DISTRIBUTION AGREEMENT
This AGREEMENT, dated this the 17th day of February, 2006, between the CM
ADVISERS FAMILY OF FUNDS, a statutory trust organized under the laws of the
State of Delaware (the "Trust"), and CAPITAL INVESTMENT GROUP, INC., a North
Carolina corporation (the "Distributor").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is so registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares") representing interests in a series of
securities and other assets, as identified in Appendix A (each a "Fund"); and
WHEREAS, the Trust offers the Shares of such Funds and has registered (or will
register) the Shares under the Securities Act of 1933, as amended (the "1933
Act"), pursuant to a registration statement on Form N-1A (the "Registration
Statement"), including a prospectus (the "Prospectus") and a statement of
additional information (the "Statement of Additional Information"); and
WHEREAS, the Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1
under the 1940 Act (the "Distribution Plan") with respect to Shares of certain
of the Fund, and may enter into related agreements providing for the
distribution of such Shares; and
WHEREAS, Distributor has agreed to act as distributor of the Shares of the Fund
for the period of this Agreement;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. Appointment of Distributor.
(a) The Trust hereby appoints Distributor its exclusive agent for the
distribution of the Shares of the Fund in jurisdictions wherein such Shares
may be legally offered for sale; provided, however, that the Trust in its
absolute discretion may issue Shares of the Fund in connection with (i) the
payment or reinvestment of dividends or distributions; (ii) any merger or
consolidation of the Trust or of a Fund with any other investment company
or trust or any personal holding company, or the acquisition of the assets
of any such entity or another fund of the Trust; or (iii) any offer of
exchange permitted by Section 11 of the 1940 Act, or any other applicable
provision.
(b) Distributor hereby accepts such appointment as exclusive agent for the
distribution of the Shares of the Fund and agrees that it will sell the
Shares as agent for the Trust at prices determined as hereinafter provided
and on the terms hereinafter set forth, all according to applicable federal
and state laws and regulations and to the Trust Instrument of the Trust.
(c) Distributor may sell Shares of the Fund to or through qualified
securities dealers or others. Distributor will require each dealer or other
such party to conform to the provisions hereof, the Registration Statement
and the Prospectus and Statement of Additional Information, and applicable
law; and neither Distributor nor any such dealers or others shall withhold
the placing of purchase orders for Shares so as to make a profit thereby.
(d) Distributor shall order Shares of the Fund from the Trust only to the
extent that it shall have received purchase orders therefor. Distributor
will not make, or authorize any dealers or others to make: (i) any short
sales of Shares; or (ii) any sales of Shares to any Trustee or officer of
the Trust or to any officer or director of Distributor or of any
corporation or association furnishing investment advisory, managerial or
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supervisory services to the Trust, or to any such corporation or
association, unless such sales are made in accordance with the then current
Prospectus and Statement of Additional Information.
(e) Distributor is not authorized by the Trust to give any information or
make any representations regarding the Shares of any Fund, except such
information or representations as are contained in the Registration
Statement or in the current Prospectus or Statement of Additional
Information of the Fund, or in advertisements and sales literature prepared
by or on behalf of the Trust for Distributor's use.
(f) Notwithstanding any provision hereof, the Trust may terminate, suspend,
or withdraw the offering of Shares of any Fund whenever, in its sole
discretion, it deems such action to be desirable.
2. Offering Price of Shares. All Funds Shares sold under this Agreement
shall be sold at the public offering price per Share in effect at the time of
the sale, as described in the then current Prospectus of the Fund. The excess,
if any, of the public offering price over the net asset value of the Shares sold
by Distributor as agent shall be retained by Distributor as a commission for its
services hereunder. Out of such commission Distributor may allow commissions or
concessions to dealers and may allow them to others in its discretion in such
amounts as Distributor shall determine from time to time. Except as may be
otherwise determined by Distributor from time to time, such commissions or
concessions shall be uniform to all dealers. At no time shall the Trust receive
less than the full net asset value of the Shares, determined in the manner set
forth in the then current Prospectus and Statement of Additional Information.
Distributor shall also be entitled to such commissions and other fees and
payments as may be authorized by the Trustees of the Trust from time to time
under the Distribution Plan.
3. Furnishing of Information. The Trust shall furnish to Distributor copies
of any information, financial statements, and other documents that Distributor
may reasonably request for use in connection with the sale of Shares of the Fund
under this Agreement. The Trust shall also make available a sufficient number of
copies of the Fund's current Prospectus and Statement of Additional Information
for use by the Distributor.
4. Fees and Expenses.
(a) In addition to any commissions, fees, or payments authorized by the
Trustees under the Distribution Plan, the Trust will pay or cause to be
paid to the Distributor for services provided and expenses assumed by the
Distributor the fee of $5,000.00 per annum per Fund. Such fee shall be paid
to the Distributor in monthly installments.
(b) The Trust will also pay or cause to be paid the following expenses:(i)
preparation, printing, and distribution to shareholders of the Prospectus
and Statement of Additional Information; (ii) preparation, printing, and
distribution of reports and other communications to shareholders; (iii)
registration of the Shares under the federal securities laws; (iv)
qualification of the Shares for sale in certain states; (v) qualification
of the Trust as a dealer or broker under state law as well as qualification
of the Trust as an entity authorized to do business in certain states; (vi)
maintaining facilities for the issue and transfer of Shares; (vii)
supplying information, prices, and other data to be furnished by the Trust
under this Agreement; (viii) certain taxes applicable to the sale or
delivery of the Shares or certificates therefore, and (ix) such other
compensation to the Distributor as the Trustees may authorize, from time to
time, in their sole discretion.
(c) Except to the extent such expenses are borne by the Trust pursuant to
the Distribution Plan, Distributor will pay or cause to be paid the
following expenses: (i) payments to sales representatives of the
Distributor and to securities dealers and others in respect of the sale of
Shares of the Fund; (ii) payment of compensation to and expenses of
employees of the Distributor and any of its affiliates to the extent they
engage in or support distribution of Fund's Shares or render shareholder
support services not otherwise provided by the Trust's transfer agent,
administrator, or custodian, including, but not limited to, answering
routine inquiries regarding a Fund, processing shareholder transactions,
and providing such other shareholder services as the Trust may reasonably
request; (iii) formulation and implementation of marketing and promotional
activities, including, but not limited to, direct mail promotions and
television, radio, newspaper, magazine, and other mass media advertising;
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(iv) preparation, printing, and distribution of sales literature and of
Prospectuses and Statements of Additional Information and reports of the
Trust for recipients other than existing shareholders of a Fund; and (v)
obtaining such information, analyses, and reports with respect to marketing
and promotional activities as the Trust may, from time to time, reasonably
request.
(d) If so requested by the Trustees in connection with the Distribution
Plan, Distributor shall prepare and deliver reports to the Trustees of the
Trust on a regular basis, at least quarterly, showing the expenditures with
respect to each Fund pursuant to the Distribution Plan and the purposes
therefor, as well as any supplemental reports as the Trustees of the Trust,
from time to time, may reasonably request.
5. Repurchase of Shares. Distributor as agent and for the account of the
Trust may repurchase Shares of the Fund offered for resale to it and redeem such
Shares at their net asset value.
6. Indemnification by the Trust. In absence of willful misfeasance, bad
faith, gross negligence, or reckless disregard of obligations or duties
hereunder on the part of Distributor, the Trust agrees to indemnify Distributor
and its officers and partners against any and all claims, demands, liabilities,
and expenses that Distributor may incur under the 1933 Act, or common law or
otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in the Registration Statement or any Prospectus or
Statement of Additional Information of a Fund, or in any advertisements or sales
literature prepared by or on behalf of the Trust for Distributor's use, or any
omission to state a material fact therein, the omission of which makes any
statement contained therein misleading, unless such statement or omission was
made in reliance upon and in conformity with information furnished to the Trust
in connection therewith by or on behalf of Distributor. Nothing herein contained
shall require the Trust to take any action contrary to any provision of the
Trust Instrument of the Trust or any applicable statute or regulation.
7. Indemnification by Distributor. Distributor agrees to indemnify the
Trust and its officers and Trustees against any and all claims, demands,
liabilities, and expenses which the Trust may incur under the 1933 Act, or
common law or otherwise, arising out of or based upon (i) any alleged untrue
statement of a material fact contained in the Registration Statement or any
Prospectus or Statement of Additional Information of any Fund, or in any
advertisements or sales literature prepared by or on behalf of the Trust for
Distributor's use, or any omission to state a material fact therein, the
omission of which makes any statement contained therein misleading, if such
statement or omission was made in reliance upon and in conformity with
information furnished to the Trust in connection therewith by or on behalf of
Distributor; or (ii) any act or deed of Distributor or its sales
representatives, or securities dealers and others authorized to sell Fund Shares
hereunder, or their sales representatives, that has not been authorized by the
Trust in any Prospectus or Statement of Additional Information of any Fund or by
this Agreement.
8. Term and Termination.
(a) With respect to the Fund, this Agreement shall become effective upon
the commencement of operations of such Fund as set forth in the attached
appendices. Unless terminated as herein provided, with respect to the Fund,
this Agreement shall continue in effect for two years from the date of such
Fund's commencement of operations and, with respect to such Fund, shall
continue in full force and effect for successive periods of one year
thereafter, but only so long as each such continuance is approved (i) by
either the Trustees of the Trust or by vote of a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of the Fund and,
in either event, (ii) by vote of a majority of the Trustees of the Trust
who are not parties to this Agreement or interested persons (as defined in
the 0000 Xxx) of any such party and who have no direct or indirect
financial interest in this Agreement or in the operation of the
Distribution Plan or in any agreement related thereto (the "Independent
Trustees"), cast at a meeting called for the purpose of voting on such
approval.
(b) With respect to the Fund, this Agreement may be terminated at any time
without the payment of any penalty by vote of the Trustees of the Trust or
a majority of the Independent Trustees or by vote of a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of the Fund or
by Distributor, on sixty days' written notice to the other party.
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(c) This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
9. Subcontract. The Distributor may, at its expense and with the approval
of the Trustees, appoint another firm or company as its sub-distributor or
agent. The Distributor shall not, however, be relieved of any of its obligations
under this Agreement by the appointment of such sub-distributor or agent.
10. Limitation of Liability. The obligations of the Trust hereunder shall
not be binding upon any of the Trustees, officers, or shareholders of the Trust
personally, but shall bind only the assets and property of the Trust. The term
"CM Advisers Family of Funds" means and refers to the Trustees from time to time
serving under the Trust Instrument of the Trust. The execution and delivery of
this Agreement has been authorized by the Trustees, and this Agreement has been
signed on behalf of the Trust by an authorized officer of the Trust, acting as
such and not individually, and neither such authorization by such 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 assets and property of the Trust as provided in the
Trust Instrument of Trust.
11. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Distributor hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request.
12. Notices. Notices of any kind to be given to the Trust hereunder by the
Distributor shall be in writing and shall be duly given if mailed or delivered
to the CM Advisers Family of Funds, 000 Xxx Xxxxx Xxxxxxx, Xxxxx 000, Xxxxxx,
Xxxxx 00000, Attention: Xxxxxx Van Den Xxxx or to such other address or to such
individual as shall be so specified by the Trust to the Distributor. Notices of
any kind to be given to the Distributor hereunder by the Trust shall be in
writing and shall be duly given if mailed or delivered to the Capital Investment
Group, Inc., X.X. Xxx 0000, Xxxxx Xxxxx, XX 00000, or at such other address or
to such individual as shall be so specified by the Distributor to the Trust.
Notices shall be effective upon delivery.
13. Confidentiality. The Distributor agrees, on behalf of itself and its
officers, directors, agents, and employees, to treat as confidential all records
and other information relating to the Trust and its prior, present, and future
shareholders (the "Confidential Information") and to not use or disclose the
Confidential Information for any purpose other than in performance of its
responsibilities and duties under the Agreement. Notwithstanding the forgoing,
the Distributor may divulge the Confidential Information (i) with the prior
written consent of the Trust; (ii) when the Distributor, in good faith, believes
it may be exposed to civil or criminal contempt proceedings for failure to
comply with court orders or when requested by duly constituted governmental
authorities or the National Association of Securities Dealers (NASD) pursuant to
their respective legal authority, upon prior written notice to the Trust, unless
prohibited by the court order or governmental authority; (iii) to the Trust's
investment adviser(s), administrator, transfer agent, custodian, outside legal
counsel, or independent public accountants, in the ordinary course of business,
to the extent necessary for those service providers to perform their respective
services to the Trust; (iv) to the Trust, when requested by the Trust; or (v)
when requested by a shareholder, but only with respect to Confidential
Information that specifically relates to such shareholder and the shareholder's
account. For purposes of this section, the following records and other
information shall not be considered Confidential Information: any record or
other information relating to the Trust and its prior, present, and future
shareholders (a) which is or becomes publicly available through no negligent or
unauthorized act or omission by the Distributor; (b) which is disseminated by
the Trust in a public filing with the Securities and Exchange Commission or
posted on the website of the Trust, the Fund, the Fund's investment adviser, or
any of the Fund's other service providers for general public review; (c) which
is lawfully obtained from third parties who are not under an obligation of
confidentiality to the Trust or its prior, present, and future shareholders; or
(d) previously known by the Distributor prior to the date of the Agreement.
14. Anti-Money Laundering. The Distributor agrees to perform such
anti-money laundering functions with respect to the Shares as the Trust may
reasonably delegate to the Distributor from time to time or as the Distributor
is otherwise obligated to perform. In accordance with mutually agreed
procedures, the Distributor shall use commercially reasonable efforts in
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carrying out such functions under the Trust's anti-money laundering program as
it relates to the Fund. It is understood and agreed that shareholders of the
Fund are not customers of the Distributor and the Trust and Fund retain legal
responsibility under the USA PATRIOT Act for anti-money laundering compliance
with respect to transactions in Shares. The Distributor agrees to allow federal
examiners having jurisdiction over the Fund to obtain information and records
relating to the Trust's anti-money laundering program in its possession and to
inspect the Distributor for purposes thereof, provided that the Distributor
provides prior notice to the Trust and follows any reasonable directions given
by the Trust with respect thereto.
IN WITNESS THEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above.
CM ADVISERS FAMILY OF FUNDS
By:/s/ Xxxxxx Van Den Xxxx
____________________________
Name: Xxxxxx Van Den Xxxx
Title: Trustee and President
CAPITAL INVESTMENT GROUP, INC.
By:/s/ Xxxxxxx X. Xxxxxx
____________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
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APPENDIX A
Dated as of February 17, 2006
o CM Advisers Fixed Income Fund
Date Fund commenced operations______________________
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