Exhibit B6
DISTRIBUTION AGREEMENT
between
XXXXXXXX CAPITAL MARKETS
and
BRAZOS MUTUAL FUNDS
THIS AGREEMENT is made as of October 1, 1998, between Brazos Mutual Funds
("Fund"), a Delaware business trust, and Xxxxxxxx Capital Markets, Inc. ("RCM"),
a corporation organized and existing under the laws of the State of New York.
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 the Fund desires to retain RCM as principal underwriter in
connection with the offering 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 or directors ("Board") and its disinterested trustees/directors in
conformity with Section 15(c) under 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 and redemption of
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. The Fund understands that any solicitation activities conducted on
behalf of the Fund will be conducted primarily, if not exclusively, by employees
of the Fund's sponsor who shall become registered representatives of RCM.
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
0000 Xxx.
(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
assist in the production of advertising and sales literature; 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) The offering price of the Shares shall be the price determined in
accordance with, and in the manner set forth in, the most current Prospectus.
The Fund shall make available to RCM a statement of each computation of net
asset value and the details of entering into such computation.
(f) 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 such 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.
(g) RCM shall not be obligated to sell any certain number of Shares.
(h) 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.
(i) RCM may enter into selling agreements with selected dealers and
others for the sale of Trust Shares, and will act only on its own behalf as
principal in entering into such selling agreements.
(j) The rights granted to RCM shall be non-exclusive in that the Trust
reserves the right to sell its Shares to investors on applications received and
accepted by the Trust. Further, the Trust reserves the right to issue Shares in
connection with (a) the merger or consolidation, or acquisition by the Trust
through purchase or otherwise, with any other investment company, trust or
personal holding company, and (b) a pro rata distribution directly to the
holders of Shares in the nature of a stock dividend or split-up.
(k) 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 RCM except such unconditional orders placed with RCM before it had
knowledge of the suspension. In addition, the Trust reserves the right to
suspend sales and RCM's authority to process orders for Shares on behalf of the
Trust if, in the judgment of the Trust, it is in the best interests of the Trust
to do so. Suspension will continue for such period as may be determined by the
Trust. In addition, RCM reserves the right to reject any purchase order.
3. Duties of the Fund.
(a) The Fund shall keep RCM fully informed of its 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.
(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.
(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 represents and warrants that its 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, that have been
approved by 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.
4. Other Broker-Dealers. RCM in its discretion may enter into agreements to
sell Shares to such registered and qualified retail dealers, as reasonably
requested by the Fund. In making agreements with such dealers, RCM shall act
only as principal and not as agent for the Fund. The form of any such dealer
agreement shall be mutually agreed upon and approved by the Fund and RCM.
5. 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.
6. 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.
7. Expenses of the Fund.
(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 SAI
under the 1933 Act, and any amendments thereto, for the
issue of its Shares;
(ii) in connection with the registration and qualification of
Shares for sale in the various states or other jurisdictions
in which the Board of Trustees (the "Trustees") of the Trust
shall determine it advisable to qualify such Shares for sale
(including registering the Trust or Series as a broker or
dealer or any officer 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) RCM shall pay expenses of:
(i) printing and distributing Prospectuses, SAIs, and reports
prepared for its use in connection with the offering of the
Shares for sale to the public;
(ii) any other literature used in connection with such offering;
and
(iii) advertising in connection with such offering.
(c) In addition to the services described above, RCM will provide
services including, without limitation, assistance in the production of
marketing and advertising materials for the sale of Shares of the Trust and
their review for compliance with applicable regulatory requirements and making
any required filings with regulatory authorities; and entering into dealer
agreements with broker-dealers to sell Shares of the Trust.
8. Compensation. In connection with the services to be provided by RCM
under this Agreement, RCM shall receive fees from the Trust's investment
adviser, and, when appropriate, reimbursement of expenses. Notwithstanding
anything to the contrary, amounts owed by the Trust to RCM shall only be paid
out of the assets and property of the particular Fund involved.
9. 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.
10. 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.
11. Indemnification.
(a) 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 (except for information furnished by RCM
as stated in Section 11(d) of this Agreement), 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.
(b) The Fund shall not be liable to RCM under this Agreement with
respect to any claim made against RCM or 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 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 retained 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 directors 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 directors, 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 directors 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, SAI, or sales literature 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. RCM agrees to notify the Trust
promptly of the commencement of any litigation or proceedings against it in
connection with the issue and sale of any of the Shares.
12. 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 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 (i) by a vote of a majority of the
Fund's Board who are neither interested persons (as defined in the 0000 Xxx) of
the Fund ("Independent trustees/directors") or RCM, cast in person at a meeting
called for the purpose of voting on such approval, and (ii) by the Board or by
vote of a majority of the outstanding voting securities of the Fund.
(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 Independent trustees/directors, 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. This Agreement will automatically
terminate in the event of its assignment (as defined in the 1940 Act).
13. 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 Independent trustees/directors.
14. Limitation of Liability. RCM is hereby expressly put on notice of the
limitation of shareholder liability as set forth in the Trust Instrument of the
Trust and agrees that obligations assumed by the Trust pursuant to this
Agreement shall be limited in all cases to the Trust and its assets, and if the
liability relates to one or more series, the obligations hereunder shall be
limited to the respective assets of such series. RCM further agrees that it
shall not seek satisfaction of any obligation from the shareholders or any
individual shareholder of a series of the Trust, nor from the Trustees or any
individual Trustee of the Trust.
15. 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.
Miscellaneous. 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. 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. 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.
16. Governing Law. 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.
17. Year 2000 Compliant. At the present time, RCM does not offer, provide
or propose to offer or provide any computer system product or service to the
Fund under the Agreement. Any such product or services are to be provided to the
Fund by the Fund's Transfer Agent/Custodian or other third party vendors to be
selected by the Fund.
18. Proprietary and Confidential Information. RCM agrees on behalf of
itself and its directors, officers, and employees to treat confidentially and as
proprietary information of the Trust all records and other information relative
to the Trust and prior, present, or potential shareholders of the Trust (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 after prior notification to and approval in writing by the
Trust, which approval shall not be unreasonably withheld and may not be withheld
where RCM may be exposed to civil or criminal contempt proceedings for failure
to comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust.
