XXXXXXXX CAPITAL TRUST
DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT, made this 18th day of July, 1997, by and
between Xxxxxxxx Capital Trust, a Massachusetts business trust ("Trust"), and LM
Financial Partners, Inc., a Maryland corporation ("Distributor").
WHEREAS, the Trust is registered with the Securities and Exchange
Commission as an open-end investment company under the Investment Company Act of
1940, as amended (the "1940 Act"), and currently offers three distinct series of
shares of beneficial interest ("Series"), which correspond to distinct
portfolios designated as the Xxxxxxxx Basic Value Fund, Xxxxxxxx Europe Fund and
Xxxxxxxx Value International Fund, respectively;
WHEREAS, the Trust's Board of Trustees ("Board") has established three
classes of shares of beneficial interest of each of the above-referenced Series,
designated as Class A, Class C and Class Y shares;
WHEREAS, each Series has adopted a Plan of Distribution pursuant to
Rule 12b-1 under the 1940 for its Class A and Class C shares (each a "Plan" and
collectively, the "Plans);
WHEREAS, the Trust wishes to retain the Distributor as the principal
distributor in connection with the offering and sale of the Class A, Class C and
Class Y shares of beneficial interest of each Series, and such other Series as
may hereafter be designated by the Board (the "Shares"), and to furnish certain
other services to the Trust as specified in this Agreement;
WHEREAS, the Board has established and designated a new Series which
corresponds to a distinct portfolio designated as the Xxxxxxxx Financial
Services Fund;
WHEREAS, this Agreement has been approved by separate votes of the
Board and of certain disinterested trustees in conformity with Section 15 of,
and paragraph (b)(2) of Rule 12b-1 under, the 1940 Act; and
WHEREAS, the Distributor is willing and able to act as principal
distributor and to furnish such services on the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1. Appointment. The Trust hereby appoints the Distributor as principal
distributor in connection with the offering and sale of the Shares on the terms
and for the period set forth in this Agreement. The Distributor hereby accepts
such appointment and agrees to act hereunder. It is understood, however, that
this appointment does not preclude sales of the Shares directly through the
Trust's transfer agent in the manner set forth in the Registration Statement. As
used in this Agreement, the term "Registration Statement" shall mean the
registration statement most recently filed by the Trust with the Securities and
Exchange Commission and effective under the Securities Act of 1933 ("1933 Act")
and the 1940 Act, as such Registration Statement is amended by any amendments
thereto at the time in effect, and the terms "Prospectus" and "Statement of
Additional Information" shall mean, respectively, the form of prospectus and
statement of additional information with respect to the Series filed by the
Trust as part of the Registration Statement, or as they may be amended from time
to time.
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2. Services and Duties of the Distributor.
(a) The Distributor, subject to applicable federal and state laws and
the Declaration of Trust and By-Laws of the Trust, agrees to sell the Shares on
a best efforts basis from time to time during the term of this Agreement as
agent for the Trust and upon the terms described in the Registration Statement.
(b) Upon the later of the date of this Agreement or the initial
offering of the Shares to the public of a Series, the Distributor will hold
itself available to receive purchase orders, satisfactory to the Distributor,
for Shares of that Series and will accept such orders on behalf of the Trust as
of the time of receipt of such orders and promptly transmit such orders as are
accepted to the Trust's transfer agent. Purchase orders shall be deemed
effective at the time and in the manner set forth in the Registration Statement.
(c) The Distributor in its discretion may enter into agreements to sell
Shares to such registered and qualified retail dealers, including but not
limited to Xxxx Xxxxx Xxxx Xxxxxx, Inc. ("Xxxx Xxxxx"), as it may select. In
making agreements with such dealers, the Distributor shall act only as principal
and not as agent for the Trust.
(d) The offering price of the Shares of each Series shall be the net
asset value per Share as next determined by the Trust following receipt of an
order at the Distributor's principal office plus the applicable initial sales
charge, if any, computed as set forth in the Registration Statement. The Trust
shall promptly furnish the Distributor with a statement of each computation of
net asset value.
(e) The Distributor shall not be obligated to sell any certain number
of Shares.
(f) To facilitate redemption of Shares by shareholders directly or
through dealers, the Distributor is authorized but not required on behalf of the
Trust to repurchase Shares presented to it by shareholders and dealers at the
price determined in accordance with, and in the manner set forth in, the
Registration Statement. Such price shall reflect the subtraction of the
contingent deferred sales charge, if any, computed in accordance with and in the
manner set forth in the Registration Statement. The Distributor will receive no
commission or other remuneration for repurchasing Shares. At the end of each
business day, the Distributor shall notify by electronic means or in writing,
the Trust and Boston Financial Data Services, Inc., the Trust's transfer agent
of the orders for repurchase of Shares received by the Distributor since the
last such report, the amount to be paid for such Shares, and the identity of the
shareholders or dealers offering Shares for repurchase. Upon such notice, the
Trust shall pay the Distributor such amounts as are required by the Distributor
for the repurchase of such Shares in cash or in the form of a credit against
monies due the Trust from the Distributor as proceeds from the sale of Shares.
The Trust reserves the right to suspend such repurchase right upon written
notice to the Distributor. The Distributor further agrees to act as agent for
the Trust to receive and transmit promptly to the Trust's transfer agent
shareholder and dealer requests for redemption of Shares.
(g) The Distributor shall provide ongoing shareholder services, which
include responding to shareholder inquiries, providing shareholders with
information on their investments in the Shares and any other services now or
hereafter deemed to be appropriate subjects for the payment of "service fees"
under Section 26(d) of the National Association of Securities Dealers, Inc.
("NASD") Rules of Fair Practice (collectively, "service activities"). "Service
activities" do not include transfer agency-related and other services for which
the Distributor may receive compensation from the Trust.
(h) The Distributor shall have the right to use any list of
shareholders of the Trust or any other list of investors which it obtains in
connection with its provision of services under this Agreement; provided,
however, that the Distributor shall not sell or knowingly provide such list or
lists to any
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unaffiliated person.
3. Authorization to Enter into Dealer Agreements and to Delegate Duties
as Distributor. With respect to the Shares of any or all Series, the Distributor
may enter into a dealer agreement with Xxxx Xxxxx or any other registered and
qualified dealer with respect to sales of the Shares or the provision of service
activities. In a separate Agreement or as part of any such dealer agreement, the
Distributor also may delegate to Xxxx Xxxxx or another registered and qualified
dealer ("sub-distributor") any or all of its duties specified in this Agreement,
provided that such separate Agreement or dealer agreement imposes on the
sub-distributor bound thereby all applicable duties and conditions to which the
Distributor is subject under this Agreement, and further provided that such
separate Agreements or dealer agreements meet all requirements of the 1940 Act
and rules thereunder.
4. Services Not Exclusive. The services furnished by the Distributor
hereunder are not to be deemed exclusive and the Distributor shall be free to
furnish similar services to others so long as its services under this Agreement
are not impaired thereby. Nothing in this Agreement shall limit or restrict the
right of any director, officer or employee of the Distributor, who may also be a
trustee, officer or employee of the Trust, to engage in any other business or to
devote his or her time and attention in part to the management or other aspects
of any other business, whether of a similar or a dissimilar nature.
5. Compensation.
(a) As compensation for its service activities under this Agreement
with respect to the Class A and Class C Shares, the Distributor shall receive
from the Trust a service fee at the rate and under the terms and conditions of
the Plan or Plans adopted by the Trust with respect to the Class A Shares and
Class C Shares, respectively, of the Series, as such Plan or Plans are amended
from time to time, and subject to any further limitations on such fee as the
Board may impose.
(b) As compensation for its activities under this Agreement with
respect to the distribution of the Class A Shares, the Distributor shall retain
the initial sales charge, if any, on purchases of Class A Shares as set forth in
the Registration Statement. The Distributor is authorized to collect the gross
proceeds derived from the sale of the Class A Shares, remit the net asset value
thereof to the Trust upon receipt of the proceeds and retain the initial sales
charge, if any.
(c) As additional compensation for its activities under this Agreement
with respect to the distribution of the Class A and Class C Shares, the
Distributor shall receive all contingent deferred sales charges imposed on
redemptions of Class A or Class C Shares, respectively, of each Series, if any.
Whether and at what rate a contingent deferred sales charge will be imposed with
respect to a redemption shall be determined in accordance with, and in the
manner set forth in, the Registration Statement.
(d) As compensation for its activities under this Agreement with
respect to the distribution of the Class C Shares, the Distributor shall receive
from the Trust a distribution fee at the rate and under the terms and conditions
of the Plan or Plans adopted by the Trust with respect to the Class C Shares of
the Series, as such Plan or Plans are amended from time to time, and subject to
any further limitations on such fee as the Board may impose.
(e) The Distributor may reallow any or all of the initial sales
charges, contingent deferred sales charges, service or distribution fees which
it is paid under this Agreement to such dealers as it may from time to time
determine; provided, however, that the Distributor may not reallow to any dealer
for service activities an amount in excess of .25% of the average annual net
asset value of the Shares with respect to which said dealer provides service
activities.
6. Duties of the Trust.
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(a) The Trust reserves the right at any time to withdraw offering
Shares of any or all Series (and of any or all Classes thereof) by written
notice to the Distributor at its principal office.
(b) The Trust shall determine in its sole discretion whether
certificates shall be issued with respect to the Shares, and there is no current
intention that such certificates shall be issued. If the Trust determines that
certificates shall be issued, the Trust will not cause certificates representing
Shares to be issued unless so requested by shareholders. If such request is
transmitted by the Distributor, the Trust will cause certificates evidencing
Shares to be issued in such names and denominations as the Distributor shall
from time to time direct.
(c) The Trust shall keep the Distributor fully informed of its affairs
and shall make available 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, without
limitation, certified copies of any financial statements prepared for the Trust
by its independent public accountants and such reasonable number of copies of
the most current prospectus, statement of additional information, and annual and
interim reports of any Series as the Distributor may request, and the Trust
shall cooperate fully in the efforts of the Distributor to sell and arrange for
the sale of the Shares of the Series and in the performance of the Distributor
under this Agreement.
(d) The Trust shall take, from time to time, all necessary action,
including payment of the related filing fee, as may be necessary to register the
Shares under the 1933 Act to the end that there will be available for sale such
number of Shares as the Distributor may be expected to sell. The Trust agrees to
file, from time to time, such amendments, reports, and other documents as may be
necessary in order that there will be no untrue statement of a material fact in
the Registration Statement, nor any omission of a material fact which omission
would make the statements therein misleading.
(e) The Trust shall use its best efforts to qualify and maintain the
qualification of an appropriate number of Shares of each Series for sale under
the securities laws of such states or other jurisdictions as the Distributor and
the Trust may approve, and, if necessary or appropriate in connection therewith,
to qualify and maintain the qualification of the Trust as a broker or dealer in
such jurisdictions; provided that the Trust shall not be required to amend its
Declaration of Trust or By-Laws to comply with the laws of any jurisdiction, to
maintain an office in any jurisdiction, to change the terms of the offering of
the Shares in any jurisdiction from the terms set forth in its Registration
Statement, to qualify as a foreign corporation in any jurisdiction, or to
consent to service of process in any jurisdiction other than with respect to
claims arising out of the offering of the Shares. 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 qualifications.
7. Expenses of the Trust. The Trust shall bear all costs and expenses
of registering the Shares with the Securities and Exchange Commission and state
and other regulatory bodies, and shall assume expenses related to communications
with shareholders of each Series, including (i) fees and disbursements of its
counsel and independent public accountants; (ii) the preparation, filing and
printing of registration statements and/or prospectuses or statements of
additional information required under the federal securities laws; (iii) the
preparation and mailing of annual and interim reports, prospectuses, statements
of additional information and proxy materials to shareholders; and (iv) the
qualifications of Shares for sale and of the Trust as a broker or dealer under
the securities laws of such jurisdictions as shall be selected by the Trust and
the Distributor pursuant to Paragraph 6(e) hereof, and the costs and expenses
payable to each such jurisdiction for continuing qualification therein.
8. Expenses of the Distributor. The Distributor shall bear all costs
and expenses of (i) preparing, printing and distributing any materials not
prepared by the Trust and other materials used by
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the Distributor in connection with the sale of Shares under this Agreement,
including the additional cost of printing copies of prospectuses, statements of
additional information, and annual and interim shareholder reports other than
copies thereof required for distribution to existing shareholders or for filing
with any federal or state securities authorities; (ii) any expenses of
advertising incurred by the Distributor in connection with such offering; (iii)
the expenses of registration or qualification of the Distributor as a broker or
dealer under federal or state laws and the expenses of continuing such
registration or qualification; and (iv) all compensation paid to the
Distributor' employees and others for selling Shares, and all expenses of the
Distributor, its employees and others who engage in or support the sale of
Shares as may be incurred in connection with their sales efforts.
9. Indemnification.
(a) The Trust agrees to indemnify, defend and hold the Distributor, its
officers and directors, and any person who controls the Distributor 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 counsel
fees incurred in connection therewith) which the Distributor, 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 alleged untrue
statement of a material fact contained in the Registration Statement or arising
out of or based upon any alleged omission to state a material fact required to
be stated in the Registration Statement or necessary to make the statements
therein not misleading, except insofar as such claims, demands, liabilities or
expenses arise out of or are based upon any such untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with information furnished in writing by the Distributor to the Trust for use in
the Registration Statement; provided, however, that this indemnity agreement
shall not inure to the benefit of any person who is also an officer or trustee
of the Trust or who controls the Trust within the meaning of Section 15 of the
1933 Act, unless a court of competent jurisdiction shall determine, or it shall
have been determined by controlling precedent, that such result would not be
against public policy as expressed in the 1933 Act; and further provided, that
in no event shall anything contained herein be so construed as to protect the
Distributor against any liability to the Trust or to the shareholders of any
Series to which the Distributor 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. The
Trust shall not be liable to the Distributor under this indemnity agreement with
respect to any claim made against the Distributor or any person indemnified
unless the Distributor or other such person shall have notified the Trust 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 such other person (or after the Distributor
or the person shall have received notice of service on any designated agent).
However, failure to notify the Trust of any claim shall not relieve the Trust
from any liability which it may have to the Distributor or any person against
whom such action is brought otherwise than on account of this indemnity
agreement. The Trust 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 indemnity agreement. If the Trust elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by the Trust and satisfactory to indemnified defendants in the suit whose
approval shall not be unreasonably withheld. In the event that the Trust 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 Trust 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 Trust agrees to notify the
Distributor promptly of the commencement of any litigation or proceedings
against it or any of its officers or trustees in connection with the issuance or
sale of any of its Shares.
(b) The Distributor agrees to indemnify, defend, and hold the Trust,
its officers and trustees and any person who controls the Trust within the
meaning of Section 15 of the 1933 Act, free and
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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) which the
Trust, its trustees or officers, or any such controlling person may incur under
the 1933 Act or under common law or otherwise arising out of or based upon any
alleged untrue statement of a material fact contained in information furnished
in writing by the Distributor to the Trust for use in the Registration
Statement, arising out of or based upon any alleged omission to state a material
fact in connection with such information required to be stated in the
Registration Statement necessary to make such information not misleading, or
arising out of any agreement between the Distributor and any retail dealer, or
arising out of any supplemental sales literature or advertising used by the
Distributor in connection with its duties under this Agreement. The Distributor
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 the Distributor elects to assume the defense, the defense shall be conducted
by counsel chosen by the Distributor and satisfactory to the indemnified
defendants whose approval shall not be unreasonably withheld. In the event that
the Distributor 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 the Distributor 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.
10. Limitation of Liability of the Trustees and Shareholders of the
Trust. The obligations of the Trust hereunder shall not be personally binding
upon any of the trustees, nominees, officers, agents or employees of the Trust,
or the shareholders of any Series, but shall bind only the assets of the Trust
or such Series as set forth in the Trust's Declaration of Trust, as amended. The
Distributor agrees that, in asserting any rights or claims under this Agreement,
it shall look only to such assets in settlement of any such right or claim.
Notice is hereby provided that the Trust's Declaration of Trust is on file with
the Secretary of the Commonwealth of Massachusetts. The execution and delivery
of this Agreement by an officer of the Trust has been authorized by the trustees
of the Trust. Such authorization and execution and delivery shall not be deemed
to have been made by any trustee, shareholder or officer individually or to
impose any personal liability upon them.
11. Services Provided to the Trust by Employees of the Distributor. Any
person, even though also an officer, director, employee or agent of the
Distributor, who may be or become an officer, trustee, employee or agent of the
Trust, shall be deemed, when rendering services to the Trust or acting in any
business of the Trust, to be rendering such services to or acting solely for the
Trust and not as an officer, director, employee or agent or one under the
control or direction of the Distributor even though paid by the Distributor.
12. Quarterly Reports to Board. The Distributor shall prepare reports
for the Board on a quarterly basis showing such information concerning
expenditures related to this Agreement as from time to time shall be reasonably
requested by the Board.
13. Duration and Termination.
(a) This Agreement shall become effective upon the date hereabove
written, provided that, with respect to any Series, this Agreement shall not
take effect unless such action has first been approved by vote of a majority of
the Board and by vote of a majority of those trustees of the Trust who are not
interested persons of the Trust, and have no direct or indirect financial
interest in the operation of the Plan relating to the Series or in any
agreements related thereto (all such trustees collectively being referred to
herein as the "Independent Trustees") cast in person at a meeting called for the
purpose of voting on such action.
(b) Notwithstanding the foregoing, with respect to any Series, this
Agreement may be terminated at any time, without the payment of any penalty, by
vote of the Board, by vote of a majority of
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the Independent Trustees or by vote of a majority of the outstanding voting
securities of the Shares of such Series on sixty days' written notice to the
Distributor or by the Distributor at any time, without the payment of any
penalty, on sixty days' written notice to the Trust or such Series. This
Agreement will automatically terminate in the event of its assignment.
(c) Termination of this Agreement with respect to any given Series
shall in no way affect the continued validity of this Agreement or the
performance thereunder with respect to any other Series.
14. 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.
15. Governing Law. This Agreement shall be construed in accordance with
the laws of the Commonwealth of Massachusetts and the 1940 Act. To the extent
that the applicable laws of the Commonwealth of Massachusetts conflict with the
applicable provisions of the l940 Act, the latter shall control.
16. 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.
17. 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 l940 Act.
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IN WITNESS WHEREOF, the parties hereto caused this Agreement to be
executed by their officers thereunto duly authorized.
Attest: XXXXXXXX CAPITAL TRUST
By: ________________________ By: _________________________
Attest: LM FINANCIAL PARTNERS, INC.
By: ________________________ By: _________________________
As revised, ___________ __, 1998
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