AMENDED UNDERWRITING AND DISTRIBUTION AGREEMENT
THIS AGREEMENT, made as of the 10th day of April, 1995, by and between
Piper Funds Inc., a Minnesota corporation ("Piper Funds") and Xxxxx Xxxxxxx
Inc., a Delaware corporation (the "Distributor").
WITNESSETH:
1. UNDERWRITING SERVICES. Piper Funds hereby engages the Distributor,
and the Distributor hereby agrees to act, as principal underwriter for Piper
Funds in the sale and distribution to the public of Piper Funds' shares of
common stock, $.01 par value (the "Shares"), either through dealers or
otherwise. The Distributor agrees to offer such Shares for sale at all times
when such Shares are available for sale and may lawfully be offered for sale and
sold. The Shares may be offered in one or more series (the "Series"), with each
designated Series representing a separate portfolio of investments. The
thirteen Series currently outstanding are Value Fund, Emerging Growth Fund,
Growth and Income Fund, Equity Strategy Fund, Balanced Fund, Government Income
Fund, Institutional Government Income Portfolio, Money Market Fund, U.S.
Government Money Market Fund, Tax-Exempt Money Market Fund, National Tax-Exempt
Fund, Minnesota Tax-Exempt Fund and Short-Intermediate Bond Fund. Other Series
may be created in the future by Piper Fund's Board of Directors.
2. SALE OF PIPER FUNDS SHARES. Such Shares are to be sold only on the
following terms:
(a) All subscriptions, offers or sales shall be subject to acceptance or
rejection by Piper Funds. Any offer or sale shall be conclusively presumed to
have been accepted by Piper Funds if Piper Funds shall fail to notify the
Distributor of the rejection of such offer or sale prior to the computation of
the net asset value of the Shares next following receipt by Piper Funds of
notice of such offer or sale.
(b) No Share shall be sold by the Distributor for any consideration other
than cash or for any amount less than the net asset value of such Share,
computed as provided in the currently effective prospectus of the appropriate
Series of Piper Funds. With respect to Money Market Fund, U.S. Government Money
Market Fund and Tax-Exempt Money Market Fund, the net asset value per Share is
normally expected to be $1.00. All Shares sold by the Distributor shall be sold
at the public offering price, as hereinafter defined, provided that, with
respect to a Series sold with a Front-End Sales Load (as hereinafter defined),
the Distributor may allow, or sell at, a discount from said public offering
price to broker-dealers that have entered into sales agreements with the
Distributor, which discount shall be no greater than the Front-End Sales Load.
(c) The public offering price of the Shares shall be the net asset value
thereof next determined following receipt of an order by the Distributor plus a
front-end sales load or loading charge, if any, which shall be such percentage
of the public offering price, computed to the nearest cent, as is set forth in
Section 7(a) hereof, or as otherwise may be agreed upon in writing by Piper
Funds and the Distributor and specifically approved by the Board of Directors of
Piper Funds (the "Front-End Sales Load"), provided that no schedule of Front-End
Sales Loads shall be effective until set forth in a prospectus of Piper Funds
meeting the requirements of the Securities Act of 1933. Said Front-End Sales
Load may be graduated on a scale based upon the dollar amount of Shares sold.
(d) In connection with purchases of $500,000 and over, a 1.00% sales load
payable upon redemption (.20% in the case of Institutional Government Income
Portfolio) (a "Contingent Deferred Sales Load") will be imposed in the event of
a redemption transaction occurring within 24 months following such a purchase.
(e) The Front-End Sales Load for any Series of Piper Funds may, at the
discretion of Piper Funds and the Distributor, be reduced or eliminated as
permitted by the Investment Company Act of 1940, and the rules and regulations
thereunder, as they may be amended from time to time, provided that such
reduction or elimination shall be set forth in the currently effective
prospectus for such Series, and provided that Piper Funds shall in no event
receive for any Shares sold an amount less than the net asset value thereof. In
addition, the Contingent Deferred Sales Load for any Series of Piper Funds may,
at the discretion of Piper Funds and the Distributor, be reduced or eliminated
in accordance with the terms of an exemptive order received from the Securities
and Exchange Commission by Piper Funds, and any amendments thereto, provided
that such reduction or elimination shall be set forth in the currently effective
prospectus for such Series.
3. INVESTMENT OF DIVIDENDS AND DISTRIBUTIONS. Piper Funds may extend to
its shareholders the right to purchase Shares of any Series (or Shares of any
series of Piper Institutional Funds Inc. or Piper Global Funds Inc. or any other
open-end investment management companies or series thereof managed by the
Adviser) at the net asset value thereof with the proceeds of any dividend or
capital gain distribution paid or payable by a Series of Piper Funds to its
shareholders.
4. REGISTRATION OF SHARES. Piper Funds agrees to make prompt and
reasonable efforts to effect and keep in effect, at its own expense, the
registration or qualification of its Shares for sale in such jurisdictions as
Piper Funds may designate.
5. INFORMATION TO BE FURNISHED TO DISTRIBUTOR. Piper Funds agrees that
it will furnish the Distributor with such information with respect to the
affairs and accounts of Piper Funds as the Distributor may from time to time
reasonably require, and further agrees that the Distributor, at all reasonable
times, shall be permitted to inspect the books and records of Piper Funds.
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6. ALLOCATION OF EXPENSES. During the period of this agreement, Piper
Funds shall pay or cause to be paid all expenses, costs and fees incurred by
Piper Funds which are not assumed by the Distributor or Piper Capital Management
Incorporated (the "Adviser"). The Distributor agrees to provide, and shall pay
costs which it incurs in connection with, ongoing servicing and/or maintenance
of shareholder accounts with respect to each Series (such costs are referred to
as "Shareholder Servicing Costs"). The Distributor shall also pay all costs of
distributing the Shares of each Series ("Distribution Expenses"). Distribution
Expenses include, but are not limited to, initial and ongoing sales compensation
(in addition to sales loads) paid to investment executives of the Distributor
and to other broker-dealers in respect of sales of Shares of a Series and other
advertising and promotional expenses in connection with the distribution of
Shares of a Series. These advertising and promotional expenses include, by way
of example and not by way of limitation, costs of printing and mailing
prospectuses, statements of additional information and shareholders reports to
prospective investors; expenses of preparation and distribution of sales
literature; expenses of advertising of any type; an allocation of the
Distributor's overhead and other expenses related to the distribution of Shares
of a Series; and payments to, and expenses of, officers, employees or
representatives of the Distributor, of other broker-dealers, banks or other
financial institutions, and of any other persons who provide support services in
connection with the distribution of Shares of a Series, including travel,
entertainment and telephone expenses. Shareholder Servicing Costs include, but
not limited to, an allocation of the Distributor's overhead and payments made to
persons, including employees of the Distributor, who respond to inquiries of
shareholders regarding their ownership of Shares or their accounts with a
Series, or who provide other administrative or accounting services not otherwise
required to be provided by the investment adviser or the transfer agent for the
Series. The investment adviser, rather than the Distributor, may bear the
expenses referred to in this section, but the Distributor shall be liable for
such expenses until paid.
7. COMPENSATION TO DISTRIBUTOR. As compensation for all of its services
provided and its costs assumed under this Agreement, the Distributor shall
receive the following forms and amounts of compensation:
(a) With respect to sales of Shares of Value Fund, Emerging Growth Fund,
Growth and Income Fund, Equity Strategy Fund, Government Income Fund,
Institutional Government Income Portfolio, National Tax-Exempt Fund, Minnesota
Tax-Exempt Fund and Short-Intermediate Bond Fund, the Distributor shall receive
the difference between the total amount charged and received by the Distributor
as the purchase price for the Shares and the net asset value thereof. Such
difference shall be equal to the Front-End Sales Loads indicated below as a
percentage of the public offering price and the net asset value. As indicated,
the Front-End Sales Loads are reduced on a graduated scale on single purchases
of $100,000 or more. Front-End Sales Loads for any future Series shall be set
forth in an amendment to this Agreement.
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SERIES OTHER THAN INSTITUTIONAL GOVERNMENT
INCOME PORTFOLIO AND SHORT-INTERMEDIATE BOND FUND
Front-End Front-End
Sales Load as Sales Load as
Amount of Transaction a Percentage of a Percentage of
at Offering Price Offering Price Net Asset Value
----------------------- ---------------- ----------------
Less than $100,000 . . . . . . . . . . . 4.00% 4.17%
$100,000 but less than $250,000. . . . . 3.25% 3.36%
$250,000 but less than $500,000. . . . . 2.50% 2.56%
$500,000 and over. . . . . . . . . . . . 0% 0%
INSTITUTIONAL GOVERNMENT INCOME PORTFOLIO AND
SHORT-INTERMEDIATE BOND FUND
Front-End Front-End
Sales Load as Sales Load as
Amount of Transaction a Percentage of a Percentage of
at Offering Price Offering Price Net Asset Value
----------------------- ---------------- ----------------
Less than $100,000 . . . . . . . . . . . 1.50% 1.52%
$100,000 but less than $250,000. . . . . 1.25% 1.27%
$250,000 but less than $500,000. . . . . 1.00% 1.01%
$500,000 and over. . . . . . . . . . . . 0% 0%
Up to the entire amount of the Front-End Sales Load set forth above with
respect to each Series may be reallowed by the Distributor to broker-dealers in
connection with the sale of the Shares of such Series. The amount of the Front-
End Sales Loads set forth above may be retained or deducted by the Distributor
from any sums received by it in payment for Shares so sold. If such amount is
not deducted by the Distributor from such payments, such amount shall be paid to
the Distributor by Piper Funds not later than five business days after the close
of any month during which any such sales were made by the Distributor and
payment received by Piper Funds.
No Front-End Sales Load shall be charged to purchasers or paid to the
Distributor on sales of Shares of Money Market Fund, U.S. Government Money
Market Fund or Tax-Exempt Money Market Fund.
(b) For each Series of Piper Funds that imposes a Front-End Sales Load, in
connection with sales of $500,000 and over, a Contingent Deferred Sales Load
will be imposed on the shareholder and paid to the Distributor in the event of a
redemption transaction occurring within 24 months following such purchase. Such
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Contingent Deferred Sales Load shall be equal to .20% of the offering price for
Institutional Government Income Portfolio and Short-Intermediate Bond Fund and
1.00% of the offering price for all other Series of Piper Funds.
No Contingent Deferred Sales Load will be imposed when a shareholder
redeems (i) shares held for longer than 24 months, (ii) amounts representing an
increase in the value of shares due to capital appreciation, or (iii) shares
purchased through reinvestment of dividends or capital gain distributions. In
determining whether a Contingent Deferred Sales Load is payable, shares that are
not subject to any Contingent Deferred Sales Load will be redeemed first, and
other shares will then be redeemed in the order purchased.
For each Series other than Institutional Government Income Portfolio and
Short-Intermediate Bond Fund, with respect to cumulative purchases of shares of
such Series in excess of $500,000, the Distributor will pay its investment
executives and other broker-dealers a fee of up to 1.00% of the first
$1,000,000 of the offering price, .75% of the next $2,000,000 of the offering
price, .50% of the next $2,000,000 of the offering price, .25% of the next
$5,000,000 of the offering price, and $.15% of the offering price in excess of
$10,000,000. Such payments may be revised from time to time as agreed upon by
Piper Funds and the Distributor and are not reimbursable under Piper Funds' Rule
12b-1 plan.
For Institutional Government Income Portfolio and Short-Intermediate Bond
Fund, in connection with cumulative purchases of shares in excess of $500,000,
the Distributor will pay its investment executives and other broker-dealers a
fee of up to .20% of the first $3,000,000 of the offering price, .15% of the
next $2,000,000 of the offering price, .10% of the next $5,000,000 of the
offering price, and .05% of the offering price in excess of $10,000,000. Such
payments may be revised from time to time as agreed upon by Piper Funds and the
Distributor and are not reimbursable under Piper Funds' Rule 12b-1 plan.
(c) Pursuant to Piper Funds' Distribution Plan adopted in accordance with
Rule 12b-1 under the Investment Company Act of 1940 (the "Plan"), each of Value
Fund, Emerging Growth Fund, Growth and Income Fund, Equity Strategy Fund,
Balanced Fund and Government Income Fund shall pay the Distributor a total fee
each month equal to .50% per annum of the average daily net assets of each such
series to cover Distribution Expenses and Shareholder Servicing Costs. Such fee
shall be equal to .30% per annum of the average daily net assets of each of
Money Market Fund, U.S. Government Money Market Fund, Tax-Exempt Money Market
Fund, National Tax-Exempt Fund, Minnesota Tax-Exempt Fund and Institutional
Government Income Portfolio and .20% of the average daily net assets of Short-
Intermediate Bond Fund. As determined from time to time by the Board of
Directors of Piper Funds, a portion of each such fee shall be designated as a
"distribution fee" designed to cover Distribution Expenses and a portion shall
be designated as a "shareholder servicing fee" designed to cover Shareholder
Servicing
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Costs. Average daily net assets shall be computed in accordance with the
currently effective prospectus of each Series.
Amounts payable to the Distributor under the Plan may exceed or be less
than the Distributor's actual Distribution Expenses and Shareholder Servicing
Costs. In the event such Expenses and Costs exceed amounts payable to the
Distributor under the Plan, the Distributor shall not be entitled to
reimbursement by Piper Funds.
(d) In each year during which this Agreement remains in effect, the
Distributor will prepare and furnish to the Board of Directors of Piper Funds,
and the Board will review, on a quarterly basis, written reports complying with
the requirements of Rule 12b-1 under the Investment Company Act of 1940, as
amended, that set forth the amounts expended under this Agreement and the Plan
and the purposes for which those expenditures were made.
8. LIMITATION OF DISTRIBUTOR'S AUTHORITY. The Distributor shall be
deemed to be an authorized independent contractor and, except as specifically
provided or authorized herein, shall have no authority to act for or represent
Piper Funds. In connection with its role as underwriter of the Shares of Piper
Funds, the Distributor shall at all times be deemed an agent of Piper Funds and
shall sell Piper Funds Shares to purchasers thereof as agent and not as
principal.
9. SUBSCRIPTION FOR SHARES; REFUND FOR CANCELED ORDERS. The Distributor
shall subscribe for the Shares of Piper Funds only for the purpose of covering
purchase orders already received by it or for the purpose of investment for its
own account. In the event that an order for the purchase of Shares is placed
with the Distributor by a customer or dealer and subsequently canceled, the
Distributor shall forthwith cancel the subscription for such Shares entered on
the book of Piper Funds and, if the Distributor has paid Piper Funds for such
Shares, shall be entitled to receive from Piper Funds in refund of such payment
the lesser of:
(a) the consideration received by Piper Funds for said Shares; or
(b) the Net Asset Value of such Shares at the time of cancellation by
the Distributor.
10. INDEMNIFICATION OF PIPER FUNDS. The Distributor agrees to indemnify
Piper Funds against any and all litigation and other legal proceedings of any
kind or nature and against any liability, judgment, cost or penalty imposed as a
result of such litigation or proceedings in any way arising out of or in
connection with the sale or distribution of the Shares of Piper Funds by the
Distributor. In the event of the threat or institution of any such litigation
or legal proceedings against Piper Funds, the Distributor shall defend such
action on behalf of Piper Funds at its own expense, and shall pay any such
liability, judgment, cost or penalty resulting therefrom, whether imposed by
legal authority or agreed upon by way of compromise and settlement; provided,
however, that the Distributor shall not be
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required to pay or reimburse Piper Funds for any liability, judgment, cost or
penalty incurred as a result of information supplied to the Distributor by or as
a result of an omission to supply information to the Distributor by Piper Funds
or a director, officer or employee of Piper Funds who is not an Interested
Person of the Distributor (as defined in Section 2(a)(19) of the Investment
Company Act of 1940 and the rules, regulations and releases relating thereto),
unless the information so supplied or omitted was available to the Distributor
or Piper Funds' investment adviser without recourse to Piper Funds or any such
Interested Person of Piper Funds.
11. FREEDOM TO DEAL WITH THIRD PARTIES. The Distributor shall be free to
render to others services of a nature either similar to or different from those
rendered under this contract, except such as may impair its performance of the
services and duties to be rendered by it hereunder.
12. EFFECTIVE DATE, DURATION AND TERMINATION OF AGREEMENT. The effective
date of this Agreement shall be the date first set forth above. Wherever
referred to in this Agreement, the vote or approval of the holders of a majority
of the outstanding Shares of Piper Funds or of a Series of Piper Funds shall
mean the vote of 67% or more of such Shares if the holders of more than 50% of
such Shares are present in person or by proxy or the vote of more than 50% of
such Shares, whichever is less.
Unless sooner terminated as hereinafter provided, this Agreement shall
continue in effect from year to year with respect to each Series, but only so
long as such continuance is specifically approved at least annually (a) by the
Board of Directors of Piper Funds or by the vote of a majority of the
outstanding voting securities of the applicable Series, and (b) by the vote of a
majority of the directors who are not Interested Persons of Piper Funds or of
the Distributor and who have no direct or indirect financial interest in the
operation of this Agreement, or in any agreements relating to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time without the payment of any
penalty by the vote of a majority of the members of the Board of Directors of
Piper Funds who are not Interested Persons of Piper Funds and who have no direct
or indirect financial interest in the operation of this Agreement or in any
agreements relating to this Agreement, or by the Distributor, upon not more than
60 days' written notice to the other party. This Agreement may be terminated
with respect to a particular Series at any time without the payment of any
penalty by the vote of the holders of a majority of the outstanding Shares of
such Series, upon 60 days' written notice to the Distributor. This Agreement
shall automatically terminate in the event of its assignment.
13. AMENDMENTS TO AGREEMENT. No material amendment to this Agreement
shall be effective until approved by the Distributor and by the vote of a
majority of
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the Board of Directors of Piper Funds who are not Interested Persons of the
Distributor.
14. NOTICES. Any notices under this Agreement shall be in writing,
addressed, delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate in writing for the receipt of such
notice.
IN WITNESS WHEREOF, Piper Funds and the Distributor have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
PIPER FUNDS INC.
By /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------
Its Vice President
--------------------------
XXXXX XXXXXXX INC.
By /s/ Xxxxxxx X. Xxxxx
-------------------------------
Its President
--------------------------
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