XXXXXXXX CAPITAL MARKETS, LLC
THE AEGIS FUNDS
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of October 31, 2007, by and among The Aegis
Funds (the "Fund"), a Delaware business trust, Xxxxxxxx Capital Markets, LLC
("RCM"), a limited liability company organized and existing under the laws of
the State of New York, and Aegis Financial Corporation (the "Adviser"), a
Delaware corporation, which is a party hereto with respect to Section 9 only.
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end management investment company, and has
registered one or more distinct series of shares of beneficial interest
("Shares") for sale to the public under the Securities Act of 1933, as amended
("1933 Act"), and has qualified its shares for sale to the public under various
state securities laws; and
WHEREAS, RCM is registered as a broker-dealer under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and is a member of the
National Association of Securities Dealers, Inc. ("NASD");
WHEREAS, the Adviser serves as the investment adviser to the Fund pursuant
to an investment advisory agreement with the Fund;
WHEREAS, the Fund desires to retain RCM as principal underwriter in
connection with the offer and sale of the Shares of each series listed on
Schedule A (as amended from time to time) to this Agreement; and
WHEREAS, this Agreement has been approved by a vote of the Fund's board of
trustees ("Board"), including a majority of those trustees who are not parties
to the Agreement or interested persons of any such party, in conformity with
Section 15(c) of the 1940 Act; and
WHEREAS, RCM is willing to act as principal underwriter for the Fund on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment.
The Fund hereby appoints RCM as its agent to be the principal
underwriter so as to hold itself out as available to receive and accept orders
for the purchase and redemption of the Shares on behalf of the Fund, subject to
the terms and for the period set forth in this Agreement. RCM hereby accepts
such appointment and agrees to act hereunder.
2. Services and Duties of RCM.
(a) RCM agrees to sell Shares on a best efforts basis from
time to time during the term of this Agreement as agent for the Fund and
upon the terms described in the Registration Statement. As used in this
Agreement, the term "Registration Statement" shall mean the currently
effective registration statement of the Fund, and any supplements thereto,
under the 1933 Act and the 1940 Act. RCM shall not be obligated to sell
any certain number of shares. RCM shall in all cases receive the net asset
value per share on all sales.
(b) RCM will hold itself available to receive purchase and
redemption orders satisfactory to RCM for Shares and will accept such
orders on behalf of the Fund. Such purchase orders shall be deemed
effective at the time and in the manner set forth in the Registration
Statement.
(c) RCM, with the operational assistance of the Fund's
transfer agent, shall make Shares available through the National
Securities Clearing Corporation's Fund/SERV System.
(d) RCM shall provide to investors and potential investors
only such information regarding the Fund as the Fund shall provide or
approve. RCM shall review and file all proposed advertisements and sales
literature with appropriate regulators and consult with the Fund regarding
any comments provided by regulators with respect to such materials.
(e) RCM at its sole discretion may repurchase Shares offered
for sale by the shareholders. Repurchase of Shares by RCM shall be at the
price determined in accordance with, and in the manner set forth in, the
most-current Prospectus. At the end of each business day, RCM shall
notify, by any appropriate means, the Fund and its transfer agent of the
orders for repurchase of Shares received by RCM since the last report, the
amount to be paid for such Shares, and the identity of the shareholders
offering Shares for repurchase. The Fund reserves the right to suspend
such repurchase right upon written notice to RCM. RCM further agrees to
act as agent for the Fund to receive and transmit promptly to the Fund's
transfer agent shareholder requests for redemption of Shares.
(f) RCM shall prepare reports for the Board regarding its
activities under this Agreement as from time to time shall be reasonably
requested by the Board.
3. Duties of the Fund.
(a) The Fund shall keep RCM fully informed of the Fund's
affairs and shall provide to RCM from time to time copies of all
information, financial statements, and other papers that RCM may
reasonably request for use in connection with the distribution of Shares,
including, without limitation, certified copies of any financial
statements prepared for the Fund by its independent public accountant and
such reasonable number of copies of the most current Prospectus, Statement
of Additional Information ("SAI"), and annual and interim reports as RCM
may request, and the Fund shall fully cooperate in the efforts of RCM to
sell and arrange for the sale of Shares.
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(b) The Fund shall maintain a currently effective Registration
Statement on Form N-1A with the Securities and Exchange Commission (the
"SEC"), maintain qualification with applicable states and file such
reports and other documents as may be required under applicable federal
and state laws. The Fund shall notify RCM in writing of the states in
which the Shares may be sold and shall notify RCM in writing of any
changes to such information. The Fund shall bear all expenses related to
preparing and typesetting such Prospectuses, SAIs and other materials
required by law and such other expenses, including printing and mailing
expenses, related to the Fund's communication with persons who are
shareholders.
(c) The Fund shall not use any advertisements or other sales
materials that have not been (i) submitted to RCM for its review and
approval, and (ii) filed with the appropriate regulators.
(d) The Fund shall make available to RCM, upon its reasonable
request, a statement of each computation of net asset value and the
details of entering into such computation.
4. Representations, Warranties and Covenants of the Parties.
(a) The Fund represents and warrants to RCM and agrees that:
(i) the Fund is duly organized and existing under the laws
of the jurisdiction of its organization, with full power
to carry on its business as now conducted, to enter into
this Agreement and to perform its obligations hereunder;
(ii) this Agreement has been duly authorized, executed and
delivered by the Fund in accordance with all requisite
action and constitutes a valid and legally binding
obligation of the Fund, enforceable in accordance with
its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general
application affecting the rights and remedies of
creditors and secured parties;
(iii) the Fund is registered as an investment company under
the 1940 Act; and
(iv) the Fund's Registration Statement and any advertisements
and sales literature (excluding statements relating to
RCM and the services it provides that are based upon
written information furnished by RCM expressly for
inclusion therein) of the Fund shall not contain any
untrue statement of material fact or omit to state any
material fact required to be stated therein or necessary
to make the statements therein not misleading, and that
all statements or information furnished to RCM, pursuant
to Section 3(a) hereof, shall be true and correct in all
material respects.
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(b) RCM represents and warrants to the Fund and agrees that:
(i) RCM is duly organized and existing under the laws of the
jurisdiction of its organization, with full power to
carry on its business as now conducted, to enter into
this Agreement and to perform its obligations hereunder;
(ii) This Agreement has been duly authorized, executed and
delivered by RCM in accordance with all requisite action
and constitutes a valid and legally binding obligation
of RCM, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization,
moratorium and other laws of general application
affecting the rights and remedies of creditors and
secured parties;
(iii) RCM is registered as a broker-dealer under the 1934 Act
and is a member in good standing of the NASD;
(iv) RCM (A) has adopted an anti-money laundering compliance
program ("AML Program") that satisfies the requirements
of all applicable laws and regulations, (B) undertakes
to carry out its AML Program to the best of its ability,
(C) will promptly notify the Fund and the Adviser if an
inspection by the appropriate regulatory authorities of
its AML Program identifies any material deficiency, and
(D) will promptly remedy any material deficiency of
which it learns;
(v) RCM (A) has compliance policies and procedures
reasonably designed to ensure compliance with the
"federal securities laws" as that term is defined in
Rule 38a-1 under the 1940 Act, (B) will upon request
provide reports and certifications in a mutually agreed
upon form to the Fund's Chief Compliance Officer
regarding the foregoing, and (C) will maintain
appropriate records in accordance with Rule 38a-1;
(vi) To the extent RCM has access to the Fund's portfolio
holdings prior to the public dissemination of such
holdings, RCM will comply with the Fund's portfolio
holdings disclosure policy;
(vii) RCM will maintain a disaster recovery and business
continuity plan and adequate and reliable computer and
other telecommunications equipment as are required by
regulations applicable to broker-dealers registered with
the SEC and to members of the NASD and as are necessary
and appropriate for RCM to carry out its obligations
under this Agreement and, upon the Fund's reasonable
request, will provide supplemental information
concerning the aspects of RCM's disaster recovery and
business continuity plan that are relevant to the
services provided by RCM hereunder; and
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(viii) In connection with all matters relating to this
Agreement, RCM will comply with the requirements of the
1933 Act, the 1934 Act, the 1940 Act, the regulations of
the NASD and all other applicable federal or state laws
and regulations.
5. Other Broker-Dealers.
RCM in its discretion may enter into agreements with such qualified
broker-dealers or other parties as it may select in order that such parties may
sell Shares. Upon the Fund's request, RCM shall enter into agreements with such
qualified broker-dealers or other parties identified by the Fund to RCM in order
that such parties may also sell Shares. The form of any such agreement shall be
mutually agreed upon and approved by the Fund and RCM.
6. Withdrawal of Offering.
The Fund reserves the right at any time to withdraw all offerings of
any or all Shares by written notice to RCM at its principal office. No Shares
shall be offered by either RCM or the Fund under any provisions of this
Agreement and no orders for the purchase or Sale of Shares hereunder shall be
accepted by the Fund if and so long as 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 5(b)(2) of the 1933 Act is not on file with
the SEC.
7. Services Not Exclusive.
The services furnished by RCM hereunder are not to be deemed
exclusive and RCM shall be free to furnish similar services to others so long as
its services under this Agreement are not impaired thereby.
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8. Expenses of the Fund.
The Fund shall bear all costs and expenses of registering the Shares
with the SEC and state and other regulatory bodies, and shall assume expenses
related to communications with shareholders of the Fund including, but not
limited to, (i) fees and disbursements of its counsel and independent public
accountant; (ii) the preparation, filing, and printing of Registration
Statements and/or Prospectuses or SAIs; (iii) the preparation and mailing of
annual and interim reports, Prospectuses, SAIs, and proxy materials to
shareholders; (iv) such other expenses related to the communications with
persons who are shareholders of the Fund; and (v) the qualifications of Shares
for sale under the securities laws of such jurisdictions as shall be selected by
the Fund pursuant to Paragraph 3(b) hereof, and the costs and expenses payable
to each such jurisdiction for continuing qualification therein. In addition, the
Fund shall bear all costs of preparing, printing, mailing and filing any
advertisements and sales literature. RCM does not assume responsibility for any
expenses not assumed hereunder.
9. Compensation.
As compensation for the services performed by RCM under this
Agreement, the Adviser shall pay RCM, as promptly as possible after receipt of a
quarterly invoice, a fee for services as set forth in Schedule B to this
Agreement.
10. Share Certificates.
The Fund shall not issue certificates representing Shares unless
requested to do so by a shareholder. If such request is transmitted through RCM,
the Fund will cause certificates evidencing the Shares owned to be issued in
such names and denominations as RCM shall from time to time direct.
11. Status of RCM.
RCM is an independent contractor and shall be agent of the Fund only
with respect to the sale and redemption of Shares.
12. Indemnification.
(a) The Fund agrees to indemnify, defend, and hold RCM, its officers
and directors, and any person who controls RCM within the meaning of Section 15
of the 1933 Act, free and harmless from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or defending such
claims, demands, or liabilities and any counsel fees incurred in connection
therewith) that RCM, its officers, directors, or any such controlling person may
incur under the 1933 Act, or under common law or otherwise, arising out of or
based upon any (i) alleged untrue statement of a material fact contained in the
Registration Statement, Prospectus, SAI or sales literature,(ii) alleged
omission to state a material fact required to be stated in the either thereof or
necessary to make the statements therein not misleading, or (iii) failure by the
Fund to comply with the terms of the Agreement; provided, that in no event shall
anything contained herein be so construed as to protect RCM against any
liability to the Fund or its shareholders to which RCM would otherwise be
subject by reason of willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations under this Agreement.
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(b) The Fund shall not be liable to RCM under this Agreement
with respect to any claim made against RCM on any person indemnified
unless RCM or other such person shall have notified the Fund 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 RCM or such other person (or after RCM or the person
shall have received notice of service on any designated agent). However,
failure to notify the Fund of any claim shall not relieve the Fund from
any liability that it may have to RCM or any other person against whom
such action is brought otherwise than on account of this Agreement.
(c) The Fund shall be entitled to participate at its own
expense in the defense or, if it so elects, to assume the defense of any
suit brought to enforce any claims subject to this Agreement. If the Fund
elects to assume the defense of any such claim, the defense shall be
conducted by counsel chosen by the Fund and satisfactory to indemnified
defendants in the suit whose approval shall not be unreasonably withheld.
In the event that the Fund elects to assume the defense of any suit and
retain counsel, the indemnified defendants shall bear the fees and
expenses of any additional counsel by them. If the Fund does not elect to
assume the defense of a suit, it will reimburse the indemnified defendants
for the reasonable fees and expenses of any counsel retained by the
indemnified defendants. The Fund agrees to promptly notify RCM of the
commencement of any litigation or proceedings against it or any of its
officers or trustees in connection with the issuance or sale of any of its
Shares.
(d) RCM agrees to indemnify, defend, and hold the Fund, its
officers and trustees, and any person who controls the Fund within the
meaning of Section 15 of the 1933 Act, free and harmless from and against
any and all claims, demands, liabilities, and expenses (including the cost
of investigating or defending against such claims, demands, or liabilities
and any counsel fees incurred in connection therewith) that the Fund, its
trustees or officers, or any such controlling person may incur under the
1933 Act, or under common law or otherwise, resulting from RCM's willful
misfeasance, bad faith or gross negligence in the performance of its
obligations and duties under this Agreement, or arising out of or based
upon any alleged untrue statement of a material fact contained in
information furnished in writing by RCM to the Fund for use in the
Registration Statement, Prospectus or SAI arising out of or based upon any
alleged omission to state a material fact in connection with such
information required to be stated in either thereof or necessary to make
such information not misleading.
(e) RCM shall be entitled to participate, at its own expense,
in the defense or, if it so elects, to assume the defense of any suit
brought to enforce the claim, but if RCM elects to assume the defense, the
defense shall be conducted by counsel chosen by RCM and satisfactory to
the indemnified defendants whose approval shall not be unreasonably
withheld. In the event that RCM elects to assume the defense of any suit
and retain counsel, the defendants in the suit shall bear the fees and
expenses of any additional counsel retained by them. If RCM does not elect
to assume the defense of any suit, it will reimburse the indemnified
defendants in the suit for the reasonable fees and expenses of any counsel
retained by them.
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13. Proprietary and Confidential Information.
RCM agrees on behalf of itself and its managers, officers, and
employees to treat confidentially and as proprietary information of the Fund,
all records and other information relative to the Fund and prior, present or
potential shareholders of the Fund (and clients of said shareholders), and not
to use such records and information for any purpose other than the performance
of its responsibilities and duties hereunder, except (i) after prior
notification to and approval in writing by the Fund, withheld and may not be
withheld where RCM may be exposed to civil or criminal contempt proceedings for
failure to comply, (ii) when requested to divulge such information by duly
constituted authorities, or (iii) when so requested by the Fund. Records and
other information which have become known to the public through no wrongful act
of RCM or any of its employees, agents or representatives, and information that
was already in the possession of RCM prior to receipt thereof from the Fund or
its agent, shall not be subject to this paragraph.
Further, RCM will adhere to the privacy policies adopted by the Fund
pursuant to Title V of the Xxxxx-Xxxxx-Xxxxxx Act, as may be modified from time
to time. In this regard, RCM shall have in place and maintain physical,
electronic and procedural safeguards reasonably designed to protect the
security, confidentiality and integrity of, and to prevent unauthorized access
to or use of, records and information relating to the Fund and its shareholders.
14. Records.
RCM shall keep records relating to the services to be performed
hereunder in the form and manner, and for such period, as it may deem advisable
and is agreeable to the Fund, but not inconsistent with the rules and
regulations of appropriate government authorities, in particular, Section 31 of
the 1940 Act and the rules thereunder. RCM agrees that all such records prepared
or maintained by it relating to the services to be performed by it hereunder are
the property of the Fund and will be preserved, maintained, and made available
in accordance with such applicable sections and rules of the 1940 Act and will
be promptly surrendered to the Fund or its designee on and in accordance with
its request.
15. Duration and Termination.
(a) This Agreement shall become effective on the date first
written above or such later date as indicated in Schedule A and, unless
sooner terminated by as provided herein, will continue in effect for two
years from the above written date. Thereafter, if not terminated, this
Agreement shall continue in effect for successive annual periods;
provided, that such continuance is specifically approved at least annually
by the Board or by a vote of a "majority of the outstanding voting
securities" of the Fund, and; provided, further, that in either event, the
continuance is also approved by a majority of the Fund's trustees who are
not parties to the Agreement or "interested persons" of any such party
("Qualified Trustees"), by a vote cast in person at a meeting called for
the purpose of voting on such approval.
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(b) Notwithstanding the foregoing, this Agreement may be
terminated in its entirety at any time, without the payment of any
penalty, by vote of the Board, by vote of a majority of the Qualified
Trustees, or by vote of a "majority of the outstanding voting securities"
of the Fund on sixty days' written notice to RCM or by RCM at any time,
without the payment of any penalty, on sixty days' written notice to the
Fund.
(c) This Agreement will automatically terminate in the event
of its "assignment" or upon the termination (i) of RCM's registration as a
broker-dealer under the 1934 Act or (ii) of RCM's membership in the NASD.
(d) Sections 12 and 13 shall survive termination of this
Agreement.
(e) In the event that, in connection with termination, a
successor to any of RCM's duties or obligations hereunder is designated by
the Fund by written notice to RCM, RCM will promptly, upon termination and
at the expense of the Fund, transfer to such successor all relevant books,
records, correspondence, and other data established or maintained by RCM
under this Agreement in a form reasonably acceptable to the Fund, and will
cooperate in the transfer of such duties and obligations. If no such
successor is designated, then such books, records and other data shall be
returned to the Fund.
16. Amendment of this Agreement.
No provision of this Agreement may be changed, waived, discharged,
or terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge, or termination is
sought. This Agreement may be amended with the approval of the Board or of a
majority of the outstanding voting securities of the Fund; provided, that in
either case, such amendment also shall be approved by a majority of the
Qualified Trustees.
17. Limitation of Liability.
The Board and shareholders of the Fund shall not be personally
liable for obligations of the Fund in connection with this Agreement.
18. Notice.
Any notice required or permitted to be given by either party to the
other shall be deemed sufficient upon receipt in writing at the other party's
principal offices.
19. Governing Law.
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This Agreement shall be construed in accordance with the laws of the
State of New York and the 1940 Act. To the extent that the applicable laws of
the State of New York conflict with the applicable provisions of the 1940 Act,
the latter shall control.
20. Miscellaneous.
(a) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors.
(b) 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.
(c) As used in this Agreement, the terms "majority of the
outstanding voting securities", "interested person", and "assignment"
shall have the same meaning as such terms have in the 1940 Act.
(d) This Agreement may be executed in two or more
counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the
same instrument.
(e) The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated as of the day and year first above
written.
ATTEST: THE AEGIS FUNDS
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxx
----------------------------------- -----------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxx
Title:Secretary Title: President
ATTEST: XXXXXXXX CAPITAL MARKETS, LLC
/s/ Xxxxxxx Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------- -----------------------------------
Name: Xxxxxxx Xxxxxxx Name: Xxxxxx X. Xxxxxxxxx
Title: Compliance Officer Title: President
ATTEST: AEGIS FINANCIAL CORPORATION
(with respect to Section 9 only)
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxx
----------------------------------- -----------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxx
Title: Managing Director Title: Managing Director
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SCHEDULE A
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Pursuant to Section 1 of the Distribution Agreement among The Aegis Funds
("Fund"), Xxxxxxxx Capital Markets, LLC ("RCM") and Aegis Financial Corporation,
the Fund hereby appoints RCM as its agent to be the principal underwriter of the
Fund with respect to its following series:
Aegis High Yield Fund
Dated: October 31, 2007
SCHEDULE B
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The service fee schedule for distribution services provided by Xxxxxxxx
Capital Markets, LLC ("RCM") to each registered investment company (or separate
series of such company) advised by Aegis Financial Corporation is:
o $15,000 per annum for the first registered investment company (or
separate series of such company) advised by Aegis Financial
Corporation; $3,000 per annum for each additional registered
investment company (or separate series).
o $150 per advertising piece for review and NASD filing plus pass
along of NASD filing fees.
o $1,000 per NASD registered representatives employed by the Fund
wherein RCM is asked to carry the NASD license.
o If applicable, RCM will pass-along any NSCC fees for Fund/SERV
processing required by the Fund.
All fees are billed and payable on a quarterly basis.
