Exhibit 6
THE HIGHLAND FAMILY OF FUNDS
DISTRIBUTION AGREEMENT
AGREEMENT made the 14th day of March 1997, between The Highland Family of
Funds (the "Trust"), a business trust organized under the laws of the
Commonwealth of Massachusetts with its principal place of business at Two
Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxx 00000, and Forum Financial Services, Inc. (the
"Distributor"), a corporation organized under the laws of the State of Delaware
with its principal place of business at Xxx Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxx
00000.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act") as an open-end management investment company
and may issue its shares of beneficial interest, par value $0.0001 per share
(the "Shares"), in separate series and classes; and
WHEREAS, the Trust desires that the Distributor, as principal
underwriter, offer the Shares of the Trust representing interests in each of
the classes now existing or in the future created in each of the separate
investment portfolios of the Trust as listed from time to time on Schedule A
hereto (each a "Fund" and, collectively, the "Funds") and the Distributor is
willing to act as principal underwriter on the terms and conditions set forth
in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and the Distributor do hereby agree as
follows:
SECTION 1. APPOINTMENT.
The Trust hereby appoints the Distributor, and the Distributor hereby
agrees, to act as distributor of the Shares for the period and on the terms set
forth in this Agreement. In connection therewith, the Trust has delivered to
the Distributor copies of its Declaration of Trust and Bylaws, the Trust's
Registration Statement and all amendments thereto filed pursuant to the
Securities Act of 1933, as amended (the "Securities Act") or the Act (the
"Registration Statement") and the current prospectus and Statement of
Additional Information of each Fund (collectively, as currently in effect and
as amended or supplemented, the "Prospectus") and shall promptly furnish the
Distributor with all amendments of or supplements to the foregoing.
SECTION 2. DISTRIBUTION SERVICES.
Subject to the direction and control of the Trust's Board of Trustees
(the "Board"), the Distributor shall serve as distributor of the Shares.
(a) As agent of and sole distributor for the Trust, the Distributor shall
offer, and solicit offers to subscribe to, the unsold balance of Shares as
shall then be effectively registered under the Securities Act and applicable
state securities laws. All subscriptions for Shares obtained by the Distributor
shall be directed to the Trust for acceptance and shall not be binding on the
Trust until accepted by it. The Distributor shall have no authority to make
binding subscriptions on behalf of the Trust. The Trust reserves the right to
sell Shares directly to investors through subscriptions received by the Trust.
The Distributor's rights under this Agreement shall not apply to Shares issued
in connection with (i) the merger or consolidation of the Trust or its series
or classes with any other investment company or series 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 (iii) the reinvestment
in Shares by the Trust's shareholders of distributions from the Trust or any
other offering by the Trust of securities to its shareholders.
(b) The Distributor shall use its best efforts to obtain subscriptions to
Shares upon the terms and conditions contained herein and in the Prospectus,
including the offering price. The Distributor shall send to the Trust promptly
all subscriptions placed with the Distributor. The Trust shall advise the
Distributor in its capacity as distributor of the approximate net asset value
per Share determined at a net asset value determination time disclosed in the
Prospectus, upon the request of the Distributor and at such other times as it
shall have been determined. The Trust shall furnish to the Distributor from
time to time, for use in connection with the offering of Shares, such other
information with respect to the Trust and Shares as the Distributor may
reasonably request. The Trust shall supply the Distributor with such copies of
the Prospectus as the Distributor may request. The Distributor may use its
employees, agents and other persons who need not be its employees, at its cost
and expense, to assist it in carrying out its obligations under this Agreement,
but no such employee, agent or other person shall be deemed to be an agent of
the Trust or have any rights under this Agreement.
(c) The Trust reserves the right to suspend the offering of Shares at any
time and to reject any particular subscription for Shares, in the absolute
discretion of the Board, and upon notice of such suspension the Distributor
shall cease to offer Shares.
(d) The Trust and the Distributor will cooperate with each other in
taking such action as may be necessary to qualify Shares for sale under the
securities laws of such states as the Trust may designate, provided that the
Distributor shall not be required by this Agreement to register as a
broker-dealer or file a consent to service of process in any such state. Any
such qualification may be withheld, terminated or withdrawn by the Trust at any
time in its discretion. The Distributor shall furnish such information and
other material relating to its affairs and activities as may be required by the
Trust in connection with such qualification. The Distributor shall monitor
sales of Shares, ensure compliance with any state laws relating to the issue or
sale of such Shares, and register, or prepare applicable filings with respect
to the Shares with the various state and other securities commissions. The
Trust shall pay all fees and expenses of registering Shares under the
Securities Act and of registering or qualifying Shares and the Trust's
qualification under applicable state securities laws. The Distributor shall pay
all expenses relating to its broker-dealer qualification.
(e) The Trust represents that its Registration Statement and Prospectus
under the Securities Act have been or will be, as the case may be, prepared in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
thereunder. The Trust represents and warrants that its Registration Statement
and Prospectus contain or will contain all statements required to be stated
therein in accordance with the Securities Act and the rules and regulations of
the Commission thereunder, and that all statements of fact contained or to be
contained therein are or will be true and correct at the time indicated or on
the effective date as the case may be; and that the Trust's Registration
Statement and Prospectus, when they shall become effective or be authorized for
use, will not 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. The Trust will from time to
time file such amendment or amendments to its Registration Statement and
Prospectus as, in the light of future developments, shall, in the opinion of
the Trust's counsel, be necessary in order to have such 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, but, if the Trust shall not file such amendment or
amendments within fifteen days after receipt of a written request from the
Distributor to do so, the Distributor may, at its option, terminate this
Agreement effective immediately. The Trust shall not file any amendment to its
Registration Statement and Prospectus without giving the Distributor reasonable
notice thereof; provided, however, that nothing in this Agreement contained
shall in any way limit the Trust's right to file at any time such amendments to
its Registration Statement and Prospectus, of whatever character, as it deems
advisable, such right being in all respects absolute and unconditional. The
Trust represents and warrants that any amendment to its Registration Statement
and Prospectus hereafter filed will, when it becomes effective, contain all
statements required to be stated therein in accordance with the 1940 Act and
the rules and regulations of the Commission thereunder, that all statements of
fact contained therein will, when the same shall become effective, be true and
correct and that no such amendment, when it becomes effective, will include an
untrue statement of a material fact or will 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.
SECTION 3. STANDARD OF CARE.
The Distributor shall use its best judgment and efforts in rendering
services to the Trust under this Agreement. The Distributor shall not be liable
to the Trust for any error of judgment or mistake of law, for any loss arising
out of any investment, or for any action or inaction of the Distributor in the
absence of bad faith, willful misconduct, gross negligence or reckless
disregard of its obligations and duties under this Agreement or based upon
information, instructions or requests with respect to a Fund made to the
Distributor by a duly authorized officer of the Trust who is not also an
officer or employee of the Distributor or its affiliates. The Distributor shall
not be responsible or liable for any failure or delay in performance of its
obligations under this Agreement caused by circumstances beyond its reasonable
control.
SECTION 4. INDEMNIFICATION
(a) The Trust will indemnify, defend and hold the Distributor, its
several officers and directors, and any person who controls the Distributor
within the meaning of Section 15 of the Securities Act (collectively, the
"Distributor Indemnitees"), free and harmless from and against any and all
claims, demands, liabilities and expenses incurred (including the cost of
investigating or defending such claims, demands or liabilities and any
reasonable counsel fees incurred in connection therewith) resulting from any
alleged untrue statement of a material fact contained in the Trust's
Prospectus, Statement of Additional Information or Registration Statement, or
exhibit to such Registration Statement, or any alleged omission of a material
fact required to be stated or necessary to make the statements therein not
misleading, unless such statement or omission was made in reliance upon, and in
conformity with, information furnished in writing to the Trust in connection
with the preparation of the Registration Statement or exhibits to the
Registration Statement by or on behalf of the Distributor.
(b) Nothing contained in this section shall be construed to protect the
Distributor against any liability to the Trust or its security holders to which
the Distributor would otherwise be subject by reason of its failure to satisfy
the standard of care set forth in Section 3 of this agreement.
(c) (i) The Trust may assume the defense of any suit brought to enforce
any claim described in paragraph (a), and retain counsel of good standing
chosen by it and approved by the Distributor, which approval shall not be
withheld unreasonably. The Trust shall advise the Distributor that it will
assume the defense of the claim and retain counsel within ten days of receiving
receipt of notice of the claim.
(ii) If the Trust assumes the defense of any such suit and retains
counsel, the defendants shall bear the fees and expenses of any additional
counsel that they retain. If the Trust does not assume the defense of any such
suit, or if Distributor does not approve of counsel chosen by the Trust or has
been advised that it may have available defenses or claims that are not
available to or conflict with those available to the Trust, the Trust will
reimburse any Distributor Indemnitee named as defendant in such suit for the
reasonable fees and expenses of any counsel that person retains.
(iii)A Distributor Indemnitee shall not settle or confess any claim
without the prior written consent of the Trust, which consent shall not be
unreasonably withheld or delayed.
(d) The Distributor will indemnify, defend and hold the Trust, its
several officers and trustees, and any person who controls the Trust within the
meaning of Section 15 of the Securities Act (collectively, the "Trust
Indemnitees"), free and harmless from and against any and all claims, demands,
liabilities and expenses incurred (including the cost of investigating or
defending such claims, demands or liabilities and any reasonable counsel fees
incurred in connection therewith) resulting from:
(i) any alleged untrue statement of a material fact contained in the
Trust's prospectus, statement of additional information, Registration
Statement, or exhibit to such Registration Statement or any alleged omission of
a material fact required to be stated or necessary to make the statements
therein not misleading, if such statement or omission was made in reliance
upon, and in conformity with, information furnished to the Trust in writing in
connection with the preparation of the Registration Statement or the exhibits
to the Registration Statement by or on behalf of the Distributor; and,
(ii) any act of, or omission by, Distributor or its sales
representatives that does not conform to the standard of care set forth in
Section 3 of this Agreement.
(e) (i) The Distributor may assume the defense of any suit brought to
enforce any claim described in paragraph (d), and retain counsel of good
standing chosen by it and approved by the Trust, which approval shall not be
withheld unreasonably. The Distributor shall advise the Trust that it will
assume the defense of the claim and retain counsel within ten days of receiving
receipt of notice of the claim.
(ii) If the Distributor assumes the defense of any such suit and
retains counsel, the defendants shall bear the fees and expenses of any
additional counsel that they retain. If the Distributor does not assume the
defense of any such suit, or if Trust does not approve of counsel chosen by the
Distributor or has been advised that it may have available defenses or claims
that are not available to or conflict with those available to the Distributor,
the Distributor will reimburse any Trust Indemnitee named as defendant in such
suit for the reasonable fees and expenses of any counsel that person retains.
(iii)A Trust Indemnitee shall not settle or confess any claim
without the prior written consent of the Distributor, which consent shall not
be unreasonably withheld or delayed.
(f) Each party's obligation to provide indemnification under this Section
is conditioned upon its receiving notice of any action brought against its
respective Indemnitees by letter, facsimile transmission or telegram to within
ten days after the summons or other first legal process shall have been served
on the other party. Such notice shall refer to the person or persons against
whom such action is brought. The failure to provide such notice shall not
relieve the party entitled to such notice of any liability that it may have to
its respective Indemnitees other than on account of the indemnification
provisions in this Section.
(g) The provisions of this Section and the parties' representations and
warranties in this Agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Indemnitees
and shall survive the sale of any Shares made pursuant to subscriptions
obtained by the Distributor. The indemnification provisions of this Section
will inure exclusively to the benefit of the Indemnitees and their respective
successors and assigns.
(h) Each party agrees promptly to notify the other party of the
commencement of any litigation or proceeding of which it becomes aware arising
out of the issuance or sale of Shares.
(i) Nothing contained herein shall require the Trust to take any action
contrary to any provision of its Declaration of Trust or any applicable statute
or regulation.
SECTION 5. NOTIFICATION BY THE TRUST
The Trust shall advise the Distributor immediately: (i) of any request by
the Commission for amendments to the Trust's Registration Statement or
Prospectus or for additional information; (ii) in the event of the issuance by
the Commission of any stop order suspending the effectiveness of the Trust's
Registration Statement or Prospectus or the initiation of any proceedings for
that purpose; (iii) of the happening of any material event which makes untrue
any statement made in the Trust's Registration Statement or Prospectus or which
requires the making of a change in either thereof in order to make the
statements therein not misleading; and (iv) of all action of the Commission
with respect to any amendments to the Trust's Registration Statement or
Prospectus which may from time to time be filed with the Commission under the
1940 Act or the Securities Act.
SECTION 6. EXPENSES
(a) The Trust shall be responsible and assumes the obligation for payment
of all the expenses of the Funds, including fees and disbursements of its
counsel and auditors, in connection with the preparation and filing of its
Registration Statement and Prospectuses and SAIs and all amendments and
supplements thereto and the preparing and mailing of annual and interim reports
and proxy materials to shareholders (including but not limited to the expense
of setting in type any registration statements, prospectuses, annual or interim
reports or proxy materials).
(b) The Trust shall bear the cost and expenses of the qualification of
Shares of the Funds for sale, and, if necessary or advisable in connection
therewith, of qualifying the Trust (but not Forum) as an issuer or as a broker
or dealer, in such states of the United States or other jurisdictions as shall
be selected by the Trust and Forum pursuant to Section 2(d) hereof and the
costs and expenses payable to each state or jurisdiction for continuing
qualification therein until the Trust decides to discontinue qualification
pursuant to Section 2(d) hereof.
SECTION 7. COMPENSATION
(a) The Distributor shall be entitled to no compensation or reimbursement
of expenses for the services provided by the Distributor pursuant to this
Agreement, except to the extent such compensation or reimbursement is provided,
with respect to any Fund or any class of a Fund, pursuant to a plan of
distribution adopted pursuant to Rule 12b-1 under the 1940 Act.
(b) Notwithstanding anything in this Agreement to the contrary, the
Distributor and person that is affiliated with the Distributor may receive
compensation or reimbursement from the Trust with respect to (i) the provision
of distribution and service activities on behalf of the Funds in accordance
with any distribution plan adopted by the Trust pursuant to Rule 12b-1 under
the 1940 Act, (ii) the provision of shareholder support or other services,
(iii) the provision of administrative services or (iv) service as a Trustee or
officer of the Trust.
SECTION 8. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to each Fund on
the date on which the Trust's Registration Statement relating to the Shares of
that Fund becomes effective.
(b) This Agreement shall continue in effect with respect to each Fund for
one year and, thereafter, with respect to such Fund, shall continue in effect
for successive one year periods, provided that such continuance is specifically
approved at least annually (i) by the Board or by a vote of a majority of the
outstanding voting securities of the Fund and (ii) by a vote of a majority of
the Trustees of the Trust (A) who are not parties to this Agreement or
interested persons of any such party and (B) who do not have any direct or
indirect financial interest in any plan of distribution adopted pursuant to
Rule 12b-1 under the 1940 Act applicable to any class of Shares of the Fund or
in any agreements related to such plan, cast in person at a meeting called for
the purpose of voting on such approval. If the continuation of this Agreement
is not approved with respect to any Fund, the Distributor may continue to
render the services described herein in the manner and to the extent permitted
by the 1940 Act.
(c) This Agreement may be terminated at any time with respect to any
Fund, without the payment of any penalty, (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Fund or, with respect to
each class of a Fund for which there is an effective plan of distribution
adopted pursuant to Rule 12b-1 under the 1940 Act, a majority of Trustees of
the Trust who do not have any direct or indirect financial interest in any such
plan or in any agreements related to such plan, on not less than 60 days'
written notice to the Distributor or (ii) by the Distributor on not less than
60 days' written notice to the Trust. This Agreement shall automatically
terminate in the event of its assignment.
SECTION 9. ACTIVITIES OF DISTRIBUTOR. Except to the extent necessary to
perform its obligations under this Agreement, nothing herein shall be deemed to
limit or restrict the Distributor's right, or the right of any of its officers,
directors or employees (whether or not they are a Trustee, officer, employee or
other affiliated person of the Trust) to engage in any other business or to
devote time and attention to the management or other aspects of any other
business, whether of a similar or dissimilar nature, or to render services of
any kind to any other company, Trust, firm, individual or association.
SECTION 10. CONFIDENTIALITY. The Distributor 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 the Distributor may
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the Commission;
(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; provided, however, that the
Distributor may release any information regarding the Trust without the consent
of the Trust if the Distributor 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 or when so requested by
the Trust.
SECTION 11. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY. The Trustees
of the Trust and the shareholders of each Fund shall not be liable for any
obligations of the Trust or of the Funds under this Agreement, and the
Distributor agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property of the Trust or the
Fund to which the Distributor's rights or claims relate in settlement of such
rights or claims, and not to the Trustees of the Trust, the shareholders of the
Funds, or any other Fund.
SECTION 12. MISCELLANEOUS
(a) Except for Schedule A, no provisions of this Agreement may be amended
or modified in any manner except by a written agreement properly authorized and
executed by both parties hereto and, if required by the Act, by a vote of a
majority of the outstanding voting securities of the Funds.
(b) 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, 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.
(c) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(d) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(e) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of New York and the provisions of the
1940 Act.
(f) 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.
(g) This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
(h) 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.
(i) The terms "vote of a majority of the outstanding voting securities,"
"interested person," "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
THE HIGHLAND FAMILY OF FUNDS
Xxxxxx Xxxx III
_______________________________
Xxxxxx Xxxx III
President
FORUM FINANCIAL SERVICES, INC.
Xxxx X. Xxxxxx
_______________________________
Xxxx X. Xxxxxx
President
DISTRIBUTION AGREEMENT
SCHEDULE A
FUNDS
AS OF MARCH 14, 1997
Highland Growth Fund
Highland Aggressive Growth Fund
