DISTRIBUTION AGREEMENT
between
The Xxxxxxx Funds
and
T. 0. Xxxxxxxxxx Securities, Inc.
THIS AGREEMENT is made as of the 11th day of November, 1998, by and between
The Xxxxxxx Funds, a Delaware business trust (the "Fund") and T.O. Xxxxxxxxxx
Securities, a corporation organized and existing under the laws of the State of
Connecticut ("TORS").
WHEREAS the Fund is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company, and will
register one or more distinct series of shares of beneficial interest ("Shares")
for sale to the public under the Securities Act of 1933, as amended (the "1933
Act"), and will qualify its shares for sale to the public under various state
securities laws; and
WHEREAS, TORS is registered as a broker-dealer under the Securities
Exchange Act of 1934, as amended (the "1934 Act") and under each state's
securities laws, and is also a member of the National Association of Securities
Dealers, Inc. (the "NASD"); and
WHEREAS the Fund desires to retain TORS as principal underwriter and
national distributor in connection with the offering and sale of the Shares of
each series listed on Schedule A (as amended from time to time) to this
Agreement and TORS is willing to act as principal underwriter and national
distributor for the Fund on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Fund hereby appoints TORS as its agent to be the
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principal underwriter and national distributor of its Shares and to hold itself
out as available to receive and accept orders for the purchase and redemption of
the Shares on behalf of the Fund, subject to the terms and for the period set
forth in this Agreement. TORS hereby accepts such appointment and agrees to act
hereunder. The Fund understands that any solicitation activities conducted on
behalf of the Fund will be conducted primarily by employees of the Fund's
sponsor who shall become registered representatives of TORS.
2. SERVICES AND DUTIES OF TORS
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(a) TORS agrees to sell Shares on a best efforts basis from time to
time during the term of this Agreement as agent for the Fund and upon the terms
described in the Registration Statement. As used in this Agreement, the term
"Registration Statement" shall mean the currently effective registration
statement of the Fund, and any supplements thereto, under the 1933 Act and the
1940 Act.
(b) TORS, with the operational assistance of the Fund's transfer
agent, will hold itself available to receive purchase and redemption orders
satisfactory to T.O.R for shares and will accept such orders on behalf of the
Fund. Such purchase orders shall be deemed effective at the time and in the
manner set forth in the Registration Statement.
(c) TORS, with the operational assistance of the Fund's transfer
agent, shall make Shares available through the National Securities Clearing
Corporation's Fund/SERV System.
(d) TORS and its registered personnel shall provide to investors and
potential investors only such information regarding the Fund as the Fund shall
provide or approve. TORS shall review and file all proposed advertisements and
sales literature with regulators, as appropriate, and consult with the Fund
regarding any comments provided by regulators with respect to such materials.
(e) The offering price of the Shares shall be the price determined in
accordance with, and in the manner set forth in, the most-current Prospectus.
The Fund shall make available to TORS a statement of each computation of net
asset value and the details of entering into such computation.
(f) TORS at its sole discretion may repurchase Shares offered for
sale by the shareholders. Repurchase of Shares by TORS shall be at the price
determined in accordance with, and in the manner set forth in, the most current
Prospectus. At the end of each business day, T.O.R shall notify, by any
appropriate means, the Fund and its transfer agent of the orders for repurchase
of Shares received by TORS since the last such report, the amount to be paid for
such Shares, and the identity of the shareholders offering Shares for
repurchase. The Fund reserves the right to suspend such repurchase right upon
written notice to TORS. TORS further agrees to act as agent for the Fund to
receive and transmit promptly to the Fund's transfer agent shareholder requests
for redemption of Shares.
(g) TORS shall not be obligated to sell any certain number of
Shares.
(h) TORS shall prepare reports for the Board regarding its activities
under this Agreement as from time to time shall be reasonably requested by the
Board.
(i) TORS shall at all times during the term of this Agreement remain
registered as a broker-dealer under the 1934 Act and with all 50 states, and
shall also remain a member in good standing of the NASD. TORS shall immediately
notify the Fund in writing if it receives written notification that such
registrations or membership have been temporarily or permanently suspended,
limited or terminated.
(j) TORS will serve as licensing/regulatory agent for employees and
other personnel of the Fund's sponsor, Xxxxxxx Associates, Inc., who will be
registered as TORS broker-dealer representatives.
3. DUTIES OF THE FUND.
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(a) The Fund shall keep TORS fully informed of its affairs and shall
provide to TORS from time to time copies of all information, financial
statements, and other papers that TORS may reasonably request for use in
connection with the distribution of Shares, including, without limitation,
certified copies of any financial statements prepared for the Fund by its
independent public accountant and such reasonable number of copies of the most
current Prospectus, Statement of Additional Information ("SAI"), and annual and
interim reports as TORS may request, and the Fund shall fully cooperate in the
efforts of TORS to sell and arrange for the sale of Shares.
(b) The Fund shall maintain a currently effective Registration
Statement on Form N-1A with the Securities and Exchange Commission (the "SEC"),
satisfy proper notice filing and fee payment provisions of applicable states and
file such reports and other documents as may be required under applicable
federal and state laws. The Fund shall notify TORS in writing of the states in
which the Shares may be sold and shall notify TORS in writing of any changes to
such information. The Fund shall bear all expenses related to preparing and
typesetting such Prospectuses, SAI and other materials required by law and such
other expenses, including printing and mailing expenses, related to the Fund's
communication with persons who are shareholders.
(c) The Fund shall not use any advertisements or other sales
materials that have not been (i) submitted to TORS for its review and approval,
and (ii) if required, filed with the appropriate regulators.
(d) The Fund represents and warrants that its Registration Statement
and any advertisements and sales literature (excluding statements relating to
TORS and the services it provides that are based upon written information
furnished by TORS expressly for inclusion therein) of the Fund shall not contain
any untrue statement of material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, and that all statements or information furnished to TORS pursuant to
Section 3(a) hereof, shall be true and correct in all material respects.
4. OTHER FUND OPERATING AGREEMENTS. The Fund and TORS further agree that
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the Fund has entered into the Fund Administrative Services Agreement, Fund
Accounting Services Agreement, Transfer Agent Agreement, Custodian Agreement,
and Fulfillment Services Agreement with Firstar Mutual Fund Services, LLC of
Milwaukee, Wisconsin ("FMFS"), copies of which are in the hands of the parties
hereto and to which reference may be had (which agreements are herein
collectively referred to as the "Fund Operating Agreements.") The Fund agrees
to maintain the Fund Operating Agreements in effect during the term of this
Agreement. The parties hereto agree that TORS is a third party beneficiary to
the Fund Operating Agreements and that portions of the duties and services to be
provided by TORS hereunder can be performed by FMFS for TORS's and the Fund's
benefit. The Fund shall be responsible for all amounts due under the Fund
Operating Agreements and TORS shall not be responsible for duplication of duties
or services provided for in the Fund Operating Agreements or any fees or
expenses thereunder.
5. OTHER BROKER-DEALERS. TORS in its discretion shall enter into
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agreements to sell Shares to such registered and qualified retail dealers, as
reasonably requested by the Fund. In making agreements with such dealers, TORS
shall act only as principal and not as agent for the Fund. The form of any such
dealer agreement shall be mutually agreed upon and approved by the Fund and
TORS.
6. WITHDRAWAL OF OFFERING. The Fund reserves the right at any time to
----------------------
withdraw all offerings of any or all Shares by written notice to TORS at its
principal office. No Shares shall be offered by either TORS or the Fund under
any provisions of this Agreement and no orders for the purchase of Shares
hereunder shall be accepted by the Fund if and so long as effectiveness of the
Registration Statement then in effect or any necessary amendments thereto shall
be suspended under any of the provisions of the 1933 Act, or if and so long as a
current prospectus as required by Section 5(b)(2) of the 1933 Act is not on file
with the SEC.
7. SERVICES NOT EXCLUSIVE. The services furnished by TORS hereunder are
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not to be deemed exclusive. TORS shall be free to furnish similar services to
other funds so long as its services under this Agreement are not impaired
thereby. The Firstar TORS relationship is an exclusive partnership. The Fund
reserves the right to (i) sell Shares to investors on applications received and
accepted by the Fund; (ii) issue Shares in connection with a merger,
consolidation, or recapitalization of the Fund; (iii) issue additional Shares to
holders of Shares; or (iv) issue Shares in connection with any offer of exchange
permitted by Section 11 of the 1940 Act.
8. EXPENSES OF THE FUND. The Fund shall bear all costs and expenses of
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registering the Shares with the SEC and state and other regulatory bodies, and
shall assume expenses related to communications with shareholders of the Fund
including, but not limited to, (i) fees and disbursements of its counsel and
independent public accountant; (ii) the preparation, filing, and printing of
Registration Statements and/or Prospectuses or SAIs; (iii) the preparation and
mailing of annual and interim reports, Prospectuses, SAIs, and proxy materials
to shareholders; (iv) such other expenses related to the communications with
persons who are shareholders of the Fund; and (v) the qualifications of Shares
for sale under the securities laws of such jurisdictions as shall be selected by
the Fund pursuant to the Paragraph 3(b) hereof, and the costs and expenses
payable to each jurisdiction for continuing qualification therein. In addition,
the Fund shall bear all costs of preparing, printing, mailing, and filing any
advertisements and sales literature. TORS does not assume responsibility for
any expenses not assumed hereunder.
9. COMPENSATION. As compensation for the services performed and the
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expenses assumed by TORS under this Agreement including, but not limited to, any
commissions paid for sales of Shares, TORS shall be entitled to the fees set
forth in Schedule B to this Agreement which are payable promptly after the last
day of each month. Such fees shall be paid to TORS by the Fund pursuant to its
Rule 12b-1 plan or, if Rule 12b-1 payments are not sufficient to pay such fees,
or if the Rule 12b-1 plan is discontinued, or if the Fund's sponsor, Xxxxxxx
Associates, Inc. otherwise determines that Rule 12b-1 fees shall not, in whole
or in part, be used to pay TORS, Xxxxxxx Associates, Inc. shall be responsible
for the payment of the amount of such fees not covered by Rule 12b-1 payments.
10. STATUS OF TORS. TORS is an independent contractor and shall be agent
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of the Fund only with respect to the sale and redemption of Shares.
11. INDEMNIFICATION.
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(a) The Fund agrees to indemnify, defend, and hold TORS, its
officers, and directors, and any person who controls TORS within the meaning of
Section 15 of the 1933 Act, free and harmless from and against any and all
claims, demands, or liabilities, and expenses (including the cost of
investigating or defending such claims, demands, liabilities, and any counsel
fees incurred in connection therewith) that TORS, its officers and directors, or
any such controlling person may incur under the 1933 Act, or under common law or
otherwise, arising out of or based upon any (i) alleged untrue statement of a
material fact contained in the Registration Statement, Prospectus, SAI, or sales
literature; (ii) alleged omission to state a material fact required to be stated
in the Fund's registration statement or necessary to make the statements therein
not misleading; or (iii) failure by the Fund to comply with the terms of the
Agreement; provided, that in no event shall anything contained herein be so
construed as to protect TORS against any liability to the Fund or its
shareholders to which TORS would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations under this Agreement.
(b) The Fund shall not be liable to TORS under this Agreement with
respect to any claim made against TORS or any person indemnified unless TORS or
other such person shall have notified the Fund 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 TORS or such
other person (or after TORS or other person shall have received notice of
service on any designated agent). However, failure to notify the Fund of any
claim shall not relieve the Fund from any liability that it may have to TORS or
any person against whom such action is brought otherwise than on account of this
Agreement.
(c) The Fund shall be entitled to participate at its own expense in
the defense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this Agreement. If the Fund elects to assume the
defense of any such claim, the defense shall be conducted by counsel chosen by
the Fund and satisfactory indemnified defendants in the suit whose approval
shall not be unreasonably withheld. In the event that the Fund elects to assume
the defense of any suit and retain counsel, the indemnified defendants shall
bear the fees and expenses of any additional counsel retained by them. If the
Fund does not elect to assume the defense of a suit, it will reimburse the
indemnified defendants for the reasonable fees and expenses of any counsel
retained by the indemnified defendants. The Fund agrees to promptly notify TORS
of the commencement of any litigation or proceedings against it or any of its
officers and directors in connection with the issuance or sale of any of its
Shares.
(d) TORS agrees to indemnify, defend, and hold the Fund, its officers
and directors, and any person who controls the Fund within the meaning of
Section 15 of the 1933 Act, free and harmless from and against any and all
claims, demands, liabilities, and expenses (including the cost of investigating
or defending against such claims, demands, or liabilities, and any counsel fees
incurred in connection therewith) that the Fund, its directors and officers, or
any such controlling person may incur under the 1933 Act, or under common law or
otherwise, resulting from TORS's willful misfeasance, bad faith, or gross
negligence in the performance of its obligations and duties under this
Agreement, or arising out of or based upon any alleged untrue statement of a
material fact contained in information furnished in writing by TORS to the Fund
for use in the Registration Statement, Prospectus, or SAI arising out of or
based upon any alleged omission to state a material fact in connection with such
information required to be stated in either thereof or necessary to make such
information not misleading.
(e) TORS shall be entitled to participate, at its own expense, in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce the claim, but if TORS elects to assume the defense, the defense shall
be conducted by counsel chosen by TORS and satisfactory to the indemnified
defendants whose approval shall not be unreasonably withheld. In the event that
TORS elects to assume the defense of any suit and retain counsel, the defendants
in the suit shall bear the fees and expenses of any additional counsel retained
by them. If TORS does not elect to assume the defense of any suit, it will
reimburse the indemnified defendants in the suit for the reasonable fees and
expenses of any counsel retained by them.
12. DURATION AND TERMINATION.
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(a) This Agreement shall become effective on the date first written
above or such later date as indicated in Schedule A and, unless sooner
terminated as provided herein, will continue in effect for two years from the
above written date. Thereafter, if not terminated, this Agreement shall
continue in effect for successive annual periods, provided that such continuance
is specifically approved at least annually (i) by a vote of a majority of the
Fund's Board who are neither interested persons (as defined in the 0000 Xxx) of
the Fund ("Independent Trustees") or TORS cast in person at a meeting called for
the purpose of voting on such approval, and (ii) by the Board or by vote of a
majority of the outstanding voting securities of the Fund.
(b) Notwithstanding the foregoing, this Agreement may be terminated
in its entirety at any time, without the payment of any penalty, by vote of the
Board, by vote of a majority of the Independent Trustees, or by vote of a
majority of the outstanding voting securities of the Fund on sixty days' written
notice to TORS or by TORS at any time, without the payment of any penalty, on
sixty days' written notice to the Fund. This Agreement will automatically
terminate in the event of its assignment.
13. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
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changed, waived, discharged, or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge, or termination is sought. This Agreement may be amended with the
approval of the Board or of a majority of the outstanding voting securities of
the Fund; provided, that in either case, such amendment also shall be approved
by a majority of the Independent trustees/directors.
14. LIMITATION OF LIABILITY. The Board and shareholders of the Fund shall
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not be personally liable for obligations of the Fund in connection with any
matter arising from or in connection with this Agreement. This Agreement is not
binding upon any trustee, officer, or shareholder of the Fund individually, and
no such person shall be individually liable with respect to any action or
inaction resulting from this Agreement.
15. NOTICE. Any notice required or permitted to be given by either party
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to the other shall be deemed sufficient upon receipt in writing at the other
party's principal offices.
16. MISCELLANEOUS. The captions in this Agreement are included for
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convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule, or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person," and "assignment" shall have the same meaning as such terms
have in the 1940 Act.
17. GOVERNING LAW. This Agreement shall be construed in accordance with
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the laws of the State of Delaware and the 1940 Act (without regard, however, to
the conflicts of law principles). To the extent that the applicable laws of the
state of Delaware conflict with the applicable provisions of the 1940 Act, the
latter shall control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated as of the day and year first above
written.
THE XXXXXXX FUNDS T.O. XXXXXXXXXX SECURITIES
By: /S/ Xxxxxx X. Xxxxxx By: /S/ Xxxxxx Xxxxxx, Jr.
--------------------------- -----------------------------
Print: Xxxxxx X. Xxxxxx Print: Xxxxxx Xxxxxx, Jr.
--------------------------- -----------------------------
Title: President Title: President
--------------------------- -----------------------------
Date: November 11, 1998 Date: November 11, 1998
Attest: /s/ Xxxxxx X. Xxxx Attest: /s/ Xxxxxxxx X. Xxxxx
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SCHEDULE A
to the
DISTRIBUTION AGREEMENT
between
The Xxxxxxx Funds
and
T.O. Xxxxxxxxxx Securities
Pursuant to Section 1 of the Distribution Agreement between The Xxxxxxx
Funds ("Fund") and T.O. Xxxxxxxxxx Securities ("TORS"), the Fund hereby appoints
TORS as its agent to be the principal underwriter of Fund with respect to its
following series:
Xxxxxxx Growth Fund
Dated: November 11, 1998
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SCHEDULE B
to the
DISTRIBUTION AGREEMENT
between
The Xxxxxxx Funds
and
T.O. Xxxxxxxxxx Securities, Inc.
As compensation pursuant to Section 9. of the Distribution Agreement
between The Xxxxxxx Funds ("Fund") and T.O. Xxxxxxxxxx Securities ("TORS"), the
Fund shall pay to TORS the sum of:
1. an annual fee of $16,000 for the first series of the Fund and $5,000
for each series thereafter or .02% (2 basis points) of the average daily net
assets of each series, computed daily and paid monthly, whichever is greater;
2. an annual compliance fee of $500 for call employee of the Funds
investment adviser who is designated by the Fund to become a Series 6 of Series
7 registered representative of TORS (compliance costs for other types of
licenses may vary), as well as the ongoing license fees and incidental costs
associated with such registrations;
3. the compensation paid by TORS to such registered representatives in
accordance with compensation schedules, as agreed upon by TORS and the Fund from
time to time;
4. the reasonable fees associated with listing and maintaining shares on
the National Securities Clearing Corporation's Fund/SERV System, on a "pass
through" basis, as agreed upon by TORS and the Fund and as reflected in the
attached NSCC fee schedule, which may change without notice; and
5. incidental expenses associated with printing and distribution
advertising and sales literature;
6. fees for legal review of advertisements and sales literature at the
rate of $150 per job for the first ten pages of an advertisement and $20 per
page thereafter, plus NASD filing fees which we billed on an out of pocket
basis;
7. plus out of pocket expenses including but not limited to travel
expenses and retention of records.
Dated: November 11, 1998
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