EXHIBIT 5
Distribution Agreement
This Distribution Agreement, made this ___ day of June, 1998, by and
between Baron Capital, Inc. a New York corporation ("BCI") and Baron
Capital Funds Trust, a Delaware business trust and all series thereof (the
"Fund"),
WHEREAS, the Fund is an open-end diversified management series
investment company and is registered under the Investment Company Act of
1940, as amended (the "1940 Act") that wishes to employ BCI to distribute
certain of the shares of the Fund's shares of beneficial interest (the
"Shares") pursuant to a Plan of Distribution pursuant to Rule 12b-1 under
the 1940 Act (the "Plan"); and
WHEREAS, BCI is a registered broker dealer and member of the National
Association of Securities Dealers, Inc. and is willing to distribute the
Shares pursuant to the Plan;
NOW THEREFORE, in consideration of the promises and mutual agreements
hereinafter set forth, the parties hereby agree as follows:
1. The Fund represents that the Plan is a written plan contemplated
by Rule 12b-1 under the 1940 Act and has been duly approved by
the Fund's Board of Trustees including a majority of whom are not
interested persons of the Fund.
2. a. BCI shall act as the exclusive agent for the Fund for the
continuous public offering of its Shares to commence after
the effectiveness of the Fund's initial registration
statement filed pursuant to the Securities Act of 1933 as
amended (the "1933 Act") and the 1940 Act. BCI shall use
its best efforts to sell the Shares.
b. BCI in its discretion may purchase from the Fund as
principal and may sell Shares to such registered and
qualified retail dealers as it may select. In making
agreements with such dealers, the Fund shall act only as
principal and not as agent for the Fund.
c. BCI is authorized on behalf of the Fund to purchase Shares
presented to it by dealers at the price determined in
accordance with, and in the manner set forth in the
Prospectus.
3. a. The Fund agrees to sell its Shares so long as it has Shares
available for sale except for such times at which the sale
of its Shares has been suspended by order of the Trustees or
order of the Securities and Exchange Commission; and to
deliver certificates (if any) for, or cause the Fund's
transfer and dividend disbursing agent to issue
confirmations evidencing, such Shares registered in such
names and amounts as BCI has requested in writing, as
promptly as practicable after receipt by the Fund of payment
therefor at the net asset value thereof and written request
of BCI therefor.
b. The Fund shall keep BCI fully informed with regard to its
affairs and shall furnish to BCI copies of all information,
financial statements and other papers which BCI may
reasonably request for use in connection with the
distribution of Shares of the Fund, and this shall include
one certified copy, upon request by BCI, of all financial
statements prepared by the Fund and audited by its
independent accountants and such reasonable number of copies
of its most current Prospectusand statement of additional
information (collectively the "Prospectus") and annual and
interim reports as BCI may request and shall cooperate fully
in the efforts of BCI to sell and arrange for the sale of
the Fund's Shares and in the performance of BCI under this
Agreement.
c. The Fund shall take, from time to time, all such steps,
including payment of the related filing fee, as may be
necessary to register the Shares under the 1933 Act and to
make available for sale such number of Shares as BCI may be
expected to sell. The Fund agrees to file from time to time
such amendments, reports and other documents as may be
necessary in order that there may be no untrue statement of
a material fact in a Registration Statement or Prospectus,
or as may be necessary in order that there may be no
omission to state a material fact in the Registration
Statement or Prospectus which omission would make the
statements therein misleading.
d. The Fund shall use its best efforts to qualify and maintain
the qualification of an appropriate number of its Shares for
sale under the securities laws of such states as BCI and the
Fund may approve, and, if necessary or appropriate in
connection therewith, to qualify and maintain the
qualification of the Fund as a broker or dealer in such
states; provided that the Fund shall not be required to
amend its Declaration of Trust or By-laws to comply with the
laws of any state, to maintain an office in any state, to
change the terms of the offering of its Shares in any state
from the terms set forth in its Registration Statement and
Prospectus, to qualify as a foreign corporation in any state
or to consent to service of process in any state other than
with respect to claims arising out of the offering of its
Shares. BCI shall furnish such information and other
material relating to its affairs and activities as may be
required by the Fund in connection with such qualifications.
4. a. The Fund shall bear all costs and expenses of the continuous
offering of its Shares in connection with: (i) fees and
disbursements of its counsel and independent accountants,
(ii) the preparation, filing and printing of any
registration statements and/or prospectuses required by and
under the federal securities laws, (iii) the preparation and
mailing of annual and interim reports, Prospectuses and
proxy materials to shareholders, (iv) the qualifications of
the Shares for sale and of the Fund pursuant to Section 3(d)
hereof and the cost and expenses payable to each such state
for continuing qualification therein and (v) any expenses
assumed by the Fund pursuant to the Plan.
b. BCI shall bear: (i) the costs and expenses of preparing,
printing and distributing any materials not prepared by the
Fund and other materials used by BCI in connection with its
offering of Shares for sale to the public, including the
additional cost of printing copies of the Prospectus and of
annual and interim reports to shareholders, other than
copies thereof required for distribution to existing
shareholders of for filing with any federal securities
authorities, (ii) any expenses of advertising incurred by
BCI in connection with such offering and (iii) the expenses
of registration or qualification of BCI as a dealer or
broker under federal or state laws and the expenses of
continuing such registration or qualification.
5. All orders for the purchase or redemption of any Shares shall be
executed promptly at the then current net asset value per share,
in each case described in the Fund's Prospectus including any
supplements or amendments thereto. The minimum initial and
subsequent purchase orders shall be as set forth in the
Prospectus. All orders are subject to acceptance by the Fund.
6. BCI shall not make any representations concerning the Shares
other than those contained in the Prospectus or in promotional
materials furnished to BCI by the Fund. BCI shall not furnish or
cause to be furnished to any person any information or materials
relating to the Fund except such information or materials as may
be provided to BCI by the Fund.
7. BCI shall not offer or sell Shares except pursuant to the terms
of the Prospectus and in compliance with applicable federal and
state securities laws. In connection with the offer to sell and
sale of Shares, BCI shall deliver or cause to be delivered to
each person to whom any such offer or sale is made, at or prior
to the time of such offer or sale, a copy of the Prospectusand,
upon request, the statement of additional information. BCI shall
request from each customer to whom it sells Shares a taxpayer
identification number certification and shall notify the Fund or
its designee of any failure to obtain such identification number.
The Fund agrees to supply BCI with copies of the Prospectus and
any such other materials and information relating to the Fund in
reasonable quantities upon request.
8. As distributor, the Fund is authorized to pay BCI a distribution
fee equal on an annual basis to 0.25% of the Fund's average daily
net assets. The Fund shall pay the distribution fee to BCI in
connection with its activities or expenses primarily intended to
result in the sale of Shares, including, but not limited to:
a. compensation to registered representatives or other
employees of BCI;
b. compensation to brokerage firms, banks or any other
financial institutions or service providers for the
servicing and administration of shareholder accounts;
c. compensation for providing administrative assistance to the
Fund or its shareholders, including but not limited to: (i)
preparing, printing and distributing promotional and
advertising materials; (ii) preparing, printing and
distributing the Prospectus and reports to other than
current shareholders; (iii) telephone calls and lines; (iv)
interest expenses; and
d. commissions and other fees to broker-dealers or other
persons who have introduced investors to the Fund.
9. If and to the extent the following expenses are considered to be
primarily intended to result in the sale of Shares within the
meaning of Rule 12b-1, they are exempted from the limits set
forth above:
a. costs of the preparation, printing and/or reproducing and
mailing all required reports and notices to shareholders of
the Fund;
b. costs of preparing, printing and/or reproducing and mailing
all proxy statements and proxies, whether or not such proxy
materials include any item relating to or directed toward
the sale of Shares;
c. costs of preparing, printing and/or reproducing and mailing
all Prospectuses;
d. all legal and accounting fees relating to the preparation of
any such report, Prospectusand proxy materials;
e. all fees and expenses relating to the qualification of the
Fund and/or its Shares under the securities or "Blue Sky"
laws of any jurisdiction;
f. all fees under the 1940 Act and the Securities Act of 1933,
including fees in connection with any application for
exemption relating to or directed toward the sale of Shares;
g. all fees and assessments, if any, of the Investment Company
Institute or any successor organization, whether or not its
activities are designed to provide sales assistance;
h. all costs of preparing and mailing confirmations of Shares
sold or redeemed and reports of Share balances; and
i. all costs of responding to telephone or mail inquiries of
shareholders or prospective shareholders.
10. BCI shall report to the Fund in writing, at least quarterly, the
amounts of all expenditures, the identity of the payees and the
purpose for which such expenditures were made for the preceding
fiscal quarter.
11. The procedures relating to all orders and the handling thereof
will be subject to the terms of the Prospectus of the Fund and
the Fund's written instructions to BCI from time to time. No
conditional orders will be accepted. BCI shall transmit or shall
direct the transmission of such orders as are so accepted to the
Fund's transfer and dividend disbursing agent as promptly as
practicable. Purchase orders shall be deemed effective at the
time and in the manner set forth in the Prospectus. BCI agrees
that: (a) BCI shall not effect any transactions (including,
without limitation, any purchases and redemptions) in any Fund
Shares registered in the name of, or beneficially owned by, any
customer unless such customer has granted BCI full right, power
and authority to effect such transactions on his behalf, and (b)
the Fund, the transfer agent and their respective officers,
directors or trustees, agents, employees and affiliates shall not
be liable for, and shall be fully indemnified and held harmless
by BCI from and against, any and all claims, demands, liabilities
and expenses (including, without limitation, reasonable
attorney's fees) which may be incurred by the Fund or any of the
foregoing persons entitled to indemnification from BCI hereunder
arising out of or in connection with the execution of any
transactions in Fund Shares registered in the name of, or
beneficially owned by, any customer in reliance upon any oral or
written instructions believed to be genuine and to have been
given by or on behalf of BCI.
12. The Fund agrees to indemnify, defend and hold BCI, its officers
and directors, and any person who controls BCI within the meaning
of Section 15 of the Securities Act of 1933, as amended, free and
harmless from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which BCI, its officers
and directors, or any such controlling person, may incur under
the Securities Act of 1933, as amended, or under common law or
otherwise, arising out of or based upon (i) any breach of any
representation, warranty or covenant made by the Fund herein,
(ii) any failure by the Fund to perform its obligations as set
forth herein, or (iii) any untrue statement, or alleged untrue
statement, of a material fact contained in any Prospectus, or
arising out of or based upon any omission, or alleged omission,
to state a material fact required to be stated in the Prospectus,
or necessary to make the statements in any Prospectus not
misleading; provided, however, that the Fund's agreement to
indemnify BCI, its officers and directors, and any controlling
person shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of any untrue statement or
alleged untrue statement or omission or alleged omission made in
any Prospectus in reliance upon and in conformity with written
information furnished to the Fund by BCI specifically for use in
the preparation thereof. The Fund's agreement to indemnify BCI,
its officers and directors, and any such controlling person, as
aforesaid, is expressly conditioned upon the Fund's being
notified of any action brought against BCI's officers or
directors, or any such controlling person, such notification to
be given by letter or by telex, telegram or similar means of same
day delivery received by the Fund at its address as specified in
Paragraph 12 of this Agreement within seven (7) days after the
summons or other first legal process shall have been served. The
failure to so notify the Fund of any such action shall not
relieve the Fund from any liability which it may have to the
person against whom such action is brought by reason of any such
breach, failure or untrue, or alleged untrue, statement or
omission, or alleged omission, otherwise than on account of the
Fund's indemnity agreement contained in this Paragraph. The Fund
will be entitled to assume the defense of any suit brought to
enforce any such claim, demand, liability or expense. In the
event that the Fund elects to assume the defense of any such suit
and retain counsel, the defendant or defendants in such suit
shall bear the fees and expenses of any additional counsel
retained by any of them; but in case the Fund does not elect to
assume the defense of any such suit, the Fund will reimburse BCI,
its officers and directors, or controlling persons named as
defendants in such suit, for the fees and expenses of any counsel
retained by BCI or them. The indemnification agreement contained
in this Paragraph shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of
BCI, its officers and directors, or any controlling person, and
shall survive the delivery of any Fund Shares and termination of
this Agreement. This Agreement of indemnity will inure
exclusively to BCI's benefit and to the benefit of any
controlling persons and their successors.
13. BCI agrees to indemnify, defend and hold the Fund and its
officers and directors, and any person who controls the Fund
within the meaning of Section 15 of the Securities Act of 1933,
as amended, free and harmless from and against any and all
claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities
and any counsel fees incurred in connection therewith) which the
Fund and its officers and directors, or any such controlling
person, may incur under the Securities Act of 1933, as amended,
or under common law or otherwise, arising out of based upon (i)
any breach of any representation, warranty or covenant made by
BCI herein, (ii) any failure by BCI to perform its obligations as
set forth herein, or (iii) any untrue, or alleged untrue,
statement of a material fact contained in the information
furnished by BCI to the Fund specifically for use in the Fund's
Prospectus, or used in the answers to any of the items of the
Prospectus, or arising out of or based upon any omission, or
alleged omission, to state a material fact in connection with
such information furnished by BCI to the Fund and required to be
stated in such answers or necessary to make such information not
misleading. BCI's agreement to indemnify the Fund and its
officers and directors and any such controlling person, as
aforesaid, is expressly conditioned upon BCI's being notified of
any action brought against any person or entity entitled to
indemnification hereunder, such notification to be given by
letter of by telex , telegram or similar means of same day
delivery received by BCI at its address as specified in Paragraph
12 of the Agreement within seven (7)days after the summons or
other first legal process shall have been served. BCI shall have
the right to control the defense of such action, with counsel of
its own choosing satisfactory to the Fund, if such action is
based solely upon such alleged misstatement or omission on BCI's
part, and in any other event each person or entity entitled to
indemnification hereunder shall have the right to participate in
the defense or preparation of the defense of any such action.
The failure to so notify BCI of any such action shall not relieve
BCI from any liability which it may have to the Fund or its
officers and directors, or to any such controlling person, by
reason or any such breach, failure or untrue, or alleged untrue,
statement or omission, or alleged omission, otherwise than on
account of BCI's indemnity agreement contained in this Paragraph.
The indemnification agreement shall remain operative and in full
force effect regardless of any investigation made by or on behalf
of any person entitled to indemnification pursuant to this
Paragraph and shall survive the delivery of any Fund Shares and
termination of this Agreement. Such agreements of indemnity will
inure exclusively to the benefit of the persons entitled to
indemnification from BCI pursuant to this Agreement and their
respective estates, successors and assigns.
14. All notices required or permitted to be given pursuant to this
Agreement shall be given in writing and delivered by personal
delivery, registered or certified first class mail, or by
telecopy or similar means of same day delivery to Baron Capital,
Inc. at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and to the
Fund at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
15. This Agreement shall commence on the date first set above. This
Agreement shall continue in effect for a period more than two
years from the date hereof only so long as such continuance is
specifically approved at least annually in conformity with the
requirements of the 1940 Act. This Agreement shall terminate
automatically in the event of its assignment ( as defined by the
1940 Act). In addition, this Agreement may be terminated by
either party at any time, without penalty, on not more than sixty
days' nor less than thirty days' written to the other party.
16. It is understood and expressly stipulated that non of the
Trustees, officers, agents or shareholders of the Fund shall be
personally liable hereunder. The name "Baron Capital Fund" is
the designation of the Trustees for the time being under a
Declaration of Trust and all persons dealing with the Fund must
look solely to the property of the Fund for the enforcement of
any claims against the Fund as neither the Trustees, officers,
agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.
17. This Agreement shall be governed by the laws of the State of New
York.
18. This Agreement constitutes the entire agreement between the
parties hereto and may be assumed only by a writing signed by the
parties hereto. This Agreement may not be assigned by either
party without the prior written consent of the other party.
Dated: New York, New York
1998
Baron Capital Funds Trust
By:
____________________________
Baron Capital, Inc.
By:
___________________________
