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DISTRIBUTION AGREEMENT
BETWEEN
XXXXXX INVESTMENT FUNDS, INC.
AND
XXXXXXXX CAPITAL MARKETS, INC.
THIS AGREEMENT is made as of November 24, 1998, between Xxxxxx
Investment Funds, Inc. ("Fund"), a corporation organized and existing under the
laws of Maryland, and Xxxxxxxx Capital Markets, Inc. ("RCM"), a corporation
organized and existing under the laws of the State of New York.
WHEREAS the Fund is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company, and
has registered one or more distinct series of shares of common stock ("Shares")
for sale to the public under the Securities Act of 1933, as amended ("1933
Act"), and has qualified its shares for sale to the public under various state
securities laws; and
WHEREAS the Fund desires to retain RCM as principal underwriter 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
WHEREAS this Agreement has been approved by a vote of the Fund's board
of directors ("Board") and its disinterested directors in conformity with
Section 15(c) under the 1940 Act; and
WHEREAS RCM is willing to act as principal underwriter 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 RCM as its agent to
be the principal underwriter so as 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. RCM
hereby accepts such appointment and agrees to act hereunder.
2. SERVICES AND DUTIES OF RCM.
(a) RCM 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 0000 Xxx.
(b) RCM will hold itself available to receive purchase and
redemption orders satisfactory to RCM for Shares and will accept such orders on
behalf of the Fund. Such purchase
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orders shall be deemed effective at the time and in the manner set forth in the
Registration Statement.
(c) RCM, 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) RCM shall provide to investors and potential investors
only such information regarding the Fund as the Fund shall provide or approve.
RCM shall review and file in a reasonably prompt manner all proposed
advertisements and sales literature with appropriate regulators and consult with
the Fund regarding any comments provided by regulators with respect to such
materials. No employee of RCM shall make any oral statements or representations
regarding the Fund, provided, however, that this provision shall not apply to
any registered representative who is an employee of the Fund's sponsor.
(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 RCM a statement of each computation
of net asset value and the details of entering into such computation.
(f) RCM at its sole discretion may repurchase Shares offered
for sale by the shareholders. Repurchase of Shares by RCM 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, RCM shall notify, by any
appropriate means, the Fund and its transfer agent of the orders for repurchase
of Shares received by RCM since the last such report, the amount to be paid for
such Shares, and the identity of the shareholders offering Shares for
repurchase. RCM reserves the right either to repurchase such Shares or 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) RCM shall not be obligated to sell any certain number of
Shares.
(h) In connection with the distribution services provided
hereunder and with respect to the Rule 12b-1 Plan adopted by the Fund, RCM shall
prepare reports for the Board regarding its activities under this Agreement as
from time to time shall be reasonably requested by the Board and conduct its
activities in accordance with such Plan.
(i) RCM shall in all material respects conform its activities
hereunder to the requirements of applicable state and federal laws and all
applicable rules of the National Association of Securities Dealers, Inc.
("NASD").
3. DUTIES OF THE FUND.
(a) The Fund shall keep RCM fully informed of its affairs and
shall provide to RCM from time to time copies of all information, financial
statements, and other papers that RCM 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
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of Additional Information ("SAI"), and annual and interim reports as RCM may
request, and the Fund shall fully cooperate in the efforts of RCM 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"),
maintain qualification with applicable states and file such reports and other
documents as may be required under applicable federal and state laws. The Fund
shall notify RCM in writing of the states in which the Shares may be sold and
shall notify RCM in writing of any changes to such information. The Fund (or its
sponsor) 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 RCM for its review and approval,
and (ii) 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 RCM and the services it provides that are based upon written
information furnished by RCM 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 RCM,
pursuant to Section 3(a) hereof, shall be true and correct in all material
respects.
4. OTHER BROKER-DEALERS. RCM in its discretion may enter into
agreements to sell Shares to such registered and qualified retail dealers, as
reasonably requested by the Fund. In making agreements with such dealers, RCM
shall act only as principal and not as agent for the Fund and shall pay any
compensation to such persons. The form of any such dealer agreement shall be
mutually agreed upon and approved by the Fund and RCM.
5. WITHDRAWAL OF OFFERING. The Fund reserves the right at any time to
withdraw all offerings of any or all Shares by written notice to RCM at its
principal office. No Shares shall be offered by either RCM or the Fund under any
provisions of this Agreement and no orders for the purchase or sale 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.
6. SERVICES NOT EXCLUSIVE. The services furnished by RCM hereunder are
not to be deemed exclusive and RCM shall be free to furnish similar services to
others so long as its services under this Agreement are not impaired thereby.
7. EXPENSES OF THE FUND. The Fund (or its sponsor) shall bear all costs
and expenses of 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,
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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 Paragraph 3(b)
hereof, and the costs and expenses payable to each such jurisdiction for
continuing qualification therein. In addition, the Fund (or its sponsor) shall
bear all costs of preparing, printing, mailing and filing any advertisements and
sales literature. RCM does not assume responsibility for any expenses not
assumed in this Agreement.
8. COMPENSATION. As compensation for the services performed and the
expenses assumed by RCM under this Agreement including, but not limited to, any
commissions paid for sales of Shares, the Fund shall pay RCM, as promptly as
possible within the timing provided in the Fund's Distribution Plan pursuant to
Rule 12b-1 under the 1940 Act, but no later than 30 days after the end of each
quarter, a fee as set forth in Schedule B to this Agreement.
9. SHARE CERTIFICATES. The Fund shall not issue certificates
representing Shares unless requested to do so by a shareholder. If such request
is transmitted through RCM, the Fund will cause certificates evidencing the
Shares owned to be issued in such names and denominations as RCM shall from time
to time direct.
10. STATUS OF RCM. RCM is an independent contractor and shall be agent
of the Fund only with respect to the sale and redemption of Shares. RCM is a
duly licensed broker-dealer with the SEC and all applicable state securities
commissions, a member of the NASD and authorized to sell shares of open-end
investment companies. Neither RCM or any "affiliated person" (as defined in the
0000 Xxx) is ineligible pursuant to Section 9 of the 1940 Act to serve as an
underwriter to any registered investment company.
11. INDEMNIFICATION.
(a) The Fund agrees to indemnify, defend, and hold RCM, its
officers and directors, and any person who controls RCM 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 such claims, demands, or liabilities and any reasonable counsel
fees incurred in connection therewith) that RCM, its officers, 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 Registration Statement, Prospectus, SAI or sales literature or necessary
to make the statements therein not misleading, (iii) action of a registered
representative employed by the Fund's sponsor, or (iv) failure by the Fund to
comply with any material terms of the Agreement; provided, that in no event
shall anything contained herein be so construed as to protect RCM against any
liability to the Fund or its shareholders to which RCM 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 RCM under this Agreement with
respect to any claim made against RCM or any person indemnified unless RCM or
other such person shall
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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 RCM or such other person (or after RCM
or the 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 RCM 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 to 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 RCM
of the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of any of its
Shares.
(d) RCM 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 reasonable
counsel fees incurred in connection therewith) that the Fund, its directors or
officers, or any such controlling person may incur under the 1933 Act, or under
common law or otherwise, resulting from (i) RCM's willful misfeasance, bad faith
or gross negligence in the performance of its obligations and duties under this
Agreement, (ii) arising out of or based upon any alleged untrue statement of a
material fact contained in information furnished in writing by RCM 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, or (iii) failure by RCM to comply with any material
terms of this Agreement.
(e) RCM 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 RCM elects to assume the defense, the defense shall be
conducted by counsel chosen by RCM and satisfactory to the indemnified
defendants whose approval shall not be unreasonably withheld. In the event that
RCM 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 RCM 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. RCM agrees to promptly notify the Fund
of (i) the commencement of any litigation or proceedings against it or any of
its personnel regarding the issuance or sale of its shares of the Fund, or (ii)
any regulatory inspection, examination or proceeding materially affecting RCM's
ability to act as principal underwriter under this Agreement.
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12. DURATION AND TERMINATION.
(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 directors") or RCM, 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 directors, or by vote of a
majority of the outstanding voting securities of the Fund on sixty days' written
notice to RCM or by RCM 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" (within the meaning of the 1940 Act).
13. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
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 directors.
14. NOTICE. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient upon receipt in writing at the
other party's principal offices.
15. MISCELLANEOUS. The captions in this Agreement are included for
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.
16. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of New York and the 1940 Act (without regard, however, to
the conflicts of law principles). To the extent that the applicable laws of the
State of New York conflict with the applicable provisions of the 1940 Act, the
latter shall control.
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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.
ATTEST: XXXXXX INVESTMENT FUNDS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------- ---------------------------
ATTEST: XXXXXXXX CAPITAL MARKETS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------- ---------------------------
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SCHEDULE A
TO THE
DISTRIBUTION AGREEMENT
BETWEEN
XXXXXX INVESTMENT FUNDS, INC.
AND
XXXXXXXX CAPITAL MARKETS, INC.
Pursuant to section 1 of the Distribution Agreement between Xxxxxx
Investment Funds, Inc. ("Fund") and Xxxxxxxx Capital Markets, Inc. ("RCM"), the
Fund hereby appoints RCM as its agent to be the principal underwriter of Fund
with respect to its following series:
Xxxxxx Bond Fund
Xxxxxx Growth Stock Fund
Minnesota Municipal Bond Fund
Pursuant to section 12 of the Distribution Agreement, the Distribution
Agreement shall become effective on December 31, 1998.
Dated November 24, 1998
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SCHEDULE B
TO THE
DISTRIBUTION AGREEMENT
BETWEEN
XXXXXX INVESTMENT FUNDS, INC.
AND
XXXXXXXX CAPITAL MARKETS, INC.
As compensation pursuant to section 8 of the Distribution Agreement
between Xxxxxx Investment Funds, Inc. (the "Fund") and Xxxxxxxx Capital Markets,
Inc. ("RCM"), the Fund shall pay to RCM the sum of:
1. a total annual fee of $15,000 for the three series of the Fund or .0075%
annually of the average daily net assets of each series, computed daily and
paid monthly, whichever is greater, in the first year. In the second year,
the total annual fee will be $18,000 for the three series of the Fund or
.0075% annually of the average daily net assets of each series, computed
daily and paid monthly, whichever is greater. In the third year, the total
annual fee will be $21,000 for the three series of the Fund or .01%
annually of the average daily net assets of each series, computed daily and
paid monthly, whichever is greater.
2. the ongoing licensing fees and incidental costs of those employees of the
Fund's sponsor who are designated by the Fund's sponsor to become
registered representatives of RCM;
3. the compensation, if any, paid by RCM to such registered representatives in
accordance with compensation schedules, as agreed upon by RCM and the
Fund's sponsor from time to time;
4. the reasonable fees associated with listing and maintaining shares on the
National Securities Clearing Corporation's Fund/SERV System;
5. incidental expenses associated with printing and distributing advertising
and sales literature, such as filings with the National Association of
Securities Dealers, Inc.; and
6. any reasonable out-of-pocket expenses, including travel expenses and
retention of records.
In no event shall fees payable by the Fund under this Agreement exceed the
permissible payments authorized under the Fund's Distribution Plan pursuant to
Rule 12b-1 under the 1940 Act.
Dated: November 24, 1998
