1
EXHIBIT 6(a)
DISTRIBUTION AGREEMENT
June 15, 1994
Xxxxxxx Xxxxxx & Co., Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned, The Xxxxxxx Xxxxxx Family of Funds (the "Trust"), a
Massachusetts business trust, has agreed that Xxxxxxx Xxxxxx & Co., Inc. (the
"Distributor") shall be, for the period of this Agreement, the distributor of
the units of beneficial interest of the investment portfolios of the Trust
identified on Schedule A hereto (each a "Fund", and collectively, the "Funds").
Such units of beneficial interest are hereinafter called "Shares."
1. Services as Distributor.
1.1. Distributor will act as agent for the distribution of the Shares
covered by the registration statement and prospectus of the Trust in effect
under the Securities Act of 1933, as amended.
1.2. Distributor agrees to use appropriate efforts to solicit orders
for the sale of the Shares and will undertake such advertising and promotion as
it believes reasonable in connection with such solicitation. The Trust
understands that Distributor may, in the future, be the distributor of the
shares of several investment companies or series (together, "Companies"),
including Companies having investment objectives similar to those of the Trust.
The Trust further understands that investors and potential investors in the
Trust may invest in shares of such other Companies. The Trust agrees that
Distributor's duties to such Companies shall not be deemed to be in conflict
with its duties to the Trust under this paragraph 1.2.
Distributor shall, at its own expense, finance appropriate activities
which it deems reasonable which are primarily intended to result in the sale of
the Shares, including, but not limited to, advertising, compensation of
underwriters, dealers and sales personnel, the printing and mailing of
prospectuses to other than current Shareholders, and the printing and mailing of
sales literature.
1.3. All activities by Distributor and its partners, agents, and
employees as distributor of the Shares shall comply with all applicable laws,
rules and regulations, including,
2
without limitation, all rules and regulations made or adopted pursuant to the
Investment Company Act of 1940 by the Securities and Exchange Commission or any
securities association registered under the Securities Exchange Act of 1934.
1.4. Distributor will provide one or more persons, during normal
business hours, to respond to telephone questions with respect to the Trust.
1.5. Distributor will transmit any orders received by it for purchase
or redemption of the Shares to the transfer agent and custodian for the Funds.
1.6. Whenever in their judgment such action is warranted by unusual
market, economic or political conditions, or by abnormal circumstances of any
kind, the Trust's officers may decline to accept any orders for, or make any
sales of the Shares until such time as those officers deem it advisable to
accept such orders and to make such sales.
1.7. Distributor will act only on its own behalf as principal if it
chooses to enter into selling agreements with selected dealers or others.
1.8. The Trust agrees at its own expense to execute any and all
documents and to furnish any and all information and otherwise to take all
actions that may be reasonably necessary in connection with the qualification of
the Shares for sale in such states as Distributor may designate.
1.9. The Trust shall furnish from time to time, for use in connection
with the sale of the Shares, such information with respect to the Funds and the
Shares as Distributor may reasonably request; and the Trust warrants that the
statements contained in any such information shall fairly show or represent what
they purport to show or represent. The Trust shall also furnish Distributor upon
request with: (a) unaudited semi-annual statements of the Funds' books and
accounts prepared by the Trust, (b) quarterly earnings statements prepared by
the Trust, (c) a monthly itemized list of the securities in the Funds, (d)
monthly balance sheets as soon as practicable after the end of each month, and
(e) from time to time such additional information regarding the financial
condition of the Funds as Distributor may reasonably request.
1.10. The Trust represents to Distributor that all registration
statements and prospectuses filed by the Trust with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, with respect to the
Shares have been carefully prepared in conformity with the requirements of said
Act and rules and regulations of the Securities and Exchange Commission
thereunder. As used in this agreement the terms
-2-
3
"registration statement" and "prospectus" shall mean any registration statement
and any prospectus and Statement of Additional Information relating to the Funds
filed with the Securities and Exchange Commission and any amendments and
supplements thereto which at any time shall have been filed with the same
Commission. The Trust represents and warrants to Distributor that any
registration statement and prospectus, when such registration statement becomes
effective, will contain all statements required to be stated therein in
conformity with said Act and the rules and regulations of said Commission; that
all statements of fact contained in any such registration statement and
prospectus will be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any prospectus when
such registration statement becomes effective will 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 the Shares. The Trust may but shall not be obligated to propose
from time to time such amendment or amendments to any registration statement and
such supplement or supplements to any prospectus as, in the light of future
developments, may, in the opinion of the Trust's counsel, be necessary or
advisable. If the Trust shall not propose such amendment or amendments and/or
supplement or supplements within fifteen days after receipt by the Trust of a
written request from Distributor to do so, Distributor may, at its option,
terminate this agreement. The Trust shall not file any amendment to any
registration statement or supplement to any prospectus without giving
Distributor reasonable notice thereof in advance; provided, however, that
nothing contained in this agreement shall in any way limit the Trust's right to
file at any time such amendments to any registration statement and/or
supplements to any prospectus, of whatever character, as the Trust may deem
advisable, such right being in all respects absolute and unconditional.
1.11. The Trust authorizes Distributor and dealers to use any
prospectus in the form furnished from time to time in connection with the sale
of the Shares. The Trust agrees to indemnify, defend and hold Distributor, its
directors, officers and employees, and any person who controls Distributor
within the meaning of Section 15 of the Securities Act of 1933, as amended, 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
Distributor, its partners and employees, or any such controlling person, may
incur under the Securities Act of 1933, as amended, or under common law or
otherwise, arising out of or based upon any untrue statement, or alleged untrue
statement, of a material fact contained in any registration statement or any
prospectus or arising out of or based upon any omission, or alleged omission, to
state a material
-3-
4
fact required to be stated in either any registration statement or any
prospectus or necessary to make the statements in either thereof not misleading;
provided, however, that the Trust's agreement to indemnify Distributor, its
directors, officers or employees, and any such controlling person shall not be
deemed to cover any claims, demands, liabilities or expenses arising out of any
statements or representations as are contained in any prospectus and in such
financial and other statements as are furnished in writing to the Trust by
Distributor and used in the answers to the registration statement or in the
corresponding statements made in the prospectus, or arising out of or based upon
any omission or alleged omission to state a material fact in connection with the
giving of such information required to be stated in such answers or necessary to
make the answers not misleading; and further provided that the Trust's agreement
to indemnify Distributor and the Trust's representations and warranties
hereinbefore set forth in paragraph 1.10 shall not be deemed to cover any
liability to the Trust or its Shareholders to which 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 Distributor's reckless disregard
of its obligations and duties under this agreement. The Trust's agreement to
indemnify Distributor, its partners and employees, and any such controlling
person, as aforesaid, is expressly conditioned upon the Trust's being notified
of any action brought against Distributor, its directors, officers or employees,
or any such controlling person, such notification to be given by letter or by
telegram addressed to the Trust at its principal office in San Francisco,
California and sent to the Trust by the person against whom such action is
brought, within 10 days after the summons or other first legal process shall
have been served. The failure to so notify the Trust of any such action shall
not relieve the Trust from any liability which the Trust may have to the person
against whom such action is brought by reason of any such untrue, or allegedly
untrue, statement or omission, or alleged omission, otherwise than on account of
the Trust's indemnity agreement contained in this paragraph 1.11. The Trust will
be entitled to assume the defense of any suit brought to enforce any such claim,
demand or liability, but, in such case, such defense shall be conducted by
counsel of good standing chosen by the Trust and approved by Distributor, which
approval shall not be unreasonably withheld. In the event the Trust elects to
assume the defense of any such suit and retain counsel of good standing approved
by Distributor, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case the
Trust does not elect to assume the defense of any such suit, or in case
Distributor reasonably does not approve of counsel chosen by the Trust, the
Trust will reimburse Distributor, its directors, officers and employees, or the
controlling person or persons named as defendant or defendants in such suit, for
the fees and expenses of any counsel retained by Distributor or them. The
-4-
5
Trust's indemnification agreement contained in this paragraph 1.11 and the
Trust's 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 Distributor, its partners and employees, or any controlling person,
and shall survive the delivery of any Shares. This agreement of indemnity will
inure exclusively to Distributor's benefit, to the benefit of its several
partners and employees, and their respective estates, and to the benefit of the
controlling persons and their successors. The Trust agrees promptly to notify
Distributor of the commencement of any litigation or proceedings against the
Trust or any of its officers or Trustees in connection with the issue and sale
of any Shares.
1.12. Distributor agrees to 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 of 1933, as amended, free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the costs of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which the
Trust, its officers or Trustees or any such controlling person, may incur under
the Securities Act of 1933, as amended, or under common law or otherwise, but
only to the extent that such liability or expense incurred by the Trust, its
officers or Trustees or such controlling person resulting from such claims or
demands, shall arise out of or be based upon any untrue, or alleged untrue,
statement of a material fact contained in information furnished in writing by
Distributor to the Trust and used in the answers to any of the items of the
registration statement or in the corresponding statements made in the
prospectus, or shall arise out of or be based upon any omission, or alleged
omission, to state a material fact in connection with such information furnished
in writing by Distributor to the Trust required to be stated in such answers or
necessary to make such information not misleading. Distributor's agreement to
indemnify the Trust, its officers and Trustees, and any such controlling person,
as aforesaid, is expressly conditioned upon Distributor's being notified of any
action brought against the Trust, its officers or Trustees, or any such
controlling person, such notification to be given by letter or telegram
addressed to Distributor at its principal office in San Francisco, California
and sent to Distributor by the person against whom such action is brought,
within 10 days after the summons or other first legal process shall have been
served. Distributor shall have the right of first control of the defense of such
action, with counsel of its own choosing, satisfactory to the Trust, if such
action is based solely upon such alleged misstatement or omission on
Distributor's part, and in any other event the Trust, its officers or Trustees
or such controlling person shall each have the right to participate in the
defense or
-5-
6
preparation of the defense of any such action. The failure to so notify
Distributor of any such action shall not relieve Distributor from any liability
which Distributor may have to the Trust, its officers or Trustees, or to such
controlling person by reason of any such untrue or alleged untrue statement, or
omission or alleged omission, otherwise than on account of Distributor's
indemnity agreement contained in this paragraph 1.12.
1.13. No Shares shall be offered by either Distributor or the Trust
under any of the provisions of this agreement and no orders for the purchase or
sale of Shares hereunder shall be accepted by the Trust if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
Securities Act of 1933, as amended, or if and so long as a current prospectus as
required by Section 10(b)(2) of said Act, as amended, is not on file with the
Securities and Exchange Commission; provided, however, that nothing contained in
this paragraph 1.13 shall in any way restrict or have an application to or
bearing upon the Trust's obligation to repurchase Shares from any Shareholder in
accordance with the provisions of the Trust's prospectus, Declaration of Trust,
or By-laws.
1.14. The Trust agrees to advise Distributor as soon as reasonably
practical by a notice in writing delivered to Distributor or its counsel:
(a) of any request by the Securities and Exchange Commission for
amendments to the registration statement or prospectus then in effect or for
additional information;
(b) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of the registration
statement or prospectus then in effect or the initiation by service of process
on the Trust of any proceeding for that purpose;
(c) of the happening of any event that makes untrue any statement of a
material fact made in the registration statement or prospectus then in effect or
which requires the making of a change in such registration statement or
prospectus in order to make the statements therein not misleading; and
(d) of all action of the Securities and Exchange Commission with
respect to any amendment to any registration statement or prospectus which may
from time to time be filed with the Securities and Exchange Commission.
For purposes of this section, informal requests by or acts of the Staff
of the Securities and Exchange Commission shall not be deemed actions of or
requests by the Securities and Exchange
-6-
7
Commission.
1.15. Distributor agrees on behalf of itself and its directors,
officers and employees to treat confidentially and as proprietary information of
the Trust all records and other information relative to the Trust and its prior,
present or potential Shareholders, and not to use such records and information
for any purpose other than performance of its responsibilities and duties
hereunder, except after prior notification to and approval in writing by the
Trust, which approval shall not be unreasonably withheld and may not be withheld
where Distributor may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
1.16. This agreement shall be governed by the laws of the Commonwealth
of Massachusetts.
2. Issuance of Shares.
The Trust reserves the right to issue, transfer or sell Shares of the
Funds at net asset value (a) in connection with the merger or consolidation of
the Trust or the Funds with any other investment company or the acquisition by
the Trust or the Funds of all or substantially all of the assets or of the
outstanding Shares of any other investment company; (b) in connection with a pro
rata distribution directly to the holders of Shares of a Fund in the nature of a
stock dividend or split; (c) upon the exercise of subscription rights granted to
the holders of Shares of a Fund on a pro rata basis; (d) in connection with the
issuance of Shares of a Fund pursuant to any exchange and reinvestment
privileges described in any then-current prospectus of a Fund; and (e) otherwise
in accordance with any then-current prospectus of the Funds.
3. Term and Matters Relating to the Trust as a Massachusetts Business
Trust.
This agreement shall become effective as to the Trust on December 15,
1989, and, unless sooner terminated as provided herein, shall continue until two
years, and thereafter shall continue automatically for successive one-year
periods ending on December 15 of each successive year; provided, however, that
such continuance is specifically approved at least annually by (i) the Trust's
Board of Trustees or (ii) by "vote of a majority of the outstanding Shares" (as
defined below) of the Trust, and provided further, that in either event the
continuance is also approved at least annually by the majority of the Trust's
Trustees who are not parties to the agreement or interested persons (as defined
in the 0000 Xxx) of any party to this agreement, by vote cast in person at a
meeting called for the purpose of voting on such
-7-
8
approval. This agreement is terminable on not less than sixty days' notice by
the Trust's Board of Trustees, by "vote of a majority of the outstanding Shares"
(as defined below) of the Trust or by Distributor. This agreement will also
terminate automatically in the event of its assignment (as defined in the 1940
Act). For purposes of this Agreement, the term "vote of a majority of the
outstanding Shares" shall mean the approval, at a meeting of Shareholders duly
called, of the lesser of (i) the holders of 67% or more of the votes present at
any such meeting, if the holders of more than 50% of the outstanding votes are
present or represented by proxy thereat; or (ii) the holders of more than 50% of
the outstanding votes.
The names "The Xxxxxxx Xxxxxx Family of Funds" and "Trustees of Xxxxxxx
Xxxxxx Family of Funds" refer respectively to the Trust created and the
Trustees, as trustees but not individually or personally, acting from time to
time under a Declaration of Trust dated as of October 20, 1989 to which
reference is hereby made and a copy of which is on file at the office of the
Secretary of State of The Commonwealth of Massachusetts and elsewhere as
required by law, and to any and all amendments thereto so filed or hereafter
filed. The obligations of "The Xxxxxxx Xxxxxx Family of Funds" entered into in
the name or on behalf thereof by any of the Trustees, representatives or agents
are made not individually, but in such capacities, and are not binding upon any
of the Trustees, Shareholders or representatives of the Trust personally, but
bind only the assets of the Trust, and all persons dealing with any series of
Shares of the Trust must look solely to the assets of the Trust belonging to
such series for the enforcement of any claims against the Trust.
4. Severability.
If any provision of this Agreement is found by a court or agency of
competent jurisdiction to be in violation of any state or federal law, rule or
regulation, then the invalidity of such provision shall not affect the
enforceability or validity of the remaining provisions.
-8-
9
Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place below indicated,
whereupon it shall become a binding agreement between us.
Yours very truly,
THE XXXXXXX XXXXXX FAMILY OF FUNDS
By: /s/ Xxxxxxxxx X. Xxxx
----------------------
Name: Xxxxxxxxx X. Xxxx
Title: President
Accepted:
XXXXXXX XXXXXX & CO., INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President -
SchwabFunds
-9-
