Exhibit (e)(1)
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of the 11th day of May, 2001 by and between
LMCG Funds (the "Trust") on behalf of its series listed on Schedule A, attached
hereto, together with all other of its series subsequently established and made
subject to this Agreement in accordance with Section 4.3 below, and Funds
Distributor, Inc., a Massachusetts corporation having a place of business at 00
Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxxxxxxx 00000 ("FDI").
WHEREAS, the shares of beneficial interest of the Trust are currently
divided into a number of separate series of shares, or funds, each corresponding
to a distinct portfolio of securities (each a "Fund"), and many of which are or
may be divided into multiple classes of shares, all as set forth on Schedule A.
For purposes of this Agreement, the term "Shares" shall mean the authorized
shares of the relevant Fund and classes of shares of the Fund, if any, and
otherwise shall mean the Trust's authorized shares. In addition, each reference
herein to the Trust shall also be understood to refer to its separate Funds, as
appropriate;
WHEREAS, FDI is registered as a broker-dealer with the Securities and
Exchange Commission (the "SEC") under the Securities Exchange Act of 1934 (the
"1934 Act") and is a member of the National Association of Securities Dealers,
Inc. (the "NASD");
WHEREAS, Xxx Xxxxxx Investments Ltd. ("Adviser") is the registered
investment adviser to each Fund pursuant to an Investment Advisory Agreement
between the Adviser and the Trust in respect of each Fund;
WHEREAS, the Board of Trustees of LMCG Funds wish to engage FDI to act
as the distributor of the Funds' Shares and FDI is willing to render such
service on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises set forth below, the parties agree as follows:
1. Services as Distributor
1.1 FDI will act as agent for the distribution of Shares covered by,
and in accordance with, the registration statement and prospectus then in effect
under the Securities Act of 1933, as amended (the "1933 Act"), and will transmit
promptly any orders received by FDI for purchase or redemption of Shares to the
Transfer and Dividend Disbursing Agent for the Trust of which the Trust has
notified FDI in writing.
1.2 FDI agrees to use its best efforts to perform its duties hereunder
in the solicitation of orders for the sale of Shares. It is contemplated that
FDI may enter into sales or servicing agreements with securities dealers,
financial institutions and other industry professionals, such as investment
advisers, accountants and estate planning firms, and in so doing FDI will act
only on its own behalf as principal.
1.3 FDI shall act as distributor of Shares in compliance with all
applicable laws, rules and regulations, including, without limitations, the
Investment Company Act of 1940, as amended (the "1940 Act"), the 1933 Act, the
1934 Act, the Rules of the NASD, the Trust's Agreement and Declaration of Trust
and By-Laws. FDI represents and warrants that it is a broker-dealer registered
with the SEC and that it is registered with the relevant securities regulatory
agencies in all fifty states, the District of Columbia and Puerto Rico. FDI also
represents and warrants that it is a member of the NASD.
1.4 FDI shall file Trust advertisements, sales literature and other
marketing and sales related materials with the appropriate regulatory agencies
and shall obtain such approvals for their use as may be required by the SEC, the
NASD and/or state securities administrators.
1.5 Whenever in their judgment such action is warranted by unusual
market, economic or political conditions, or by abnormal circumstances of any
kind deemed by the parties hereto to render sales of a Fund's Shares not in the
best interest of the Fund, the parties hereto may decline to accept any orders
for, or make any sales of, any Shares until such time as those parties deem it
advisable to accept such orders and to make such sales and each party shall
advise promptly the other party of any such determination.
1.6 The Trust agrees to pay all costs and expenses in connection with
the registration of Shares under the 1933 Act and all expenses in connection
with maintaining facilities for the issue and transfer of Shares and for
supplying information, prices and other data to be furnished by the Trust
hereunder, and all expenses in connection with the preparation and printing of
the Trust's prospectuses and statements of additional information for regulatory
purposes and for distribution to shareholders; provided however, that the Trust
shall not pay any of the costs of advertising or promotion for the sale of
Shares, except as authorized by a plan adopted pursuant to Rule 12b-1 under the
1940 Act. FDI shall also be entitled to compensation for FDI's services as
provided in any Distribution Plan adopted as to any Fund and class of the
Trust's Shares pursuant to Rule 12b-1 ("Rule 12b-1 fees"). To the extent that
Rule 12b-1 fees are paid to FDI as default broker-dealer, such Rule 12b-1 fees
shall continue to be paid to FDI after FDI ceases to act as distributor of the
Trust for so long as FDI continues to serve as such default broker-dealer.
1.7 The Trust agrees to execute any and all documents and to furnish
any and all information and otherwise to take all actions which may be
reasonably necessary in the discretion of the Trust's officers in connection
with the qualification of Shares for sale in such states as FDI may designate to
the Trust and the Trust may approve, and the Trust agrees to pay all expenses
which may be incurred in connection with such qualification. FDI shall pay all
expenses connected with its own qualification as a dealer under state or Federal
laws and, except as otherwise specifically provided in this Agreement, all other
expenses incurred by FDI in connection with the sale of Shares as contemplated
in this Agreement.
1.8 The Trust shall furnish FDI from time to time, for use in
connection with the sale of Shares, such information with respect to the Trust
or any relevant Fund and the Shares as FDI may reasonably request. The Trust
also shall furnish FDI upon request with semi-annual reports
and annual audited reports of the Trust's books and accounts made by independent
public accountants regularly retained by the Trust and from time to time such
additional information regarding the Trust's financial condition as FDI may
reasonably request.
1.9 From time to time, each party shall be permitted
reasonable access to records maintained by the other party in
connection with this Agreement to the extent necessary to perform its
obligations hereunder; provided, however, that to the extent a party
provides records containing information relating to a customer of that
party, the party receiving such records shall use the information
contained in such records solely for the purpose of fulfilling its
obligations under this Agreement and applicable law and for no other
purpose.
1.10 The Trust represents to FDI that all registration statements and
prospectuses filed by the Trust with the SEC under the 1933 Act and under the
1940 Act with respect to the Shares have been prepared in conformity with the
requirements of said Acts and rules and regulations of the SEC thereunder. As
used in this Agreement, the term "registration statement" shall mean any
registration statement relating to a Fund and any amendments and supplements
thereto. As used in this Agreement, the term "prospectus" shall mean any
prospectus of a Fund, including any statement of additional information
incorporated by reference therein, any "omitting" prospectus under Rule 482
under the 1933 Act and any "fund profile" under Rule 498 under the 1933 Act, and
any amendments and supplements thereto. The Trust represents and warrants to FDI
that any registration statement and prospectus, when such registration statement
becomes effective, will contain all material statements required to be stated
therein in conformity with said Acts and the rules and regulations of the SEC;
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. 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 FDI to do so, FDI may,
at its option, terminate this Agreement on not less than 60 days' notice or
decline to make offers of the relevant Fund's securities until such amendments
are made. The Trust shall not file any amendment to any registration statement
or supplement to any prospectus without giving FDI 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. Upon written notice from the Trust, FDI will cease
making offers of the relevant Fund's securities as soon as is reasonably
practicable.
1.11 The Trust authorizes FDI and any dealers with whom FDI has entered
into dealer agreements to use any prospectus in the form furnished by the Trust
in connection with the sale of Shares. The Trust agrees to indemnify, defend and
hold FDI, its several officers and directors, and any person who controls FDI
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 reasonable cost of investigating or defending such claims,
demands or liabilities and any reasonable counsel fees incurred in connection
therewith) which FDI, its officers and directors, or any such controlling
persons, may incur under the 1933 Act, the 1940 Act, or common law or otherwise,
arising out of or on the basis of any untrue statement, or alleged untrue
statement, of a material fact required to be stated in either any registration
statement or any prospectus or any statement of additional information, or
arising out of or based upon any omission, or alleged omission, to state a
material fact required to be stated in any registration statement, any
prospectus or any statement of additional information or necessary to make the
statements in any of them not misleading, except that the Trust's agreement to
indemnify FDI, its officers or directors, and any such controlling person will
not be deemed to cover any such claim, demand, liability or expense to the
extent that it arises out of or is based upon any such untrue statement, alleged
untrue statement, omission or alleged omission made in any registration
statement, any prospectus or any statement of additional information in reliance
upon information furnished by FDI, its officers, directors or any such
controlling person to the Trust or its representatives for use in the
preparation thereof, and except that the Trust's agreement to indemnify FDI and
the Trust's representations and warranties set out in paragraph 1.10 of this
Agreement will not be deemed to cover any liability to the Trust or its
shareholders to which FDI 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 ("Disqualifying Conduct"). The Trust's agreement to indemnify FDI, its
officers and directors, and any such controlling person, as aforesaid, is
expressly conditioned upon the Trust's being notified of any action brought
against FDI, its officers or directors, or any such controlling person, such
notification to be given by letter, by facsimile or by telegram addressed to the
Trust at its address set forth on Schedule A, attached hereto, within a
reasonable period of time after the summons or other first legal process shall
have been served. The failure so to 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 alleged
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 FDI, which approval
shall not be unreasonably withheld. In the event the Trust elects to assume the
defense of any such suit, 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, the Trust
will reimburse FDI, its officers and directors, or the controlling person or
persons named as defendant or defendants in such suit, for the reasonable fees
and expenses of any counsel retained by FDI or them. The 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 FDI, its officers and
directors, or any controlling person, and shall survive the delivery of any
Shares. This agreement of indemnity will inure exclusively to FDI's benefit, to
the benefit of FDI's several officers and directors, and their respective
estates, and to the benefit of any controlling persons and their successors. The
Trust agrees promptly to notify FDI 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 Shares.
1.12 FDI agrees to indemnify, defend and hold the Trust, its several
officers and Trustees (including for this purpose former Trustees), and any
person who controls the Trust 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 reasonable cost of investigating or defending such
claims, demands or liabilities and any reasonable counsel fees incurred in
connection therewith) which the Trust, its officers or Trustees, or any such
controlling person, may incur under the 1933 Act, the 1940 Act, 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, (a) shall arise out of or be based upon any
unauthorized sales literature, advertisements, information, statements or
representations or any Disqualifying Conduct in connection with the offering and
sale of any Shares, (b) 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 FDI to the Trust specifically for use in the Trust's registration
statement, 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 FDI to the Trust and required to be stated in such answers or
necessary to make such information not misleading or (c) any other liability to
which the Trust becomes subject by reason of willful misfeasance, bad faith or
gross negligence in the performance (or failure to perform) of FDI's duties
under the Agreement. FDI's agreement to indemnify the Trust, its officers and
Trustees, and any such controlling person, as aforesaid, is expressly
conditioned upon FDI 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, by facsimile or by telegram addressed to FDI at its address set
forth below within a reasonable period of time after the summons or other first
legal process shall have been served. FDI shall have the right to control 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 FDI'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 preparation of the defense of any such action. The failure so to notify FDI
of any such action shall not relieve FDI from any liability which FDI 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 FDI's indemnity agreement contained in
this paragraph 1.12. This agreement of indemnity will inure exclusively to the
Trust's benefit, to the benefit of the Trust's officers and Trustees, and their
respective estates, and to the benefit of any controlling persons and their
successors. FDI agrees promptly to notify the Trust of the commencement of any
litigation or proceedings against FDI or any of its officers or directors in
connection with the issue and sale of Shares.
1.13 No Shares shall be offered by either FDI or the Trust under any of
the provisions of this Agreement and no orders for the purchase or sale of such
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 1933
Act or if and so long as a current prospectus as required by Section 10 of said
Act, as amended, is not on file with the SEC; 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 any Shares from any shareholder in accordance with the
provisions of the Trust's prospectus or charter documents.
1.14 The Trust agrees to advise FDI immediately in writing:
(a) of any request by the SEC for amendments to the
registration statement or prospectus then in effect or for additional
information (not including comments provided by the SEC on an amendment
to the Trust's registration statement);
(b) in the event of the issuance by the SEC of any stop order
suspending the effectiveness of the registration statement or
prospectus then in effect or the initiation of any proceeding for that
purpose;
(c) of the happening of any event which 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, except when FDI has informed the
Trust of the happening of such event; and
(d) of all actions of the SEC with respect to any amendments
to any registration statement or prospectus which may from time to time
be filed with the SEC (not including comments provided by the SEC on an
amendment to the Trust's registration statement).
2. Offering Price
Shares of any class of a Fund offered for sale by FDI shall be offered
at a price per share (the "Offering Price") plus a purchase premium, as set
forth in the then-current prospectus. The Offering Price, if not an exact
multiple of one cent, shall be adjusted to the nearest cent. In addition, Shares
of any class of the Trust offered for sale by FDI may be subject to a redemption
fee as set forth in the Trust's then-current prospectus. Purchase premiums and
redemption fees are retained by the Trust to offset transaction costs associated
with investments and redemptions. Any payments to dealers shall be governed by a
separate agreement between FDI and such dealer and the Trust's then-current
prospectus.
3. Term
This Agreement shall become effective with respect to the Trust and
each Fund as of the date hereof and will continue for an initial two-year term
and will continue thereafter so long as such continuance is specifically
approved at least annually (i) by the Trust's Board of Trustees or (ii) by a
vote of a majority of the Shares of the Trust or the relevant Fund, as the case
may be, provided that in either event its continuance also is approved by a
majority of the Board of Trustees who are not "interested persons" of any party
to this Agreement and have no direct or indirect financial interest in the
operation of this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable with respect to
the Trust, a Fund or a class, without penalty, on not less than sixty days'
notice, by the Trust's
Board of Trustees, by vote of a majority of the outstanding voting securities of
such Fund, or by FDI. This Agreement will automatically and immediately
terminate in the event of its "assignment." (As used in this Agreement, the
terms "majority of the outstanding voting securities," "interested person" and
"assignment" shall have the same meanings as such terms have in the 1940 Act).
FDI agrees to notify the Trust immediately upon the event of its expulsion,
suspension or censure by the NASD. This Agreement will automatically and
immediately terminate in the event of FDI's expulsion or suspension by the NASD.
4. Miscellaneous
4.1 The Trust recognizes that, except to the extent otherwise agreed to
by the parties hereto, FDI's directors, officers and employees may from time to
time serve as directors, trustees, officers and employees of corporations and
business trusts (including other investment companies), and that FDI or FDI's
affiliates may enter into distribution or other agreements with other
corporations and trusts.
4.2 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 an enforcement of the change, waiver, discharge or termination is
sought.
4.3 This Agreement and the Schedules forming a part hereof may be
amended at any time by a writing signed by each of the parties hereto. In the
event that the Trustees of the Trust indicate by vote that additional funds are
to be made parties to this Agreement, whether such funds were in existence at
the time of the effective date of this Agreement or subsequently formed,
Schedule A hereto shall be amended to reflect the addition of such new funds and
such new funds shall thereafter become parties hereto. In the event that the
Trust terminates the registration of any of the Funds listed on Schedule A as
series of a management investment company, or otherwise ceases its operations,
Schedule A shall be amended to reflect the deletion of such Fund and its various
classes.
4.4 This Agreement is executed by the Board of Trustees of the Trust,
not individually, but in their capacity as Trustees under the Agreement and
Declaration of Trust made June 29, 2000, as amended. None of the shareholders,
Trustees, officers, employees, or agents of the Trust shall be personally bound
or liable under this Agreement, nor shall resort be had to their private
property for the satisfaction of any obligation or claim hereunder but only to
the property of the Trust and, if the obligation or claim relates to the
property held by the Trust for the benefit of one or more but fewer than all
Funds, then only to the property held for the benefit of the affected Funds.
4.5 This Agreement shall be governed by the internal laws of The
Commonwealth of Massachusetts without giving effect to principles of conflicts
of laws.
4.6 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.
4.7 The parties agree that the Trust is executing this Agreement on
behalf of each of the Funds separately; that each of the Funds is acting solely
on its own behalf separately from each of the other Funds and not jointly or
jointly and severally with any of the other Funds; that this Agreement shall
constitute, and shall for all purposes be construed to give effect to the
intention of the parties that it constitute, a separate Agreement between FDI
and the Trust on behalf of each such Fund separately, as if the Trust had
executed this Agreement separately on behalf of such Fund; and that no Fund
shall be liable for the obligations of any other Fund arising hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement by a duly
authorized representative of the parties hereto.
LMCG FUNDS
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
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Title: Vice President
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FUNDS DISTRIBUTOR, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxx
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Name: Xxxxxxxx X. Xxxxxxxx
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Title: Executive Vice President
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A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of the
trustees of the Trust as trustees and not individually and that the obligations
of this instrument are not binding upon any of the trustees, officers, or
shareholders of the Trust individually but are binding only upon the assets and
property of the Trust.
SCHEDULE A
LMCG Funds
Funds Classes
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LMCG Small Cap Growth Fund A Shares
LMCG Mid Cap Growth Fund A Shares
LMCG Small Cap Tax-Sensitive Fund A Shares
LMCG Technology Fund A Shares
LMCG Internet Fund A Shares
