EXHIBIT 5(a)
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT made this 16th day of October, 1992, by and between
Pacific Global Fund, Inc., a Maryland corporation doing business as Pacific
Advisors Fund Inc. (the "Corporation"), and Pacific Global Fund Distributors,
Inc., a California corporation (the "Distributor").
W I T N E S S E T H:
WHEREAS, the Corporation intends to engage in business as an open-end
management investment company and is registered as such under the Investment
Company Xxx 0000, as amended (the "1940 Act"); and
WHEREAS, the Corporation is authorized to issue shares of its Common
Stock, par value $.01 per share (the "Shares"), in separately designated series
("Funds") each with its own investment objectives, investment program, policies,
and restrictions; and
WHEREAS, the Corporation 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 Corporation has adopted a Plan of Distribution Pursuant to
Rule 12b-1 under the 1940 Act (the "Distribution Plan") 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 Corporation wishes to engage the services of the Distributor
as distributor of the Shares of the Funds and the Distributor is willing to
serve in that capacity;
NOW, THEREFORE, in consideration of the premises 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 Corporation hereby appoints the
Distributor as principal underwriter and distributor of the Corporation 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 Corporation
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 Corporation 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 or another series of the
Corporation, (iii) any offer of exchange authorized by the Board of Directors of
the Corporation, (iv) any sales of Shares to directors and officers of the
Corporation and such other persons identified in the current Prospectus and
Statement of Additional Information of the Corporation, or (v) the issuance of
such Shares to a unit investment trust if such unit investment trust has elected
to use Shares as an underlying investment. Notwithstanding any other provision
hereof, the Corporation 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 hereby accepts such appointment as principal
underwriter and distributor of the Corporation and agrees that it will use its
best efforts to promote the Funds and to solicit orders for the purchase of
Shares. The Distributor shall sell Shares of the Funds as agent for the
Corporation at prices determined as hereinafter provided and on the terms set
forth herein, all according to applicable federal and state laws and regulations
and the Articles of Incorporation and By-Laws of the Corporation. 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 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 Corporation
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 Corporation, the Distributor, or any corporation or association
furnishing investment advisory, managerial, or supervisory services to the
Corporation, or to any such corporation or association, unless such sales are
made in accordance with the then current Prospectus and Statement of Additional
Information.
(d) The Distributor is not authorized by the Corporation to give any
information or to make any representation other than those contained in the
current Prospectus, Statement of Additional Information, and shareholder
reports, or in supplementary sales materials specifically approved by the
Corporation.
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 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 plus a sales charge of not
more than 5.75% of such public offering price. The excess, if any, of the public
offering price over the net asset value of the Shares sold by the Distributor as
agent shall be retained by the Distributor as
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a commission for its services hereunder. Out of such commission the Distributor
may allow commissions or concessions to brokers or dealers, and, in its
discretion, to others, in such amounts as the Distributor shall determine from
time to time. Except as may be otherwise determined by the Distributor from time
to time, such commissions or concessions shall be uniform to all brokers and
dealers. At no time shall the Corporation receive less than the full net asset
value of the Shares, determined in the manner set forth in the then current
Prospectus and Statement of Additional Information.
3. DISTRIBUTION PLAN PAYMENTS. (a) The Distributor shall be entitled to
reimbursement of its expenses incurred in promoting the sale of Shares of each
Fund, including payments made to qualified brokers, dealers, and others in
respect of Shares of each Fund sold by such persons. Such payments to the
Distributor shall be made by the Funds pursuant to the Distribution Plan at such
times and in such amount as the Board of Directors of the Corporation may from
time to time determine.
(b) The Distributor shall prepare and deliver reports to the Board of
Directors of the Corporation on a regular basis, at least quarterly, showing the
payments made by the Distributor to qualified brokers, dealers, and others and
the payments made by the Funds to the Distributor pursuant to the Distribution
Plan, and other amounts expended by the Distributor in connection with its
activities hereunder and the purposes for which such expenditures were made, as
well as any supplemental reports as the Board of Directors of the Corporation
may from time to time reasonably request.
4. PAYMENT OF EXPENSES. (a) Except as otherwise provided herein, the
Distributor shall pay, or arrange for others to pay, all its expenses, including
the following: (i) payments to sales representatives of the Distributor and 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 Corporation's transfer and shareholder
servicing agent; (iii) formulation and implementation of marketing and
promotional activities; (iv) preparation, printing, and distribution of
supplementary sales materials and the printing and distribution of Prospectuses,
Statements of Additional Information, and shareholder reports for recipients
other than existing shareholders of the Funds; (v) qualification of the
Corporation as a broker or dealer under state law as well as qualification of
the Corporation as an entity authorized to do business in certain states; and
(vi) obtaining such information, analyses, and reports with respect to marketing
and promotional activities as the Corporation may from time to time reasonably
request.
(b) The Corporation 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 to
shareholders; (iii) registration of the Shares of the Funds under the federal
securities laws;
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(iv) qualification of the Shares of the Funds for sale in such states as the
Distributor and the Corporation may approve; (v) maintaining facilities for the
issue and transfer of Shares; (vi) supplying information, prices, and other data
to be furnished by the Corporation under this Agreement; and (vii) taxes
applicable to the sale or delivery of the Shares of the Funds or certificates
therefor.
5. FURNISHING OF INFORMATION. The Corporation shall furnish to the
Distributor for use in connection with the sale of Shares of the Funds such
information, financial statements, and other documents as the Distributor may
reasonably request. The Corporation shall also make available such number of
copies of the current Prospectus, Statement of Additional Information, and
shareholder reports as the Distributor shall reasonably request.
6. REPURCHASE OF SHARES. The Distributor as agent and for the account of
the Corporation 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
Prospectus and Statement of Additional Information.
7. INDEMNIFICATION. (a) The Corporation agrees to indemnify and hold
harmless the Distributor and each person, if any, who controls the Distributor
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
against any losses, claims, damages, or liabilities to which the Distributor or
such controlling person may become subject under the 1933 Act or otherwise,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any amendment thereto or
the Prospectus (other than an omitting prospectus prepared pursuant to
Rule 482 under the 1933 Act unless such omitting prospectus has been
specifically approved by the Corporation) or the Statement of Additional
Information or any amendment or supplement thereto or an annual or interim
report to shareholders; or
(ii) the omission or alleged omission to state in the Registration
Statement or any amendment thereto or the Prospectus (other than an
omitting prospectus prepared pursuant to Rule 482 under the 1933 Act
unless such omitting prospectus has been specifically approved by the
Corporation) or the Statement of Additional Information or any amendment
or supplement thereto or an annual or interim report to share holders, a
material fact required to be stated therein or necessary to make the
statements therein not misleading;
and shall reimburse, as incurred, the Distributor and each such controlling
person for any legal or other expenses reasonably incurred by the Distributor or
such controlling person in connection with
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investigating, defending against, or appearing as a third-party witness in
connection with any such loss, claim, damage, liability, or action; PROVIDED,
HOWEVER, that the Corporation shall not be liable in any such case to the
extent that any such loss, claim, damage, or liability arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement or any amendment thereto, or the
Prospectus or Statement of Additional Information or any amendment or supplement
thereto, or in an annual or interim report to shareholders, in reliance upon and
in conformity with written information furnished to the Corporation by the
Distributor specifically for use therein; and PROVIDED, FURTHER, that this
indemnity agreement shall not protect the Distributor or any such controlling
person against any liability to which it would otherwise be subject by reason of
willful misfeasance, bad faith, or negligence in the performance of its duties,
or by reason of its failure to exercise due care in rendering services
hereunder. This indemnity agreement shall be in addition to any liability which
the Corporation may otherwise have.
(b) The Distributor agrees to indemnify and hold harmless the Corporation,
each of the Corporation's directors, each of the Corporation's officers who
signed the Registration Statement, and each person, if any, who controls the
Corporation within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act, against any losses, claims, damages or liabilities to which the
Corporation or any such director, officer, or controlling person may become
subject under the 1933 Act or otherwise, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon:
(i) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any amendment thereto or
the Prospectus or Statement of Additional Information, or any amendment or
supplement thereto, or the omission or alleged omission to state in the
Registration Statement or any amendment thereto, or the Prospectus or
Statement of Additional Information or any amendment or supplement
thereto, a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent
that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Corporation by the Distributor specifically
for use therein; or
(ii) any untrue statement or alleged untrue statement of a material
fact contained in any unauthorized supplementary sales materials or
omitting prospectus prepared pursuant to Rule 482 under the 1933 Act, or
the omission or alleged omission to state in any such materials or
prospectus, a material fact required to be stated therein or necessary to
make the statements therein not misleading; or
(iii) any act or deed of the Distributor, its employees, or its
sales representatives which has not been authorized by the Corporation in
any Prospectus or Statement of Additional Information or by this
Agreement;
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and shall reimburse, as incurred, any legal or other expenses reasonably
incurred by the Corporation or any such director, officer, or controlling person
in connection with investigating, defending against, or appearing as a
third-party witness in connection with any such loss, claim, damage, liability
or action; PROVIDED, HOWEVER, that this indemnity agreement shall not protect
any director or officer of the Corporation against any liability to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office. This indemnity agreement shall be in addition to any liability which the
Distributor may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 7, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 7. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it may
wish, to assume the defense thereof, with counsel satisfactory to such
indemnified party; PROVIDED, HOWEVER, that if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be one or more
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnifying party shall not have the right to direct the defense of such action
on behalf of such indemnified party or parties and such indemnified party or
parties shall have the right to select separate counsel to defend such action on
behalf of such indemnified party or parties. After notice from the indemnifying
party to such indemnified party of its election so to assume the defense thereof
and approval by such indemnified party of counsel appointed to defend such
action, the indemnifying party shall not be liable to such indemnified party
under this Section 7 for any legal or other expense, other than reasonable costs
of investigation, subsequently incurred by such indemnified party in connection
with the defense thereof, unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
or (ii) the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party. After such notice
from the indemnifying party to such indemnified party, the indemnifying party
shall not be liable for the costs and expenses of any settlement of such action
effected by such indemnified party without the consent of the indemnifying
party, unless such indemnifying party waived its rights under this Section 7 in
which case the indemnified party may effect such a settlement without such
consent.
8. 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 until October 16, 1994, and thereafter may
be continued for successive periods of one year, but only so long as each such
continuance is specifically approved at least annually (i) by the Board of
Directors of the Corporation, and (ii) by vote of a majority of the directors of
the Corporation who are not interested persons of the Corporation and who have
no direct or indirect financial interest in
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the operation of the Distribution Plan or in this Agreement or any other
agreement related to the Distribution 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 Corporation or a majority of the
Rule 12b-1 Directors, by vote of a majority of the outstanding voting securities
of the Corporation, or by the Distributor, on not more than 60 days' nor less
than 30 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 reimbursement and indemnification provisions contained in Section
7 of this Agreement shall remain in full force and effect regardless of any
termination of this Agreement.
9. 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
Corporation by the Securities and Exchange Commission, or such interpretative
positions as may be taken by the Commission or its staff under the 1940 Act.
10. NOTICES. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, (a) if to the Corporation, to
Pacific Global Fund, Inc., 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, XX
00000, and (b) if to the Distributor, to Pacific Global Fund Distributors,
Inc., at the foregoing office of the Corporation.
11. 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 their construction or effect.
12. INTERPRETATION. Nothing herein contained shall be deemed to require
the Corporation 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 Directors
of its responsibility for and control of the conduct of the affairs of the
Corporation.
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13. GOVERNING LAW. Except insofar as the 1940 Act or other federal laws
and regulations may be controlling, this Agreement shall be governed by, and
construed and enforced in accordance with the laws of the State of Maryland.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
ATTEST: PACIFIC GLOBAL FUND, INC
d/b/a PACIFIC ADVISORS FUND INC.
/s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxx
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ATTEST: PACIFIC GLOBAL FUND
DISTRIBUTORS, INC.
/s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxxxx X. Xxxxx
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