Contract
Exhibit (m)2
U.S. Global Investors Funds
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 1st day of October, 2008, between U.S. Global Investors
Funds, a Delaware statutory trust (the “Trust”), having its principal place of business in San
Antonio, Texas and U.S. Global Brokerage, Inc. a corporation organized under the laws of the State
of Texas (the “Distributor”), having its principal place of business in San Antonio, Texas.
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 is authorized (i) to issue shares of
beneficial interest in separate series, with the shares of each such series representing the
interests in a separate portfolio of securities and other assets, and (ii) to divide such shares of
beneficial interest of each such series into two or more classes; and
WHEREAS, the Trust wishes to employ the services of the Distributor with respect to the
distribution of shares of beneficial interest of the Trust (“Shares”) and classes thereof
representing interests in each portfolio series thereof identified from time to time on Schedule A
hereto (each such portfolio series being referred to herein as a “Fund”); and
WHEREAS, the Distributor wishes to provide distribution services to the Trust with respect to
the Shares.
NOW, THEREFORE, in consideration of the mutual promises and undertakings herein contained, the
parties agree as follows:
1. SALE OF SHARES BY THE DISTRIBUTOR. The Trust grants to the Distributor the right to sell
Shares during the term of this Agreement and subject to the registration requirements of the
Securities Act of 1933, as amended (the “1933 Act”), and of the laws governing the sale of
securities in the various states (“Blue Sky Laws”), under the following terms and conditions: the
Distributor (i) shall have the right to sell, as agent and on behalf of the Trust, Shares
authorized for issue and registered under the 1933 Act; and (ii) may sell such Shares only in
compliance with the terms set forth in the Trust’s currently effective registration statement, as
may be in effect from time to time, and any further limitations the Board of Trustees of the Trust
may impose. The Distributor may enter into selling agreements with selected dealers and others for
the sale of Shares and will act only on the Trust’s behalf as principal in entering into such
selling agreements.
2. SALE OF SHARES BY THE TRUST. The rights granted to the Distributor shall be nonexclusive
in that the Trust reserves the right to sell its shares to investors on applications received and
accepted by the Trust. The Trust also reserves the right to issue Shares in connection with (i)
the merger or consolidation of the assets of, or acquisition by the Trust through purchase or
otherwise, with any other investment company, trust or personal holding company; (ii) a pro rata
distribution directly to the holders of Shares in the nature of a stock
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dividend or split-up; and (iii) as otherwise may be provided in the then current registration
statement of the Trust.
3. PUBLIC OFFERING PRICE. Except as otherwise noted in the Trust’s current prospectus (the
“Prospectus”) or Statement of Additional Information (the “SAI”), all Shares sold by the
Distributor or the Trust will be sold at the public offering price plus any applicable sales charge
described therein. The public offering price for all accepted subscriptions will be the net asset
value per share, determined in the manner described in the Trust’s then current Prospectus and SAI
with respect to the applicable Fund. The Trust shall in all cases receive the net asset value per
Share on all sales. If a sales charge is in effect, the Distributor shall be entitled to retain
the applicable sales charges, if any, subject to any reallowance obligations of the Distributor as
set forth in any selling agreements with selected dealers and others for the sale of Shares and/or
as set forth in the Prospectus and/or SAI of the Trust with respect to Shares, in accordance with
Section 22 of the 1940 Act and rules thereunder.
4. SUSPENSION OF SALES. If and whenever the determination of net asset value is suspended and
until such suspension is terminated, no further orders for Shares shall be processed by the
Distributor, except such unconditional orders placed with the Distributor before it had knowledge
of the suspension. In addition, the Trust reserves the right to suspend sales of Shares and the
Distributor’s authority to process orders for Shares if, in the judgment of the Trust, it is in the
best interest of the Trust to do so. Suspension will continue for such period as may be determined
by the Trust. In addition, the Trust and Distributor reserve the right to reject any purchase
order.
5. SOLICITATION OF SALES. In consideration of these rights granted to the Distributor, the
Distributor agrees to use all reasonable efforts, consistent with its other business, to secure
purchasers for Shares of the Trust. This shall not prevent the Distributor from entering into like
arrangements (including arrangements involving the payment of underwriting commissions) with other
issuers. This does not obligate the Distributor to register as a broker-dealer under the Blue Sky
Laws of any jurisdiction in which it is not now registered or to maintain registration in any
jurisdiction in which it is now registered. The Distributor may also enter into dealer or similar
agreements with qualified intermediaries it may select for the performance of distribution services
and shareholder services, provided that the Board of Trustees shall approve the form of dealer
agreement and shall evidence such approval by filing said form of dealer agreement and amendments
thereto as an exhibit to its currently effective registration statement under the 0000 Xxx. The
Distributor will not direct remuneration from commissions paid by the Trust for portfolio
securities transactions to a broker or dealer for promoting or selling Shares.
6. AUTHORIZED REPRESENTATIONS. The Distributor is not authorized by the Trust to give any
information or to make any representations other than those contained in the appropriate
registration statements, Prospectuses or SAIs filed with the U.S. Securities and Exchange
Commission under the 1933 Act (as those registration statements, Prospectuses and SAIs may be
amended from time to time), or contained in shareholder reports or other material that may be
prepared by or on behalf of the Trust for the Distributor’s use. This shall not be construed to
prevent the Distributor from preparing and distributing, in compliance with
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applicable laws and regulations, sales literature or other material as it may deem appropriate.
Distributor will furnish or cause to be furnished copies of such sales literature or other material
to the Trust. Distributor agrees to take appropriate action to cease using such sales literature or
other material to which the Trust reasonably objects as promptly as practicable after receipt of
the objection. Distributor further agrees that, in connection with the offer and sale of Shares,
Distributor shall comply with all applicable securities laws of the United States and each state
thereof in which Shares are offered and/or sold (including without limitation, the maintenance of
effective federal and state broker-dealer registrations, as required) and the rules and regulations
of the NASD.
7. PORTFOLIO SECURITIES. Portfolio securities may be bought or sold by or through the
Distributor and the Distributor may participate directly or indirectly in brokerage commissions or
“spreads” for transactions in portfolio securities of the Funds.
8. REGISTRATION OF SHARES. The Trust agrees that it will use its best efforts to register
Shares under the Blue Sky laws of any state as well as under the 1933 Act (subject to the necessary
approval, if any, of its shareholders) and to qualify and maintain the registration and
qualification of an unlimited number of shares under the 1933 Act so that there will be available
for sale the number of Sales the Distributor may reasonably be expected to sell. Distributor shall
furnish such information and other materials relating to its affairs and activities as shall be
required by the Trust in connection with such registration and qualification. The Distributor
agrees that it will not offer or sell Shares in any jurisdiction unless the offer or sale of Shares
has been so qualified or registered or is otherwise exempt from such registration or qualification.
The Trust 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 of each Fund.
9. EXPENSES, COMPENSATION AND REIMBURSEMENT.
(a) The Trust shall pay all fees and expenses (i) in connection with the preparation, setting
in type and filing of any registration statement, Prospectus and Statement of Additional
Information under the 1933 Act and amendments for the issue of its shares, (ii) in connection with
the registration and qualification of shares for sale in the various states in which the officers
of the Trust shall determine to be advisable (including registering the Trust as a broker or dealer
or any officers of the Trust as agent or salesperson in any state), (iii) of preparing, setting in
type, printing and mailing any report or other communication to shareholders of the Trust in their
capacity as such, and (iv) of preparing, setting in type, printing and mailing Prospectuses, SAIs
and any supplements thereto sent to existing shareholders.
(b) Compensation. For the distribution support services provided by the Distributor pursuant
to the terms of this Agreement, the Trust shall, pursuant to the Distribution Plan adopted pursuant
to Rule 12b-1 under the 1940 Act (the “Distribution Plan”), pay the Distributor at the rate and
under the terms and conditions set forth in the Distribution Plan, as such Distribution Plan may be
amended from time to time, and subject to any further limitations on such fees as the Board of
Trustees of the Trust may impose. All rights of compensation under this Agreement for services
performed by the Distributor as of the termination date shall survive
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the termination of this Agreement. Subject to and calculated in accordance with the Rules of Fair
Practice of the NASD, if during any annual period the total of (i) the compensation payable to the
Distributor and (ii) amounts payable under the Trust’s Distribution Plan exceeds 0.25% of a Fund’s
average daily net assets, the Distributor will rebate that portion of its fee necessary to result
in the total of (i) and (ii) above not exceeding 0.25% of the Fund’s average daily net assets. The
payment of compensation is authorized pursuant to the Trust’s Distribution Plan adopted pursuant to
Rule 12b-1 under the 1940 Act and is contingent upon the continued effectiveness of the Trust’s
Distribution Plan.
(c) Revenue Sharing. As provided in the Distribution Plan adopted by the Trust, it is
recognized by the Trust that the Adviser or its affiliates may make payments to the Distributor
with respect to any expenses incurred in the distribution of Shares, such payments payable from the
past profits or other resources of the Adviser or its affiliates including advisory fees paid to it
by the Trust.
10. INDEMNIFICATION.
(a) The Trust agrees to indemnify and hold harmless the Distributor and each of its directors
and officers and each person, if any, who controls the Distributor within the meaning of Section 15
of the 1933 Act against any loss, liability, claim, damage or expense (including the reasonable
cost of investigating or defending any alleged loss, liability, claim, damage or expense and
reasonable counsel fees incurred in connection therewith) arising out of or based upon: (i) any
violation of the Trust’s representations or covenants herein contained; (ii) any wrongful act of
the Trust or any of its representatives (other than the Distributor or any of its employees or
representatives (regardless of the capacity in which such employee or representative is acting) or
any other person for whose acts the Distributor is responsible or is alleged to be responsible
(including any selected dealer or person through whom sales are made pursuant to an agreement with
the Distributor)); or (iii) any untrue statement of a material fact contained in a registration
statement, Prospectus, SAI or shareholder reports or other information filed or made public by the
Trust (as from time to time amended) of any Fund or any omission to state a material fact required
to be stated therein or necessary in order to make the statements therein not misleading under the
1933 Act, or any other statute or common law, except to the extent the statement or omission was
made in reliance upon, and in conformity with, information furnished to the Trust by or on behalf
of the Distributor. In no case (i) is the indemnity by the Trust in favor of the Distributor or
any person indemnified to be deemed to protect the Distributor or any person against any liability
to the Trust or its security holders 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 its
duties or by reason of its reckless disregard of its obligations and duties under this agreement,
or (ii) is the Trust to be liable under its indemnity agreements contained in this paragraph with
respect to any claim made against the Distributor or any person indemnified unless the Distributor
or person, as the case may be, 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 any such person or after the
Distributor or such 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
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whom such action is brought other than on account of its indemnity agreement contained in this
Paragraph 10(a). 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, but if the Trust
elects to assume the defense, the defense shall be conducted by counsel chosen by it and
satisfactory to the Distributor, or person or persons, defendant or defendants in the suit. In the
event the Trust elects to assume the defense of any suit and retain counsel, the Distributor,
officers or directors or controlling person(s) or defendant(s) in the suit shall bear the fees and
expenses of any additional counsel retained by them. If the Trust does not elect to assume the
defense of any suit, it will reimburse the Distributor, officers or directors or controlling
person(s) or defendant(s) in the suit for the reasonable fees and expenses of any counsel retained
by them. 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 the Shares.
(b) The Distributor agrees to indemnify and hold harmless the Trust and each of its Trustees
and officers and each person, if any, who controls the Trust within the meaning of Section 15 of
the 1933 Act, against any loss, liability, claim, damage or expense (including the reasonable cost
of investigating or defending any alleged loss, liability, claim, damage or expense and reasonable
counsel fees incurred in connection therewith) arising out of or based upon: (i) any violation of
the Distributor’s representations or covenants herein contained; (ii) any wrongful act of the
Distributor or any of its employees or representatives or any other person for whose acts the
Distributor is responsible or is alleged to be responsible (including any selected dealer or person
through whom sales are made pursuant to an agreement with the Distributor); or (iii) any untrue
statement of a material fact contained in a registration statement, Prospectus, SAI or shareholder
reports or other information filed or made public by the Trust (as from time to time amended) or
any omission to state a material fact required to be stated therein or necessary in order to make
the statements therein not misleading, but only if the statement or omission was made in reliance
upon, and in conformity with, information furnished to the Trust by or on behalf of the
Distributor. In no case (x) is the indemnity by the Distributor in favor of the Trust or any
person indemnified to be deemed to protect the Trust or any person against any liability to the
Distributor or its security holders to which the Trust or such person 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 and duties under this agreement, or (y) is the
Distributor to be liable under its indemnity agreements contained in this paragraph with respect to
any claim made against the Trust or any person indemnified unless the Trust or 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 Trust or any such person or after the Trust or such person shall have
received notice of service on any designated agent. However, failure to notify the Distributor of
any claim shall not relieve the Distributor from any liability which it may have to the Trust or
any person against whom such action is brought other than on account of its indemnity agreement
contained in this Paragraph 10(b). 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
any claims, but if the Distributor elects to assume the defense, the defense shall be conducted by
counsel chosen by it and satisfactory to the Trust, or person or persons, defendant or defendants
in the suit. In the event the Distributor elects to assume the defense of
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any suit and retain counsel, the Trust, officers or Trustees or controlling person(s) or
defendant(s) 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
Trust, officers or Trustees or controlling person(s) or defendant(s) in the suit for the reasonable
fees and expenses of any counsel retained by them. The Distributor agrees to notify the Trust
promptly of the commencement of any litigation or proceedings against it or any of its officers or
directors in connection with the issuance or sale of any of the Shares.
(c) The indemnification obligations of the parties in this Paragraph 10 shall survive the
termination of this Agreement.
11. CODE OF ETHICS. The Distributor has adopted a written code of ethics that complies with
the requirements of Rule 17j-1 under the 1940 Act and will provide the Fund with a copy of such
code of ethics and all subsequent modifications, together with evidence of its adoption. At least
annually, the Distributor will provide the Fund with a report which (i) summarizes existing
procedures for compliance with the code and any changes in the procedures made during the past
year, (ii) describes any issues arising under the code since the last report to the Board of
Trustees, including any material violations of the code and any sanctions imposed in response to
the material violations, and (iii) identifies any recommended changes in existing restrictions or
procedures based upon experience with the code, evolving industry practice, or developments in
applicable laws or regulations. The Distributor will also certify, at least annually, that the
Distributor has adopted procedures reasonably necessary to prevent “Access Persons” as defined in
the code and Rule 17j-1 from violating the code.
12. CONFIDENTIALITY. The Distributor agrees 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 when requested by the
Trust or when requested to divulge such information by duly constituted authorities, after prior
notification to and approval in writing by the Trust. Such approval shall not be unreasonably
withheld and may not be withheld where the Distributor may be exposed to civil or criminal contempt
proceedings for failure to comply.
13. EFFECTIVENESS, TERMINATION, ETC. This Agreement shall become effective as follows: (i)
with respect to the Shares of each Fund identified on Schedule A hereto as of the date hereof, and
(ii) with respect to the Shares of any Fund added to Schedule A hereto, subsequent hereto, as of
the date Schedule A is amended to add such Fund. Unless terminated as provided herein, the
Agreement shall continue in force for one (1) year from the date of its execution and thereafter
from year to year, provided continuance is approved at least annually by either (i) the vote of a
majority of the Trustees of the Trust, or by the vote of a majority of the outstanding voting
securities of the Trust, and (ii) the vote of a majority of those Trustees of the Trust who are not
interested persons of the Trust and who are not parties to this Agreement or interested persons of
any party, cast in person at a meeting called for the purpose of voting on the approval. This
Agreement shall automatically terminate in the event of its assignment. In addition to termination
by failure to approve continuance or by assignment, this Agreement may at any time be terminated
without the payment of any penalty with respect to any Fund or class
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of Shares thereof by vote of a majority of the Trustees of the Trust who are not interested persons
of the Trust, or by vote of a majority of the outstanding voting securities of the Fund or class of
shares thereof, on not more than sixty (60) days’ written notice by the Trust. This Agreement may
be terminated by the Distributor upon not less than sixty (60) days’ prior written notice to the
Trust. As used in this Paragraph 13, the terms “vote of a majority of the outstanding voting
securities,” “assignment” and “interested person” shall have the respective meanings specified in
the 1940 Act and the rules enacted thereunder as now in effect or as hereafter amended.
14. NOTICE. Any notice under this Agreement shall be given in writing addressed and hand
delivered or sent by registered or certified mail, postage prepaid, to the other party to this
Agreement at its principal place of business.
15. SEVERABILITY. 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.
16. GOVERNING LAW. This Agreement shall be construed in accordance with the laws of the State
of Delaware, without giving effect to the choice of laws provision thereof.
17. LIMITATION OF LIABILITY. The Distributor is expressly put on notice of the limitation of
liability as set forth in the Trust’s Agreement and Declaration of Trust, and agrees that the
obligations assumed by the Fund pursuant to this Agreement shall be limited in all cases to each
Fund and each Fund’s respective assets, and the Distributor shall not seek satisfaction of any such
obligation from shareholders or any shareholder of the Funds. In addition, the Distributor shall
not seek satisfaction of any such obligations from the Trustees of the Trust or any individual
Trustee. The Distributor understands that the rights and obligations of any Fund under Trust’s
Agreement and Declaration of Trust are separate and distinct from those of any of and all other
Funds.
18. AML AND PRIVACY. The Distributor represents that it is in compliance in all material
respects, and will continue to so comply, with all applicable laws and regulations relating to
guarding against terrorism and money laundering, and the Distributor agrees to comply with the
Trust’s anti-money laundering program to the extent applicable. The Distributor also agrees to
comply with the Trust’s privacy policies with respect to all information obtained pursuant to this
Agreement. It is acknowledged and agreed that other service providers to the Trust perform
anti-money laundering services and reviews for the Trust, and that the Distributor receives little,
if any, information concerning Fund shareholders.
19. MARKET TIMING. From time to time, the Trust may implement policies, procedures or charges
in an effort to avoid the potential adverse affects on the Funds of short-term trading by market
timers. The Distributor agrees to cooperate in good faith with the Trust in the implementation of
(i) any such policies, procedures or charges, and (ii) the imposition and payment over to the Trust
of redemption fees specified in the Trust’s registration statement.
20. MISCELLANEOUS. Each party agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes hereof. The captions in this
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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. This Agreement may be executed
in two counterparts, each of which taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
above written.
U.S. GLOBAL INVESTORS FUNDS U.S. GLOBAL BROKERAGE, INC.
By:
|
/s/ Xxxxx X. Xxxxxx
|
By: | /s/ Xxxxx X. Xxxxx
|
|||||||
| President and Chief Executive | President | |||||||||
| Officer |
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SCHEDULE A
U.S. Global Investors Funds
Funds
China Region Fund
All American Equity Fund
Gold and Precious Metals Fund
World Precious Minerals Fund
Global Resources Fund
Eastern European Fund
Global Emerging Markets Fund
Xxxxxx Growth Fund
Global MegaTrends Fund
Tax Free Fund
Near-Term Tax Free Fund
U.S. Government Securities Savings Fund
U.S. Treasury Securities Cash Fund
All American Equity Fund
Gold and Precious Metals Fund
World Precious Minerals Fund
Global Resources Fund
Eastern European Fund
Global Emerging Markets Fund
Xxxxxx Growth Fund
Global MegaTrends Fund
Tax Free Fund
Near-Term Tax Free Fund
U.S. Government Securities Savings Fund
U.S. Treasury Securities Cash Fund
Dated: October 1, 2008
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