U.S. GLOBAL ACCOLADE FUNDS
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 3rd day of September 1998, between U.S. Global
Accolade Funds, a Massachusetts business trust (the "Trust"), having its
principal place of business in San Antonio, Texas, and U.S. Global Brokerage,
Inc. a corporation organized under the laws of the State of Texas (the
"Distributor"), having its principal place of business in San Antonio, Texas.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and is authorized (i) to issue shares of beneficial interest in separate series,
with the shares of each such series representing the interests in a separate
portfolio of securities and other assets, and (ii) to divide such shares of
beneficial interest of each such series into two or more classes; and
WHEREAS, the Trust wishes to employ the services of the Distributor
with respect to the distribution of shares of beneficial interest of the Trust
("Shares") and classes thereof representing interests in each portfolio series
thereof identified from time to time on Schedule A hereto (each such portfolio
series being referred to herein as a "Fund"); and
WHEREAS, the Distributor wishes to provide distribution services to the
Trust with respect to the Shares.
NOW, THEREFORE, in consideration of the mutual promises and undertakings
herein contained, the parties agree as follows:
1. SALE OF SHARES BY THE DISTRIBUTOR. The Trust grants to the Distributor
the right to sell Shares during the term of this Agreement and subject to the
registration requirements of the Securities Act of 1933, as amended (the "1933
Act"), under the following terms and conditions: (i) the Distributor, as agent
for the Trust, shall sell Shares authorized for issue and registered under the
1933 Act; and (ii) the Distributor shall sell such Shares only in compliance
with the terms set forth in the Trust's currently effective registration
statement, as may be in effect from time to time, and any further limitations
the Trustees of the Trust may impose. The Distributor may enter into selling
agreements with selected dealers and others for the sale of Shares and will act
only on its behalf as principal in entering into such selling agreements.
2. SALE OF SHARES BY THE TRUST. The Trust reserves the right to issue
Shares in connection with (i) the merger or consolidation of the assets of, or
acquisition by the Trust through purchase or otherwise, with any other in-
vestment company, trust or personal holding company; (ii) a pro rata
distribution directly to the holders of Shares in the nature of a stock dividend
or split-up; and (iii) as otherwise may be provided in the then current
registration statement of the Trust.
3. SHARES COVERED BY THIS AGREEMENT. This Agreement shall apply to issued
Shares, Shares held in its treasury in the event that in the discretion
of the Trust treasury Shares shall be sold, and Shares repurchased for resale.
4. PUBLIC OFFERING PRICE. Except as otherwise noted in the Trust's
prospectus for any Fund (the "Prospectus") or Statement of Additional
Information for any Fund (the "SAI"), as amended or supplemented from time to
time, all Shares sold by the Distributor or the Trust will be sold at the public
offering price plus any applicable sales charge described therein. The public
offering price for all accepted subscriptions will be the net asset value per
share, determined in the manner described in the Trust's then current Prospectus
and SAI with respect to the applicable Fund. The Trust shall in all cases
receive the net asset value per Share on
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Distribution Agreement
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all sales and the Distributor shall be entitled to retain the applicable sales
charges, if any, subject to any reallowance obligations of the Distributor as
set forth in any selling agreements with selected dealers and others for the
sale of Shares and/or as set forth in the Prospectus and/or SAI of the Trust
with respect to Shares.
5. SUSPENSION OF SALES. 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 the Distributor, except such
unconditional orders placed with the Distributor before it had knowledge of the
suspension. In addition, the Trust reserves the right to suspend sales of Shares
and the Distributor's authority to sell Shares if, in the judgment of the Trust,
it is in the best interest of the Trust to do so. Suspension will continue for
such period as may be determined by the Trust. In addition, the Trust and
Distributor reserve the right to reject any purchase order.
6. SOLICITATION OF SALES. In consideration of these rights granted to the
Distributor, the Distributor agrees to use all reasonable efforts, consistent
with its other business, to secure purchasers for Shares of the Trust. This
shall not prevent the Distributor from entering into like arrangements
(including arrangements involving the payment of underwriting commissions)
with other issuers. Distributor agrees to use all reasonable efforts to
ensure that taxpayer identification numbers provided for holders of Shares of
the Trust are correct. In addition, Distributor (in coordination with
investment advisers retained by the Trust) will be responsible for the
production of marketing and advertising materials for the sale of Shares of the
Trust and the review thereof for compliance with applicable regulatory
requirements, entering into other agreements with broker-dealers, if any, to
sell Shares of the Trust and monitoring their financial strength and contractual
compliance.
7. AUTHORIZED REPRESENTATIONS. The Distributor is not authorized by
the Trust to give any information or to make any representations other than
those contained in the appropriate registration statements, Prospectuses or SAIs
filed with the Securities and Exchange Commission under the 1933 Act (as those
registration statements, Prospectuses and SAIs may be amended from time to
time), or contained in shareholder reports or other material that may be
prepared by or on behalf of the Trust for the Distributor's use. This shall not
be construed to prevent the Distributor from preparing and distributing, in
compliance with applicable laws and regulations, sales literature or other
material as it may deem appropriate. Distributor will furnish or cause to be
furnished copies of such sales literature or other material to the Trust.
Distributor agrees to take appropriate action to cease using such sales
literature or other material to which the Trust reasonably objects as promptly
as practicable after receipt of the objection. Distributor further agrees that,
in connection with the offer and sale of Shares, Distributor shall comply with
all applicable securities laws of the United States and each state thereof in
which Shares are offered and/or sold (including without limitation, the
maintenance of effective federal and state broker-dealer registrations, as
required).
8. REGISTRATION OF SHARES. The Trust agrees that it will use its
best efforts to register Shares under the 1933 Act (subject to the necessary
approval, if any, of its shareholders) and to qualify and maintain the
registration and qualification of an appropriate number of shares under the 1933
Act so that there will be available for sale the number of Sales the Distributor
may reasonably be expected to sell. Distributor shall furnish such information
and other materials relating to its affairs and activities as shall be required
by the Trust in connection with such registration and qualification. The
Distributor agrees that it will not offer or sell Shares in any jurisdiction
unless the offer or sale of Shares has been so qualified or registered or is
otherwise exempt from such registration or qualification. The Trust shall
furnish to the Distributor copies of all information, financial statements and
other papers which the Distributor may reasonably request for use in connection
with the distribution of Shares of each series of the Trust.
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Distribution Agreement
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9. EXPENSES, COMPENSATION AND REIMBURSEMENT.
(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 states 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 as a broker or dealer or any officer of the
Trust as agent or salesperson in any such location);
(iii) of preparing, setting in type, printing and mailing any
report or other communication to holders of Shares 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 holders of
Shares.
(b) The Distributor shall pay cost 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;
(iii) advertising in connection with such offering including, but
not limited to the following: public relations services, sales presentations,
media charges, preparation, printing and mailing of advertising and sales
literature, data processing necessary to distribution effort, printing and
mailing of prospectuses; and
(iv) any additional out-of-pocket expenses incurred in connection
with these costs.
10. INDEMNIFICATION.
(a) The Trust agrees to indemnify and hold harmless the Distributor
and each of its directors and officers and each person, if any, who controls the
Distributor within the meaning of Section 15 of the 1933 Act against any loss,
liability, claim, damage or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damage or expense
and reasonable counsel fees incurred in connection therewith) arising out of
or based upon: (i) any violation of the Trust's representations or covenants
herein contained; (ii) any wrongful act of the Trust or any of its
representatives (other than the Distributor or any of its employees or
representatives (regardless of the capacity in which such employee or
representative is acting) or any other person for whose acts the Distributor is
responsible or is alleged to be responsible (including any selected dealer or
person through whom sales are made pursuant to an agreement with the
Distributor)); (iii) any untrue statement of a material fact contained in a
registration statement, Prospectus, SAI or shareholder report of any Fund or any
omission to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, except to the extent the
statement or omission
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Distribution Agreement
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was made in reliance upon, and in conformity with, information furnished in
writing to the Trust by or on behalf of the Distributor; or (iv) any untrue
statement of a material fact contained in any advertising material of a Fund or
any omission to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading, to the extent that such
statement or omission was made in reliance upon, and in conformity with,
information furnished to the Distributor by the Trust. In no case (x) is the
indemnity by the Trust in favor of the Distributor or any person indemnified to
be deemed to protect the Distributor or any person against any liability to the
Trust or its security holders to which the Distributor or such person would
otherwise be subject by reason of willful misfeasance, bad faith or ordinary
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this agreement, or (y) is the
Trust to be liable under its indemnity agreements contained in the Section 10(a)
with respect to any claim made against the Distributor or any person indemnified
unless the Distributor or person, as the case may be, shall have notified the
Trust 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 the Distributor or any such person or after the
Distributor or such person shall have received notice of service on any
designated agent. However, except to the extent the Trust is harmed thereby,
failure to notify the Trust of any claim shall not relieve the Trust from any
liability which it may have to the Distributor or any person against whom such
action is brought other than on account of its indemnity agreement contained in
this Section 10(a). 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 claims, but if the Trust elects to assume the defense,
the defense shall be conducted by counsel chosen by it and satisfactory to the
Distributor, or person or persons, defendant or defendants in the suit. In the
event the Trust elects to assume the defense of any suit and retain counsel, the
Distributor, officers or directors or controlling person(s) or defendant(s) in
the 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 suit, it will
reimburse the Distributor, officers or directors or controlling person(s) or
defendant(s) in the suit, for the reasonable fees and expenses of any counsel
retained by them. The Trust agrees to notify the Distributor promptly of the
commencement of any litigation or proceedings against it or any of its officers
or Trustees in connection with the issuance or sale of any of the Shares.
(b) The Distributor agrees to indemnify and hold harmless the
Trust and each of its Trustees and officers and each person, if any, who
controls the Trust within the meaning of Section 15 of the 1933 Act, against any
loss, liability, claim, damage or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damage or expense
and reasonable counsel fees incurred in connection therewith) arising out of or
based upon: (i) any violation of the Distributor's representations or covenants
herein contained; (ii) any wrongful act of the Distributor or any of its
employees or representatives or any other person for whose acts the Distributor
is responsible or is alleged to be responsible (including any selected dealer or
person through whom sales are made pursuant to an agreement with the
Distributor); (iii) any untrue statement of a material fact contained in a
registration statement, Prospectus, SAI or shareholder report of any Fund or any
omission to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, to the extent the statement
or omission was made in reliance upon, and in conformity with, information
furnished in writing to the Trust by or on behalf of the Distributor; or (iv)
any untrue statement of a material fact contained in any advertising material of
a Fund or any omission to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, except to the
extent that such statement or omission was made in reliance upon, and in
conformity with, information furnished to the Distributor by the Trust. In no
case (x) is the indemnity by the Distributor in favor of the Trust or any person
indemnified to be deemed to protect the Trust or any person against any
liability to the Distributor or its security holders to which the Trust or such
person would otherwise be subject by reason of
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Distribution Agreement
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willful misfeasance, bad faith or ordinary negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
under this agreement, or (y) is the Distributor to be liable under its indemnity
agreements contained in the Section 10(b) with respect to any claim made against
the Trust or any person indemnified unless the Trust or person, as the case may
be, shall have notified the Distributor 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 the
Distributor or any such person or after the Distributor or such person shall
have received notice of service on any designated agent. However, except to the
extent the Distributor is harmed thereby, failure to notify the Distributor of
any claim shall not relieve the Distributor from any liability which it may have
to the Trust or any person against whom such action is brought other than on
account of its indemnity agreement contained in this Section 10(b). 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
claims, but if the Distributor elects to assume the defense, the defense shall
be conducted by counsel chosen by it and satisfactory to the Trust, or person or
persons, defendant or defendants in the suit. In the event the Distributor
elects to assume the defense of any suit and retain counsel, the Trust, officers
or Trustees or controlling person(s) or defendant(s) in the 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 suit, it will reimburse
the Trust, officers or Trustees or controlling person(s) or defendant(s) in the
suit, for the reasonable fees and expenses of any counsel retained by them. The
Distributor agrees to notify the Trust promptly 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 the Shares.
(c) The indemnification obligations of the parties in this Section 10
shall survive the termination of this Agreement.
11. EFFECTIVENESS, TERMINATION, ETC. This Agreement shall become effective
as follows: (i) with respect to the Shares of each Fund (or class thereof)
identified on Schedule A hereto on the date hereof, as of the date hereof,
and (ii) with respect to the Shares of any Fund (or class thereof) added to
Schedule A hereto, subsequent hereto, as of the date Schedule A is amended to
add such Fund or class of Shares. Unless terminated as provided herein, the
Agreement shall continue in force for two (2) years from the date of its
execution and thereafter from year to year, provided continuance is approved at
least annually by either (i) the vote of a majority of the Trustees of the
Trust, or by the vote of a majority of the outstanding voting securities of the
Trust, and (ii) the vote of a majority of those Trustees of the Trust who are
not interested persons of the Trust and who are not parties to this Agreement or
interested persons of any party, cast in person at a meeting called for the
purpose of voting on the approval. This Agreement shall automatically terminate
in the event of its assignment. In addition to termination by failure to approve
continuance or by assignment, this Agreement may at any time be terminated
without the payment of any penalty with respect to any Fund or class of Shares
thereof by vote of a majority of the Trustees of the Trust who are not
interested persons of the Trust, or by vote of a majority of the outstanding
voting securities of the Trust, on not more than sixty (60) days written notice
by the Trust. This Agreement may be terminated by the Distributor upon not less
than sixty (60) days prior written notice to the Trust. As used in this Section
11, the terms "vote of a majority of the outstanding voting securities,"
"assignment" and "interested person" shall have the respective meanings
specified in the 1940 Act and the rules enacted thereunder as now in effect or
as hereafter amended.
12. NOTICE. Any notice under this Agreement shall be given in writing
addressed and hand delivered or sent by registered or certified mail, postage
prepaid, to the other party to this Agreement at its principal place of
business.
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Distribution Agreement
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13. SEVERABILITY. 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.
14. GOVERNING LAW. To the extent that state law has not been preempted
by the provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement shall be
administered,construed and enforced according to the laws of the State of Texas.
15. LIMITATION OF LIABILITY. The Distributor acknowledges that it has
received notice of and accepts the limitations set forth in the Trust's Amended
and Restated Master Trust Agreement. The Distributor agrees that the Trust's
obligations hereunder shall be limited to the Trust, and that the Distributor
shall have recourse solely against the assets of the Fund with respect to which
the Trust's obligations hereunder relate and shall have no recourse against the
assets of any other Fund or against any shareholder, Trustee, officer, employee
or agent of the Trust.
16. MISCELLANEOUS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof. 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. This Agreement may be executed in two
counterparts, each of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
U.S. GLOBAL ACCOLADE FUNDS U.S. GLOBAL BROKERAGE, INC.
By: /s/ Frank E. Holmes By: /s/ Creston A. King, III
--------------------------- -------------------------------
Frank E. Holmes Creston A. King, III
President President
Chief Executive Officer
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Distribution Agreement
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SCHEDULE A
U.S. Global Accolade Funds
Portfolios and Fee Schedule
Portfolios covered by Distribution Agreement:
Bonnel Growth Fund
MegaTrends Fund
Adrian Day Global Opportunity Fund
Regent Eastern European Fund
Fees for distribution and distribution support services on behalf of the
Portfolios:
Annual Fee: $24,000
This fee shall be paid in monthly installments of $2,000.00 each.
September 3, 1998
U.S. GLOBAL ACCOLADE FUNDS U.S. GLOBAL BROKERAGE, INC.
By: /s/ Frank E. Holmes By: /s/ Creston A. King, III
--------------------------- -------------------------------
Frank E. Holmes Creston A. King, III
President President
Chief Executive Officer