Exhibit 99.B(6)(a)
UNDERWRITING AGREEMENT
This Agreement, dated as of the 25th day of July, 1996, made by and between
Trainer, Xxxxxxx First Mutual Funds, a business trust (the "Trust") operating as
an open-end, management investment company registered under the Investment
Company Act of 1940, as amended (the "Act"); Trainer, Xxxxxxx & Co., Inc.
("Trainer Xxxxxxx"), a registered investment adviser existing as a corporation
duly organized and existing under the laws of the state of New York; and
Fund/Plan Broker Services, Inc. ("Fund/Plan"), a corporation duly organized and
existing under the laws of the State of Delaware (collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, the Trust is authorized by its Trust Instrument to issue separate
series of shares representing interests in separate investment portfolios (the
"Series"), which Series are identified on Schedule "C" attached hereto, and
which Schedule "C" may be amended from time to time by mutual agreement among
the Parties;
WHEREAS, Trainer Xxxxxxx has been appointed investment adviser to the
Trust;
WHEREAS, Fund/Plan is a broker-dealer registered with the U.S. Securities
and Exchange Commission and a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Parties are desirous of entering into an agreement providing
for the distribution by Fund/Plan of the shares of the Trust (the "Shares").
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, and in exchange of good and valuable consideration, the
sufficiency and receipt of which is hereby acknowledged, the Parties hereto,
intending to be legally bound, do hereby agree as follows:
1. Appointment.
-----------
The Trust hereby appoints Fund/Plan as its exclusive agent for the
distribution of the Shares in the fifty United States of America, the
District of Columbia and Commonwealth of Puerto Rico, and Fund/Plan hereby
accepts such appointment under the terms of this Agreement. The Trust agrees
that it will not sell any shares to any person except to fill orders for the
shares received through Fund/Plan; provided, however, that the foregoing
exclusive right shall not apply: (a) to shares issued or sold in connection
with the merger or consolidation of any other investment company with the
Trust or the acquisition by purchase or otherwise of all or substantially
all of the assets of
company by the Trust; (b) to shares which may be offered by the Trust to its
stockholders for reinvestment of cash distributed from capital gains or net
investment income of the Trust; or (c) to shares which may be issued to
shareholders of other funds who exercise any exchange privilege set forth in
the Trust's Prospectus. Notwithstanding any other provision hereof, the
Trust may terminate, suspend, or withdraw the offering of the Shares
whenever, in its sole discretion, it deems such action to be desirable.
2. Sale and Repurchase of Shares.
-----------------------------
Fund/Plan agrees to provide the services contemplated hereby, and
(a) Fund/Plan is hereby granted the right, as agent for the Trust, to sell
Shares to the public against orders therefor at the public offering
price (as defined in sub-paragraph 2.(c) below).
(b) Fund/Plan will also have the right to take, as agent for the Trust, all
actions which, in Fund/Plan's judgement, and subject to the Trust's
reasonable approval, are necessary to carry into effect the
distribution of the Shares.
(c) The net asset value of the Shares shall be determined in the manner
provided in the then current Prospectus and Statement of Additional
Information relating to the Shares, and when determined shall be
applicable to all transactions as provided in the Prospectus. The net
asset value of the Shares shall be calculated by the Trust or by
another entity on behalf of the Trust. Fund/Plan shall have no duty to
inquire into, or liability for, the accuracy of the net asset value per
Share as calculated.
(d) On every sale, the Distributor shall promptly pay to the Trust the
applicable net asset value of the Shares. (e)Upon receipt of purchase
instructions, Fund/Plan will transmit such instructions to the Trust or
its transfer agent for registration of the Shares purchased.
(f) Nothing in this Agreement shall prevent Fund/Plan or any affiliated
person (as defined in the Act) of Fund/Plan from acting as underwriter
or distributor for any other person, firm or corporation (including
other investment companies), or in any way limit or restrict Fund/Plan
or such affiliated person from buying, selling or trading any
securities for its or their own account or for the accounts of others
for whom it or they may be
acting; provided, however, that Fund/Plan expressly agrees that it will
not for its own account purchase any Shares of the Trust except for
investment purposes, and that it will not for its own account sell any
such Shares except by redemption of such Shares by the Trust, and that
it will not undertake in any activities which, in its judgement, will
adversely affect the performance of its obligations to the Trust under
this Agreement.
(g) Fund/Plan may repurchase Shares at such prices and upon such terms and
conditions as shall be specified in the Prospectus.
3. Rules of Sale of Shares.
-----------------------
Fund/Plan does not agree to sell any specific number of Shares. Fund/Plan,
as Underwriter for the Trust, undertakes to sell Shares on a best efforts
basis and only against orders received therefor. The Trust reserves the
right to terminate, suspend or withdraw the sale of its Shares for any
reason deemed adequate by it, and the Trust reserves the right to refuse at
any time or times to sell any of its Shares to any person for any reason
deemed adequate by it.
4. Rules of NASD.
-------------
(a) Fund/Plan will conform to the Rules of Fair Practice of the NASD and
the securities laws of any jurisdiction in which it directly or
indirectly sells any Shares.
(b) Fund/Plan will require each dealer with whom Fund/Plan has a selling
agreement to conform to the applicable provisions of the Prospectus,
with respect to the public offering price of the Shares, and Fund/Plan
shall not cause the Trust to withhold the placing of purchase orders
so as to make a profit thereby.
(c) The Trust and Trainer Xxxxxxx agree to furnish to Fund/Plan sufficient
copies of any and all: agreements, plans, communications with the
public or other materials which the Trust or Trainer Xxxxxxx intends
to use in connection with any sales of Shares, in adequate time for
Fund/Plan to file and clear such materials with the proper authorities
before they are put in use. Fund/Plan and the Trust or Trainer Xxxxxxx
may agree that any such material does not need to be filed subsequent
to distribution. In addition,
the Trust and Trainer Xxxxxxx agree not to use any such materials
until so filed and cleared for use by appropriate authorities as well
as by Fund/Plan.
(d) Fund/Plan, at its own expense, will qualify as a dealer or broker, or
otherwise, under all applicable state or federal laws required in
order that the Shares may be sold in such states as may be mutually
agreed upon by the Parties.
(e) Fund/Plan shall remain registered with the U.S. Securities and
Exchange Commission and a member of the National Association of
Securities Dealers for the term of this Agreement.
(f) Fund/Plan shall not, in connection with any sale or solicitation of a
sale of the Shares, make or authorize any representative, service
organization, broker or dealer to make any representations concerning
the Shares, except those contained in the Prospectus covering the
Shares and in communications with the public or sales materials
approved by Fund/Plan as information supplemental to such Prospectus.
Copies of the Prospectus will be supplied by the Trust or Trainer
Xxxxxxx to Fund/Plan in reasonable quantities upon request.
5. Records to be Supplied by the Trust.
-----------------------------------
The Trust shall furnish to Fund/Plan copies of all information, financial
statements and other papers which Fund/Plan may reasonably request for use
in connection with the distribution of the Shares including, but not limited
to, one certified copy of all financial statements prepared for the Trust by
its independent public accountants.
6. Expenses.
--------
(a) The Trust will bear the following expenses:
(i) preparation, setting in type, and printing of sufficient copies of
the Prospectuses and Statements of Additional Information for
distribution to shareholders, and the cost of distribution of same
to the shareholders;
(ii) preparation, printing and distribution of reports and other
communications to shareholders;
(iii) registration of the Shares under the federal securities laws;
(iv) qualification of the Shares for sale in the jurisdictions as
directed by the Trust;
(v) maintaining facilities for the issue and transfer of the Shares;
(vi) supplying information, prices and other data to be furnished by
the Trust under this Agreement; and
(vii) any original issue taxes or transfer taxes applicable to the
sale or delivery of the Shares or certificates therefor.
(b) Trainer Xxxxxxx will pay all other expenses incident to the sale and
distribution of the Shares sold hereunder.
7. Term and Compensation.
---------------------
(a) The term of this Agreement shall commence on the date on which the
Trust's registration statement is declared effective by the U.S.
Securities and Exchange Commission ("Effective Date").
(b) This Agreement shall remain in effect for two (2) years from the
Effective Date. This Agreement shall continue thereafter for periods
not exceeding one (1) year, if approved at least annually (i) by a
vote of a majority of the outstanding voting securities of each
Series; or (ii) by a vote of a majority of the Trustees of the Trust
who are not parties to this Agreement (other than as Trustees of the
Trust) or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval.
(c) Fees payable to Fund/Plan shall be paid by Trainer Xxxxxxx as set
forth in Schedule "B" attached and shall be fixed for the two (2) year
period commencing on the Effective Date of this Agreement. Thereafter,
the fee schedule will be subject to annual review and adjustment.
(d) This Agreement (I) may at any time be terminated without the payment
of any penalty, either by a vote of the Trustees of the Trust or by a
vote of a majority of the outstanding voting securities of each Series
with respect to such Series, on sixty (60) days' written notice to
Fund/Plan; and (ii) may be terminated by Fund/Plan on sixty (60) days'
written notice to the Trust with respect to any Series.
(e) This Agreement shall automatically terminate in the event of its
assignment.
8. Indemnification of Fund/Plan by Trainer Xxxxxxx.
------------------------------------------------
Trainer Xxxxxxx and the Trust will indemnify and hold Fund/Plan harmless
for the actions of Trainer Xxxxxxx'x employees registered with the NASD as
Fund/Plan representatives, and hereby undertakes to maintain compliance
with all rules and
regulations concerning any and all sales presentations made by such employees.
9. Liability of Fund/Plan.
----------------------
(a) Fund/Plan, its directors, officers, employees, shareholders and agents
shall not be liable for any error of judgement or mistake of law or
for any loss suffered by the Trust in connection with the performance
of this Agreement, except a loss resulting from a breach of
Fund/Plan's obligation pursuant to Section 4 of this Agreement (Rules
of NASD), a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of Fund/Plan in
the performance of its obligations and duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
(b) The Trust agrees to indemnify and hold harmless Fund/Plan against any
and all liability, loss, damages, costs or expenses (including
reasonable counsel fees) which Fund/Plan may incur or be required to
pay hereafter, in connection with any action, suit or other
proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which Fund/Plan may be involved
as a party or otherwise or with which Fund/Plan may be threatened, by
reason of the offer or sale of the Trust Shares by persons other than
Fund/Plan or its representatives, prior to the execution of this
Agreement. If a claim is made against Fund/Plan as to which Fund/Plan
may seek indemnity under this Section, Fund/Plan shall notify the
Trust promptly after any written assertion of such claim threatening
to institute an action or proceeding with respect thereto and shall
notify the Trust promptly of any action commenced against Fund/Plan
within 10 days time after Fund/Plan shall have been served with a
summons or other legal process, giving information as to the nature
and basis of the claim. Failure so to notify the Trust shall not,
however, relieve the Trust from any liability which it may have on
account of the indemnity under this Section 9(b) if the Trust has not
been prejudiced in any material respect by such failure. The Trust
shall have the sole right to control the settlement of any such
action, suit or proceeding subject to Fund/Plan's approval, which
shall not be unreasonably withheld. Fund/Plan shall have the right to
participate in the defense of an action or proceeding and to retain
its own counsel, and the reasonable fees and expenses of such counsel
shall be
borne by the Trust (which shall pay such fees, costs and expenses at
least quarterly) if:
(I) Fund/Plan has received an opinion of counsel stating that
the use of counsel chosen by the Trust to represent Fund/Plan
would present such counsel with a conflict of interest;
(ii) the defendants in, or targets of, any such action or
proceeding include both Fund/Plan and the Trust, and legal
counsel to Fund/Plan shall have reasonably concluded that there
are legal defenses available to it which are different from or
additional to those available to the Trust or which may be
adverse to or inconsistent with defenses available to the Trust
(in which case the Trust shall not have the right to direct the
defense of such action on behalf of Fund/Plan); or
(iii) the Trust shall authorize Fund/Plan to employ separate
counsel at the expense of the Trust.
(c) Any person, even though also a director, officer, employee, shareholder or
agent of Fund/Plan, who may be or become an officer, director, trustee,
employee or agent of the Trust, shall be deemed, when rendering services to
the Trust or acting on any business of the Trust (other than services or
business in connection with Fund/Plan's duties hereunder), to be rendering
such services to or acting solely for the Trust and not as a director,
officer, employee, shareholder or agent, or one under the control or
direction of Fund/Plan even though receiving a salary from Fund/Plan.
(d) The Trust agrees to indemnify and hold harmless Fund/Plan, and each person
who controls Fund/Plan within the meaning of Section 15 of the Securities
Act of 1933, as amended (the "Securities Act"), or Section 20 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), against
any and all losses, claims, damages and liabilities, joint or several
(including any reasonable investigative, legal and other expenses incurred
in connection therewith) to which they, or any of them, may become subject
under the Act, the Securities Act, the Exchange Act or other federal or
state law or regulation, at common law or otherwise insofar as such losses,
claims, damages or liabilities (or actions, suits or proceedings in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in a Prospectus, Statement of
Additional Information, supplement thereto, sales literature or other
written information prepared by the Trust and furnished by the Trust
to Fund/Plan for Fund/Plan's use hereunder, disseminated by the Trust
or which arise out of or are 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.
Such indemnity shall not, however, inure to the benefit of Fund/Plan
(or any person controlling Fund/Plan) on account of any losses,
claims, damages or liabilities (or actions, suits or proceedings in
respect thereof) arising from the sale of the Shares of the Trust to
any person by Fund/Plan (I) if such untrue statement or omission or
alleged untrue statement or omission was made in the Prospectus,
Statement of Additional Information, or supplement, sales or other
literature, in reliance upon and in conformity with information
furnished in writing to the Trust by Fund/Plan specifically for use
therein or (ii) if such losses, claims, damages or liabilities arise
out of or are based upon an untrue statement or omission or alleged
untrue statement or omission found in any Prospectus, Statement of
Additional Information, supplement, sales or other literature,
subsequently corrected, but negligently distributed by Fund/Plan and a
copy of the corrected Prospectus was not delivered to such person at
or before the confirmation of the sale to such person.
(e) Fund/Plan shall not be responsible for any damages, consequential or
otherwise, which Trainer Xxxxxxx or the Trust may experience, due to
the disruption of the distribution of Shares caused by any action or
inaction of any registered representative or affiliate of Fund/Plan or
of Fund/Plan itself.
10. Amendments.
----------
No provision of this Agreement may be amended or modified in any manner
whatsoever, except by a written agreement properly authorized and executed
by the Parties.
11. Section Headings.
----------------
Section and paragraph headings are for convenience only and shall not be
construed as part of this Agreement.
12. Reports.
-------
Fund/Plan shall prepare reports for the Board of Trustees of the Trust, on
a quarterly basis, showing such information as, from time to time, shall
be reasonably requested by such Board.
13. Severability.
------------
If any part, term or provision of this Agreement is held by any court to
be illegal, in conflict with any law or otherwise invalid, the remaining
portion or portions shall be considered severable and not affected, 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 provided that the basic agreement is not
thereby substantially impaired.
14. Governing Law.
-------------
This Agreement shall be governed by the laws of the State New York and the
exclusive venue of any action arising under this Agreement shall be
Xxxxxxxxxx County, Commonwealth of Pennsylvania.
15. Authority to Execute
--------------------
The Parties represent and warrant to each other that the execution and
delivery of this Agreement by the undersigned officer of each Party has
been duly and validly authorized; and, when duly executed, this Agreement
will constitute a valid and legally binding and enforceable obligation of
each Party.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement consisting of
ten type written pages, together with Schedule "A" and Schedule "B", to be
signed by their duly authorized officers, as of the day and year first above
written.
Trainer, Xxxxxxx First Mutual Funds Fund/Plan Broker Services, Inc.
----------------------------------- -------------------------------
---------------------------------- -----------------------------------
By: Xxxxxxx X. Xxxxx, President By: Xxxxxxx X. Xxxxx, President
Trainer, Xxxxxxx First Mutual Funds
-----------------------------------
-----------------------------------
By: Xxxxx X. Xxxx, President
Schedule "A"
============
Underwriter/Sponsor Services
for
Trainer, Xxxxxxx First Mutual Funds
I. Underwriter/Sponsor services include:
------------------------------------
A) Preparation and execution of Underwriter and 12b-1 Plan Agreements
. Monitoring accruals
. Monitoring expenses
. Disbursements for expenses and trail commissions
B) Quarterly 12b-1 Reports to Board of Trustees
C) Literature review, recommendations and submission to the NASD
D) Initial NASD Licensing and Transfers of Registered Representatives
. U-4 Form and Fingerprint Submission to NASD
. Supplying Series 6 and 63 written study material
. Registration for Exam Preparation classes
. Renewals and Terminations of Representatives
E) Written supervisory procedures and manuals for Registered
Representatives
F) Ongoing compliance updates for Representatives regarding sales
practices, written correspondence and other communications with the
public.
G) NASD Continuing Education Requirement
Schedule "B"
============
Underwriter and Distribution Fee Schedule
for
Trainer, Xxxxxxx First Mutual Funds
This Fee Schedule is fixed for a period of two (2) years from the Effective Date
as that term is defined in the Agreement.
I. A) Underwriter/Sponsor Services
----------------------------
The annual fee to Fund/Plan Broker Services (FPBS) of $20,000 per year
for the initial portfolio or class of shares and $5,000 per year for
each additional portfolio or class of shares for services rendered as
primary Underwriter/Sponsor of the Trust, including primary
licensing/regulatory agent for Trust personnel.
The fee for representing the Trust as primary Distributor includes the
expenses and personnel required to maintain the various regulatory
books and records of the Broker/Dealer and maintenance of shareholder
files and records for all transactions processed on behalf of the
Trust. These fees also include the regulatory requirements of all
marketing related and distribution reports including maintenance of
records regarding individual transaction activities of the Trust's
registered representatives.
B) FPBS will maintain annual NASD and state license renewals and the
monitoring required of representative activities as follows:
$3,000 per Representative (each calender year)
Schedule "C"
============
Identification of Series
------------------------
Below are listed the Series and Classes of Shares to which services under this
Agreement are to be performed as of the Effective Date of this Agreement:
"Trainer, Xxxxxxx First Mutual Funds"
1. First Mutual Fund
2. Trainer, Xxxxxxx Emerging Growth Fund
3. Trainer, Xxxxxxx Total Return Bond Fund
This Schedule "C" may be amended from time to time by agreement of the Parties.
