DISTRIBUTION AGREEMENT
This Agreement made this 1st day of October, 2001 by and between BUILDERS
FIXED INCOME FUND, INC., a Maryland corporation (the "Fund"), and QUASAR
DISTRIBUTORS, LLC, a Delaware limited liability company (the "Distributor").
W I T N E S S E T H:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940 (the "1940 Act"); and it is in
the interest of the Fund to offer its shares for sale continuously; and
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934 (the "1934 Act") and is a member in good
standing of the National Association of Securities Dealers, Inc. (the "NASD");
and
WHEREAS, the Fund and the Distributor wish to enter into an agreement with
each other with respect to the continuous offering of the shares of each
existing and future series (the "Shares") of the Fund;
NOW, THEREFORE, the parties agree as follows:
1. Appointment of Distributor. The Fund hereby appoints the Distributor as
agent to sell and to arrange for the sale of the Shares, on the terms and for
the period set forth in this Agreement, and the Distributor hereby accepts such
appointment and agrees to act hereunder directly and/or through the Fund's
transfer agent in the manner set forth in the Prospectus (as defined below). It
is understood and agreed that the services of the Distributor hereunder are not
exclusive, and the Distributor may act as principal underwriter for the shares
of any other registered investment company.
2. Services and Duties of the Distributor.
(a) The Distributor agrees to sell the Shares, as agent for the Fund,
from time to time during the term of this Agreement upon the terms
described in a Prospectus. As used in this Agreement, the term "Prospectus"
shall mean a prospectus and statement of additional information included as
part of the Fund's Registration Statement, as such prospectus and statement
of additional information may be amended or supplemented from time to time,
and the term "Registration Statement" shall mean the Registration Statement
most recently filed from time to time by the Fund with the Securities and
Exchange Commission ("SEC") and effective under the Securities Act of 1933
(the "1933 Act") and the 1940 Act, as such Registration Statement is
amended by any amendments thereto at the time in effect. The Distributor
shall not be obligated to sell any certain number of Shares.
(b) The Distributor will hold itself available to receive orders,
satisfactory to the Distributor, for the purchase of the Shares and will
accept such orders and will transmit such orders and funds received by it
in payment for such Shares as are so accepted to the Fund's transfer agent
or custodian, as appropriate, as promptly as practicable. Purchase orders
shall be deemed accepted and shall be effective at the time and in the
manner set forth in the Fund's Prospectus. The Distributor shall not make
any short sales of Shares.
( c) The offering price of the Shares shall be the net asset value per
share of the Shares, plus the sales charge, if any, (determined as set
forth in the Prospectus). The Fund shall furnish the Distributor with a
quotation of the public offering price on each business day.
(d) The Distributor shall have the right to enter into selected dealer
agreements with securities dealers of its choice ("selected dealers") for
the sale of Shares. Shares sold to selected dealers shall be for resale by
such dealers only at the offering price of the Shares as set forth in the
Prospectus. The Distributor shall offer and sell Shares only to such
selected dealers as are members in good standing of the NASD.
3. Duties of the Fund.
(a) Maintenance of Federal Registration. The Fund shall, at its
expense, take, from time to time, all necessary action and such steps,
including payment of the related filing fees, as may be necessary to
register and maintain registration of a sufficient number of Shares under
the 0000 Xxx. The Fund agrees to file from time to time such amendments,
reports and other documents as may be necessary in order that there may be
no untrue statement of a material fact in a Registration Statement or
Prospectus, or necessary in order that there may be no omission to state a
material fact in the Registration Statement or Prospectus which omission
would make the statements therein misleading.
(b) Maintenance of "Blue Sky" Qualifications. The Fund shall, at its
expense, use its best efforts to qualify and maintain the qualification of
an appropriate number of Shares for sale under the securities laws of such
states as the Distributor and the Fund may approve; provided that the Fund
shall not be required to amend its Articles of Incorporation or By-Laws to
comply with the laws of any state, to maintain an office in any state, to
change the terms of the offering of the Shares in any state, to change the
terms of the offering of the Shares in any state from the terms set forth
in Prospectus, to qualify as a foreign corporation in any state or to
consent to service of process in any state other than with respect to
claims arising out of the offering and sale of the Shares. The Distributor
shall furnish such information and other material relating to its affairs
and activities as may be required by the Fund in connection with such
qualifications.
(c) Copies of Reports and Prospectuses. The Fund shall, at its
expense, keep the Distributor fully informed with regard to its affairs and
in connection therewith shall furnish to the Distributor copies of all
information, financial statements and other papers which the Distributor
may reasonably request for use in connection with the distribution of
Shares, including such reasonable number of copies of Prospectuses and
annual and interim reports as the Distributor may request and shall
cooperate fully in the efforts of the Distributor to sell and arrange for
the sale of the Shares and in the performance of the Distributor under this
Agreement.
4. Conformity with Applicable Law and Rules. The Distributor agrees that in
selling Shares hereunder it shall conform in all respects with the laws of the
United States and of any state in which Shares may be offered, and with
applicable rules and regulations of the NASD.
5. Independent Contractor. In performing its duties hereunder, the
Distributor shall be an independent contractor. The Distributor shall be
responsible for its own conduct and the employment, control, and conduct of its
agents and employees and for injury to such agents or employees or to others
through its agents or employees. The Distributor assumes full responsibility for
its agents and employees under applicable statutes and agrees to pay all
employee taxes thereunder. The Distributor agrees to register any officers or
employees of the Fund's investment manager who engage in sales activities on
behalf of the Fund as agents of the Distributor as may be required under
applicable securities laws.
6. Indemnification.
(a) Indemnification of Fund. The Distributor agrees to indemnify and
hold harmless the Fund and each of its present or former Directors,
officers, employees, representatives and each person, if any, who controls
or previously controlled the Fund within the meaning of Section 15 of the
1933 Act against any and all losses, liabilities, damages, claims or
expenses (including the reasonable costs of investigating or defending any
alleged loss, liability, damage, claims or expense and reasonable legal
counsel fees incurred in connection therewith) to which the Fund or any
such person may become subject under the 1933 Act, under any other statute,
at common law, or otherwise, arising out of the acquisition of any Shares
by any person which (i) may be based upon any wrongful act by the
Distributor or any of the Distributor's directors, officers, employees or
representatives, or (ii) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in a Registration Statement,
Prospectus, shareholder report or other information covering Shares filed
or made public by the Fund or any amendment thereof or supplement thereto,
or the omission or alleged omission to state therein a material fact
required to be stated therein 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 Fund by the Distributor. In
no case (i) is the Distributor's indemnity in favor of the Fund, or any
person indemnified to be deemed to protect the Fund or such indemnified
person against any liability to which the Fund or such person would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of the Fund's or such person's duties or by
reason of reckless disregard of the Fund's or such person's obligations and
duties under this Agreement or (ii) is the Distributor to be liable under
its indemnity agreement contained in this Paragraph with respect to any
claim made against the Fund or any person indemnified unless the Fund or
such person, as the case may be, shall have notified the Distributor 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 the Fund or upon such person (or after the Fund
or such person shall have received notice of such service on any designated
agent). However, failure to notify the Distributor of any such claim shall
not relieve the Distributor from any liability which the Distributor may
have to the Fund or any person against whom such action is brought
otherwise than on account of the Distributor's indemnity agreement
contained in this Paragraph.
The Distributor and any other indemnified party shall be entitled to
participate, at its own expense, in the defense, or, if the Distributor so
elects, to assume the defense of any suit brought to enforce any such claim,
but, if the Distributor elects to assume the defense, such defense shall be
conducted by legal counsel chosen by the Distributor and satisfactory to the
Fund, and to the persons indemnified as defendant or defendants, in the suit. In
the event that the Distributor elects to assume the defense of any such suit and
retain such legal counsel, the Fund, and the persons indemnified as defendant or
defendants in the suit, shall bear the fees and expenses of any additional legal
counsel retained by them. If the Distributor does not elect to assume the
defense of any such suit, the Distributor will reimburse the Fund and the
persons indemnified defendant or defendants in such suit for the reasonable fees
and expenses of any legal counsel retained by them. The Distributor agrees to
promptly notify the Fund of the commencement of any litigation of proceedings
against it or any of its officers, employees or representatives in connection
with the issue or sale of any Shares.
(b) Indemnification of the Distributor. The Fund agrees to indemnify
and hold harmless the Distributor and each of its present or former
directors, officers, employees, representatives or agents and each person,
if any, who controls or previously controlled the Distributor within the
meaning of Section 15 of the 1933 Act against any and all losses,
liabilities, damages, claims or expenses (including the reasonable costs of
investigating or defending any alleged loss, liability, damage, claim or
expense and reasonable legal counsel fees incurred in connection therewith)
to which the Distributor or any such person may become subject under the
1933 Act, under any other statute, at common law, or otherwise, arising out
of the acquisition of any Shares by any person which (i) may be based upon
any wrongful act by the Fund or any of the Fund's Directors, officers,
employees or representatives, or (ii) may be based upon any untrue
statement or alleged untrue statement of a material fact contained in a
Registration Statement, Prospectus, shareholder report or other information
covering Shares filed or made public by the Fund or any amendment thereof
or supplement thereto, or the omission or alleged omission to state therein
a material fact required to be stated therein 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 to the
Fund by the Distributor. In no case (i) is the Fund's indemnity in favor of
the Distributor, or any person indemnified to be deemed to protect the
Distributor or such indemnified person against any liability to which the
Distributor or such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of such
person's duties or by reason of reckless disregard of such person's
obligations and duties under this Agreement or (ii) is the Fund to be
liable under their indemnity agreement contained in this Paragraph with
respect to any claim made against Distributor, or person indemnified unless
the Distributor, or such person, as the case may be, 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 the Distributor or upon such person (or
after the Distributor or such person shall have received notice of such
service on any designated agent). However, failure to notify the Fund of
any such claim shall not relieve the Fund from any liability which the Fund
may have to the Distributor or any person against whom such action is
brought otherwise than on account of the Fund's indemnity agreement
contained in this Paragraph.
The Fund and any other indemnified party shall be entitled to
participate, at its own expense, in the defense, or, if the Fund so elects,
to assume the defense of any suit brought to enforce any such claim, but if
the Fund elects to assume the defense, such defense shall be conducted by
legal counsel chosen by the Fund and satisfactory to the Distributor and to
the persons indemnified as defendant or defendants, in the suit. In the
event that the Fund elects to assume the defense of any such suit and
retain such legal counsel, the Distributor, the persons indemnified as
defendant or defendants in the suit, shall bear the fees and expenses of
any additional legal counsel retained by them. If the Fund does not elect
to assume the defense of any such suit, the Fund will reimburse the
Distributor and the persons indemnified as defendant or defendants in such
suit for the reasonable fees and expenses of any legal counsel retained by
them. The Fund agrees to promptly notify the Distributor of the
commencement of any litigation or proceedings against it or any of its
Directors, officers, employees or representatives in connection with the
issue or sale of any Shares.
7. Authorized Representations. The Distributor is not authorized by the
Fund to give on behalf of the Fund any information or to make any
representations in connection with the sale of Shares other than the information
and representations contained in a Registration Statement or Prospectus filed
with the SEC under the 1933 Act and/or the 1940 Act, covering Shares, as such
Registration Statement and Prospectus may be amended or supplemented from time
to time, or contained in shareholder reports or other material that may be
prepared by or on behalf of the Fund for the Distributor's use. This shall not
be construed to prevent the Distributor from preparing and distributing
tombstone ads and sales literature or other material as it may deem appropriate.
No person other than the Distributor is authorized to act as principal
underwriter (as such term is defined in the 0000 Xxx) for the Fund.
8. Compensation. As compensation for services rendered by the Distributor
during the term of this Agreement, the Fund's manager, Capital Mortgage
Management, Inc., shall pay to the Distributor an annual fee at the rate of
$20,000, plus NASD advertising filing fees and annual agent registration fees
incurred on behalf of the Fund.
9. Term of Agreement. The term of this Agreement shall begin on the date
first above written, and unless sooner terminated as hereinafter provided, this
Agreement shall remain in effect for a period of two years from the date first
above written. Thereafter, this Agreement shall continue in effect from year to
year, subject to the termination provisions and all other terms and conditions
thereof, so long as such continuation shall be specifically approved at least
annually by (i) the Board of Directors or by vote of a majority of the
outstanding voting securities of each series of the Fund and, (ii) by the vote,
cast in person at a meeting called for the purpose of voting on such approval,
of a majority of the Directors of the Fund who are not parties to this Agreement
or interested persons of any such party. The Distributor shall furnish to the
Fund, promptly upon its request, such information as may reasonably be necessary
to evaluate the terms of this Agreement or any extension, renewal or amendment
hereof.
10. Amendment or Assignment of Agreement. This Agreement may not be amended
or assigned except as permitted by the 1940 Act, and this Agreement shall
automatically and immediately terminate in the event of its assignment.
11. Termination of Agreement. This Agreement may be terminated by either
party hereto, without the payment of any penalty, on not less than upon 60 days'
prior notice in writing to the other party; provided, that in the case of
termination by the Fund such action shall have been authorized by resolution of
a majority of the Directors of the Fund who are not parties to this Agreement or
interested persons of any such party, or by vote of a majority of the
outstanding voting securities of each series of the Fund.
12. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Nothing herein contained shall be deemed to require the Fund to take any
action contrary to its Articles of Incorporation or By-Laws, or any applicable
statutory or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Board of Directors of the Fund of
responsibility for and control of the conduct of the affairs of the Fund.
13. Definition of Terms. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretation thereof, if any, by the United
States courts or, in the absence of any controlling decision of any such court,
by rules, regulations or orders of the SEC validly issued pursuant to the 1940
Act. Specifically, the terms "vote of a majority of the outstanding voting
securities", "interested persons," "assignment," and "affiliated person," as
used in Paragraphs 8, 9 and 10 hereof, shall have the meanings assigned to them
by Section 2(a) of the 1940 Act. In addition, where the effect of a requirement
of the 1940 Act reflected in any provision of this Agreement is relaxed by a
rule, regulation or order of the SEC, whether of special or of general
application, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
14. Compliance with Securities Laws. The Fund represents that it is
registered as an open-end management investment company under the 1940 Act, and
agrees that it will comply with all the provisions of the 1940 Act and of the
rules and regulations thereunder. The Fund and the Distributor each agree to
comply with all of the applicable terms and provisions of the 1940 Act, the 1933
Act and, subject to the provisions of Section 4(d), all applicable "Blue Sky"
laws. The Distributor agrees to comply with all of the applicable terms and
provisions of the 1934 Act.
15. Notices. Any notice required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by registered mail, postage
prepaid, to the Distributor at 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx
00000 or to the Fund at 0000 Xxxxx Xxxxx Xxxx, Xxxxx 000, Xx. Xxxxx, Xxxxxxxx
00000.
16. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the date first written above.
BUILDERS FIXED INCOME FUND, INC.
By:/s/ Xxxx x. Xxxxxxx
-----------------------------
Name: Xxxx X. Xxxxxxx
Title: President
QUASAR DISTRIBUTORS, LLC
By:/s/ Xxxxx Xxxxxxxxx
-------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
