OH&S DRAFT
12/07/88
DISTRIBUTION AGREEMENT
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This Agreement, dated as of December 8, 1988, by and between BB&K Fund
Group, a Massachusetts business trust (the "Trust"), on behalf of the BB&K
Diversa Fund series of the Trust (the "Fund"), and BB&K Fund Services, Inc., a
[California] corporation (the "Distributor"),
W I T N E S S E T H:
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WHEREAS, the Trust is registered as a diversified, open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Distributor is a broker/dealer licensed to act as a
distributor of securities, is engaged in the business of selling and
distributing securities, including investment company securities, and has the
ability to create appropriate and effective sales literature, advertising and
other sales promotional aids; and
WHEREAS, the Trust desires to retain the Distributor to render such
services to the Fund in the manner and on the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual and
dependent covenants set forth herein, the Trust and the Distributor agree as
follows:
1. Appointment of Distributor. The Trust hereby appoints the
Distributor as its exclusive agent to act as principal underwriter and
distributor of the Shares of Beneficial Interest, $0.01 par value, of the Fund
(the "Shares") during the term of this Agreement.
2. Acceptance of Appointment. The Distributor hereby accepts such
appointment and agrees to use its best efforts lawfully and properly to promote
the sale of the Shares; provided, however, that the Distributor may suspend its
efforts when, in its judgment, sales of Shares are not commercially reasonable.
The Distributor agrees that the Fund may withdraw the offering of the Shares (a)
at any time with the consent of the Distributor or (b) without such consent when
so required by the provisions of any statute, rule, regulation or order of any
governmental body or administrative agency or by order of any court.
3. Term of Agreement. Unless sooner terminated as provided herein, this
Agreement shall be in effect for a
period of two years from the date hereof and shall continue from year to year
thereafter as long as such is specifically approved at least annually (a) by
either (i) the Board of Trustees of the Trust or (ii) the vote of a majority of
the outstanding voting securities (as defined in the 0000 Xxx) of the Trust and
(b) by the vote of a majority of the trustees of the Trust who are not parties
to this Agreement or interested persons (as defined in the 0000 Xxx) of any such
party at a meeting called for the purpose of voting on such continuance.
4. Duties of the Trust.
(a) The Trust shall use its best efforts:
(i) to maintain its registration as a diversified, open-end
management investment company under the 1940 Act and to comply with the
provisions of the 1940 Act and the rules and regulations thereunder;
(ii) to keep authorized and registered under the Securities
Act of 1933, as amended (the "1933 Act"), sufficient Shares to meet the
reasonable requirements of the Distributor; and
(iii) to qualify the Shares for sale and to keep effective and
renew such permits and authorizations as may be required for the sale
thereof in all jurisdictions, as the Distributor may reasonably
request.
(b) The Trust shall not arbitrarily or without reasonable cause refuse
to accept or confirm orders for the purchase of Shares obtained by the
Distributor as agent of the Trust and submitted by the Distributor to the Trust.
The Trust shall confirm each order upon receipt of a duly executed Shareholder
Application Form in the form contained in the prospectus of the Fund, as amended
and supplemented from time to time (the "Prospectus").
(c) The Trust shall not during the term of this Agreement offer any
Shares for sale through any person (as defined in Sections 2(a)(28) and 2(a)(8)
of the 0000 Xxx) other than the Distributor, although the Trust reserves the
right to sell Shares directly. However, in the event the Distributor is unable
to continue to distribute or sell Shares either generally or in specific
jurisdictions, the Trust may make arrangements for the offer and sale of Shares
generally or within the jurisdiction or jurisdictions in which distribution or
sale thereof by the Distributor has been prevented; provided that, if the
Distributor has removed all
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material obstacles to resuming the offer and sale generally or within such
jurisdictions within 90 days from the date it becomes unable to continue such
distribution or sale, then the right of the Trust to distribute Shares through
persons other than the Distributor shall be extinguished, subject only to the
provisions of Section 2 hereof.
5. Duties of the Distributor.
(a) The Distributor is, and shall use its best efforts to continue to
be, a member in good standing of the National Association of Securities Dealers,
Inc. ("NASD"), a broker/dealer registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 and a broker/dealer
licensed in the jurisdictions in which its activities on behalf of the Fund
require it to be so licensed.
(b) The Distributor shall not purchase any Shares except from or on
behalf of the Fund as agent.
(c) The Distributor shall not directly or indirectly withhold orders
for the purchase of Shares, purchase Shares in anticipation of orders or accept
conditional orders.
(d) The Distributor shall, to the extent it deems necessary in its sole
discretion, prepare, print and distribute advertising and sales literature
relating to the Fund and the Shares and shall pay all costs incurred in
connection therewith, including related travel, telephone and overhead expenses.
Any dissemination by the Distributor of such advertising and sales literature
shall be in compliance with applicable Federal and state securities laws and
regulations. The Distributor shall provide copies of such advertising and sales
literature to the Fund in order to permit the Fund to timely file such
advertising and sales literature with the Securities and Exchange Commission,
the NASD and any other regulatory authorities, as may be required. The
Distributor shall not use any such material to which the Fund reasonably and
promptly objects.
(e) Except with respect to sales and repurchases of Shares, the
Distributor shall act as principal in all matters relating to promotion of the
Fund and shall enter into all of its engagements, agreements and contracts as
principal on its own account.
(f) The Distributor shall perform its duties and obligations hereunder
in a manner that complies with the terms of the registration statement of the
Trust filed with the Securities and Exchange Commission, as amended or
supplemented
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from time to time (the "Registration Statement"), the Declaration of Trust and
the By-Laws of the Trust, the requirements of the 1940 Act and the securities
laws and regulations of the United States and of the jurisdictions in which the
Distributor does business or offers Shares on behalf of the Fund, and shall
conduct its affairs in accordance with the Rules of Fair Practice of the NASD.
Unless otherwise expressly provided or authorized, the Distributor shall have no
authority to act for or represent the Trust or the Fund in any way, or otherwise
be deemed an agent of the Trust or the Fund.
(g) The Distributor shall maintain all books and records with respect
to the Fund required by subparagraph (d) of Rule 3la-l under the 1940 Act.
(h) The services provided by the Distributor under this Agreement are
not exclusive, and the Distributor is free to engage in any other business and
may render services similar to those provided hereunder to other issuers,
including other investment companies.
6. Public Offering Price of Shares to be Maintained. The Shares shall
be offered and sold only at the public offering price described in the
Prospectus, which shall be the then current net asset value per Share (as
described in the Prospectus). Provisions of the Prospectus and the Shareholder
Application Form contained therein pertaining to the public offering price are
specifically incorporated herein by reference.
7. Distributor's Compensation. The Distributor shall receive no
distribution fee, sales commission or other payment for its services hereunder.
8. Indemnification.
(a) The Trust shall indemnify and hold harmless the Distributor
(including for purposes of this Section 8(a), each person deemed to be a
controlling person of the Distributor) against any loss, liability, claim,
damage or expense (including the reasonable cost of investigating or defending
any alleged loss, liability, claim, damage or expense and reasonable counsel
fees incurred in connection therewith), based upon the 1933 Act, the 1940 Act or
any state securities statute or at common law, on the ground that the
Registration Statement, or the Prospectus or Statement of Additional Information
contained therein, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
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made, not misleading, unless such statement or omission was made in reliance
upon, and in conformity with, written information furnished to the Trust in
connection therewith by or on behalf of the Distributor. However, in no case
shall the Trust indemnify the Distributor against any liability to which the
Distributor is subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of the reckless
disregard of its obligations and duties under this Agreement. The Trust shall
not be liable to indemnify the Distributor pursuant to this Section 8(a) with
respect to any claim made against the Distributor unless the Distributor has
notified the Trust in writing within a reasonable time after service upon it of
first legal process giving information about the nature of the claim, but
failure to notify the Trust of any such claim shall not relieve it from any
liability which it may have to the Distributor otherwise than on account of the
indemnity agreement contained herein. The Trust 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 such liability, but if the Trust elects to
assume the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Distributor. In the event the Trust elects to assume the
defense of any such suit and retain such counsel, the Distributor shall bear the
fees and expenses of any additional counsel retained by it. If the Trust does
not elect to assume the defense of any such suit, it shall reimburse the
Distributor for the reasonable fees and expenses of any counsel retained by it.
The Trust shall promptly notify the Distributor of the commencement of any
litigation or proceedings against it or any of its officers or trustees in
connection with the issuance or sale of any of the Shares.
(b) The Distributor shall indemnify and hold harmless the Trust and the
Fund (including for purposes of this Section 8(b) each person deemed to be a
controlling person of the Trust or the Fund) against any loss, liability, claim,
damage or expense described in Section 8(a) hereof, but only to the extent that
any such loss, liability, claim, damage or expense relates to material
statements or omissions made in reliance upon, and in conformity with, written
information furnished to the Trust by or on behalf of the Distributor for use in
connection with the Registration Statement, the Prospectus or the Statement of
Additional Information as described in Section 8(a).
9. Termination. This Agreement may be terminated at any time, without
payment of any penalty, by the Board of Trustees of the Trust or by the vote of
a majority of the outstanding voting securities (as defined in the 0000 Xxx) of
the Fund on not more than 60 days' nor less than 30 days'
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written notice to the Distributor, or by the Distributor on like notice to the
Trust. In the absence of the issuance of an order by the Securities and Exchange
Commission providing an exemption from the provisions of Section 15(b) of the
1940 Act, this Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
10. Other Provisions.
(a) This Agreement shall not be construed as authorizing any
broker/dealer or other person (other than the Distributor) to act as agent of
any of the Trust, the Fund or the Distributor.
(b) All records that the Distributor maintains for the Fund are the
property of the Trust, and the Distributor shall surrender promptly to the Trust
any of such records upon the Trust's request. The Distributor will preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act any such records as are
required to be maintained by it pursuant to this Agreement.
(c) Notice is hereby given of the limitations of the liability of the
Trust's shareholders and trustees as set forth in the Trust's Declaration of
Trust on file with the Secretary of The Commonwealth of Massachusetts. The
obligations assumed by the Trust pursuant to this Agreement shall be limited in
all cases to the Trust and its assets. party named herein shall seek
satisfaction of any such obligation from the shareholders or any shareholder of
the Trust; nor shall any party named herein seek satisfaction of any such
obligation from the Board of Trustees or any individual trustee.
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(d) This Agreement shall be governed by the laws of the State of
California and the applicable provisions of the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers duly authorized as of the day and year first above
written.
BB&K FUND GROUP
By: /s/ Xxxxx X. Xxxxx
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Title: President
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BB&K FUND SERVICES, INC.
By: /s Xxxxx Xxxxx
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Title: Treasurer
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