EXHIBIT 6(a)(2)
DISTRIBUTION AGREEMENT
THE PBHG FUNDS, INC.
THIS AGREEMENT is made as of this 1st day of July, 1996 between The
PBHG Funds, Inc. (the "Company"), a Maryland corporation, and SEI Financial
Services Company (the "Distributor"), a Pennsylvania corporation.
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-1A (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 the 1940 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.
(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 Directors 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 Articles of Incorporation and ByLaws 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 Director 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
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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.
(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 be entitled to pay to financial intermediaries, plan fiduciaries,
and investment professionals ("Service Providers") a shareholder
servicing fee at the aggregate annual rate of up to 0.25% of each
Fund's average daily net assets attributable to Trust Class Shares. The
shareholder servicing fee is intended to compensate Service Providers
for providing to shareholders or the underlying beneficial owners of
Trust Class Shares: (a) personal support services; (b) distribution
assistance and distribution support services; and (c) account
maintenance services. In addition, insurance companies or their
affiliates may be paid the shareholder servicing fee described in this
Section 5 for providing similar services to variable annuity or
variable life insurance contract holders ("Contract Holders") or their
participants for which such insurance companies are not otherwise
compensated by Contract Holders or participants.
(b) The Distributor shall prepare and deliver written reports
to the Board of Directors 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 Directors of the Company may from time to time reasonably
request.
5. Payment of Expenses.
(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
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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 therefor.
(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. 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 the
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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 Directors 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
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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.
(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 Directors 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
Directors 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 Directors"), 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 Directors of the Company or a
majority of the Rule 12b-1 Directors, 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.
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(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 SEI Financial Services Company, 000 Xxxx
Xxxxxxxxxx Xxxx, Xxxxx, Xxxxxxxxxxxx 00000-0000; and (b) if to the Company, to
Pilgrim Xxxxxx & Associates, Ltd., 0000 Xxxxxxxx Xxxx, Xxxxx 000,
Xxxxx, Xxxxxxxxxxxx 00000-0000, Attention: Xxxxxxx Xxxxxxxxxx.
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
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it is bound, or to relieve or deprive the Board of Directors 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.
ATTEST: THE PBHG FUNDS, INC.
By:
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Title: Title:
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ATTEST: SEI FINANCIAL SERVICES COMPANY
By:
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Title: Title:
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EXHIBIT A
THE PBHG FUNDS, INC.
The PBHG Funds, Inc. consists of the following Funds:
PBHG Growth Fund
PBHG Emerging Growth Fund
PBHG Core Growth Fund
PBHG Select Equity Fund
PBHG Large Cap Growth Fund
PBHG Technology & Communications Fund
PBHG International Fund
PBHG Cash Reserves Fund
PBHG Limited Fund
PBHG Large Cap 20 Fund
PBHG Large Cap Value Fund
PBHG Mid-Cap Value Fund
PBHG Strategic Small Company Fund
PBHG Small Cap Value Fund
Date: April ___, 1997
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EXHIBIT B
The Distributor is currently registered as a broker-dealer or exempt from
registration in the following jurisdictions:
[TO BE PROVIDED]
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