Distribution Agreement
This Distribution Agreement, made this ___ day of April, 2003, by and
between Baron Capital, Inc. a New York corporation ("BCI") and Baron Select
Funds, a Delaware business trust (the "Trust") with respect to the shares of
beneficial interest of all series of the Trust (separately, a "Fund" and
collectively, the "Funds"),
Whereas, the Trust is an open-end diversified management investment company
and is registered under the Investment Company Act of 1940, as amended (the
"1940 Act") as a series fund that wishes to employ BCI to distribute 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 Trust represents that the Plan is a written plan contemplated by Rule
12b-1 under the 1940 Act and has been duly approved by the 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 therefore at the net asset value
thereof and written request of BCI therefore.
(b) The Trust 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
prospectus and 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 Trust 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 Trust 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 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 Trust 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
prospectus and, 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. Such
distribution fee payable to BCI shall be reduced by the amount, if any, BCI
receives as a contingent deferred sales charge pursuant to the Prospectus.
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 and expenses of employees of BCI who engage in or
support the distribution of Shares or who service 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
(excluding banks) 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, prospectus and 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;
(i) all costs of preparing and mailing confirmations of Shares sold or
redeemed and reports of Share balances; and
(j) 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 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 indemnified 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 Trust 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 Trust herein, (ii) any failure by the Trust 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 Trust'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 Trust's agreement to indemnify BCI, its
officers and directors, and any such controlling person, as aforesaid, is
expressly conditioned upon the Trust'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 Trust 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 Trust of any such action shall not relieve the Trust 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 Trust 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 Trust 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 Trust does not elect to
assume the defense of any such suit, the Trust 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 Trust and its officers and
directors, and any person who controls the Trust 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 Trust 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 Trust 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 Trust and required to be stated in such answers or
necessary to make such information not misleading. BCI's agreement to
indemnify the Trust 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 Trust, 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 Trust 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 Trust 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 Select Funds" is the designation of the Trustees
for the time being under a Declaration of Trust dated , and all persons
dealing with the Trust must look solely to the property of the Trust for
the enforcement of any claims against the Trust 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
April , 2003
Baron Select Funds
By:
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Baron Capital, Inc.
By:
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