Exhibit e
DISTRIBUTION AGREEMENT
This Agreement is made as of the ___ day of __________, 2001 by and between
INVESTORS RESEARCH FUND, INC., a Delaware business Trust (the "Trust"), and
FIRST FUND DISTRIBUTORS, INC., a Delaware corporation (the "Distributor").
WITNESSETH:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940 (the "1940 Act"), with shares
of beneficial interest organized into a single series ( the "series" or
"portfolio"), and it is in the interest of the Trust to offer the shares of
beneficial interest of the series 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 Trust and the Distributor wish to enter into an agreement with
each other with respect to the continuous offering of the shares of beneficial
interest of the Trust (the "Shares");
NOW, THEREFORE, the parties agree as follows:
1. APPOINTMENT OF DISTRIBUTOR. The Trust hereby appoints the Distributor as
principal underwriter 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 other relevant
documents referred to herein, and the Distributor hereby accepts such
appointment and agrees to act hereunder directly and/or through the Trust's
transfer agent in the manner set forth in the Prospectuses (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. It is further understood and
agreed that the Trust may at any time, suspend the sale of its shares.
2. SERVICES AND DUTIES OF THE DISTRIBUTOR.
(a) The Distributor agrees to sell the Shares, as agent for the Trust,
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
Trust'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 Trust 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 shall hold itself available to receive orders,
satisfactory to the Distributor, for the purchase of the Shares and shall accept
such orders and shall transmit such orders and funds received by it in payment
for such Shares as are so accepted to the Trust's transfer agent or custodian,
as appropriate, as promptly as practicable. The Distributor acknowledges and
understands that orders may also be received through National Securities
Clearing Corporation. Purchase orders shall be deemed accepted and shall be
effective at the time and in the manner set forth in the series' Prospectuses.
Any order may be rejected by the Trust or Distributor in its reasonable
discretion. 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 applicable sales charge, if any (determined as set
forth in the Prospectuses). The Trust shall furnish or cause its agent to
furnish the Distributor, with all possible promptness, an advice of each
computation of net asset value and offering price.
(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, and shall use reasonable efforts to enter into such agreements
with the selected dealers who have entered into similar agreements with the
previous distributor of Shares. Shares shall be sold by such dealers only at the
offering price of the Shares as set forth in the Prospectuses. The Distributor
shall offer and sell Shares only through such selected dealers as are
appropriately qualified and members in good standing of the NASD.
(e) The Distributor agrees to permit duly qualified persons nominated
by the Trust or its Investment Advisor to act as registered representative of
the Distributor, as set forth in the attached schedule, subject to the approval
by the Distributor and the NASD. Such approval will not be unreasonably
withheld.
(f) The Distributor shall provide reports of sales of Shares to the
Trust at such times as the Trust may reasonably request.
(g) The Trust or its agents shall have the right, at the expense of
the Trust, to inspect the records of the Distributor with respect to sales of
Shares upon request during normal business hours.
(h) Except as otherwise stated in this Agreement or in any other
agreement between the Distributor and any other service provider to the Trust,
the Distributor shall pay all expenses incurred by it in performing its services
hereunder.
(i) The Distributor understands and agrees that the Trust does not
intend to issue stock certificates evidencing the Shares to any shareholder
unless requested by such shareholder.
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3. DUTIES OF THE TRUST.
(a) MAINTENANCE OF FEDERAL REGISTRATION. The Trust has registered and
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
maintain registration of a sufficient number of Shares under the 1933 Act. The
Trust agrees to provide adequate numbers of authorized Shares under Delaware law
for the purpose of the continuing offering of Shares. The Trust also 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 Trust 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 Trust may agree upon, and, if necessary or
appropriate in connection therewith, to qualify and maintain the qualification
of the Trust in such states; provided that the Trust shall not be required to
amend its Declaration of Trust 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 from the terms set forth in Prospectuses, 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 Trust in
connection with such qualifications.
(c) COPIES OF REPORTS AND PROSPECTUSES. The Trust 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 its use, excluding copies for use in connection with distributions
of shares.
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 Regulation.
5. INDEPENDENT CONTRACTOR. In performing its duties hereunder, the
Distributor shall be an independent contractor and neither the Distributor, nor
any of its officers, directors, employees, or representatives, is or shall be an
employee of the Trust in the performance of the Distributor's duties hereunder.
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,
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6. INDEMNIFICATION.
(a) INDEMNIFICATION OF TRUST. The Distributor shall indemnify and hold
harmless the Trust and each of its present or former Trustees, officers,
employees, representatives and each person, if any, who controls or previously
controlled the Trust 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 Trust 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 willful misfeasance, bad faith, negligence, gross negligence or
reckless disregard of its duties and obligations under this Agreement 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 Trust, 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 Trust by the Distributor. In no case (i) is the Distributor's indemnity
in favor of the Trust, or any other person indemnified hereunder, to be deemed
to protect the Trust or such other indemnified person against any liability to
which the Trust or such other person would otherwise be subject by reason of
willful misfeasance, bad faith, negligence, or gross negligence in the
performance of the Trust's or such other person's duties or by reason of
reckless disregard of the Trust's or such other person's obligations and duties
under this Agreement (as determined by a final judgement on the merits by a
court of competent jurisdiction or, in the absence of such a decision, a
reasonable determination, based upon a review of the facts, that the indemnified
person did not engage in such conduct by a vote of a majority of a quorum of the
Trustees who are neither "interested persons" of the Trust as defined in the
1940 Act nor parties to the proceeding, or an independent legal counsel in a
written opinion) or (ii) is the Distributor to be liable under its indemnity
agreement contained in this paragraph with respect to any claim made against the
Trust or any other person indemnified unless the Trust or such other 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 upon such other person (or after the Trust or such other 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 Trust or any other
person against whom such action is brought (i) if any such failure did not
result in any prejudice to the Distributor, or (ii) otherwise than on account of
the Distributor's indemnity agreement contained in this paragraph.
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The Distributor 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 defenses shall be conducted by legal counsel chosen by the
Distributor and reasonably satisfactory to the Trust and to the other persons
indemnified as defendant or defendants in ths suit. In the event that the
Distributor elects to assume the defense of any such suit and retain such legal
counsel, the Trust and the other 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 shall reimburse the Trust and the other persons
indemnified hereunder as defendant or defendants in such suit for the reasonable
fees and expenses of any legal counsel retained by them. The Distributor shall
promptly notify the Trust of the commencement of any litigation or other
proceedings against it or any of its directors, officers, employees or
representatives in connection with the issue or sale of any Shares.
(b) INDEMNIFICATION OF THE DISTRIBUTOR. The Trust shall indemnify and
hold harmless the Distributor and each of its present or former directors,
officers, employees, representatives 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 entitled 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 willful misfeasance, bad faith, negligence, gross
negligence or reckless disregard of its duties and obligations under this
Agreement by the Trust or any of the Trust's Trustees, officers, employees or
representatives, or (ii) may be based upon any untrue statement or alleged
untrue statement of material fact contained in a Registration Statement,
Prospectus, shareholder report or other information covering Shares filed or
made public by the Trust, 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 Trust by the Distributor. In no case (i) is
the Trust's indemnity in favor of the Distributor, or any other person
indemnified hereunder, to be deemed to protect the Distributor or such other
indemnified person against any liability to which the Distributor or other such
person would otherwise be subject by reason of willful misfeasance, bad faith,
negligence or gross negligence in the performance of the Distributor or such
other person's duties or by reason of reckless disregard of the Distributor or
such other person's obligations and duties under this Agreement (as determined
by a final judgement on the merits by a court of competent jurisdiction or, in
the absence of such a decision, a reasonable determination, based upon a review
of the facts, that the indemnified person did not engage in such conduct by a
vote of a majority of a quorum of the Trustees who are neither "interested
persons" of the Trust as defined in the 1940 Act nor parties to the proceeding,
or an independent legal counsel in a written opinion) or (ii) is the Trust to be
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liable under its indemnity agreement contained in this paragraph with respect to
any claim made against, the Distributor or other person indemnified unless the
Distributor, or such other 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 upon such other person (or after
the Distributor or such other person shall have received notice of such service
on any designated agent). However, failure to notify the Trust of any such claim
shall not relieve the Trust from any liability which the Trust may have to the
Distributor or any other person against whom such action is brought otherwise
than on account of the Trust's indemnity agreement contained in this paragraph.
The Trust shall be entitled to participate, at its own expense, in the
defense, or, if the Trust so elects, to assume the defense, of any suit brought
to enforce any such claim, but if the Trust elects to assume the defense, such
defense shall be conducted by legal counsel chosen by the Trust and reasonably
satisfactory to the Distributor and to the persons indemnified as defendant or
defendants, in the suit. In the event that the Trust elects to assume the
defense of any such suit and retain such legal counsel, the Distributor and the
other persons indemnified hereunder as defendant or defendants in the suit shall
bear the fees and expenses of any additional legal counsel retained by them. If
the Trust does not elect to assume the defense of any such suit, the Trust shall
reimburse the Distributor and the other persons indemnified, hereunder as
defendant or defendants in such suit for the reasonable fees and expenses of any
legal counsel retained by them. The Trust shall promptly notify the Distributor
of the commencement of any litigation or other proceedings against it or any of
its Trustees, officers, employees or representatives in connection with the
issue or sale of any Shares.
7. AUTHORIZED REPRESENTATIONS. The Distributor is not authorized by the
Trust to give on behalf of the Trust any information or to make on behalf of the
Trust 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 the 1940 Act, covering
Shares, 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
tombstone ads and sales literature or other material as it may deem appropriate,
subject to the prior approval of an officer or officers of the Trust not
affiliated with the Distributor. No person other than the Distributor is
authorized to act as principal underwriter (as such term is defined in the 0000
Xxx) for the Trust.
8. 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
hereof, so long as such continuation shall be specifically approved at least
annually by (i) the Board of Trustees or by vote of a majority of the
outstanding voting securities of the Trust and, (ii) by the vote, cast in person
at a meeting called for the purpose of voting on such approval, of a majority of
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the Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party. The Distributor shall furnish to the Trust, 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.
9. AMENDMENT OR ASSIGNMENT OF AGREEMENT. This Agreement constitutes the
entire agreement between the parties. This Agreement may not be amended or
assigned except with the written consent of both parties and as permitted by the
1940 Act, and this Agreement shall automatically and immediately terminate in
the event of its assignment.
10. TERMINATION OF AGREEMENT. This Agreement may be terminated by either
party hereto, without the payment of any penalty, on not less than 30 days'
prior notice in writing to the other party; provided, that in the case of
termination by the Distributor, such action shall have been authorized by the
chief executive officer of the Distributor, and in the case of termination by
the Trust such action shall have been authorized by resolution of a majority of
the Trustees of the Trust 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 the Trust.
11. 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 Trust to take any
action contrary to its Declaration of Trust 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 Trustees of the Trust of
responsibility for and control of the conduct of the affairs of the Trust.
12. 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
Stales 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 persons as used
in Paragraph 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.
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13. COMPLIANCE WITH SECURITIES LAWS. The Trust represents that it is
registered as an open-end arrangement 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 Trust 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 provisiosis of Section 4(d), all applicable "Blue Sky"
laws, and of the rules and regulations thereunder. The Distributor represents
that it is duly registered as a broker-dealer under the 1934 Act and is a member
in good standing of the NASD, and agrees to comply with all of the applicable
terms and provisions of the 1934 Act, and of the rules and regulations
thereunder.
14. NOTICES. Any notice required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by registered or certified
mail, postage prepaid, to the Distributor at 0000 X. Xxxxxxxxx Xxxx., Xxxxx 000
X, Xxxxxxx, XX 00000 or to the Trust at 00000 Xxxxx Xxxxxx Xxxx., Xxx. 000, Xxx
Xxxxxxx, XX 00000.
15. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of California without regard to principles
of conflicts of law, subject to the federal and state securities laws referred
to in Section 13 thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the date first written above.
INVESTORS RESEARCH FUND. INC.
By:
------------------------------------
Name:
Title:
FIRST FUND DISTRIBUTORS, INC
By:
------------------------------------
Name:
Title:
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WESTCAP INVESTORS/INVESTORS RESEARCH FUND, INC.
MUTUAL FUND ADMINISTRATION AND DISTRIBUTOR TRANSITION PLAN
DISTRIBUTOR SERVICES AND DUTIES PROVIDED BY FIRST FUND DISTRIBUTORS. INC.
(ONCE THE FUND'S CONTRACT WITH THE PREVIOUS DISTRIBUTOR IS TERMINATED, WE WILL
BECOME THE FUND'S DISTRIBUTOR.)
MAINTAIN BROKER-DEALER REGISTRATION IN NASDR AND ALL STATE/TERRITORIAL
JURISDICTIONS.
* File FOCUS and other reports with NASDR/SEC.
* File Financial Statements and other forms as required by states.
REGISTRATION OF REPRESENTATIVES
* Register individuals as representatives with NASDR and states through
Central Registration Depository ("CRD").
* Develop and administer both firm and regulatory element of Continuing
Education Program for Registered Reps.
SUPERVISION
* Conduct compliance meeting--formal annual meeting plus supplemental
meetings, if and as needed.
* Provide updating memos to registered reps through firm element of CEP.
ADVERTISING/SALES LITERATURE
* Review and File all advertising, sales literature and other public
communications with the public with NASDR Advertising Department,
* Review and comment on any "dealer only" or other limited distribution
materials.
* Respond to any comments and negotiate revisions with respect to NASDR
Advertising Department review.
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DISTRIBUTOR SERVICE AND DUTIES (CONTINUED)
PAYMENT PROCESS
* Oversee process by which sales loads and asset-based sales charges are paid
to dealers.
* Liaison with transfer agent, other providers to monitor payment timeliness
and accuracy.
CLIENT MARKETING AND DISTRIBUTION STRATEGY SERVICES
* Review firm background and core business strategies.
* Examine existing core business relationships for strengths and weaknesses.
* Review current marketing and distribution efforts/plans for the firm and
for the Fund(s).
* Compile detailed marketing strategy document with recommendations.
* Assist with establishing supermarket and brokerage participation.
* Plan execution and project management of sales literature development
available.
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WESTCAP INVESTORS/INVESTORS RESEARCH FUND, INC.
BROKER/DEALER FEES:
$5,000* One time usage fee. Broker/Dealer is registered
in all 50 states.
$1,000* Annual maintenance fee (up to 3 reps). $250 per
rep thereafter, commencing in year two.
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* To be paid by Westcap Investors LLC, the Trust's Investment Adviser.
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