PIPER FUNDS, INC.
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made and entered into as of this 18th day of February,
1997, by and between Piper Funds Inc., a Minnesota corporation (the "Company"),
for and on behalf of each series of the Company (each series is referred to
hereinafter as a "Fund"), and Xxxxx Xxxxxxx Inc., a Delaware corporation (the
"Distributor"). This Agreement shall apply to each class of shares offered by
the following Funds: Small Company Growth Fund, Emerging Growth Fund, Growth
Fund, Growth and Income Fund, Balanced Fund, Government Income Fund,
Intermediate Bond Fund, National Tax-Exempt Fund, Minnesota Tax-Exempt Fund,
Money Market Fund, Tax-Exempt Money Market Fund and U.S. Government Money Market
Fund.
WITNESSETH:
1. UNDERWRITING SERVICES
The Company, on behalf of each Fund, hereby engages the Distributor, and
the Distributor hereby agrees to act, as principal underwriter for each Fund in
the sale and distribution of the shares of each class of such Fund to the
public, 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.
2. SALE OF SHARES
The shares of each Fund are to be sold only on the following terms:
(a) All subscriptions, offers, or sales shall be subject to acceptance or
rejection by the Company. Any offer for or sale of shares shall be conclusively
presumed to have been accepted by the Company if the Company shall fail to
notify the Distributor of the rejection of such offer or sale prior to the
computation of the net asset value of such shares next following receipt by the
Company of notice of such offer or sale.
(b) No share of a Fund shall be sold by the Distributor for any
consideration other than cash or, pursuant to any exchange privilege provided
for by the applicable currently effective Prospectus or Statement of Additional
Information (hereinafter referred to collectively as the "Prospectus"), shares
of another Fund or of a series of another investment company for which the
Distributor acts as the principal underwriter. All shares of a Fund shall be
sold at the public offering price per share, which shall be determined in
accordance with the applicable currently effective Prospectus, provided that,
with respect to a class of shares that is sold with a front-end sales charge,
the Distributor may 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 charge set forth in
the applicable currently effective Prospectus.
(c) In connection with certain sales of shares, a contingent deferred
sales charge will be imposed in the event of a redemption transaction occurring
within a certain period of time following such a purchase, as described in the
applicable currently effective Prospectus.
(d) The front-end sales charge, if any, for any class of shares of a Fund
may, at the discretion of the Company 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 (the "1940
Act"), provided that such reduction or elimination shall be set forth in the
Prospectus for such class, and provided that the Company shall in no event
receive for any shares sold an amount less than the net asset value thereof. In
addition, any contingent deferred sales charge for any class of shares of a Fund
may, at the discretion of the Company and the Distributor, be reduced or
eliminated as
permitted by the 1940 Act, provided that such reduction or elimination shall be
set forth in the Prospectus for such class of shares.
3. REGISTRATION OF SHARES
The Company agrees to make prompt and reasonable efforts to effect and keep
in effect, at its expense, the registration or qualification of each Fund's
shares for sale in such jurisdictions as the Company may designate.
4. INFORMATION TO BE FURNISHED TO THE DISTRIBUTOR
The Company agrees that it will furnish the Distributor with such
information with respect to the affairs and accounts of the Company (and each
Fund or class thereof) 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 the Company.
5. ALLOCATION OF EXPENSES
During the period of this Agreement, the Company shall pay or cause to be
paid all expenses, costs and fees incurred by the Company 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 Fund (such costs are referred to as "Shareholder Servicing
Costs"). Shareholder Servicing Costs include, but are 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 Fund shares or their accounts with a Fund, or who provide
other administrative services not otherwise required to be provided by the
applicable Fund's investment adviser or transfer agent. The Distributor shall
also pay all costs of distributing the shares of each Fund ("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 Fund and other advertising and promotional expenses in connection
with the distribution of shares of a Fund. 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
shareholder 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 Fund; interest expenses incurred in connection with
financing the distribution of Class B shares; 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
Fund, including travel, entertainment and telephone expenses. The 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.
6. COMPENSATION TO THE 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) The Distributor shall be entitled to receive or retain any front-end
sales charge imposed in connection with sales of shares of each Fund, as set
forth in the applicable current Prospectus. Up to the entire amount of such
front-end sales charge may be reallowed by the Distributor to broker-dealers in
connection with their sale of Fund shares. The amount of the front-end sales
charge (if any) 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
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be paid to the Distributor by the Company not later than five business days
after the close of any calendar quarter during which any such sales were made by
the Distributor and payment received by the Company.
(b) The Distributor shall be entitled to receive or retain any contingent
deferred sales charge imposed in connection with any redemption of shares of
each Fund, as set forth in the applicable current Prospectus.
(c) Pursuant to the Company's Plan of Distribution adopted in accordance
with Rule 12b-1 under the 1940 Act (the "Plan"):
(i) Class A of each Fund offering shares of such class, and each Fund
that does not issue multiple classes of shares, is obligated to pay the
Distributor a total fee in connection with the servicing of shareholder
accounts of such class or Fund and in connection with distribution-related
services provided in respect of such class or Fund, calculated daily and
payable quarterly, at the annual rate of .50% of the value of the average
daily net assets of such class or Fund with respect to Small Company Growth
Fund, Emerging Growth Fund, Growth Fund, Growth and Income Fund, Balanced
Fund and Government Income Fund, and .30% of the value of the average daily
net assets of such class or Fund with respect to Intermediate Bond Fund,
National Tax-Exempt Fund, Minnesota Tax-Exempt Fund, Money Market Fund,
Tax-Exempt Money Market Fund and U.S.Government Money Market Fund. All or
any portion of such total fee may be payable as a Shareholder Servicing Fee
designed to cover Shareholder Servicing Costs, and all or any portion of
such total fee may be payable as a Distribution Fee designed to cover
Distribution Expenses, as determined from time to time by the Company's
Board of Directors. Until further action by the Board of Directors, a
portion of such total fee equal to .25% per annum of the average daily net
assets of the applicable class or Fund shall be designated and payable as a
Shareholder Servicing Fee and the remainder of such fee shall be designated
as a Distribution Fee.
(ii) Class B of each Fund offering shares of such class is obligated
to pay the Distributor a total fee in connection with the servicing of
shareholder accounts of such class and in connection with
distribution-related services provided in respect of such class, calculated
daily and payable quarterly, at the annual rate of 1.00% of the value of
the average daily net assets of such class. All or any portion of such
total fee may be payable as a Shareholder Servicing Fee, and all or any
portion of such total fee may be payable as a Distribution Fee, as
determined from time to time by the Company's Board of Directors. Until
further action by the Board of Directors, a portion of such total fee equal
to .25% per annum of Class B's average daily net assets shall be designated
and payable as a Shareholder Servicing Fee and the remainder of such fee
shall be designated as a Distribution Fee.
(iii) Average daily net assets shall be computed in accordance with
the applicable currently effective Prospectus.
(iv) 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 Distribution Expenses and Shareholder
Servicing Costs exceed amounts payable to the Distributor under the Plan,
the Distributor shall not be entitled to reimbursement by the Company.
(d) In each year during which this Agreement remains in effect, the
Distributor will prepare and furnish to the Board of Directors of the Company,
and the Board will review, on a quarterly basis, written reports complying with
the requirements of Rule 12b-1 under the 1940 Act that set forth the amounts
expended under this Agreement and the Plan, on a class by class basis as
applicable, and the purposes for which those expenditures were made.
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7. LIMITATION OF THE DISTRIBUTOR'S AUTHORITY
The Distributor shall be deemed to be an independent contractor and, except
as specifically provided or authorized herein, shall have no authority to act
for or represent any Fund or the Company.
8. SUBSCRIPTION FOR SHARES--REFUND FOR CANCELED ORDERS
The Distributor shall subscribe for the shares of a Fund 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 of a Fund 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 books of the Fund, and, if the Distributor has
paid the Fund for such shares, shall be entitled to receive from the Fund in
refund of such payment the lesser of:
(a) the consideration received by the Fund for said shares; or
(b) the net asset value of such shares at the time of cancellation by the
Distributor.
9. INDEMNIFICATION OF THE COMPANY
The Distributor agrees to indemnify each Fund and the Company 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 such Fund by the Distributor. In the event of the
threat or institution of any such litigation or legal proceedings against any
Fund, the Distributor shall defend such action on behalf of the Fund or the
Company at the Distributor's 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,
the Distributor shall not be required to pay or reimburse a Fund for any
liability, judgment, cost, or penalty incurred as a result of information
supplied by, or as the result of the omission to supply information by, the
Company to the Distributor, or to the Distributor by a director, officer, or
employee of the Company who is not an "interested person," as defined in the
provisions of the 1940 Act, of the Distributor, unless the information so
supplied or omitted was available to the Distributor or the Adviser without
recourse to the Fund or the Company or any such person referred to above.
10. 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.
11. EFFECTIVE DATE, DURATION AND TERMINATION OF AGREEMENT
(a) The effective date of this Agreement is set forth in the first
paragraph of this Agreement. Unless sooner terminated as hereinafter provided,
this Agreement shall continue in effect with respect to each Fund (and class
thereof) for a period of one year after the date of its execution, and from year
to year thereafter, but only so long as such continuance is specifically
approved at least annually (i) by a vote of the Board of Directors of the
Company or by the vote of a majority of the outstanding voting securities of the
applicable Fund (or class thereof), and (ii) by the vote of a majority of the
directors who are not "interested persons" (as defined in the provisions of the
0000 Xxx) of the Company and have no direct or indirect financial interest in
the operation of the Plan or in any agreement related to the Plan (including,
without limitation, this Agreement), cast in person at a meeting called for the
purpose of voting on this Agreement.
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(b) This Agreement may be terminated at any time with respect to any Fund
or class thereof, without the payment of any penalty, by the vote of a majority
of the members of the Board of Directors of the Company who are not "interested
persons" (as defined in the provisions of the 0000 Xxx) of the Company and have
no direct or indirect financial interest in the operation of the Plan or in any
agreement related to the Plan (including, without limitation, this Agreement),
or by the vote of a majority of the outstanding voting securities of such Fund
(or class thereof), or by the Distributor, upon 60 days' written notice to the
other party.
(c) This Agreement shall automatically terminate in the event of its
"assignment" (as defined by the provisions of the 1940 Act).
(d) Wherever referred to in this Agreement, the vote or approval of the
holders of a majority of the outstanding voting securities of a Fund (or class
thereof) shall mean the lesser of (i) the vote of 67% or more of the voting
securities of such Fund (or class thereof) present at a regular or special
meeting of shareholders duly called, if more than 50% of the Fund's (or class's,
as applicable) outstanding voting securities are present or represented by
proxy, or (ii) the vote of more than 50% of the outstanding voting securities of
such Fund (or class thereof).
12. AMENDMENTS TO AGREEMENT
No material amendment to this Agreement shall be effective until approved
by the Distributor and by vote of a majority of the Board of Directors of the
Company who are not interested persons of the Distributor.
13. NOTICES
Any notice 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 receipt of such notice.
IN WITNESS WHEREOF, the Company 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/ Xxxxxxx X. Xxxxx
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Its Chairman
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XXXXX XXXXXXX INC.
By /s/ Xxxxxx X. Xxxx
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Its President
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