarding the Trust without the consent of the
Trust if AFD reasonably believes that it may be exposed to civil or criminal
legal proceedings for failure to comply, when requested to release any
information by duly constituted authorities. The Trust will be notified prior to
the release of any such information.
14. EFFECTIVENESS AND DURATION
(a) This Agreement shall become effective as of the date hereof and
will continue for an initial two-year term and will continue thereafter so long
as such continuance is specifically approved at least annually (i) by the Board
or (ii) by a vote of a majority of the outstanding voting securities of the
Funds, provided that in either event its continuance also is approved by a
majority of the Board members who are not "interested persons" of any party to
this Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval.
(b) This agreement is terminable, without penalty, on not less than
ninety (90) days notice by the Board, by vote of a majority of the outstanding
voting securities of the Funds, or by AFD.
(c) This Agreement will automatically and immediately terminate in
the event of its "assignment."
(d) AFD agrees to notify the Trust immediately upon the event of
AFD's expulsion or suspension by the NASD. This Agreement will automatically and
immediately terminate in the event of AFD's expulsion or suspension by the NASD.
(e) The obligations of Sections 8, 9, 10, 11 and 13 shall survive any
termination of this Agreement.
15. DISASTER RECOVERY
AFD shall enter into and shall maintain in effect with appropriate
parties one or more agreements making reasonable provisions for emergency use of
electronic data processing equipment to the extent appropriate equipment is
available.
Page 16 of 20
16. MISCELLANEOUS
(a) No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
(b) This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the Commonwealth of
Virginia.
(c) This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
(d) The parties may execute this Agreement or any number of
counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(e) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected by such
determination, and the rights and obligations of the parties shall be construed
and enforced as if the Agreement did not contain the particular part, term or
provision held to be illegal or invalid.
(f) In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other party resulting from such failure to perform or otherwise from such
causes.
(g) Any controversy or claim arising out of, or related to, this
Agreement, its termination or the breach thereof, shall be settled by binding
arbitration by three arbitrators (or by fewer arbitrator(s), if the parties
subsequently agree to fewer) in the State of Nebraska or the Commonwealth of
Virginia, in accordance with the rules then obtaining of the NASD, and the
arbitrators' decision shall be binding and final, and judgment upon the award
rendered may be entered in any court having jurisdiction thereof. The party
initiating the action shall determine the situs of the matter in Nebraska or
Virginia.
(h) Section and paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
(i) All notices and other communications hereunder shall be in
writing, shall be deemed to have been given when received or when sent by telex
or facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):
Page 17 of 20
TO THE TRUST: TO AFD:
Doit X. Xxxxxxx XX Xxx X. Xxxxxx
Chairman President
New River Funds Aquarius Fund Distributors, Inc.
0000 Xxxxxx Xxxxxx 0000 Xxxxx 000xx Xxxxxx
Xxxxxxx, XX 00000 Xxxxx, XX 00000
With a copy to:
Xxxx X. Xxxxxxx, Esq.
Xxxxxxxx Ronon Xxxxxxx & Xxxxx LLP
0000 00xx Xxxxxx, X.X. - Xxxxx 000
Xxxxxxxxxx, X.X. 00000
(j) Notwithstanding any other provision of this Agreement, the
parties agree that the assets and liabilities of each Fund of the Trust are
separate and distinct from the assets and liabilities of each other Fund and
that no Fund shall be liable or shall be charged for any debt, obligation or
liability of any other Fund, whether arising under this Agreement or otherwise.
(k) Each of the undersigned expressly warrants and represents that
they have full power and authority to sign this Agreement on behalf of the party
indicated and that their signature will bind the party indicated to the terms
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their names and on their behalf by and through their duly
authorized persons, as of the day and year first above written.
NEW RIVER FUNDS AQUARIUS FUND DISTRIBUTORS, INC.
By: ______________________________ By: ____________________________
Doit X. Xxxxxxx XX Xxx X. Xxxxxx
Chairman President
Page 18 of 20
UNDERWRITING AGREEMENT
SCHEDULE A - FUNDS TO BE SERVICED
New River Core Equity Fund
New River Core Fixed Income Fund
New River Small Cap Fund
Page 19 of 20
UNDERWRITING AGREEMENT
SCHEDULE B - FEES AND EXPENSES
FEES FOR BASIC SERVICES
o For services performed hereunder, the Trust shall pay .01 of 1% (1
basis point) per annum of the Fund's average daily net assets, payable
monthly in arrears, subject to a minimum annual fee of $3,000 per Fund
per share class.
FEES FOR ADVERTISING COMPLIANCE REVIEW/NASD FILINGS
o $75 per request for the first 10 pages (minutes if tape or video); $10
per page (minutes if tape or video) thereafter
o NASD expedited Service for 5 day turnaround is available for the
following charges:
o $500 per request for the first 10 pages (minutes if tape or
video); $25 per page (minutes if tape or video) thereafter
FEES FOR INDIVIDUAL LICENSING/SUPERVISION (IF DESIRED)
o $400 per year, per Series 7 representative, plus all NASD and State
fees for the representative, including license and renewal fees
OUT-OF-POCKET EXPENSES
The Trust shall pay all reasonable out-of-pocket expenses incurred by AFD in
connection with activities performed for the Trust hereunder including, without
limitation:
o typesetting, printing and distribution of Prospectuses and shareholder
reports
o production, printing, distribution and placement of advertising and
sales literature and materials
o engagement of designers, free-xxxxx writers and public relations firms
o long-distance telephone lines, services and charges
o postage
o overnight delivery charges
o NASD fees
o record retention fees
o travel, lodging and meals
Page 20 of 20
