EXHIBIT (e)(1)
DISTRIBUTION AGREEMENT
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AGREEMENT made as of the 1st day of April, 2002, between Legacy Funds
Group (the "Company"), a Massachusetts business trust having its principal place
of business at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, and BISYS FUND SERVICES
LIMITED PARTNERSHIP ("Distributor"), having its principal place of business at
0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000.
WHEREAS, the Company is an open-end management investment company,
organized as a Massachusetts business trust and registered with the Securities
and Exchange Commission (the "Commission") under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, it is intended that Distributor act as the distributor of the
shares of beneficial interest ("Shares") of each of the investment portfolios of
the Company (such portfolios being referred to individually as a "Fund" and
collectively as the "Funds").
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. SERVICES AS DISTRIBUTOR.
1.1 Distributor will act as agent for the distribution of the Shares
covered by the registration statement and prospectus of the Company then in
effect under the Securities Act of 1933, as amended (the "Securities Act"). As
used in this Agreement, the term "registration statement" shall mean Parts A
(the prospectus), B (the Statement of Additional Information) and C of each
registration statement that is filed on Form N-1A, or any successor thereto,
with the Commission, together with any amendments thereto. The term "prospectus"
shall mean each form of prospectus and Statement of Additional Information used
by the Funds for delivery to shareholders and prospective shareholders after the
effective dates of the above referenced registration statements, together with
any amendments and supplements thereto.
1.2 Distributor agrees to use appropriate efforts to solicit orders
for the sale of the Shares and will undertake such advertising and promotion as
it believes reasonable in connection with such solicitation. The Company
understands that Distributor is now and may in the future be the distributor of
the shares of several investment companies or series (together, "Investment
Companies") including Investment Companies having investment objectives similar
to those of the Company. The Company further understands that investors and
potential investors in the Company may invest in shares of such other Investment
Companies. The Company agrees that Distributor's duties to such Investment
Companies shall not be deemed in conflict with its duties to the Company under
this paragraph 1.2.
Except as provided in Section 2 herein, Distributor shall, at
its own expense, finance appropriate activities which it deems reasonable, which
are primarily intended to result in the sale of the Shares, including, but not
limited to, advertising, compensation of underwriters, dealers and sales
personnel, the printing and mailing of prospectuses to other than current
Shareholders, and the printing and mailing of sales literature.
1.3 In its capacity as distributor of the Shares, all activities of
Distributor and its partners, agents, and employees shall comply with all
applicable laws, rules and regulations, including, without limitation, the 1940
Act, all rules and regulations promulgated by the Commission thereunder and all
rules and regulations adopted by any securities association registered under the
Securities Exchange Act of 1934.
1.4 Distributor will provide one or more persons, during normal
business hours, to respond to telephone questions with respect to the Company.
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1.5 Distributor will transmit any orders received by it for purchase
or redemption of the Shares to the transfer agent and custodian for the Funds.
1.6 Whenever in their judgment such action is warranted by unusual
market, economic or political conditions, or by abnormal circumstances of any
kind, the Company's officers may decline to accept any orders for, or make any
sales of, the Shares until such time as those officers deem it advisable to
accept such orders and to make such sales.
1.7 Distributor will act only on its own behalf as principal if it
chooses to enter into selling agreements with selected dealers or others.
1.8 The Company agrees at its own expense to execute any and all
documents and to furnish any and all information and otherwise to take all
actions that may be reasonably necessary in connection with the qualification of
the Shares for sale in such states as Distributor may designate.
1.9 The Company shall furnish from time to time, for use in
connection with the sale of the Shares, such information with respect to the
Funds and the Shares as Distributor may reasonably request; and the Company
warrants that the statements contained in any such information shall fairly show
or represent what they purport to show or represent. The Company shall also
furnish Distributor upon request with: (a) unaudited semi-annual statements of
the Funds' books and accounts prepared by the Company, (b) a monthly itemized
list of the securities in the Funds, (c) monthly balance sheets as soon as
practicable after the end of each month, and (d) from time to time such
additional information regarding the financial condition of the Funds as
Distributor may reasonably request.
1.10 The Company represents to Distributor that, with respect to the
Shares, all registration statements and prospectuses filed by the Company with
the Commission under the Securities Act have been carefully prepared in
conformity with requirements of said Act and rules and regulations of the
Commission thereunder. The registration statement and prospectus contain all
statements required to be stated therein in conformity with said Act and the
rules and regulations of said Commission and all statements of fact contained in
any such registration statement and prospectus are true and correct.
Furthermore, neither any registration statement nor any prospectus includes an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading to a purchaser
of the Shares. The Company 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 Company's counsel, be necessary or
advisable. If the Company shall not propose such amendment or amendments and/or
supplement or supplements within fifteen days after receipt by the Company of a
written request from Distributor to do so, Distributor may, at its option,
terminate this Agreement. The Company shall not file any amendment to any
registration statement or supplement to any prospectus without giving
Distributor reasonable notice thereof in advance; provided, however, that
nothing contained in this Agreement shall in any way limit the Company's right
to file at any time such amendments to any registration statement and/or
supplements to any prospectus, of whatever character, as the Company may deem
advisable, such right being in all respects absolute and unconditional.
1.11 The Company may request Distributor to use an electronic
processing system over the internet in which electronically transmitted orders
are forwarded electronically for processing by a third party known to the
Company under circumstances in which Distributor will not review the orders.
Under such circumstances, the Company acknowledges and agrees that it will
independently determine that the third party is a satisfactory service provider
and that Distributor's review will not be necessary. The Company authorizes
Distributor and dealers to use the current prospectus in the form furnished from
time to time in connection with the sale of the Shares. The Distributor shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Company in connection with the matters to which this Agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the Distributor's part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement. In
the absence of willful misfeasance, bad faith or gross negligence
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or reckless disregard of obligations or duties hereunder on the part of
Distributor or any of its partners, employees or control persons the Company
agrees to indemnify, defend and hold Distributor, its several partners and
employees, and any person who controls Distributor within the meaning of Section
15 of the Securities 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 reasonable counsel fees
incurred in connection therewith) which Distributor, its partners and employees,
or any such controlling person, may incur (a) arising out of or based upon the
electronic processing of orders over the internet; (b) based on any act or
omission in the course of, or connected with, rendering services hereunder; (c)
based on any representations made herein by the Company; (d) based on any act or
omission of any prior distributor (in its capacity as distributor or
sub-administrator), Administrator or Adviser to the Company, including the
registration or failure to register any shares of the Company in accordance with
state or federal laws or resulting from or relating to any books or records
delivered to the Distributor in connection with its responsibilities under this
Agreement and occurring prior to the date of this Agreement; or (e) under the
Securities Act or under common law or otherwise, arising out of or based upon
(i) any untrue statement, or alleged untrue statement, of a material fact
contained in any registration statement or any prospectus, (ii) any omission, or
alleged omission, to state a material fact required to be stated in any
registration statement or any prospectus or necessary to make the statements in
either thereof, in the light of the circumstances under which they were made not
misleading or (iii) any Company advertisement or sales literature that is not in
compliance with applicable laws, rules or regulations (including, but not
limited to the Conduct Rules of the National Association of Securities Dealers,
Inc.); provided, however, that the Company's agreement to indemnify Distributor,
its partners or employees, and any such controlling person shall not be deemed
to cover any claims, demands, liabilities or expenses arising out of any
statements or representations as are contained in any prospectus, advertisement
or sales literature and in such financial and other statements as are furnished
in writing to the Company by Distributor and used in the answers to the
registration statement or in the corresponding statements made in the
prospectus, advertisement or sales literature, or arising out of or based upon
any omission or alleged omission to state a material fact in connection with the
giving of such information required to be stated in such answers or necessary to
make the answers, in light of the circumstances under which they were made, not
misleading; and further provided that the Company's agreement to indemnify
Distributor and the Company's representations and warranties hereinbefore set
forth in paragraph 1.10 shall not be deemed to cover any liability to the
Company or its Shareholders to which Distributor would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of its duties, or by reason of Distributor's reckless disregard of its
obligations and duties under this Agreement. The Company's agreement to
indemnify Distributor, its partners and employees and any such controlling
person, as aforesaid, is expressly conditioned upon the Company being notified
of any action brought against Distributor, its partners or employees, or any
such controlling person, such notification to be given by letter or by telegram
addressed to the Company at its principal office in Columbus, Ohio, along with a
copy to First Financial Capital Advisors LLC, 000 Xxxx Xxxxxx, Xxxxxxxx, Xxxx
00000, Attn: Xxxxxx Xxxxx and sent to the Company by the person against whom
such action is brought, within 10 days after the summons or other first legal
process shall have been served. The failure to so notify the Company of any such
action shall not relieve the Company from any liability which the Company may
have to the person against whom such action is brought by reason of any such
untrue, or allegedly untrue, statement or omission, or alleged omission,
otherwise than on account of the Company's indemnity agreement contained in this
paragraph 1.11. The Company 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 Company and
approved by Distributor, which approval shall not be unreasonably withheld. In
the event the Company elects to assume the defense of any such suit and retain
counsel of good standing approved by Distributor, 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 Company does not elect to assume the defense of any
such suit, or in case Distributor reasonably does not approve of counsel chosen
by the Company, the Company will reimburse Distributor, its partners and
employees, or the controlling person or persons named as defendant or defendants
in such suit, for the fees and expenses of any counsel retained by Distributor
or them. The Company's indemnification agreement contained in this paragraph
1.11 and the Company'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 Distributor, its partners and employees, or any
controlling person, and shall survive the delivery of any Shares.
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This Agreement of indemnity will inure exclusively to
Distributor's benefit, to the benefit of its several partners and employees, and
their respective estates, and to the benefit of the controlling persons and
their successors. The Company agrees promptly to notify Distributor of the
commencement of any litigation or proceedings against the Company or any of its
officers or Trustees in connection with the issue and sale of any Shares.
1.12 Distributor agrees to indemnify, defend and hold the Company,
its several officers and Trustees and any person who controls the Company within
the meaning of Section 15 of the Securities Act free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
costs of investigating or defending such claims, demands, or liabilities and any
reasonable counsel fees incurred in connection therewith) which the Company, its
officers or Trustees or any such controlling person, may incur under the
Securities Act or under common law or otherwise, arising out of or be based (i)
upon any untrue, or alleged untrue, statement of a material fact contained in
information furnished in writing by Distributor to the Company and used in the
answers to any of the items of the registration statement or in the
corresponding statements made in the prospectus, or (ii) any omission, or
alleged omission, to state a material fact in connection with such information
furnished in writing by Distributor to the Company required to be stated in such
answers or necessary to make such information, in light of the circumstances
under which they were made, not misleading. Distributor's agreement to indemnify
the Company, its officers and Trustees, and any such controlling person, as
aforesaid, is expressly conditioned upon Distributor being notified of any
action brought against the Company, its officers or Trustees, or any such
controlling person, such notification to be given by letter or telegram
addressed to Distributor at its principal office in Columbus, Ohio, and sent to
Distributor by the person against whom such action is brought, within 10 days
after the summons or other first legal process shall have been served.
Distributor shall have the right of first control of the defense of such action,
with counsel of its own choosing, satisfactory to the Company, if such action is
based solely upon such alleged misstatement or omission on Distributor's part,
and in any other event the Company, 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 to so notify Distributor of any such
action shall not relieve Distributor from any liability which Distributor may
have to the Company, 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 Distributor's indemnity agreement
contained in this paragraph 1.12.
1.13 No Shares shall be offered by either Distributor or the Company
under any of the provisions of this Agreement and no orders for the purchase or
sale of Shares hereunder shall be accepted by the Company 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
Securities Act or if and so long as a current prospectus as required by Section
10(b)(2) of said Act is not on file with the Commission; provided, however, that
nothing contained in this paragraph 1.13 shall in any way restrict or have an
application to or bearing upon the Company's obligation to repurchase Shares
from any Shareholder in accordance with the provisions of the Company's
prospectus, Declaration of Trust, or Bylaws.
1.14 The Company agrees to advise Distributor as soon as reasonably
practical by a notice in writing delivered to Distributor or its counsel:
(a) of any request by the Commission for amendments to the
registration statement or prospectus then in effect or for
additional information;
(b) in the event of the issuance by the Commission of any stop
order suspending the effectiveness of the registration
statement or prospectus then in effect or the initiation by
service of process on the Company of any proceeding for
that purpose;
(c) of the happening of any event that 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; and
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(d) of all material action of the Commission with respect to
any amendment to any registration statement or prospectus
which may from time to time be filed with the Commission.
For purposes of this section, informal requests by or acts of
the Staff of the Commission shall not be deemed actions of or requests by the
Commission.
1.15 Distributor agrees on behalf of itself and its partners and
employees to treat confidentially and as proprietary information of the Company
all records and other information relative to the Company and its prior, present
or potential Shareholders, and not to use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except, after prior notification to and approval in writing by the Company,
which approval shall not be unreasonably withheld and may not be withheld where
Distributor 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 Company.
1.16 This Agreement shall be governed by the laws of the State of
Ohio.
1.17 In the event Distributor purchases the initial shares of the
Company for purposes of satisfying the minimum net worth requirements set forth
in Section 14 (a) of the 1940 Act, and a notice of termination is subsequently
given or this Agreement is otherwise terminated pursuant to Section 6 herein for
any reason prior to the time that organizational expenses incurred by the
Company have been fully amortized, then the Company shall cause the successor
distributor of the shares (the "Successor Distributor") to pay to Distributor,
within ten (10) days prior to the termination of this Agreement, an amount of
cash that is sufficient to purchase the initial shares that are held by
Distributor.
2. FEE.
Distributor shall receive from the Funds identified in the
Distribution and Shareholder Service Plan attached as Schedule A hereto (the
"Distribution Plan Funds") a distribution fee at the rate and upon the terms and
conditions set forth in such Plan. The distribution fee shall be accrued daily
and shall be paid on the first business day of each month, or at such time(s) as
the Distributor shall reasonably request.
3. SALE AND PAYMENT.
Shares of a Fund may be subject to a sales load and may be subject
to the imposition of a distribution fee pursuant to the Distribution and
Shareholder Service Plan referred to above. To the extent that Shares of a Fund
are sold at an offering price which includes a sales load or at net asset value
subject to a contingent deferred sales load with respect to certain redemptions
(either within a single class of Shares or pursuant to two or more classes of
Shares), such Shares shall hereinafter be referred to collectively as "Load
Shares" (in the case of Shares that are sold with a front-end sales load,
"Front-End Load Shares" or in the case of Shares that are sold subject to a
contingent deferred sales load, "CDSL Shares" and individually as a "Load
Share," a "Front-End Load Share" or a "CDSL Share.") A Fund that contains
Front-End Load Shares shall hereinafter be referred to collectively as "Load
Funds" or "Front-End Load Funds" and individually as a "Load Fund" or a
"Front-end Load Fund." A Fund that contains CDSL Shares shall hereinafter be
referred to collectively as "Load Funds" or "CDSL Funds" and individually as a
"Load Fund" or a "CDSL Fund." Under this Agreement, the following provisions
shall apply with respect to the sale of, and payment for, Load Shares.
3.1 Distributor shall have the right to purchase Load Shares at
their net asset value and to sell such Load Shares to the public against orders
therefor at the applicable public offering price, as defined in Section 4
hereof. Distributor shall also have the right to sell Load Shares to dealers
against orders therefor at the public offering price less a concession
determined by Distributor, which concession shall not exceed the amount of the
sales charge or underwriting discount, if any, referred to in Section 4 below.
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3.2 Prior to the time of delivery of any Load Shares by a Load Fund
to, or on the order of, Distributor, Distributor shall pay or cause to be paid
to the Load Fund or to its order an amount in Boston or New York clearing house
funds equal to the applicable net asset value of such Shares. Distributor may
retain so much of any sales charge or underwriting discount as is not allowed by
Distributor as a concession to dealers.
4. PUBLIC OFFERING PRICE.
The public offering price of a Load Share shall be the net asset
value of such Load Share, plus any applicable sales charge, all as set forth in
the current prospectus of the Load Fund. The net asset value of Shares shall be
determined in accordance with the provisions of the Declaration of Trust and
Bylaws of the Company and the then-current prospectus of the Load Fund.
5. ISSUANCE OF SHARES.
The Company reserves the right to issue, transfer or sell Load
Shares at net asset value (a) in connection with the merger or consolidation of
the Company or the Load Fund(s) with any other investment company or the
acquisition by the Company or the Load Fund(s) of all or substantially all of
the assets or of the outstanding Shares of any other investment company; (b) in
connection with a pro rata distribution directly to the holders of Shares in the
nature of a stock dividend or split; (c) upon the exercise of subscription
rights granted to the holders of Shares on a pro rata basis; (d) in connection
with the issuance of Load Shares pursuant to any exchange and reinvestment
privileges described in any then-current prospectus of the Load Fund; and (e)
otherwise in accordance with any then-current prospectus of the Load Fund.
6. TERM, DURATION AND TERMINATION.
This Agreement shall become effective with respect to each Fund
listed on Schedule A hereof as of the date first written above (or, if a
particular Fund is not in existence on such date, on the date an amendment to
Schedule A to this Agreement relating to that Fund is executed) and, unless
sooner terminated as provided herein, shall continue until March 31, 2004.
Thereafter, if not terminated, this Agreement shall continue with respect to a
particular Fund automatically for successive one-year terms, provided that such
continuance is specifically approved at least annually by (a) by the vote of a
majority of those members of the Company'sTrustees who are not parties to this
Agreement or interested persons of any such party, cast in person at a meeting
for the purpose of voting on such approval and (b) by the vote of the Company's
Trustees or the vote of a majority of the outstanding voting securities of such
Fund. This Agreement is terminable without penalty, on not less than sixty days'
prior written notice, by the Company's Trustees, by vote of a majority of the
outstanding voting securities of the Company or by the Distributor. This
Agreement will also terminate automatically in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested persons" and "assignment" shall have the same meanings
as ascribed to such terms in the 1940 Act.)
7. GOVERNING LAW AND MATTERS RELATING TO THE COMPANY AS A MASSACHUSETTS
BUSINESS TRUST.
This Agreement shall be governed by and its provisions shall be
construed in accordance with the laws of the State of Ohio. It is expressly
agreed that the obligations of the Company hereunder shall not be binding upon
any of the Trustees, shareholders, nominees, officers, agents or employees of
the Company personally, but shall bind only the trust property of the Company.
The execution and delivery of this Agreement have been authorized by the
Trustees, and this Agreement has been signed and delivered by an authorized
officer of the Company, acting as such, and neither such authorization by the
Trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Company as provided in
the Company's Declaration of Trust.
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8. PRIVACY.
Nonpublic personal financial information relating
consumers or customers of the Funds provided by, or at the direction
of the Funds to the Distributor, or collected or retained by the
Distributor to perform its duties as distributor shall be considered
confidential information. The Distributor shall not disclose or
otherwise use nonpublic personal financial information relating to
present or former shareholders of the Funds other than for the
purposes for which that information was disclosed to the
Distributor, including use under an exception in sections 248.14 or
248.15 of Securities and Exchange Commission Regulation S-P in the
ordinary course of business to carry out those purposes. The
Distributor 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
consumers or customers of the Funds. The Company represents to the
Distributor that it has adopted a Statement of its privacy policies
and practices as required by Securities and Exchange Commission
Regulation S-P and agrees to provide Distributor with a copy of that
statement annually.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
written above.
LEGACY FUNDS GROUP
By:_____________________________________
Title:__________________________________
Date:___________________________________
BISYS FUND SERVICES
LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc.,
General Partner
By:_____________________________________
Title:__________________________________
Date:__________________________________
SCHEDULE A
TO THE DISTRIBUTION AGREEMENT
BETWEEN
LEGACY FUNDS GROUP
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AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
