DISTRIBUTION AGREEMENT
PBHG FUNDS
THIS AGREEMENT is made as of this __day of ______, 2001 between PBHG
Funds (the "Company"), a Delaware business trust, and PBHG Fund Distributors
(the "Distributor"), a Pennsylvania business trust.
WHEREAS, the Company is registered as an investment company with the
Securities and Exchange Commission ("SEC") under the Investment Company Act of
1940, as amended (the "1940 Act"), and is authorized to issue shares of common
stock ("Shares") in separately designated series ("Funds"), each with its own
objectives, investment program, policies and restrictions; and
WHEREAS, the Company has registered the Shares of the Funds under the
Securities Act of 1933, as amended (the "1933 Act"), pursuant to a registration
statement on Form N-IA (the "Registration Statement"), including a prospectus
("Prospectus") and a statement of additional information ("Statement of
Additional Information"); and
WHEREAS, the Company has adopted a Service Plan Pursuant to Rule 12b-1
under the1940 Act (the "Service Plan") with respect to one of its classes of
shares, i.e., the Trust Class, and may enter into related agreements providing
for the distribution of the Shares of the Funds: and
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the " 1934 Act"); and
WHEREAS, the Company wishes to continue to engage the services of the
Distributor as principal underwriter and distributor of the Shares of the Funds
that now exist and that hereafter may be established, which are listed on
Exhibit A to this Agreement as may be amended from time to time, and the
Distributor is willing to continue to serve in that capacity.
NOW, THEREFORE, in consideration of the promises and mutual covenants
and agreements hereinafter set forth, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. Appointment of Distributor.
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(a) The Company hereby appoints the Distributor as principal
underwriter and distributor of the Funds of the Company to sell the Shares of
the Funds in jurisdictions wherein the Shares may be legally offered for sale.
The Distributor shall be the exclusive agent for the distribution of Shares of
the Funds; provided, however, that the Company in its absolute discretion may
issue Shares of the Funds otherwise than through the Distributor in connection
with (i) the payment or reinvestment of dividends or distributions, (ii) any
merger or consolidation of the Company or a Fund with any other investment
company or trust or any personal holding company, or the acquisition of the
assets of any such entity by the Company or any Fund, and (iii) any offer of
exchange authorized by the Board of Trustees of the Company. Notwithstanding any
other provision hereof, the Company may terminate, suspend, or withdraw the
offering of the Shares of a Fund whenever, in its sole discretion, it deems such
action to be desirable.
(b) The Distributor agrees that it will use all reasonable efforts,
consistent with its other business, in connection with the distribution of
Shares of the Company; provided, however, that the Distributor shall not be
prevented from entering into like arrangements with other issuers. The
provisions of this paragraph do not obligate the Distributor to register as a
broker or dealer under the state Blue Sky laws of any jurisdiction when it
determines it would be uneconomical for it to do so or to maintain its
registration in any jurisdiction in which it is now registered nor obligate the
Distributor to sell any particular number of Shares. The Distributor is
currently registered as a broker-dealer or exempt from registration in all
jurisdictions listed in Exhibit B hereto. The Distributor shall promptly notify
the Company in the event it fails to maintain its registration in any
jurisdiction in which it is currently registered. The Distributor shall sell
Shares of the Funds as agent for the Company at prices determined as hereinafter
provided and on the terms set forth herein, all according to applicable federal
and state Blue Sky laws and regulations and the Declaration of Trust and By-Laws
of the Company. The Distributor may sell Shares of the Funds to or through
qualified brokers, dealers or others and shall require each such person to
conform to the provisions hereof, the Registration Statement, the then current
Prospectus and Statement of Additional Information, and applicable law. Neither
the Distributor nor any such person shall withhold the placing of purchase
orders for Shares so as to make a profit thereby.
(c) The Distributor shall order Shares of the Funds from the Company
only to the extent that it shall have received purchase orders therefor. The
Distributor will not make, or authorize any brokers, dealers, or others to make,
(i) any short sales of Shares or (ii) any sales of Shares to any Trustee or
officer of the Company, the Distributor, or any corporation or association
furnishing investment advisory, managerial, or supervisory services to the
Company, or to any such corporation or association, unless such sales are made
in accordance with the Company's then current Prospectus and Statement of
Additional Information.
(d) The Distributor is not authorized by the Company to give any
information or to make any representation other than those contained in the then
current Prospectus, Statement of Additional Information, and Fund shareholder
reports ("Shareholder Reports"), or in supplementary sales materials
specifically approved by the Company. The Distributor may prepare and distribute
sales literature and other material as it may deem appropriate, provided that
such literature and- materials have been approved by the Company prior to their
use.
2. Offering Price of Shares. All Shares of each Fund 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 Company's then current Prospectus and
Statement of Additional Information; provided, however that any public offering
price for the Shares shall be the net asset value per Share, as determined in
the manner described in the Company's then current Prospectus and/or Statement
of Additional Information. At no time shall the Company receive less than the
full net asset value of the Shares, determined in the manner set forth in the
then current Prospectus and/or Statement of Additional Information.
3. Registration of Shares. The Company agrees that it will take all
actions necessary to register Shares under the Federal and state Blue Sky
securities laws so that there will be available for sale the number of Shares
the Distributor may reasonably be expected to sell and to pay all fees
associated with said registration.
4. Service Plan Payments.
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(a) The Company has adopted a Service Plan pursuant to Rule 12b-1 under 1940 Act
to enable the Trust Class Shares of each Fund to directly and indirectly bear
certain expenses relating to the distribution of such Shares. Pursuant to such
Service Plan, the Company shall pay a service as set forth in the Service Plan.
The shareholder servicing fee is intended to compensate the distributor
providing or arranging with and paying other to provide to shareholders or the
underlying beneficial owners of Trust Class Shares: (a) personal support
services and (b) account maintenance services. Arranging with and paying others
to provide personal services to shareholders of the Advisor Class shares and/or
the maintenance of Shareholder accounts shall expressly include, but not be
limited to, (i) insurance companies or their affiliates who provide similar
services to variable and group annuity or variable life insurance contract
holders ("Contract Holders") or their participants; (ii) sponsors of and/or
administrators to contribution plans; and (iii) sponsors of and/or
administrators to various wrap and asset allocation programs.
(b) The Distributor shall prepare and deliver written reports
to the Board of Trustees of the Company on a regular basis (at least quarterly)
setting forth the payments made to Service Providers pursuant to the Service
Plan, and the purposes for which such expenditures were made, as well as any
supplemental reports as the Board of Trustees of the Company may from time to
time reasonably request.
5. Payment of Expenses.
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(a) Except as otherwise provided herein, the Distributor shall
pay, or arrange for others to pay, all of the following expenses: (i) payments
to sales representatives of the Distributor and at the discretion of the
Distributor to qualified brokers, dealers and others in respect of the sale of
Shares of the Funds; (ii) compensation and expenses of employees of the
Distributor who engage in or support distribution of Shares of the Funds or
render shareholder support services not otherwise provided by the Company's
transfer and shareholder servicing agent; and (iii) the cost of obtaining such
information, analyses, and reports with respect to marketing and promotional
activities as the Company may from time to time reasonably request.
(b) The Company shall pay, or arrange for others to pay, the
following expenses: (i) preparation, printing, and distribution to shareholders
of Prospectuses and Statements of Additional Information; (ii) preparation,
printing, and distribution of Shareholder Reports and other communications
required by law to shareholders; (iii) registration of the Shares of the Funds
under the federal securities laws; (iv) qualification of the Shares of the Funds
for sale in such states as the Distributor and the Company may approve; (v)
maintaining facilities for the issue and transfer of Shares; (vi) supplying
information, prices, and other data to be furnished by the Company- under this
Agreement; and (vii) taxes applicable to the sale or delivery of the Shares of
the Funds or certificates therefore.
(c) In connection with the Distributor's distribution of sales
materials, Prospectuses, Statements of Additional Information, and Shareholder
Reports to potential investors in the Company, the Company shall make available
to the Distributor such number of copies of such materials as the Distributor
may reasonably request. The Company shall also furnish to the Distributor copies
of all information, financial statements and other documents the Distributor may
reasonably request for use in connection with the distribution of Shares of the
Company. The Company will enter into arrangements providing that persons other
than the Company will bear any and all expenses of preparing, printing and
providing to the Distributor, sales materials, Prospectuses, Statements of
Additional Information and Shareholder Reports for distribution to potential
investors in the Company.
6. Compensation. Except as provided in the Service Plan, it
is understood that the Distributor will not receive any commissions or other
compensation for acting as the Company's principal underwriter and
distributor.
7. Repurchase of Shares. The Distributor as agent and
for the account of the Company may repurchase Shares of the Funds
offered for resale to it and redeem such Shares at their net asset
value determined as set forth in the then current Prospectus and Statement of
Additional Information.
8. Indemnification of Distributor. The Company 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, damages or expense (including
the reasonable cost of investigating or defending any alleged loss, liability,
damages, claim, or expense, and any reasonable counsel fees and disbursements
incurred in connection therewith) arising by reason of any person acquiring any
Shares, based upon the ground that the Registration Statement, Prospectuses,
Statements of Additional Information, Shareholder Reports or other information
filed or made public by the Company (as from time to time amended) included an
untrue statement of a material fact or omitted to state a material fact required
to be stated or necessary in order to make the statements made not misleading.
However, the Company does not agree to indemnify the Distributor or hold it
harmless to the extent that the statements or omission was made in reliance
upon, and in conformity with, information furnished to the Company by or on
behalf of the Distributor.
In no case (i) is the indemnity of the Company to be deemed to protect
the Distributor against any liability to the Company or its shareholders to
which the Distributor or such person otherwise would be subject by reason of
willful misfeasance, bad faith or negligence in tile performance of its duties
or by reason of its failure to exercise due care in rendering its services and
duties under this Agreement, or (ii) is the Company to be liable to the
Distributor under the indemnity agreement contained in this section with respect
to any claim made against the Distributor or any person indemnified unless the
Distributor or other person shall have notified the Company 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 such other person (or after the Distributor or
the person shall have received notice of service on any designated agent).
However, failure to notify the Company of any claim shall not relieve the
Company from any liability which it may have to the Distributor or any person
against whom such action is brought otherwise than on account of its indemnity
agreement contained in this section.
The Company 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 subject to this indemnity provision. If the Company elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by the Company and satisfactory to the indemnified defendants in the suit
whose approval shall not be unreasonably withheld. In the event that the Company
elects to assume the defense of any suit and retain counsel, the indemnified
defendants shall bear the fees and expenses of any additional counsel retained
by them. If the Company does not elect to assume the defense of a suit, it will
reimburse the indemnified defendants for the reasonable fees and expenses of any
counsel retained by the indemnified defendants.
The Company 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 its Shares.
9. Indemnification of Company. The Distributor covenants and agrees
that it will indemnify and hold harmless the Company and each of its directors
and officers and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act, against any loss, liability, damages,
claim or expense (including the reasonable cost of investigating or defending
any alleged loss, liability, damages, claim or expense, and reasonable counsel
fees and disbursements incurred in connection therewith) based upon the 1933 Act
or any other statute or common law and arising by reason of any person acquiring
any Shares, and alleging (i) a wrongful act or deed of the Distributor or any of
its employees or sales representatives, or (ii) that the Registration Statement,
Prospectuses, Statements of Additional Information, shareholder reports or other
information filed or made public by the Company (as from time to time amended)
included an untrue statement of a material fact or omitted to state a material
fact required to be stated or necessary in order to make the statements not
misleading, insofar as any such statements or omissions were made in reliance
upon and in conformity with information furnished to the Company by or on behalf
of the Distributor.
In no case (i) is the indemnity of the Distributor in favor of the
Company or any other person indemnified to be deemed to protect the Company or
any other person against any liability to which the Company or such other person
would otherwise be subject by reason of willful misfeasance or bad faith in the
performance of its duties or by reason of its failure to exercise due care in
rendering its services and duties under this Agreement, or (ii) is the
Distributor to be liable under its indemnity agreement contained in this section
with respect to any claim made against the Company or any person indemnified
unless the Company 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 Company or upon any person (or after the
Company or such person shall have received notice of service on any designated
agent). However, failure to notify the Distributor of any claim shall not
relieve the Distributor from any liability which it may have to the Company or
any person against whom the action is brought otherwise than on account on its
indemnity agreement contained in this section.
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 the claim, but if the Distributor elects to assume the defense, the
defense shall be conducted by counsel chosen by the Distributor and satisfactory
to the indemnified defendants, whose approval shall not be unreasonably
withheld. In the event that the Distributor elects to assume the defense of any
suit and retain counsel, the defendants 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 indemnified
defendants in the suit for the reasonable fees and expenses of any counsel
retained by them.
The Distributor agrees to notify the Company promptly of the
commencement of any litigation or proceedings against it in connection with the
issue and sale of any of the Company's Shares.
10. Term and Termination.
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(a) This Agreement shall become effective as of the date
hereof. Unless sooner terminated as herein provided, this Agreement shall remain
in full force and effect for two (2) years from the effective date and
thereafter for successive periods of one year, but only so long as each such
continuance is specifically approved at least annually (i) either by vote of a
majority of the Board of Trustees of the Company or by vote of a majority of the
outstanding voting securities of the company, and (ii) by vote of a majority of
the Trustees of the Company who are not interested persons of the Company and
who have no direct or indirect financial interest in the operation of the
Service Plan or in this Agreement or any other agreement related to the Service
Plan (the "Rule 12b-1 Trustees"), cast in person at a meeting called for the
purpose of voting on such approval.
(b) This Agreement may be terminated at any time, without the
payment of any penalty, by the Board of Trustees of the Company or a majority of
the Rule 12b-1 Trustees, by vote of a majority of the outstanding voting
securities of the Company, or by the Distributor, on not less than ninety (90)
days' written notice to the other party or upon such shorter notice as may be
mutually agreed upon.
(c) This Agreement shall automatically terminate in the
event of its assignment.
(d) The indemnification provisions contained in Sections 8 and
9 of this Agreement shall remain in full force and effect regardless of any
termination of this Agreement.
11. Amendment. No provisions of this Agreement may be changed, waived,
discharged, or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge, or
termination is sought. If the Company should at any time deem it necessary or
advisable in the best interests of the Company that any amendment of this
Agreement be made in order to comply with the recommendations or requirements of
the SEC or other governmental authority or to obtain any advantage under state
or federal tax laws and notifies Distributor of the form of such amendment, and
the reasons therefor, and if Distributor should decline to assent to such
amendment, the Company may terminate this Agreement forthwith. If Distributor
should at any time request that a change be made in the Company's Articles of
Incorporation or By-Laws or in its methods of doing business, in order to comply
with any requirements of Federal law or regulations of the SEC, or of a national
securities association of which Distributor is or may be a member relating to
the sale of Shares, and the Fund should not make such necessary change within a
reasonable time, Distributor may terminate this Agreement forthwith.
12. Independent Contractor. Distributor shall be an independent
contractor and neither Distributor nor any of its officers, directors,
employees, or representatives is or shall be an employee of the Company in the
performance of Distributor's duties hereunder. Distributor shall be responsible
for its own conduct and the employment, control, and conduct of its agents and
employees and for injury to such agents or employees or to others through its
agents or employees. Distributor assumes full responsibility for its agents and
employees under applicable statutes and agrees to pay all employee taxes
thereunder.
13. Definition of Certain Terms. For purposes of this Agreement the
terms "assignment," "interested person," "majority of the outstanding voting
securities," and "principal underwriter" shall have their respective meanings
defined in the 1940 Act and the rules and regulations thereunder, subject,
however, to such exemptions as may be granted to either the Distributor or the
Company by the SEC, or such interpretative positions as may be taken by the SEC
or its staff under the 1940 Act.
14. Notice. Any notice under this Agreement shall be deemed to be
sufficient if it is given in writing, addressed and delivered, or mailed
postpaid (a) if to the Distributor, to PBHG Fund Distributors, 0000 Xxxxxxx
Xxxxx Xxxxx, Xxxxx, Xxxxxxxxxxxx 00000; and (b) if to the Company, to PBHG
Funds, 0000 Xxxxxxx Xxxxx Xxxxx, Xxxxx, Xxxxxxxxxxxx 00000, Attention: Xxx X.
Xxxxxxxx.
15. Captions. The captions in this Agreement are included for convenience
of reference only and in no other way define or delineate any of the
provisions hereof or otherwise affect construction or effect.
16. Interpretation. Nothing herein contained shall be deemed to require
the Company or the Distributor to take any action contrary to its Articles of
Incorporation or By-Laws, or any applicable statutory or regulatory requirement
to which it is subject or by which it is bound, or to relieve or deprive the
Board of Trustees of its responsibility for and control of the conduct of the
affairs of the Company.
17. Governing Law. This Agreement shall be construed in accordance with the
laws of the Commonwealth of Pennsylvania and the applicable provisions of the
1940 Act. To the extent that the applicable laws of the Commonwealth of
Pennsylvania or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
18. Multiple Originals. This Agreement may be executed in two or more
counterparts, each of which when so executed shall be deemed to be an original,
but such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the Company and Distributor have each duly executed
this Agreement, as of the day and year above written.
PBHG FUNDS
Attest: ________________ Name:____________________
Title: ______________ Title: _____________________
PBHG FUND DISTRIBUTORS
Attest: _________________ Name:_____________________
Title: ______________ Title: ______________________
