Exhibit (e)(1)
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made and entered into as of this ____ day of _______,
2000, by and among Brazos Insurance Funds, a Delaware business trust ("Trust"),
Xxxx XxXxxx Investment Counsel, L.P., a Delaware limited partnership (the
"Adviser") and Xxxxxxxx Securities, Inc., a _____________ ("Distributor").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end management investment company, and is
authorized to issue shares of beneficial interests ("Shares") in separate series
with each such series representing interests in a separate portfolio of
securities and other assets;
WHEREAS, the Adviser is duly registered under the Investment Advisers Act
of 1940, as amended, and any applicable state securities laws, as an investment
adviser;
WHEREAS, the Trust desires to retain the Distributor 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) (the "Funds") to this
Agreement;
WHEREAS, the Distributor 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. (the "NASD");
WHEREAS, this Agreement has been approved by a vote of the Trust's board of
trustees or directors ("Board") and its disinterested trustees/directors in
conformity with Section 15(c) of the 1940 Act; and
WHEREAS, the Distributor is willing to act as principal underwriter for the
Trust on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto, intending to be legally bound,
do hereby agree as follows:
1. APPOINTMENT OF THE DISTRIBUTOR.
The Trust hereby appoints the Distributor as its agent for the sale and
distribution of Shares of the Funds, subject to the terms and for the period set
forth in this Agreement. The Distributor hereby accepts such appointment and
agrees to act hereunder.
2. SERVICES AND DUTIES OF THE DISTRIBUTOR.
(a) The Distributor agrees to sell Shares of the Funds as agent for
the Trust during the term of this Agreement, upon the terms and at the current
offering price (plus sales charge, if any) described in the Prospectus. As used
in this Agreement, the term "Prospectus"
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shall mean the current prospectus, including the statement of additional
information, as amended or supplemented, relating to the Funds and included in
the currently effective registration statement or post-effective amendment
thereto (the "Registration Statement") of the Trust under the Securities Act of
1933 (the "1933 Act") and the 0000 Xxx.
(b) During the continuous public offering of Shares of the Funds, the
Distributor will hold itself available to receive orders, satisfactory to the
Distributor, for the purchase of Shares of the Funds and will accept such orders
on behalf of the Trust. Such purchase orders shall be deemed effective at the
time and in the manner set forth in the Prospectus.
(c) The Distributor, with the operational assistance of the Trust's
transfer agent, shall make Shares available through the National Securities
Clearing Corporation's Fund/SERV System.
(d) In connection with all matters relating to this Agreement, the
Distributor agrees to act in conformity with the Trust's Declaration of Trust
and By-Laws and with the instructions of the Board and to 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. The
Distributor acknowledges and agrees that it is not authorized to provide any
information or make any representations other than as contained in the
Prospectus and any sales literature specifically approved by the Trust and the
Distributor.
(e) The Distributor agrees to cooperate with the Trust in the
development of all proposed advertisements and sales literature relating to the
Funds. The Distributor agrees to review all proposed advertisements and sales
literature for compliance with applicable laws and regulations, and shall file
with appropriate regulators those advertisements and sales literature it
believes are in compliance with such laws and regulations. The Distributor
agrees to furnish to the Trust any comments provided by regulators with respect
to such materials and to use its best efforts to obtain the approval of the
regulators to such materials.
(f) The Distributor at its sole discretion may repurchase Shares
offered for sale by shareholders of the Funds. Repurchase of Shares by the
Distributor shall be at the price determined in accordance with, and in the
manner set forth in, the current Prospectus. At the end of each business day,
the Distributor shall notify, by any appropriate means, the Trust and its
transfer agent of the orders for repurchase of Shares received by the
Distributor since the last report, the amount to be paid for such Shares, and
the identity of the shareholders offering Shares for repurchase. The Trust
reserves the right to suspend such repurchase right upon written notice to the
Distributor. The Distributor further agrees to act as agent for the Trust to
receive and transmit promptly to the Trust's transfer agent shareholder requests
for redemption of Shares.
(g) The Distributor may, in its discretion, acting only as principal
on its own behalf, enter into agreements with such qualified broker-dealers as
it may select, in order that such broker-dealers also may sell Shares of the
Funds. The Distributor may pay a portion of any applicable sales charge, or
allow a discount, to a selling broker-dealer, as described in the Prospectus or,
if not described, as agreed upon with the broker-dealer. The Distributor shall
include in the forms of agreement with selling broker-dealers a provision for
the forfeiture by
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them of their sales charge or discount with respect to Shares sold by them and
redeemed, repurchased or tendered for redemption within seven business days
after the date of confirmation of such purchases.
(h) The Distributor shall devote its best efforts to effect sales of
Shares of the Funds but shall not be obligated to sell any certain number of
Shares.
(i) The Distributor shall prepare reports for the Board regarding its
activities under this Agreement as from time to time shall be reasonably
requested by the Board.
(j) The services furnished by the Distributor hereunder are not to be
deemed exclusive and the Distributor shall be free to furnish similar services
to others so long as its services under this Agreement are not impaired thereby.
The Trust recognizes that from time to time officers and employees of the
Distributor may serve as directors, trustees, officers and employees of other
entities (including investment companies), that such other entities may include
the name of the Distributor as part of their name and that the Distributor or
its affiliates may enter into distribution, administration, fund accounting,
transfer agent or other agreements with such other entities.
3. DUTIES AND REPRESENTATIONS OF THE TRUST.
(a) The Trust represents that it is registered as an open-end
management investment company under the 1940 Act and agrees that it will act in
material conformity with its Declaration of Trust, By-Laws, its Registration
Statement as may be amended from time to time and resolutions and other
instructions of its Board. The Trust agrees to comply in all material respects
with the 1933 Act, the 1940 Act, and all other applicable federal and state laws
and regulations.
(b) The Trust shall take or cause to be taken all necessary action to
register Shares of the Funds under the 1933 Act and to maintain an effective
Registration Statement for such Shares in order to permit the sale of Shares as
herein contemplated. The Trust authorizes the Distributor to use the Prospectus,
in the form furnished to the Distributor from time to time, in connection with
the sale of Shares.
(c) The Trust shall have the right to suspend the sale of Shares of
any Fund at any time in response to conditions in the securities markets or
otherwise, and to suspend the redemption of Shares of any Fund at any time
permitted by the 1940 Act or the rules of the Securities and Exchange Commission
("SEC"). The Trust shall advise the Distributor promptly of any such
determination.
(d) The Trust agrees to advise the Distributor promptly in writing:
(i) of any correspondence or other communication by the SEC or
its staff relating to the Funds, including requests by the
SEC for amendments to the Registration Statement or
Prospectus;
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(ii) in the event of the issuance by the SEC of any stop-order
suspending the effectiveness of the Registration Statement
then in effect or the initiation of any proceeding for that
purpose;
(iii) of the happening of any event which makes untrue any
statement of a material fact made in the Prospectus or
which requires the making of a change in such Prospectus in
order to make the statements therein not misleading; and
(iv) of all actions taken by the SEC with respect to any
amendments to any Registration Statement or Prospectus
which may from time to time be filed with the SEC.
(e) The Trust shall file such reports and other documents as may be
required under applicable federal and state laws and regulations. The Trust
shall notify the Distributor in writing of the states in which the Shares may be
sold and shall notify the Distributor in writing of any changes to such
information.
(f) The Trust agrees to file from time to time such amendments to its
Registration Statement and Prospectus as may be necessary in order that its
Registration Statement and Prospectus will 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.
(g) The Trust shall fully cooperate in the efforts of the Distributor
to sell and arrange for the sale of Shares and shall make available to the
Distributor a statement of each computation of net asset value. In addition, the
Trust shall keep the Distributor fully informed of its affairs and shall provide
to the Distributor from time to time copies of all information, financial
statements, and other papers that the Distributor may reasonably request for use
in connection with the distribution of Shares, including, without limitation,
certified copies of any financial statements prepared for the Trust by its
independent public accountants and such reasonable number of copies of the most
current Prospectus, statement of additional information and annual and interim
reports to shareholders as the Distributor may request.
4. EXPENSES.
(a) The Trust shall bear all costs and expenses in connection with
registration of the Shares with the SEC and related compliance with state
securities laws, as well as all costs and expenses in connection with the
offering of the Shares and communications with shareholders of its Funds,
including but not limited to (i) fees and disbursements of its counsel and
independent public accountants; (ii) costs and expenses of the preparation,
filing, printing and mailing of Registration Statements and Prospectuses and
amendments thereto, as well as related advertising and sales literature, (iii)
costs and expenses of the preparation, printing and mailing of annual and
interim reports, proxy materials and other communications to shareholders of the
Funds; and (iv) fees required in connection with the offer and sale of Shares in
such jurisdictions as shall be selected by the Trust pursuant to Section 3(e)
hereof.
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(b) The Distributor shall bear the expenses of registration or
qualification of the Distributor as a dealer or broker under federal or state
laws and the expenses of continuing such registration or qualification. The
Distributor does not assume responsibility for any expenses not expressly
assumed hereunder.
5. INDEMNIFICATION.
(a) The Trust shall indemnify, defend and hold the Distributor, and
each of its present or former members, officers, employees, representatives and
any person who controls or previously controlled the Distributor within the
meaning of Section 15 of the 1933 Act, free and harmless from and against any
and all losses, claims, demands, liabilities, damages and expenses (including
the costs of investigating or defending any alleged losses, claims, demands,
liabilities, damages or expenses and any reasonable counsel fee incurred in
connection therewith) which the Distributor, each of its present and former
members, officers, employees or representatives or any such controlling person,
may incur under the 1933 Act, the 1934 Act, any other statute (including Blue
Sky laws) or any rule or regulation thereunder, or under common law or
otherwise, arising out of or based upon any untrue statement, or alleged untrue
statement of a material fact contained in the Registration Statement or any
Prospectus, as from time to time amended or supplemented, or in any annual or
interim report to shareholders, or in any advertisement or sales literature that
is not the product of the process described in Section 2(e) above, or arising
out of or based upon any omission, or alleged omission, to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Trust's obligation to
indemnify the Distributor and any of the foregoing indemnitees shall not be
deemed to cover any losses, claims, demands, liabilities, damages or expenses
arising out of any untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, Prospectus, annual or
interim report, or any such advertisement or sales literature in reliance upon
and in conformity with information relating to the Distributor and furnished to
the Trust or its counsel by the Distributor for the purpose of, and used in, the
preparation thereof; and provided further that the Trust's agreement to
indemnify the Distributor and any of the foregoing indemnitees shall not be
deemed to cover any liability to the Trust or its shareholders to which the
Distributor would otherwise be subject by reason of its 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. The
Trust's agreement to indemnify the Distributor, and any of the foregoing
indemnitees, as the case may be, with respect to any action, is expressly
conditioned upon the Trust being notified of such action brought against the
Distributor, or any of the foregoing indemnitees, within a reasonable time after
the summons or other first legal process giving information of the nature of the
claim shall have been served upon the Distributor, or such person, such
notification to be given by letter or by telegram addressed to the Trust's
President, but 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 Section 6(a).
(b) The Trust 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 such loss, claim, demand, liability, damage or expense, but if the
Trust elects to assume the defense, such defense
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shall be conducted by counsel chosen by the Trust and approved by the
Distributor, which approval shall not be unreasonably withheld. In the event the
Trust elects to assume the defense of any such suit and retain such counsel, the
indemnified defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by them. If the Trust does not elect
to assume the defense of any such suit, or in case the Distributor does not, in
the exercise of reasonable judgment, approve of counsel chosen by the Trust, the
Trust will reimburse the indemnified person or persons named as defendant or
defendants in such suit, for the fees and expenses of any counsel retained by
Distributor and them. The Trust's indemnification agreement contained in
Sections 6(a) and 6(b) 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 the Distributor, and each of its present
or former directors, officers, employees, representatives or any controlling
person, and shall survive the delivery of any Shares and the termination of this
Agreement. This agreement of indemnity will inure exclusively to the
Distributor's benefit, to the benefit of each of its present or former members,
officers, employees or representatives or to the benefit of any controlling
persons and their successors. The Trust agrees promptly to notify the
Distributor of the commencement of any litigation or proceedings against the
Trust or any of its officers or directors in connection with the issue and sale
of any of the Shares.
(c) The Trust shall not indemnify any person pursuant to this Section
6 unless (i) the court or other body before which the proceeding was brought has
rendered a final decision on the merits that such indemnified person was not
liable by reason of his willful misfeasance, bad faith or gross negligence in
the performance of his duties, or his reckless disregard of obligations and
duties, under this Agreement or, (ii) in the absence of such a decision, a
reasonable determination (based upon a review of the facts) that such
indemnified person was not liable by reason of such conduct has been made by the
vote of a majority of a quorum of trustees of the Trust who are neither
"interested persons" of the Trust nor parties to the proceedings, or by an
independent legal counsel in a written opinion.
(d) The Trust shall advance attorney's fees and other expenses
incurred by any person in defending any claim, demand, action or suit which is
the subject of a claim for indemnification pursuant to this Section 6, so long
as: (i) such person shall undertake to repay all such advances unless it is
ultimately determined that he is entitled to indemnification hereunder; and (ii)
such person shall provide security for such undertaking, or the Trust shall be
insured against losses arising by reason of any lawful advances, or a majority
of a quorum of the disinterested, non-party trustees of the Trust (or an
independent legal counsel in a written opinion) shall determine, based on a
review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that such person ultimately will be found
entitled to indemnification hereunder.
(e) Distributor shall indemnify, defend and hold the Trust, and each
of its present or former trustees, officers, employees, representatives, and any
person who controls or previously controlled the Trust within the meaning of
Section 15 of the 1933 Act, free and harmless from and against any and all
losses, claims, demands, liabilities, damages and expenses (including the costs
of investigation or defending any alleged losses, claims, demands, liabilities,
damages or expenses, and any reasonable counsel fee incurred in connection
therewith) which the Trust, and each of its present or former trustees,
officers, employees, representatives, or any
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such controlling person, may incur under the 1933 Act, the 1934 Act, any other
statute (including Blue Sky laws) or any rule or regulation thereunder, or under
common law or otherwise, arising out of or based upon any untrue, or alleged
untrue, statement of a material fact contained in the Trust's Registration
Statement or any Prospectus, as from time to time amended or supplemented, or in
any annual or interim report to shareholders or in any advertisement or sales
literature that is not the product of the process described in Section 2(e)
above, or arising out of or based upon the omission, or alleged omission, to
state therein a material fact required to be stated therein or necessary to make
the statement not misleading, but only if such statement or omission was made in
reliance upon, and in conformity with, information relating to the Distributor
and furnished to the Trust or its counsel by the Distributor for the purpose of,
and used in, the preparation thereof. The Distributor's agreement to indemnify
the Trust and any of the foregoing indemnitees shall not be deemed to cover any
liability to the Distributor to which the Trust would otherwise be subject by
reason of its 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. The Distributor's agreement to
indemnify the Trust, and any of the foregoing indemnitees, is expressly
conditioned upon the Distributor's being notified of any action brought against
the Trust, and any of the foregoing indemnitees, such notification to be given
by letter or telegram addressed to the Distributor's President, within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the Trust or
such person, but the failure so to notify the Distributor of any such action
shall not relieve the Distributor from any liability which the Distributor may
have to the person against whom such action is brought by reason of any such
untrue, or alleged untrue, statement or omission, otherwise than on account of
the Distributor's indemnity agreement contained in this Section 6(e).
(f) The Distributor 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 such loss, claim, demand, liability, damage or expense,
but if the Distributor elects to assume the defense, such defense shall be
conducted by counsel chosen by the Distributor and approved by the Trust, which
approval shall not be unreasonably withheld. In the event the Distributor elects
to assume the defense of any such suit and retain such counsel, the indemnified
defendant or defendants in such suit shall bear the fees and expenses of any
additional counsel retained by them. If the Distributor does not elect to assume
the defense of any such suit, or in case the Trust does not, in the exercise of
reasonable judgment, approve of counsel chosen by the Distributor, the
Distributor will reimburse the indemnified person or persons named as defendant
or defendants in such suit, for the fees and expenses of any counsel retained by
the Trust and them. The Distributor's indemnification agreement contained in
Sections 6(e) and (f) and the Distributor'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 the Trust, and each of its present or
former directors, officers, employees, representatives or any controlling
person, and shall survive the delivery of any Shares and the termination of this
Agreement. This Agreement of indemnity will inure exclusively to the Trust's
benefit, to the benefit of each of its present or former directors, officers,
employees or representative or to the benefit of any controlling persons and
their successors. The Distributor agrees promptly to notify the Trust of the
commencement of any litigation or proceedings against the Distributor or any of
its officers or directors in connection with the issue and sale of any of the
Shares.
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6. OBLIGATIONS OF TRUST.
This Agreement is executed by and on behalf of the Trust and the
obligations of the Trust hereunder are not binding upon any of the trustees,
officers or shareholders of the Trust individually but are binding only upon the
Trust and with respect to the Funds to which such obligations pertain.
7. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original agreement but all of which counterparts shall
together constitute but one and the same instrument.
8. GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the State
of Wisconsin, without regard to conflicts of law principles. To the extent that
the applicable laws of the State of Wisconsin, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter shall
control, and nothing herein shall be construed in a manner inconsistent with the
1940 Act or any rule or order of the SEC thereunder.
9. DURATION AND TERMINATION.
(a) This Agreement shall become effective with respect to each Fund
listed on Schedule A hereof as of the date hereof and, with respect to each Fund
not in existence on that date, on the date an amendment to Schedule A to this
Agreement relating to that Fund is executed. Unless sooner terminated as
provided herein, this Agreement shall continue in effect for one year from the
date hereof. Thereafter, if not terminated, this Agreement shall continue
automatically in effect as to each Fund for successive one-year periods,
provided such continuance is specifically approved at least annually by (i) the
Trust's Board or (ii) the vote of a "majority of the outstanding voting
securities" of a Fund, and provided that in either event the continuance is also
approved by a majority of the Trust's Board who are not "interested persons" of
any party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval.
(b) Notwithstanding the foregoing, this Agreement may be terminated,
without the payment of any penalty, with respect to a particular Fund (i)
through a failure to renew this Agreement at the end of a term, (ii) upon mutual
consent of the parties, or (iii) upon no less than 60 days' written notice, by
either the Trust through a vote of a majority of the members of the Board who
are not "interested persons" of the Trust and have no direct or indirect
financial interest in the operation of this Agreement or by vote of a "majority
of the outstanding voting securities" of a Fund, or by the Distributor. The
terms of this Agreement shall not be waived, altered, modified, amended or
supplemented in any manner whatsoever except by a written instrument signed by
the Distributor and the Trust. This Agreement will automatically terminate in
the event of its assignment.
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10. 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. Any provision of this Agreement which may
be determined by competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. This Agreement shall be binding upon and 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.
11. NOTICE.
Any notice required or permitted to be given by any party to the others
shall be in writing and shall be deemed to have been given when delivered
personally or sent by registered or certified mail, postage prepaid, return
receipt requested or sent by facsimile transmission to the other parties'
respective principal offices.
Notice to the Distributor shall be sent to:
Xxxxxxxx Securities, Inc.
0000 Xxxxxx Xxxx, Xxxxx 0000
Xxxxxx, XX 00000
notice to the Trust shall be sent to:
Brazos Insurance Funds
0000 Xxxxxx Xxxx, Xxxxx 0000
Xxxxxx, XX 00000
notice to the Adviser shall be sent to:
Xxxx XxXxxx Investment Counsel, L.P.
0000 Xxxxxx Xxxx, Xxxxx 0000
Xxxxxx, XX 00000
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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.
BRAZOS INSURANCE FUNDS XXXXXXXX SECURITIES, INC.
By: By:
------------------------------------ -------------------------------
Title: Title:
------------------------------ -----------------------------
XXXX XXXXXX INVESTMENT COUNSEL, L.P.
By:
------------------------------------
Title:
------------------------------
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SCHEDULE A
TO THE
DISTRIBUTION AGREEMENT
BY AND AMONG
BRAZOS INSURANCE FUNDS
XXXXXXXX SECURITIES, INC.
XXXX XXXXXX INVESTMENT COUNSEL, L.P.
Brazos Small Cap Growth Portfolio
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SCHEDULE B
TO THE
DISTRIBUTION AGREEMENT
BY AND AMONG
BRAZOS INSURANCE FUNDS
XXXXXXXX SECURITIES, INC.
XXXX XXXXXX INVESTMENT COUNSEL, L.P.
FEES
Out of Pocket Expenses
Reasonable out-of pocket expenses incurred by the Distributor in connection with
activities primarily intended to result in the sale of Shares, including,
without limitation:
o typesetting, printing and distribution of Prospectuses and shareholder
reports
o production, printing, distribution and placement of advertising and
sales literature and materials
o engagement of designers, free-xxxxx writers and public relations firms
o long-distance telephone lines, services and charges
o postage
o overnight delivery charges
o regulatory filing fee
o record retention
o travel, lodging and meals
