DISTRIBUTION AGREEMENT
----------------------
This Agreement made as of June 1, 2000 by and between THE GANNETT WELSH &
KOTLER Funds, a Massachusetts business trust (the "Trust"), and IFS FUND
DISTRIBUTORS, INC., an Ohio corporation ("Distributor").
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, Distributor is a broker-dealer registered with the Securities and
Exchange Commission and a member of the National Association of Securities
Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust and Distributor are desirous of entering into an
agreement providing for the distribution by Distributor of shares of beneficial
interest ("Shares") of each series of shares of the Trust (the "Series");
NOW, THEREFORE, in consideration of the promises and agreements of the
parties contained herein, the parties agree as follows:
1. APPOINTMENT.
-----------
The Trust hereby appoints Distributor as its agent for the
distribution of Shares, and Distributor hereby accepts such appointment under
the terms of this Agreement. While this Agreement is in force, the Trust shall
not sell any Shares except on the terms set forth in this Agreement.
Notwithstanding any other provision hereof, the Trust may terminate, suspend or
withdraw the offering of Shares whenever, in its sole discretion, it deems such
action to be desirable. Upon notice of such termination, suspension or
withdrawal, the Distributor shall cease to offer Shares.
2. SALE OF SHARES.
--------------
(a) Distributor will have the right, as agent for the Trust, to offer,
and to solicit offers to subscribe to, the unsold balance of Shares of the Trust
as shall then be effectively registered under the Securities Act of 1933 at the
then-current public offering price for the Shares.
(b) All subscriptions for Shares obtained by the Distributor shall be
directed to the Trust for acceptance and shall not be binding on the Trust until
accepted by the Trust. The Distributor shall have no authority to make binding
subscriptions on the Trust's behalf. The Distributor will send to the Trust
promptly all subscriptions placed with the Distributor.
(c) The public offering price for Shares of each Series shall be the
respective net asset value of Shares of that Series then in effect.
(d) The net asset value of Shares of each Series shall be determined
in the manner provided in the then-current prospectus and statement of
additional information (the "Registration Statement"), and when determined shall
be applicable to transactions as provided for in the Registration Statement. The
net asset value of Shares of each Series shall be calculated by the Trust or by
another entity on behalf of the Trust. Distributor shall have no duty to inquire
into or liability for the accuracy of the net asset value per Share as
calculated.
(e) On every sale, the Trust shall receive the applicable net asset
value of Shares promptly, but in no event later than the third business day
following the date on which Distributor shall have received an order for the
purchase of Shares.
(f) Upon receipt of purchase instructions, Distributor will transmit
such instructions to the Trust or its transfer agent for registration of Shares
purchased.
2
(g) Nothing in this Agreement shall prevent Distributor or any
affiliated person (as defined in the Act) of Distributor from acting as
underwriter or distributor for any other person, firm or corporation (including
other investment companies) or in any way limit or restrict Distributor or any
such affiliated person from buying, selling or trading any securities for its or
their own account or for the accounts of others for whom it or they may be
acting; provided, however, that Distributor expressly represents that it will
undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
3. SALE OF SHARES BY THE TRUST.
---------------------------
The Trust reserves the right to sell Shares through other distributors
or directly to investors through subscriptions received by the Trust or the
Trust's transfer agent. The right given to the Distributor under this Agreement
shall not apply to Shares issued in connection with (a) the merger or
consolidation of any other investment company with the Trust, (b) the Trust's
acquisition, by purchase or otherwise, of all or substantially all of the assets
or stock of any other investment company, or (c) the reinvestment in Shares by
shareholders of the Trust of dividends or other distributions or any other
offering by the Trust of securities to Trust shareholders.
4. BASIS OF SALE OF SHARES.
-----------------------
Distributor does not agree to sell any specific number of Shares.
Distributor, as agent for the Trust, undertakes to sell Shares on a best-efforts
basis only against orders therefor.
5. RULES OF NASD, ETC.
-------------------
(a) Distributor will conform to the Conduct Rules of the NASD and the
securities laws of any jurisdiction in which it sells, directly or indirectly,
any Shares.
3
(b) Distributor will require each dealer with whom Distributor has a
dealer agreement to conform to the applicable provisions hereof and the
Registration Statement with respect to the public offering price of Shares, and
neither Distributor nor any such dealers shall withhold the placing of purchase
orders so as to make a profit thereby.
(c) Distributor agrees to furnish to the Trust sufficient copies of
any agreements, plans or other materials it intends to use in connection with
any sales of Shares in adequate time for the Trust to file and clear them with
the proper authorities before they are put in use, and not to use them until so
filed and cleared.
(d) Distributor, at its own expense, will qualify as dealer or broker,
or otherwise, under all applicable state or federal laws required in order that
Shares may be sold in such states as may be mutually agreed upon by the parties.
(e) Distributor shall not make, or permit any representative to make,
in connection with any sale or solicitation of a sale of Shares, any
representations concerning Shares except those contained in the then-current
prospectus and statement of additional information covering the Shares and in
printed information approved by the Trust as information supplemental to such
prospectus and statement of additional information. Copies of the then-effective
prospectus and statement of additional information and any such printed
supplemental information will be supplied by the Trust to Distributor in
reasonable quantities upon request.
6. RECORDS TO BE SUPPLIED BY TRUST.
-------------------------------
The Trust shall furnish to Distributor copies of all information,
financial statements and other papers which Distributor may reasonably request
for use in connection with the distribution of the Shares, and this shall
include, but shall not be limited to, one certified
4
copy, upon request by Distributor, of all financial statements prepared for the
Trust by independent public accountants.
7. EXPENSES.
--------
In the performance of its obligations under this Agreement,
Distributor will pay only the costs incurred in qualifying as a broker or dealer
under state and federal laws and in establishing and maintaining its
relationships with the dealers selling Shares. All other costs in connection
with the offering of Shares will be paid by the Trust or the Trust's investment
adviser (the "Adviser") in accordance with agreements between them as permitted
by applicable law, including the Act and rules and regulations promulgated
thereunder.
8. INDEMNIFICATION OF TRUST.
------------------------
Distributor agrees to indemnify and hold harmless the Trust, the
Adviser and each person who has been, is, or may hereafter be a trustee,
director, officer, employee, partner, shareholder or control person of the Trust
or the Adviser, against any loss, damage or expense (including the reasonable
costs of investigation) reasonably incurred by any of them in connection with
any claim or in connection with any action, suit or proceeding to which any of
them may be a party, which arises out of or is alleged to arise out of or is
based upon any untrue statement or alleged untrue statement of a material fact,
or the omission or alleged omission to state a material fact necessary to make
the statements not misleading, on the part of Distributor or any agent or
employee of Distributor or any other person for whose acts Distributor is
responsible, unless such statement or omission was made in reliance upon written
information furnished by the Trust or the Adviser. Distributor likewise agrees
to indemnify and hold harmless the Trust, the Adviser and each such person in
connection with any claim or in
5
connection with any action, suit or proceeding which arises out of or is alleged
to arise out of Distributor's failure to exercise reasonable care and diligence
with respect to its services, if any, rendered in connection with investment,
reinvestment, automatic withdrawal and other plans for Shares. The term
"expenses" for purposes of this and the next paragraph includes amounts paid in
satisfaction of judgments or in settlements which are made with Distributor's
consent. The foregoing rights of indemnification shall be in addition to any
other rights to which the Trust, the Adviser or each such person may be entitled
as a matter of law.
9. INDEMNIFICATION OF DISTRIBUTOR.
------------------------------
Distributor, its directors, officers, employees, shareholders and
control persons shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Trust in connection with the matters to which
this Agreement relates, except a loss resulting from willful misfeasance, bad
faith or negligence on the part of any of such persons in the performance of
Distributor's duties or from the disregard by any of such persons of
Distributor's obligations and duties under this Agreement. The Trust will
advance attorneys' fees or other expenses incurred by any such person in
defending a proceeding, upon the undertaking by or on behalf of such person to
repay the advance if it is ultimately determined that such person is not
entitled to indemnification. Any person employed by Distributor who may also be
or become an officer or employee of the Trust shall be deemed, when acting
within the scope of his employment by the Trust, to be acting in such employment
solely for the Trust and not as an employee or agent of Distributor.
6
10. COMPENSATION OF DISTRIBUTOR
---------------------------
For services rendered under this Agreement, the Distributor will
receive a fee of $500 per month per Series. Fees shall be paid monthly in
arrears.
11. TERMINATION AND AMENDMENT OF THIS AGREEMENT.
-------------------------------------------
This Agreement shall automatically terminate, without the payment of
any penalty, in the event of its assignment. This Agreement may be amended only
if such amendment is approved (i) by Distributor, (ii) either by action of the
Board of Trustees of the Trust or at a meeting of the Shareholders of the Trust
by the affirmative vote of a majority of the outstanding Shares, and (iii) by a
majority of the Trustees of the Trust who are not interested persons of the
Trust or of Distributor by vote cast in person at a meeting called for the
purpose of voting on such approval.
Either the Trust or Distributor may at any time terminate this
Agreement on sixty (60) days' written notice delivered or mailed by registered
mail, postage prepaid, to the other party.
12. EFFECTIVE PERIOD OF THIS AGREEMENT.
----------------------------------
This Agreement shall take effect upon its execution and shall remain
in full force and effect until December 4, 2001 from the date of its execution
(unless terminated automatically as set forth in Section 11), and from year to
year thereafter, subject to annual approval (i) by Distributor, (ii) by the
Board of Trustees of the Trust or a vote of a majority of the outstanding
Shares, and (iii) by a majority of the Trustees of the Trust who are not
interested persons of the Trust or of Distributor by vote cast in person at a
meeting called for the purpose of voting on such approval.
7
13. LIMITATION OF LIABILITY.
-----------------------
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, Shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust property
of the Trust, as provided in the Declaration of Trust. The execution and
delivery of this Agreement have been authorized by the Trustees and Shareholders
of the Trust and signed by an officer of the Trust, acting as such, and neither
such authorization by such Trustees and Shareholders nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Declaration of
Trust.
14. NEW SERIES.
----------
The terms and provisions of this Agreement shall become automatically
applicable to any additional series of the Trust established during the initial
or renewal term of this Agreement.
15. SUCCESSOR INVESTMENT COMPANY.
----------------------------
Unless this Agreement has been terminated in accordance with Paragraph
11, the terms and provisions of this Agreement shall become automatically
applicable to any investment company which is a successor to the Trust as a
result of reorganization, recapitalization or change of domicile.
8
16. SEVERABILITY.
------------
In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
17. QUESTIONS OF INTERPRETATION.
---------------------------
(a) This Agreement shall be governed by the laws of the State of Ohio.
(b) Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Act shall be resolved by reference to such term or provision of the Act
and to interpretation thereof, if any, by the United States courts or in the
absence of any controlling decision of any such court, by rules, regulations or
orders of the Securities and Exchange Commission issued pursuant to said Act. In
addition, where the effect of a requirement of the Act, reflected in any
provision of this Agreement is revised by rule, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
18. NOTICES.
-------
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Trust for this purpose
shall be ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and that the address
of Distributor for this purpose shall be ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇.
9
IN WITNESS WHEREOF, the Trust and Distributor have each caused this
Agreement to be signed in duplicate on their behalf, all as of the day and year
first above written.
ATTEST: THE GANNETT WELSH & KOTLER FUNDS
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------- ---------------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President
ATTEST: IFS FUND DISTRIBUTORS, INC.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------- ---------------------------------
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Senior V.P. & COO
10