SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENTSCHEDULE 14A
INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
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(Name of Registrant as Specified in Its Charter)
THE SANTA BARABARA GROUP OF MUTUAL FUNDS, INC.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
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/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
IMPORTANT NEWS
FOR THE SANTA BARBARA GROUP OF MUTUL FUNDS, INC. SHAREHOLDERS
WHILE WE ENCOURAGE YOU TO READ THE FULL TEXT OF THE ENCLOSED PROXY STATEMENT,
HERE'S A BRIEF OVERVIEW OF MAJOR MATTERS TO BE VOTED UPON.
Q & A ABOUT THE ENCLOSED PROXY MATERIALS
Q. WHAT IS HAPPENING?
A. SBG Capital Management Company, Inc.(SBG) -- NOT YOUR FUND -- has agreed to
a change of control wherein Mr. Stephen Y. Ascher, presently a 50%
shareholder of SBG, will sell all of his stock in SBG to Mr. John P. Odell.
The stock sale will result in a change of control in SBG. In order for SBG
to serve as investment manager of your fund after the stock sale, it is
necessary for your fund to approve a new investment management agreement
with SBG under its new control persons. The following pages elaborate on
Mr. Odell and the proposed new investment management agreement for SBG. A
vote is also being sought on revised Rule 12b-1 plans*, the election of
Directors to the Board of Directors, the approval of a new distribution
agreement, and approval of a new sub-advisory agreement.
Q. WHY AM I BEING ASKED TO VOTE ON THE PROPOSED NEW INVESTMENT MANAGEMENT
AGREEMENT?
A. The Investment Company Act of 1940 requires a vote of the shareholders of a
fund whenever there is a change in control of an investment manager. Mr.
Ascher's sale of his interest to Mr. Odell is such a change of control and
therefore requires fund shareholder approval of a new investment management
agreement with the investment advisor.
Q. WHY AM I BEING ASKED TO VOTE ON PROPOSED NEW 12B-1 DISTRIBUTION PLANS?
A. The Investment Company Act of 1940 requires a vote of the shareholders of a
fund whenever there is a material amendment to, or an assignment of, a
12b-1 Plan. On or about July 15, 1998, Ascher/Decision Services, Inc., the
principal underwriter of the Fund and a party to the current 12b-1 Plans,
resigned as principal underwriter. The Board of Directors of the Fund,
after full deliberations and a vote of the Board as a whole and of the
independent directors, voting separately, chose Declaration Distributor,
Inc. to become the Fund's new principal underwriter. After full
consideration, the Board has decided to continue the 12b-1 Plans with the
new underwriter, which requires new plans and shareholder approval.
Q. WHY AM I BEING ASKED TO VOTE ON A NEW DISTRIBUTION AGREEMENT?
A. On or about July 15, 1998, Ascher/Decision Services, Inc., the principal
underwriter of the Fund and the distributor of the Fund's shares, resigned
as principal underwriter. After careful consideration, the Board of
Directors of the Fund chose Declaration Distributors, Inc. to become the
Fund's new principal underwriter, and entered into an agreement with
Declaration on or about August 1, 1998. Subsequently, the board analyzed
the manner in which the Fund was paying for its services, and decided to
alter its contractual relationships to make them more efficient and to
place a cap on the overall normal operating expenses of the Fund.
Accordingly, as part of that restructuring, the distribution agreement with
Declaration is being amended, and the amended agreement is being submitted
to the shareholders for their approval .
Q. HOW WILL THE SBG CHANGE AFFECT ME AS A FUND SHAREHOLDER?
A. Your fund and your fund investment advisor will not change. You will still
own the same shares in the same fund. The terms of the new investment
management agreement are more advantageous to you than the current
agreement. If the new investment management agreement and Rule 12b-1 plans
are approved, your fund shares will not change, the advisory fees charged
to your fund will decrease, and the fee rate payable under your fund's
12b-1 plan will stay the same. SBG has committed to continue to provide all
resources necessary to provide your fund with top quality investment
management and shareholder services.
Q. WILL THE INVESTMENT ADVISORY AND RULE 12B-1 FEES BE THE SAME?
A. The investment advisory fees paid by your fund will decrease. The 12b-1
fees paid by your fund will stay the same.
Q. WHY AM I BEING ASKED TO VOTE FOR A NEW SUB-ADVISORY AGREEMENT?
A. The current Sub-advisory agreement is between SBG and Robert Bender &
Associates, Inc. With the change in control of SBG and the termination of
the current investment advisory agreement, it will be necessary for SBG to
enter into a new sub-advisory agreement with Robert Bender & Associates, to
continue to allow them to provide investment services to the fund. After
careful consideration, the Board has decided that Robert Bender &
Associates has provided competent investment services to the fund and is
therefore seeking shareholder approval of a new sub-advisory agreement.
Q. WHY AM I BEING ASKED TO VOTE FOR DIRECTORS?
A. The Investment Company Act of 1940 requires that a majority of a fund's
board of directors be elected by the shareholders of that fund. Due to the
change of control in SBG and the pending resignations of Mr. Ascher and
others from the board, new directors must be elected by the shareholders.
The present board earlier formed a nominating committee composed of the
independent directors of the fund to nominate and recommend new board
members to you. The list of nominated board members appears on the sample
ballot described below.
Q. HOW DO THE BOARD MEMBERS OF MY FUND SUGGEST THAT I VOTE?
A. After careful consideration, the board members of your fund, including the
independent members, recommend that you vote "For" all the items on the
enclosed ballot.
Q. WHO IS PAYING THE COST OF THE SHAREHOLDER MEETING AND THIS PROXY
SOLICITATION?
A. SBG Capital Management Company, Inc. -- not your fund -- is paying all
costs of the fund's shareholder meeting and proxy solicitation.
Q. WHOM DO I CALL FOR MORE INFORMATION?
A. Please call Shareholder Services at 1-626-844-1446
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* Rule 12b-1 of the Investment Company Act of 1940 sets forth the terms under
which an investment company (mutual fund) may use fund assets to pay for the
distribution of fund shares. Declaration Distributors, Inc., the principal
underwriter and distributor for each fund, distributes each fund's shares
according to a Rule 12b-1 plan.
<PAGE>
ABOUT THE BALLOT
Shown below is the ballot that you will use to vote on the matters described
above and hereafter in these proxy materials.
1. Elect the following persons as Directors.
(1) Steven W. Arnold, (2) Robert L. Bender, (3) John P. Odell,
(4) John W. Svendsen, (5) William H. Phelps, (6) Harvey A. Marsh,
(7) Wayne Turkheimer, (8) Glory Burns
For All For All Except Withhold All
/ / / / / /
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To withhold authority to vote on any individual nominee(s), please print the
number(s)of the nominee(s) on the line above.
2. Approve a new investment management agreement with SBG Capital Management
Company, Inc. on new terms which result in a decrease in fees to the fund.
For Against Abstain
/ / / / / /
3.A Shareholders Only. Approve a new Rule 12b-1 distribution plan on the same
terms as the current plan.
For Against Abstain
/ / / / / /
3.Y For Class Y Shareholders Only. Approve a new Rule 12b-1 distribution plan
on the same terms as the current plan.
For Against Abstain
/ / / / / /
3.C For Class C Shareholders Only. Approve a new Rule 12b-1 distribution plan
on the same terms as the current plan.
For Against Abstain
/ / / / / /
4. Approve a new distribution agreement with Declaration Distributors, Inc. on
the same terms as the current agreement.
For Against Abstain
/ / / / / /
5. Approve a new sub-advisory agreement with Robert Bender & Associates, Inc.
on new terms which result in a decrease in fees to the fund.
For Against Abstain
/ / / / / /
Signature(s) (All registered owners of accounts shown to the left must sign. If
signing for a corporation, estate or trust, please indicate your capacity or
title.)
X
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Signature Date
X
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Signature Date
PLEASE VOTE TODAY!
Please vote all issues shown on your ballot.
Please vote on each issue using blue or black ink to mark an X in one of the
three boxes provided on each ballot. On Item 1 (election of Directors), mark
- --For All, Withhold All or For All Except. If you mark an X in the For All
Except box, you should print the number(s) relating to the individual(s) for
which you wish to withhold authority. On all other Items, mark -- For, Against
or Abstain. Then sign, date and return your ballot in the accompanying
postage-paid envelope. All registered owners of an account, as shown in the
address on the ballot, must sign the ballot. If you are signing for a
corporation, trust or estate, please indicate your title or position.
THANK YOU FOR MAILING YOUR BALLOT PROMPTLY!
<PAGE>
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The Santa Barbara Group Of Mutual Funds, Inc.
107 South Fair Oaks Blvd., Suite 315
Pasadena, CA 91105
TELEPHONE 1-626-844-1446
September 1, 1998
Dear Shareholder:
As you read in the Questions and Answers (Q & A) on page 1, Mr. Stephen Y.
Ascher, a 50% shareholder of SBG Capital Management Company, Inc., has agreed to
sell all of his shares to Mr. John P. Odell. This sale will result in a change
of control in SBG Capital Management Company, Inc.. (More information about Mr.
Odell can be found inside the proxy statement.)
We're sending this proxy statement to you because your vote is important to
the planned stock sale. Because of the change of control, it is necessary for
your fund to approve a new investment management agreement and the adoption of
new Rule 12b-1 Plans.
As you review these materials, please keep in mind that SBG Capital
Management Company, Inc. -- NOT YOUR FUND -- is being affected by the stock
sale. If the new investment management agreement and Rule 12b-1 Plans are
approved, YOUR FUND SHARES WILL NOT CHANGE, THE ADVISORY FEES CHARGED TO YOUR
FUND WILL DECREASE, AND THE FEE RATE PAYABLE UNDER YOUR FUND'S RULE 12B-1 PLAN
WILL STAY THE SAME. If you approve the new investment management agreement and
Rule 12b-1 Plans, you should continue to receive the high quality investment
management and shareholder services that you have come to expect over the years.
Your Fund Board has approved the proposals and recommends them for your
approval. I encourage you to vote in favor of the proposals. PLEASE VOTE NOW TO
HELP SAVE THE COST OF ADDITIONAL SOLICITATIONS.
As always, we thank you for your confidence and support.
Sincerely,
Steven W. Arnold
President
<PAGE>
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THE SANTA BARBARA GROUP OF MUTUAL FUNDS, INC.
107 South Fair Oaks Blvd., Suite 315
Pasadena, CA 91105TELEPHONE 1-626-844-1446
NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS
SEPTEMBER 30, 1998 AND PROXY STATEMENT
September 1, 1998
To the Shareholders:
You are invited to attend a joint special meeting of shareholders of the
following series of the Santa Barbara Group of Mutual Funds, Inc (the
"Company"):
THE BENDER GROWTH FUND ("BENDER" OR THE "FUND")**
The meeting will be held at 107 South Fair Oaks, Blvd., Suite 315, Pasadena, CA
91105, on Wednesday, September 30, 1998 at 10:00 a.m., Pacific time, for the
following purposes and to transact such other business as may properly come
before the meeting or any adjournment of the meeting:
1. To elect eight (8) Directors to the Board of Directors.
2. To approve a new investment management agreement with SBG Capital
Management Company, Inc. on different terms than the current
agreement.
3. To approve new Rule 12b-1 distribution plans with Declaration
Distributors, Inc. or its successor ("DDI") on the same terms as the
current plans.
4. To approve a new distribution agreement with Declaration Distributors,
Inc. on the same terms as the current plan
5. To approve a new sub-advisory agreement with Robert Bender &
Associates, Inc. on different terms than the current agreement.
The Board of Directors of SBGMF has selected the close of business on August 31,
1998 as the record date for the determination of shareholders of the Fund
entitled to notice of and to vote at the meeting. Shareholders are entitled to
one vote for each share held.
** The Starbuck/Tisdale Growth and Income Fund ("Starbuck") is also a series of
the Santa Barbara Group of Mutual Funds, Inc. However, as of July 31, 1998,
Starbuck had no assets and no shareholders of record, and SBGMF is not presently
offering shares of Starbuck to the public. Accordingly, Starbuck is not included
in this Proxy and will not be mentioned or included in any discussions or
statements of information contained herein.
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PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD. SIGN, DATE
AND RETURN IT IN THE ENVELOPE PROVIDED. TO SAVE THE COST OF ADDITIONAL
SOLICITATIONS, PLEASE MAIL YOUR PROXY PROMPTLY.
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The accompanying proxy is solicited by the Board of Directors (the "Board") of
the Company for voting at the joint special meeting of shareholders of the
Company to be held on Wednesday, September 30, 1998, and at any and all
adjournments thereof (the "Meeting"). This proxy statement was first mailed to
shareholders on or about September 1, 1998.
THE SERIES FUNDS. The Santa Barbara Group of Mutual Funds, Inc.("SBGMF" or
"Company") is a "series company" that issues various series of shares. (Each
series also is sometimes described herein as a "Fund.") Each series has its own
investment objective and policies and operates independently for purposes of
investments, dividends and redemptions.
The series of SBGMF are:
The Bender Growth Fund ("Bender" or the "Fund")
The Starbuck/Tisdale Growth and Income Fund ("Starbuck")**
** As of July 31, 1998, Starbuck had no assets and no shareholders of record,
and SBGMF is not presently offering shares of Starbuck to the public.
Accordingly, Starbuck is not included in this Proxy. The Fund presently is
divided into three classes of shares; Class A Shares, Class Y Shares, and Class
C Shares.
Shares of each Class represent a proportionate interest in that Class.
The shareholders of the Fund are being asked to vote on five items. On Item 1
(election of Directors), Item 2 (approval of new investment management
agreement), Item 4 (approval of a new distribution agreement) and Item 5
(approval of a new sub-advisory agreement), shareholders will vote in the
aggregate and not by class. On Item 3 (approval of new Rule 12b-1 Plans), the
Class Y Shares, Class A Shares and Class C Shares of the Fund will each vote
separately. The Board of Directors of your Company recommends an affirmative
vote on all items. The vote required to approve each item is described under the
section of this proxy statement entitled "Miscellaneous."
The following table indicates which shareholders are solicited with respect to
each Item:
ITEM CLASS A CLASS C CLASS Y
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1. Elect Directors. X X X
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2. Approval of New Investment
Management Agreement. X X X
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3.A Approval of New Rule 12b-1
Plan for Class A Shareholders. X
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3.C. Approval of New Rule 12b-1
Plan for Class Y Shareholders. X
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3.Y. Approval of New Rule 12b-1
Plan for Class C Shareholders. X
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4. Approval of a new Distribution
Agreement with Declaration
Distributors, Inc. X X X
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5. Approval of new Sub-Advisory
Agreement with Bender. X X X
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The Board of Directors has fixed the close of business on August 31, 1998 as the
record date for the determination of shareholders of the Fund entitled to notice
of and to vote at the Meeting. As of July 31, 1998, the Fund had Class A, Class
C and Class Y Shares issued and outstanding as follows:
FUND CLASS A CLASS C CLASS Y
- ---- ------- ------- -------
Bender None 527,732.554 169,941.713
ITEM 1. ELECTION OF BOARD OF DIRECTORS
At the Meeting, eight (8) directors are to be elected to constitute the Board of
Directors of SBGMF. Steven W. Arnold, Robert L. Bender, John W. Svendsen and
William H. Phelps were elected to the Board at a special meeting of shareholders
held on or about December 10, 1996. John P. Odell, Harvey A. Marsh, Wayne
Turkheimer and Glory Burns are standing for election by SBGMF's shareholders for
the first time at the Meeting.
It is intended that the proxies will be voted for the election of the nominees
described below. Each director so elected will serve as a director of the Fund
until the next meeting of shareholders, if any, called for the purpose of
electing directors and until the election and qualification of a successor or
until such director sooner dies, resigns or is removed as provided in the
Articles of Incorporation and By-Laws for SBGMF. Since SBGMF does not hold
annual meetings unless required to do so under the Investment Company Act of
1940, as amended, directors will hold office for an indeterminate period.
All the nominees listed below have consented to serve as directors of SBGMF, if
elected. In case any nominee shall be unable or shall fail to act as a director
by virtue of an unexpected occurrence, the proxies may be voted for such other
person(s) as shall be determined by the persons acting under the proxies in
their discretion.
NAME (DATE OF BIRTH), PRINCIPAL YEAR FIRST BECAME
OCCUPATION AND AFFILIATIONS A DIRECTOR
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(1) STEVEN W. ARNOLD* (8/6/55) 1996
Co-President, Director and Shareholder
Of SBG Capital Management Company, Inc.
Marketing Manager for Robert Bender &
Associates, Inc. President, Director and
Shareholder of SBGMF.
(2) JOHN P. ODELL* (3/22/66) Standing for initial election
Co-President and shareholder of SBG
Capital Management Company, Inc.
Shareholder of SBGMF.
(3) ROBERT L. BENDER* (5/28/37) 1996
President and sole shareholder of
Robert L. Bender & Associates, Inc. Sub-
Adviser to the Fund since inception.
(4) WILLIAM H. PHELPS (8/24/54) 1997
Vice President & Associate General
Counsel, Kidder, Peabody & Co., since 1991.
Attorney and general counsel to securities
Industry firms since 1979. B.A., Colorado
College, 1976. J.D., University of California,
Hastings College of Law, 1979.
(5) JOHN W. SVENDSEN (5/2/40) 1996
Retired private Investor. Director
And Shareholder of SBGMF.
(6) HARVEY MARSH (10/15/38) Standing for initial election
Self-employed financial consultant since
1996. Vice President, Finance, FACTRetirement
Services, from 1993-1996.Certified Public
Accountant. B.B.A., Loyola Marymount University,
1961. Shareholder of SBGMF.
(7) WAYNE TURKHEIMER (11/30/52) Standing for initial election
Attorney in solo practice since 1986,
specializing In general business, probate
and estate law. A.B from UCLA, Cum laude, 1974.
J.D., USC Law Center, 1977.
(8) GLORY BURNS (12/29/52) Standing for initial election
Professor, Colorado State University since
1991. B.S., university of Colorado, 1975.
M.B.A., University Of Denver, 1980.
J.D., University of Puget Sound, 1978.
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* Interested persons of the Fund as defined in the Investment Company Act of
1940 ("1940 Act") because of their positions with SBG, the investment manager of
the Fund, and/or Robert Bender & Associates, Inc., the sub-advisor of the Fund.
The Board of Directors of SBGMF formed a nominating committee, the members of
which are Watson M. Laetsch, William H. Phelps, Hugh M. Grant, and John W.
Svendsen. It proposed the nominees for election by the shareholders, and the
Board of Directors, including the non-interested directors, concurred.
Shareholders wishing to submit the name of a candidate for consideration by the
nominating committee should submit their recommendations to the secretary of
SBGMF.
The Board met four times during the Fund's most recently completed fiscal year.
Each then current director attended 75% or more of the respective meetings of
the Board and the committees of which he was a member that were held during that
period.
The Fund pays directors who are not interested persons of the Fund an annual
retainer and an attendance fee for each Board meeting and committee meeting
attended, plus expense reimbursement. As reflected above, certain of the
directors are officers and/or shareholders in the investment manager and are
therefore considered to be "interested persons" as defined in the Investment
Company Act of 1940. Directors or officers who are "interested persons" receive
no compensation from SBGMF.
The table below shows, for each director entitled to receive compensation from
SBGMF, the aggregate compensation paid or accrued by SBGMF for its most recently
completed fiscal year and the total compensation that SBGMF paid to each
director during the calendar year 1997.
NAME OF DIRECTOR COMPENSATION PAID BY FUND
- ---------------------------- -----------------------------------------
Fiscal Year Calendar Year
Ending 3/31/98 ending 12/31/97
-------------- ---------------
(1) Watson W. Laetsch $2000 $2000
(2) Hugh M. Grant $2000 $2000
(3) John W. Svendsen $2000 $2000
(4) William H. Phelps $2000 $0.00
FUND OFFICERS. Information about the executive officers of SBGMF, with their
respective dates of birth and terms as Fund officers indicated, is set forth
below.
Stephen Y. Ascher (12/12/35) Elected Chairman of the Board and Chief Executive
Officer of SBGMF in 1992. Has served in that capacity since election.
Steven W. Arnold (8/6/55) Elected President of SBGMF by the Board of Directors
in 1996. Has served in that capacity since election.
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The officers of SBGMF are elected by the Board of SBGMF at an annual or special
meeting of the Board to serve until their successors are elected and qualified.
SHAREHOLDINGS
Listed below is the number of shares of the Fund owned beneficially by each
current and proposed director as of July 31, 1998. Also shown is the number of
shares owned beneficially by the directors/proposed directors and officers as a
group. In each case, the amounts shown are less than 5% of the outstanding
shares of each class of SBGMF or any series of SBGMF:
NAME OF DIRECTOR/
PROPOSED DIRECTOR Class C Class Y
- ----------------- ------- -------
(1) Stephen Y. Ascher(a) 2,500 3024.194
(2) Steven W Arnold NONE 1431.591
(3) John P. Odell NONE 13184.235
(4) Watson W. Laetsch(a) NONE 2759.980
(5) John W. Svendsen NONE 21,075.657
(6) Robert L. Bender 10.00 11820.967
(7) William H. Phelps NONE NONE
(8) Harvey Marsh 916 NONE
(9) Wayne Turkheimer NONE NONE
(10) Glory Burns NONE NONE
The Group As A Whole 3426 50,536.64
(a) Resigning effective September 30, 1998
As of July 31, 1998, no person is known to SBGMF to own beneficially more than
five percent of the shares of any class or series of SBGMF, except as shown in
Exhibit A.
BOARD OF DIRECTORS RECOMMENDATION
The Board recommends that shareholders vote FOR ALL of the Directors nominated
by the Nominating Committee to serve as Directors of SBGMF.
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<PAGE>
ITEM 2. NEW INVESTMENT MANAGEMENT AGREEMENT
INTRODUCTION
SBG Capital Management Company, Inc. ("SBG") is the investment adviser and
manager for the Fund. Mr. Stephen Y. Ascher, a 50% shareholder of SBG, has
entered into an agreement with Mr. John P. Odell dated as of July 14, 1998 (the
"Stock Sale Agreement"), whereby Mr. Ascher will sell all of his stock in SBG to
Mr. Odell (the "Stock Sale").
Consummation of the Stock Sale will constitute an "assignment," as that term is
defined in the Investment Company Act of 1940 (the "1940 Act"), of the Fund's
current investment management agreement with SBG. As required by the 1940 Act,
each current investment management agreement provides for its automatic
termination in the event of its assignment. In anticipation of the Stock Sale, a
new investment management agreement between SBGMF and SBG ("management
agreement") is being proposed for approval by shareholders of the Fund. A copy
of the form of the new management agreement is attached hereto as Exhibit B. THE
NEW MANAGEMENT AGREEMENT FOR THE FUND IS ON THE SAME TERMS AS THE CURRENT
MANAGEMENT AGREEMENT, EXCEPT THAT THE MANAGEMENT FEES PAYABLE TO SBG UNDER THE
NEW AGREEMENT ARE LOWER.
BOARD OF DIRECTORS RECOMMENDATION
The Board met on August 20, 1998 to consider the Stock Sale and its anticipated
effects upon SBG and the investment management and other services provided to
SBGMF by SBG. The Board of SBGMF, including a majority of the directors who are
not parties to such agreement or interested persons of any such party, voted to
approve the new management agreement and to recommend it to shareholders for
their approval.
For information about the Board's deliberations and the reasons for its
recommendation, please see "Board of Directors Evaluation" near the end of this
Item 2.
The Board recommends that shareholders vote FOR approval of the new management
agreement.
INVESTMENT MANAGEMENT AGREEMENT
The current and new management agreements both provide that SBGMF's investment
manager will act as investment adviser, manage SBGMF's investments, administer
its business affairs, furnish offices, necessary facilities and equipment,
provide clerical, bookkeeping and administrative services, provide shareholder
and information services and permit any of its officers or employees to serve
without compensation as Directors or officers of SBGMF if duly elected to such
positions. Under the current and new management agreements, SBGMF agrees to
assume and pay the charges and expenses of its operations including, by way of
example and not by way of limitation, the compensation of the directors other
than those affiliated with the investment manager, charges and expenses of
independent auditors, of legal counsel, of any transfer or dividend disbursing
agent, of any registrar of SBGMF and of the custodian (including fees for
safekeeping of securities), costs of calculating net asset value, all costs of
acquiring and disposing of portfolio securities, interest, if any, on
obligations incurred by SBGMF, costs of share certificates, membership dues in
the Investment Company Institute or any similar organization, reports and
notices to shareholders, other like miscellaneous expenses and all taxes and
fees to federal, state or other governmental agencies.
Listed below is a comparison of the annual management fee rates as a percentage
of average daily net assets payable under the current management agreement and
the new management agreement for SBGMF.
APPLICABLE ASSETS CURRENT AGREEMENT NEW AGREEMENT
- ----------------- ----------------- -------------
$0 - $250,000........................ 1.25% 0.50%
$250,000 - $1,000,000................ 1.25% 0.50%
$1,000,000 - $2,500,000.............. 1.25% 0.50%
$2,500,000 - $5,000,000.............. 1.25% 0.50%
$5,000,000 - $7,500,000.............. 1.25% 0.50%
$7,500,000 - $10,000,000............. 1.25% 0.50%
$10,000,000 - $12,500,000............ 1.25% 0.50%
Over $12,500,000..................... 1.25% 0.50%
Each management agreement provides that SBGMF 's investment manager shall not be
liable for any error of judgment or of law, or for any loss suffered by SBGMF in
connection with the matters to which the management agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of SBGMF's investment manager in the performance of its obligations and
duties or by reason of its reckless disregard of its obligations and duties
under the management agreement.
Each management agreement may be terminated by SBGMF or series thereof without
penalty upon sixty (60) days written notice by SBGMF, or ninety days notice by
SBG, or by a majority vote of the outstanding shares of SBGMF or series thereof,
and automatically terminates in the event of its assignment.
The new management agreement for SBGMF will be dated as of the date of the
consummation of the Stock Sale. The Stock Sale is expected to occur in the third
quarter of 1998, but in no event later than October 1, 1998. The new management
agreement will continue in effect for an initial term of two years, and may
continue thereafter from year to year if specifically approved at least annually
by vote of "a majority of the outstanding voting securities" of SBGMF, as
defined under the 1940 Act, or by the Board and, in either event, the vote of a
majority of the directors who are not parties to the agreement or interested
persons of any such party, cast in person at a meeting called for such purpose.
At the Board meeting on August 20, 1998, Mr. Odell and Mr. Arnold of SBG also
discussed the new management agreement as it would relate to a planned
restructuring of the Fund's contracts with all of its service providers,
including the distribution agreement discussed in Item 4. Presently, the Fund
enters into contracts with each service provider and pays those providers out of
Fund assets. If the total of those fees exceeds the Fund's self-imposed fee cap,
the Fund looks to the Adviser to waive its fees and/or absorb certain expenses
in order to allow the Fund to maintain its expense limitations. Accordingly, the
Adviser has periodically waived fees and absorbed expenses to maintain the
Fund's expense ratios (See Exhibit G and expense table below). The new
management agreement is designed to work in conjunction with a New Operating
Services Agreement between the Fund and the Adviser. Under the Operating
Services Agreement, the Adviser would be responsible for providing, or arranging
to provide, essentially all of the services to the Fund. If the Adviser chooses
to contract out such services, the Adviser, not the Fund, will pay for such
services. The Adviser explained to the Board that such actions were being
contemplated in order to simplify the expenses of the Fund and "lock in" the
Fund's expense ratios without the need for the Fund be reimbursed by the
Adviser. Finally, such a change would result in a substantial reduction in fees
to the Fund. A comparison of the Fees of the Fund under the present and
anticipated fee structure is shown in the table below:
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING
EXPENSE CATEGORY CLASS A CLASS Y CLASS C
Present New Present New Present New
------- --- ------- --- ------- ---
<S> <C> <C> <C> <C> <C> <C>
Investment Adviser Fees 1.25% 0.50% 1.25% 0.50% 1.25% 0.50%
12b-1 Fees 0.25% 0.25% 0.25% 0.25% 1.00% 1.00%
Other Expenses (1) 3.09% 1.05% 3.09% 1.75% 3.09% 1.75%
- ------------------ ----- ----- ----- ----- ----- -----
Total Expenses (2) 4.59% 1.80% 4.49% 2.50% 5.34% 3.25%
</TABLE>
(1) Under the Fund's "Present" construction, "Other Expenses" included fees
charged to the Fund as a result of contracts between the Fund and its
distributor, administrator and transfer agent. Those fees were gross fees
before any expense reimbursements as of March 31, 1998. After expense
reimbursement by the Adviser, net "Other Expenses" for each share class
were 2.50%. Under the "New" category, "Other Expenses" will consist only of
the Operating Services Agreement between the Fund and the Adviser. The
Adviser will be responsible for providing, or arranging to provide, all
necessary services to the Fund. Accordingly, the Fund's expenses will be
set at substantially lower contracted levels, without the need for any fee
waivers or expense reimbursements. (2) Under the Fund's "Present"
construction, "Total Expenses" after expense reimbursements were 2.75% for
Class A and Y shares, and 3.50% for Class C shares as of March 31, 1998.
"Total Expenses" under the "New" category apply to amounts in excess of
$2.5 million for Class Y shares, $7.0 million for Class C shares and all
assets in Class A shares. For amounts over $2.5 million in Class Y shares
and $7.5 million in Class C shares, "Total Expenses" will be 1.80% and
2.55%, respectively. For amounts over $2.5 million in Class Y shares,
"Other Expenses" will be 1.05% for both Classes of shares.
SBG has acted as investment adviser and manager for SBGMF since it commenced
public offering of its shares. On August 20, 1998, the Board voted to continue
the current agreement until September 30, 1998, and further voted to recommend
the new agreement to shareholders for their approval.
BOARD OF DIRECTORS EVALUATION
At a regular meeting of the Board on July 15, 1998, the Board was informed that
Mr. Ascher had entered into an agreement with Mr. Odell pursuant to which Mr.
Ascher's entire interest in SBG would be acquired by Mr. Odell in a stock sale
transaction. The definitive Stock Sale documents were signed on July 14, 1998.
There was discussion of, and questioning about, the terms of the Stock Sale and
Mr. Odell's plans for SBG and the Funds. Subsequent to the regular Board
meeting, the Board was given Mr. Odell's financial reports and other information
regarding Mr. Odell. In addition, counsel to the Fund and the independent
directors prepared and distributed an analysis of the Board's fiduciary
obligations. At a special meeting on August 20, 1998, the directors discussed
the initial information provided about Mr. Odell and reviewed their fiduciary
obligations. Mr. Odell, who was present by invitation, presented a review of
matters relevant to the discussions. There was extended discussion of, and
questioning about, Mr. Odell's qualifications as an investment advisor and his
plans for SBG and the Fund. As a result of their investigation and consideration
of the Stock Sale and the new management agreement, at its meeting on August 20,
1998, the Board voted to approve the new management agreement and to recommend
it to the shareholders of the Fund for their approval.
During its deliberations, the Board used outside assistance in its analysis of
financial and other aspects of the Stock Sale to help evaluate the potential
effects upon SBG and SBGMF. Throughout the review process the independent
directors had the assistance of legal counsel.
The Board obtained from SBG and Mr. Odell information regarding Mr. Odell, the
Stock Sale, and the future plans of the parties. Included in the information
furnished to and discussed with the Board were financial statements and other
representations of the financial condition of Mr. Odell In connection with their
deliberations, the Board obtained certain assurances from Mr. Odell, including
the following: - - The Stock Sale will not result in any change in any Fund's
investment objectives or policies.
- - - The Stock Sale is not expected to result in any adverse change in the
investment management or operations of the Fund, or the investment personnel
managing the Fund; Mr. Odell neither plans nor proposes to make any material
change in the composition of senior management of SBG; and Mr. Odell neither
plans nor proposes to make any adverse change in the manner in which investment
advisory services are rendered to the Fund.
In connection with the Board's approval of the new management agreement, the
Board considered that the terms of the Stock Sale do not require any change in
the Fund's investment objective or policies, the investment management or
operation of SBGMF, or the investment personnel managing the Fund. If, after the
Stock Sale, changes are proposed that might materially affect SBG's services to
SBGMF, the Board will consider the effect of those changes and take such action
as it deems advisable under the circumstances.
In evaluating the new management agreement, the Board took into account that the
new management agreement for SBGMF, including the terms relating to the services
to be provided and the fees and expenses payable by SBGMF, is on the same terms
as the current management agreement, except that the fees payable to SBG have
been reduced. The Board noted that, in previously approving the continuation of
the current management agreement, the Board had considered a number of factors,
including the nature and quality of services provided by SBG; investment
performance, both of SBGMF itself and relative to that of competitive investment
companies; investment management fees and expense ratios of SBGMF and
competitive investment companies; SBG profitability from managing the Funds;
fall-out benefits to SBG from its relationship to SBGMF, including revenues
derived from services provided to SBGMF by affiliates of SBG; and the potential
benefits to SBG and to SBGMF and their shareholders of receiving research
services from broker/dealer firms in connection with the allocation of portfolio
transactions to such firms. The Board discussed the Stock Sale and the financial
condition of Mr. Odell with the senior management of SBG and Mr. Odell and among
themselves.
In evaluating the new management agreement, the Board gave great, though not
controlling, weight to the fact that the new management agreement would not
result in any material change to the management of the Fund or the provision of
services to the Fund by the Adviser. The nature and quality of services provided
by SBG; investment performance, both of SBGMF itself and relative to that of
competitive investment companies; investment management fees and expense ratios
of SBGMF and competitive investment companies; SBG profitability from managing
the Funds; fall-out benefits to SBG from its relationship to SBGMF, including
revenues derived from services provided to SBGMF by affiliates of SBG; and the
potential benefits to SBG and to SBGMF and their shareholders of receiving
research services from broker/dealer firms in connection with the allocation of
portfolio transactions to such firms, were all equally important factors leading
the Board to conclude that the new management agreement would be of benefit to
the Fund. Of equal importance to the Board was the fact that approval of the new
management agreement would result in a substantial decrease in the ongoing
expenses of the Fund, and would result in a simplified fee structure to the
Fund. Lastly, the Board gave careful consideration to the financial condition of
Mr. Odell, his ability to contribute to the ongoing financial viability of the
Adviser, and his assurances to the Board that the Adviser would continue to
provide services to the Fund at the same level and in the same manner as in the
past.
As a result of their investigation and consideration of the Stock Sale and the
new management agreement, at its meeting on August 20, 1998, the Board voted to
approve the new management agreement and to recommend it to the shareholders of
SBGMF for their approval.
The Board of SBGMF recommends that shareholders vote FOR approval of the new
management agreement.
- --------------------------------------------------------------------------------
ITEM 3. NEW RULE 12B-1 DISTRIBUTION PLAN (FOR CLASS A, CLASS Y AND CLASS C
SHAREHOLDERS INDEPENDENTLY)
INTRODUCTION
Rule 12b-1 under the 1940 Act (the "Rule"), provides, among other things, that
an investment company (mutual fund) may bear expenses of distributing its shares
only pursuant to a plan (a "Rule 12b-1 Plan") adopted in accordance with the
Rule. Ascher/Decision Services, Inc., previously acting as principal underwriter
and distributor for the Fund, distributed the Fund's Class A Shares, Class Y
Shares and Class C Shares pursuant to a Rule 12b-1 Plan.
On or about July 15, 1998, Ascher/Decision Services, Inc. resigned as principal
underwriter of the Funds, and was replaced, pursuant to a vote of SBGMF's Board
and independent directors, voting separately, by Declaration Distributors, Inc.
("DDI"). As required by the 1940 Act, each Fund's Rule 12b-1 Plan provides for
its automatic termination in the event of its assignment. Accordingly, a new
Rule 12b-1 Plan is being submitted for shareholder approval of each Fund's Class
A, Class Y and Class C shareholders. THE NEW RULE 12B-1 PLANS ARE ON THE SAME
TERMS AS SBGMF'S CURRENT RULE 12B-1 PLANS. A form of the new Rule 12b-1 Plan for
each Class is attached hereto as Exhibit C.
NO CHANGE IN FEES IS BEING PROPOSED.
On August 20, 1998, the Board, including a majority of the "non-interested"
Directors, voted to approve the new Rule 12b-1 Plans for each Class of Shares,
and directed that each Plan be submitted to the Class A, Class Y and Class C
shareholders of SBGMF at the Meeting, along with a recommendation that such
shareholders approve such Rule 12b-1 Plans.
If each new Rule 12b-1 Plan is approved by its Share Class, it will become
effective for that class and will replace the current Rule 12b-1 Plan
immediately. If the shareholders of a Class do not approve the new Rule 12b-1
Plan, the Board would consider appropriate action.
DESCRIPTION OF THE NEW RULE 12B-1 PLANS
As noted above, a form of each new Rule 12b-1 Plan is attached as Exhibit C and
this summary is qualified in its entirety by reference to Exhibit C. THE TERMS
OF THE NEW RULE 12B-1 PLANS DESCRIBED BELOW ARE THE SAME AS IN THE CURRENT RULE
12B-1 PLAN FOR EACH CLASS.
Under each Rule 12b-1 Plan, DDI receives a distribution fee, payable as an
expense of the Class A, Class Y and the Class C Shares of the Fund, which DDI
uses to pay for distribution services for those classes. DDI bears all the
expenses of providing such services, including the payment of any commissions or
distribution fees. DDI provides for the preparation of advertising or sales
literature and bears the cost of printing and mailing prospectuses to persons
other than shareholders. DDI bears the cost of qualifying and maintaining the
qualification of Shares for sale under the securities laws of the various
states, and SBGMF bears the expense of registering its Shares with the SEC. DDI
may enter into related selling group agreements with various broker-dealers,
including affiliates of DDI, that provide distribution services to investors.
DDI also may provide some of the distribution services. (See "Other Information
- - -- Underwriter" below.) Before August 1, 1998, Ascher/Decision Services, Inc.
("ADS") served as the Fund's principal underwriter. On August 1, 1998, SBGMF and
ADS terminated the underwriting agreement existing between them, and the Board,
as a whole and upon the vote of a majority of the disinterested Directors,
entered into an agreement with DDI, and DDI assumed, all of the rights,
interests, liabilities, duties and obligations previously undertaken by ADS
under the underwriting agreement.
Class A Shares are sold to the public at net asset value less a sales charge of
5.75% of the dollars invested in the Fund. DDI receives a distribution fee,
payable monthly for as long as the shares are owned, at the annual rate of 0.25%
of average daily net assets attributable to Class A Shares.
Class Y Shares are sold to institutional investors only and to certain
employees, directors and family members of SBGMF, SBG and others. The Shares are
sold at their net asset value, without sales charges. DDI receives a
distribution fee, payable monthly for as long as the shares are owned, at the
annual rate of 0.25% of average daily net assets attributable to Class Y Shares.
Class C Shares are sold to the public at net asset value. DDI receives a
servicing fee, payable monthly for as long as the shares are owned, at the
annual rate of 0.25% of average daily net assets attributable to Class C Shares.
This fee is accrued daily as an expense of Class C Shares. DDI also receives a
distribution fee, payable monthly for as long as the shares are owned, at the
annual rate of 0.75% of average daily net assets attributable to Class C Shares.
This fee is accrued daily as an expense of Class C Shares. DDI currently pays
firms for sales of Class C Shares a distribution fee, payable quarterly, at an
annual rate of .75% of net assets attributable to Class C Shares maintained and
serviced by the firm. A firm becomes eligible for the distribution fee based
upon assets in accounts in the 13th month of purchase and the fee continues
until terminated by DDI or the Fund.
The table below shows, as to the Rule 12b-1 Plan for the Class A Shares, Class Y
Shares and the Class C Shares of the Fund, the date adopted, the date of last
amendment (if any), the date last approved by the Directors and the date to
which it continues.
CLASS A RULE 12B-1 PLAN
-----------------------
DATE APPROVAL DATE
FUND ADOPTED BY DIRECTORS CONTINUED TO
- --------------------------------------------------------------------------------
BENDER 06/01/98 8/20/98 9/30/98
CLASS Y RULE 12B-1 PLAN
-----------------------
DATE APPROVAL DATE
FUND ADOPTED BY DIRECTORS CONTINUED TO
- --------------------------------------------------------------------------------
BENDER 12/10/96 8/20/98 9/30/98
CLASS C RULE 12B-1 PLAN
-----------------------
DATE APPROVAL DATE
FUND ADOPTED BY DIRECTORS CONTINUED TO
- --------------------------------------------------------------------------------
BENDER 12/10/96 8/20/98 9/30/98
The table below shows the distribution fees paid by the Fund to ADS (as
predecessor to DDI) for its Class A Shares, Class Y Shares and Class C Shares
for the most recent fiscal year.
CLASS A PLAN CLASS Y PLAN CLASS C PLAN
FUND FEES PAID FEES PAID FEES PAID
TO ADS TO ADS TO ADS
YEAR END YEAR END YEAR END
($000) ($000) ($000)
- --------------------------------------------------------------------------------
THE FUND NONE $585.00 $6,594.00
The new Rule 12b-1 Plans will continue in effect for an initial term of one
year, and may continue thereafter from year to year for a class if specifically
approved at least annually by vote of "a majority of the outstanding voting
securities" of that class, as defined under the 1940 Act, or by the Board,
including, in either event, the vote of a majority of the "non interested"
Directors, cast in person at a meeting called for such purpose. Pursuant to the
new Rule 12b-1 Plans, DDI will prepare reports to the Board on a quarterly basis
for the Fund's Class A Shares, Class Y Shares and Class C Shares showing the
amounts paid to the various firms and such other information as from time to
time the Board may reasonably request.
In approving the new Rule 12b-1 Plans, the Board determined, as with the current
Rule 12b-1 Plans, that there is a reasonable likelihood that the new Rule 12b-1
Plans would benefit SBGMF, the Fund and its shareholders. In doing so, the Board
considered several factors, including that the new Rule 12b-1 Plans would (i)
enable investors to choose the purchasing option best suited to their individual
situations, thereby encouraging current shareholders to make additional
investments in SBGMF and attracting new investors and assets to SBGMF to the
benefit of the Fund and its shareholders, (ii) facilitate distribution of each
series' shares, (iii) help maintain the competitive position of SBGMF in
relation to other funds that have implemented or are seeking to implement
similar distribution arrangements; and (iv) permit possible economies of scale
through increased Fund size.
BOARD OF DIRECTORS RECOMMENDATION
As a result of their consideration of the foregoing factors, the Board voted to
approve the new Rule 12b-1 Plans and to submit them to the shareholders for
their approval.
The Board recommends that shareholders vote FOR approval of the new Rule 12b-1
Plans.
- --------------------------------------------------------------------------------
ITEM 4. NEW DISTRIBUTION AGREEMENT WITH DECLARATION DISTRIBUTORS, INC.
INTRODUCTION
On or about July 15, 1998, Ascher/Decision Services, Inc. served notice to the
Board of Directors of SBGMF that it was resigning as principal underwriter of
the Fund, such resignation to be effective as of August 1, 1998. Before August
1, 1998, Ascher/Decision Services, Inc. ("ADS") served as the Fund's principal
underwriter. In response to the resignation of ADS, the Board, as a whole and
upon the vote of a majority of the disinterested Directors, entered into an
agreement with DDI, and DDI assumed all of the rights, interests, liabilities,
duties and obligations previously undertaken by ADS under the underwriting
agreement. Subsequent to the Board meeting, management of the Fund reevaluated
the structure of the Fund as that structure related to the payment of fees and
the controlling of Fund expenses. As a result of management's evaluation, it was
decided to restructure several contractual relationships between the Fund and
its service providers in order to place a cap on normal fund expenses and to
better define the roles and responsibilities of the various providers of
services to the Fund.
Under the new structure, SBG will act as the Fund's manager pursuant to an
operating services agreement in which SBG will provide, or arrange to provide,
essentially all operational services to the Fund on an ongoing basis. In turn,
SBG will arrange for DDI to act as distributor and principal underwriter for the
Fund under a contract identical in all respects to the current agreement except
that the new agreement will include SBG as a party and SBG will be responsible
for the payment of all fees due DDI under the agreement. SBGMF will pay an
advisory fee to SBG under an investment advisory agreement, and that along with
the fee payable under the operating services agreement, will constitute the only
fees payable by the Fund for its normal operating expenses. This will have the
effect of capping SBGMF's normal operating expenses, and will make SBG
responsible for the provision of essentially all services to the Fund. A copy of
the new distribution agreement is attached as Exhibit D and is incorporated
herein by reference.
At a special meeting of the Board of Directors of SBGMF on August 20, 1998, the
Board reviewed the recommendations of management relating to the restructuring
of Fund contracts, and the Board, as a whole and upon the vote of a majority of
the disinterested Directors, approved the new distribution agreement and
directed that the distribution agreement be submitted to the shareholders of
SBGMF at the Meeting, along with a recommendation that the shareholders approve
the new distribution agreement.
In approving the new distribution agreement, the Board considered several
factors, including (1) that the new agreement was substantially the same as the
agreement previously approved by the board at its July 15, 1998 meeting, and (2)
by approving the new agreement, the Fund would be better able to control its
normal operating expenses and substantially lower those expenses on an ongoing
basis.
BOARD OF DIRECTORS RECOMMENDATION
As a result of their consideration of the foregoing factors, the Board voted to
approve the distribution agreement and to submit it to the shareholders for
their approval.
The Board recommends that shareholders vote FOR approval of the new Distribution
Agreement.
- --------------------------------------------------------------------------------
ITEM 5. NEW SUB-ADVISORY AGREEMENT WITH ROBERT BENDER & ASSOCIATES, INC.
INTRODUCTION
Robert Bender & Associates, Inc.("RBA") acts as the investment advisor to SBGMF
under a sub-advisory contract with SBG. Mr. Stephen Y. Ascher, a 50% shareholder
of SBG, has entered into an agreement with Mr. John Odell dated as of July 14,
1998 (the "Stock Sale Agreement"), whereby Mr. Ascher will sell all of his stock
in SBG to Mr. Odell (the "Stock Sale").
Consummation of the Stock Sale will constitute an "assignment," as that term is
defined in the Investment Company Act of 1940 (the "1940 Act"), of SBG's current
sub-advisory agreement with RBA. As required by the 1940 Act, each current
investment management agreement provides for its automatic termination in the
event of its assignment. In anticipation of the Stock Sale, a new sub-advisory
agreement between RBA and SBG ("sub-advisory agreement") is being proposed for
approval by shareholders of SBGMF. A copy of the form of the new sub-advisory
agreement is attached hereto as Exhibit E. THE NEW SUB-ADVISORY AGREEMENT FOR
SBGMF IS ON THE SAME TERMS AS THE CURRENT AGREEMENT, EXCEPT THAT THE MANAGEMENT
FEES PAYABLE TO RBA UNDER THE NEW AGREEMENT ARE LOWER.
BOARD OF DIRECTORS RECOMMENDATION
The Board met on August 20, 1998 to consider the Stock Sale and its anticipated
effects upon SBG and the investment management and other services provided to
SBGMF by SBG and RBA. The Board of SBGMF, including a majority of the directors
who are not parties to such agreement or interested persons of any such party,
voted to approve the new sub-advisory agreement and to recommend it to
shareholders for their approval.
For information about the Board's deliberations and the reasons for its
recommendation, please see "Board of Directors Evaluation" near the end of this
Item 5.
The Board recommends that shareholders vote FOR approval of the new sub-advisory
agreement.
SUB-ADVISORY AGREEMENT
The current and new sub-advisory agreements both provide that the Fund's
investment manager will act as investment adviser and manage the Fund's
investments, administer its business affairs, furnish offices, necessary
facilities and equipment, provide clerical, bookkeeping and administrative
services, provide shareholder and information services and permit any of its
officers or employees to serve without compensation as Directors or officers of
SBGMF if duly elected to such positions. Under the current and new sub-advisory
agreements, the Fund agrees to assume and pay the charges and expenses of its
operations including, by way of example and not by way of limitation, the
compensation of the directors other than those affiliated with the investment
manager, charges and expenses of independent auditors, of legal counsel, of any
transfer or dividend disbursing agent, of any registrar of SBGMF and of the
custodian (including fees for safekeeping of securities), costs of calculating
net asset value, all costs of acquiring and disposing of portfolio securities,
interest, if any, on obligations incurred by SBGMF, costs of share certificates,
membership dues in the Investment Company Institute or any similar organization,
reports and notices to shareholders, other like miscellaneous expenses and all
taxes and fees to federal, state or other governmental agencies.
Listed below is a comparison of the annual management fee rates as a percentage
of average daily net assets payable under the current sub-advisory agreement and
the new sub-advisory agreement for SBGMF The fees payable to RBA under both
agreements is paid by SBG, not the Fund.
APPLICABLE ASSETS CURRENT AGREEMENT NEW AGREEMENT
- ----------------- ----------------- -------------
$0 - $250,000........................ 0.50% 0.40%
$250,000 - $1,000,000................ 0.50% 0.40%
$1,000,000 - $2,500,000.............. 0.50% 0.40%
$2,500,000 - $5,000,000.............. 0.50% 0.40%
$5,000,000 - $7,500,000.............. 0.50% 0.40%
$7,500,000 - $10,000,000............. 0.50% 0.40%
$10,000,000 - $12,500,000............ 0.50% 0.40%
Over $12,500,000 .................... 0.50% 0.40%
Each sub-advisory agreement provides that the Fund's investment adviser shall
not be liable for any error of judgment or of law, or for any loss suffered by
SBGMF in connection with the matters to which the sub-advisory agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Fund's investment adviser in the performance of
its obligations and duties or by reason of its reckless disregard of its
obligations and duties under the management agreement.
Each sub-advisory agreement may be terminated by SBGMF without penalty upon
sixty (60) days written notice by SBGMF, or ninety days notice by RBA, or by a
majority vote of the outstanding shares of the Fund, and automatically
terminates in the event of its assignment.
The new sub-advisory agreement will be dated as of the date of the consummation
of the Stock Sale. The Stock Sale is expected to occur in the third quarter of
1998, but in no event later than October 1, 1998. The new sub-advisory agreement
will continue in effect for an initial term of two years, and may continue
thereafter from year to year if specifically approved at least annually by vote
of "a majority of the outstanding voting securities" of the Fund, as defined
under the 1940 Act, or by the Board and, in either event, the vote of a majority
of the directors who are not parties to the agreement or interested persons of
any such party, cast in person at a meeting called for such purpose.
RBA has acted as investment adviser for the Fund since it commenced public
offering of its shares. At a meeting of the Board on August 20, 1998, the Board,
voting as a whole and upon a vote of a majority of the "disinterested"
directors, voted to continue the current sub-advisory agreement until September
30, 1998.
BOARD OF DIRECTORS EVALUATION
At a regular meeting of the Board on July 15, 1998, the Board was informed that
Mr. Ascher had entered into an agreement in principle with Mr. Odell pursuant to
which Mr. Ascher's entire interest in SBG would be acquired by Mr. Odell in a
stock sale transaction. The definitive Stock Sale documents were signed on July
14, 1998. There was discussion of, and questioning about, the terms of the Stock
Sale and Mr. Odell's plans for SBG and the Funds. The Board also examined the
performance of RBA in light of Mr. Odell's representations that RBA would
continue to act as sub-advisor to SBGMF. Throughout the review process the
independent directors had the assistance of legal counsel.
In evaluating the new sub-advisory agreement at its meeting on August 20, 1998,
the Board took into account that the new sub-advisory agreement for SBGMF,
including the terms relating to the services to be provided, is on the same
terms as the current sub-advisory agreement, except that the fees payable to RBA
have been reduced. The Board noted that, in previously approving the
continuation of the current sub-advisory agreement, the Board had considered a
number of factors, including the nature and quality of services provided by RBA;
investment performance, both of SBGMF itself and relative to that of competitive
investment companies; investment management fees and expense ratios of SBGMF and
competitive investment companies; RBA profitability from managing the Bender
Growth Fund; fall-out benefits to RBA from its relationship to SBGMF, including
revenues derived from services provided to SBGMF by affiliates of RBA; and the
potential benefits to RBA and to SBGMF and their shareholders of receiving
research services from broker/dealer firms in connection with the allocation of
portfolio transactions to such firms.
As a result of their investigation and consideration of the Stock Sale and the
new sub-advisory agreement, at its meeting on August 20, 1998, the Board voted
to approve the new sub-advisory agreement and to recommend it to the
shareholders of SBGMF for their approval.
The Board of SBGMF recommends that shareholders vote FOR approval of the new
sub-advisory agreement.
- --------------------------------------------------------------------------------
OTHER INFORMATION
UNDERWRITER
Declaration Distributors, Inc. ("DDI") is a broker/dealer registered as such
with the Securities and Exchange Commission, and is a member in good standing of
the National Association of Securities Dealers. DDI has been providing
underwriting services to mutual fund companies for ten years. DDI is a
wholly-owned subsidiary of Declaration Holdings, Inc. ("DHI"), a Delaware
corporation. Declaration Service Company ("DSC"), another wholly-owned
subsidiary of DHI, provides transfer agency, accounting and administrative
services to mutual fund companies, including SBGMF. In considering whether to
enter into an agreement with DDI to act as underwriter to the Fund, the Board
considered many factors, including (1) cost savings to the Fund as a result of
the engagement of DDI as underwriter, (2) improved communications and
shareholder servicing due to all services of the Fund being performed by related
entities that use common systems, and (3) potential increased efficiencies from
such operational interrelations.
Class A Shares. Each Fund's Class A Shares are sold to the public at an offering
price which is the net asset value plus a sales commission equal to a percentage
of the offering price ranging from 5.75% down to 0%, depending upon the
aggregate purchase price involved. DDI receives no compensation from SBGMF as
principal underwriter for Class A Shares. SBGMF receives in all cases the full
net asset value of the shares sold and DDI retains the sales commission, from
which it allows commissions to financial services firms and pays costs of
distribution.
Class A, Class Y and C Shares. See Item 4 -- New Rule 12b-1 Distribution Plan.
Class Y Shares. Each Fund's Class Y Shares are sold at net asset value without a
front-end sales load and are not subject to a CDSC, distribution fee or service
fee. Class Y Shares are offered only for purchase by affiliated employee benefit
plans and certain institutional investors.
ALLOCATION OF PORTFOLIO TRANSACTIONS. SBG is the investment manager for the
Fund, and RBA acts as the portfolio manager for the Fund. RBA, in effecting
purchases and sales of portfolio securities for the account of a Fund,
implements SBGMF's policy of seeking best execution of orders, which includes
best net prices, except to the extent that RBA may be permitted to pay higher
brokerage commissions for research services as described below. Consistent with
this policy, orders for portfolio transactions are placed with broker-dealer
firms giving consideration to the quality, quantity and nature of each firm's
professional services, which include execution, clearance procedures, wire
service quotations and statistical and other research information provided to a
Fund and RBA. Any research benefits derived are available for all clients,
including clients of affiliated companies. Since statistical and other research
information is only supplementary to research efforts of RBA and still must be
analyzed and reviewed by its staff, the receipt of research information is not
expected to materially reduce its expenses. In selecting among firms believed to
meet the criteria for handling a particular transaction, RBA may give
consideration to those firms that have sold or are selling shares SBGMF, as well
as to those firms that provide market, statistical and other research
information to SBGMF and RBA. RBA is not authorized to pay higher commissions or
in the case of principal trades, higher prices, to firms that provide such
services, except as provided below.
RBA may in certain instances be permitted to pay higher brokerage commissions
solely for receipt of market, statistical and other research services. Subject
to Section 28(e) of the Securities Exchange Act of 1934 and procedures adopted
by the Board, SBGMF could pay to a firm that provides research services to RBA a
commission for effecting a securities transaction for SBGMF in excess of the
amount other firms would have charged for the transaction. SBGMF could do this
if RBA determines in good faith that the greater commission is reasonable in
relation to the value of the research services provided by the executing firm
viewed in terms either of a particular transaction or RBA 's overall
responsibilities to SBGMF or other clients. Not all such research services may
be useful or of value in advising a particular series. Research benefits will be
available for all clients of RBA and its subsidiaries. In addition, the
investment management fee paid by SBG to RBA is not reduced because RBA receives
these research services.
Set forth in Exhibit F are the total brokerage commissions paid by SBGMF for its
most recently completed fiscal year, as well as the percentage of such that was
allocated to broker-dealer firms on the basis of research information or on the
basis of sales of shares.
MISCELLANEOUS
GENERAL
The cost of preparing, printing and mailing the enclosed proxy, accompanying
notice and proxy statement and all other costs in connection with solicitation
of proxies will be paid by SBG, including any additional solicitation made by
letter, telephone or telegraph. In addition to solicitation by mail, certain
officers and representatives of SBGMF, officers and employees of SBG and certain
financial services firms and their representatives, who will receive no extra
compensation for their services, may solicit proxies by telephone, telegram or
personally. In addition, SBGMF and/or SBG may retain a firm to solicit proxies
on behalf of the Board, the fee for which will be borne by SBG. A COPY OF YOUR
FUND'S ANNUAL REPORT AND ANY MORE RECENT SEMI-ANNUAL REPORT ARE AVAILABLE
WITHOUT CHARGE UPON REQUEST BY WRITING TO SBGMF, 107 SOUTH FAIR OAKS BLVD.,
SUITE 315, PASADENA, CA 91105, OR BY CALLING 1-626-844-1446.
PROPOSALS OF SHAREHOLDERS
As a Maryland Corporation, SBGMF is not required to hold annual shareholder
meetings, but will hold special meetings as required or deemed desirable. Since
SBGMF does not hold regular meetings of shareholders, the anticipated date of
the next special shareholders meeting cannot be provided. Any shareholder
proposal that may properly be included in the proxy solicitation material for a
special shareholder meeting must be received by SBGMF no later than four months
prior to the date when proxy statements are mailed to shareholders.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Directors of SBGMF is not aware of any matters that will be
presented for action at the Meeting other than the matters set forth herein.
Should any other matters requiring a vote of shareholders arise, the proxy in
the accompanying form will confer upon the person or persons entitled to vote
the shares represented by such proxy the discretionary authority to vote the
shares as to any such other matters in accordance with their best judgment in
the interest of SBGMF.
VOTING, QUORUM
Each share of a Fund is entitled to one vote on each matter submitted to a vote
of the holders of that class of shares of such Fund at the Meeting; no shares
have cumulative voting rights.
Each valid proxy will be voted in accordance with the instructions on the proxy
and as the persons named in the proxy determine on such other business as may
come before the Meeting. If no instructions are given, the proxy will be voted
FOR the election of the persons who have been nominated as Directors and FOR
Items 2, 3, 4 and 5. Shareholders who execute proxies may revoke them at any
time before they are voted, either by writing to SBGMF or in person at the time
of the Meeting. Proxies given by telephone or electronically transmitted
instruments may be counted if obtained pursuant to procedures designed to verify
that such instructions have been authorized.
Item 1 (election of Directors) requires a plurality vote of the shares of SBGMF.
This means that the eight nominees receiving the largest number of votes will be
elected. Item 2 (approval of new investment management agreement), Item 4
(approval of new distribution agreement), and Item 5 (approval of new
sub-advisory agreement) require the affirmative vote of a "majority of the
outstanding voting securities" of the Fund, and Item 3 (approval of new Rule
12b-1 Plans) requires the affirmative vote of a "majority of the outstanding
voting securities" of the applicable Class of Shares to which the 12b-1 Plan
applies. The term "majority of the outstanding voting securities" as defined in
the 1940 Act means: the affirmative vote of the lesser of (1) 67% of the voting
securities of the Fund present at the meeting if more than 50% of the
outstanding shares of the Fund are present in person or by proxy or (2) more
than 50% of the outstanding shares of the Fund.
On Items 1, 2, 4 and 5, shareholders will vote in the aggregate and not by
series or class. On Item 3, the Class A Shares, the Class Y Shares and the Class
C Shares of the Fund will vote separately by class.
The Articles of Incorporation and By-Laws of SBGMF provide that the presence at
a shareholder meeting in person or by proxy of at least 33.3% of the shares of a
series constitutes a quorum for that series. Thus, the meeting for a particular
series could not take place on its scheduled date if less than 33.3% of the
shares of that series were represented. If, by the time scheduled for the
meeting, a quorum of shareholders of a series is not present or if a quorum is
present but sufficient votes in favor of any of the items are not received, the
persons named as proxies may propose one or more adjournments of the meeting for
that series to permit further soliciting of proxies from its shareholders. Any
such adjournment will require the affirmative vote of a majority of the shares
of the series as to which the meeting is being adjourned present (in person or
by proxy) at the session of the meeting to be adjourned. The persons named as
proxies will vote in favor of any such adjournment if they determine that such
adjournment and additional solicitation are reasonable and in the interest of
the respective series' shareholders. You should be aware that there are no
shareholders of record for the Starbuck/Tisdale Growth and Income Fund, and the
only series to which this proxy applies is the Bender Growth Fund. Accordingly,
a quorum of shareholders of the Bender Growth Fund will constitute a quorum for
the Meeting
In tallying shareholder votes, abstentions and "broker non-votes" (i.e., shares
held by brokers or nominees as to which (i) instructions have not been received
from the beneficial owners or persons entitled to vote and (ii) the broker or
nominee does not have discretionary voting power on a particular matter) will be
counted for purposes of determining whether a quorum is present for purposes of
convening the Meeting. On Item 1, abstentions and broker non-votes will have no
effect; the eight nominees receiving the largest number of votes will be
elected. On Items 2, 4 7 5, abstentions and broker non-votes will not be counted
as "votes cast" and will have no effect on the result of the vote. On Item 3,
abstentions and broker non-votes will be considered to be both present at the
Meeting and issued and outstanding and, as a result, will have the effect of
being counted as voted against the Items.
The Board of Directors of SBGMF recommends an affirmative vote on all items.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Board of Directors,
Steven W. Arnold
President & Secretary
<PAGE>
EXHIBIT A
HOLDERS OF MORE THAN 5% OF
ANY CLASS OF A FUND'S SHARES
FUND NAME AND ADDRESS % OWNERSHIP # SHARES CLASS
- -------- ---------------- ----------- -------- -----
BENDER NONE
STARBUCK NONE
<PAGE>
EXHIBIT B
FORM OF
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT ADVISOR AGREEMENT
AGREEMENT, made this 30th day of September, 1998, between The Santa Barbara
Group of Mutual Funds, Inc. (the "Company") and SBG Capital Management, Inc.
(the "Adviser"), a California Corporation.
WHEREAS, the Company is a Maryland Corporation authorized to issue shares
in series and is registered as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended ( "Advisers Act");
WHEREAS, THE Company presently offers a single series, the Bender Growth
Fund (the "Fund");
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the Company and the Adviser as follows:
1. Appointment
The Company hereby appoints the Adviser to act as Investment Adviser to the
Fund for the periods and on the terms set forth herein. The Adviser accepts the
appointment and agrees to furnish the services set forth herein for the
compensation provided herein.
2. Services as Investment Adviser
Subject to the general supervision and direction of the Board of Directors
of the Company, the Adviser will (a) manage the Fund in accordance with the
Fund's investment objective and policies as stated in the Fund's Prospectus and
the Statement of Additional Information filed with the Securities and Exchange
Commission, as they may be amended from time to time; (b) make investment
decisions for the Fund; (c) place purchase and sale orders on behalf of the
Fund; and, (d) employ professional portfolio managers and securities analysts to
provide research services to the Fund. In providing those services, the Adviser
will provide the Fund with ongoing research, analysis, advice, and judgements
regarding individual investments, general economic conditions and trends and
long-range investment policy. In addition, the Adviser will furnish the Fund
with whatever statistical information the Fund may reasonably request with
respect to the securities that the Fund may hold or contemplate purchasing.
The Adviser further agrees that, in performing it's duties hereunder, it
will:
a. comply with the 1940 Act and all rules and regulations thereunder, the
Adviser's Act, the Internal Revenue Code of 1986, as amended (the
"Code") and all other applicable federal and state laws and
regulations, and with any applicable procedures adopted by the
Directors;
b. use reasonable efforts to manage the Fund so that it will qualify, and
continue to qualify, as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder;
c. maintain books and records with respect to the Fund's securities
transactions, render to the Board of Directors of the Company such
periodic and special reports as the Board may reasonably request, and
keep the Directors informed of developments materially affecting the
Fund's portfolio;
d. make available to the Fund's administrator, and the Company, promptly
upon their request, such copies of its investment records and ledgers
with respect to the Fund as may be required to assist the
Administrator and the Company in their compliance with applicable laws
and regulations. The Adviser will furnish the Directors with such
periodic and special reports regarding the Fund as they may reasonably
request;
e. immediately notify the Company in the event that the Adviser or any of
its affiliates: (1) becomes aware that it is subject to a statutory
disqualification that prevents the Adviser from serving as an
investment adviser pursuant to this Agreement; or (2) becomes aware
that it is the subject of an administrative proceeding or enforcement
action by the Securities and Exchange Commission or other regulatory
authority. The Adviser further agrees to notify the Company
immediately of any material fact known to the Adviser respecting or
relating to the Adviser that is not contained in the Company's
Registration Statement regarding the Fund, or any amendment or
supplement thereto, but that is required to be disclosed therein, and
of any statement contained therein that becomes untrue in any material
respect.
3. Investment Adviser
The Company authorizes Adviser to enter into such Investment Advisory
Agreements as the Adviser deems necessary to carry out the terms of this
Agreement and to meet investment objectives of the individual series of Funds
that may be offered from time to time by the Company. Adviser is responsible for
the payment of all compensation to any Sub-investment Advisor.
4. Documents
The Fund has delivered properly certified or authenticated copies of each
of the following documents to the Advisor and will deliver to it all future
amendments and supplements thereto, if any:
a. certified resolution of the Board of Directors of the Company
authorizing the appointment of the Adviser and approving the form of
this Agreement;
b. The Registration Statement as filed with the Securities and Exchange
Commission and any amendments thereto;
c. Exhibits, powers of attorneys, certificates and any and all other
documents relating to or filed in connection with the Registration
Statement described above.
5. Brokerage
In selecting brokers or dealers to execute transactions on behalf of the
Fund, the Adviser will use its best efforts to seek the best overall terms
available. In assessing the best overall terms available for any Fund
transaction, the Adviser will consider all factors it deems relevant, including,
but not limited to, the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer and the reasonableness of the commission, if any, for the specific
transaction and on a continuing basis. In selecting brokers or dealers to
execute a particular transaction, and in evaluating the best overall terms
available, the Adviser is authorized to consider the brokerage and research
services (as those terms are defined in section 28(e) of the Securities Exchange
Act of 1934, as amended (the "1934 Act") provided to the Fund and/or other
accounts over which the Adviser or its affiliates exercise investment
discretion. In accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T)
thereunder, and subject to any other applicable laws and regulations, the
Adviser and its affiliates are authorized to effect portfolio transactions for
the Fund and to retain brokerage commissions on such transactions.
6. Records
The Advisor agrees to maintain and to preserve for the periods prescribed
under the 1940 Act any such records as are required to be maintained by the
Advisor with respect to the Fund by the 1940 Act. The Adviser further agrees
that all records which it maintains for the Fund are the property of the Fund
and it will promptly surrender any of such records upon request.
7. Standard of Care
The Adviser shall exercise its best judgment in rendering the services
under this Agreement. The Adviser shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Fund or the Fund's
shareholders in connection with the matters to which this Agreement relates,
provided that nothing herein shall be deemed to protect or purport to protect
the Adviser against any liability to the Fund or to its shareholders to which
the Adviser would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or by
reason of the Adviser's reckless disregard of its obligations and duties under
this Agreement. As used in this Section 7, the term "Adviser" shall include any
officers, directors, employees, or other affiliates of the Adviser performing
services with respect to the Fund.
8. Compensation
In consideration of the services rendered pursuant to this Agreement, the
Fund will pay the Adviser the following fees, at an annual rate as follows:
APPLICABLE ASSETS MANAGEMENT FEE
($000)
- ------------------ --------------
$0 - $250,000..................... 0.50%
$250,000 - $1,000,000............. 0.50%
$1,000,000 - $2,500,000........... 0.50%
$2,500,000 - $5,000,000........... 0.50%
$5,000,000 - $7,500,000........... 0.50%
$7,500,000 - $10,000,000.......... 0.50%
$10,000,000 - $12,500,000......... 0.50%
Over $12,500,000.................. 0.50%
This fee shall be computed and accrued daily and payable monthly. For the
purpose of determining fees payable to the Adviser, the value of the Fund's
average daily net assets shall be computed at the times and in the manner
specified in the Fund's Prospectus or Statement of Additional Information.
9. Expenses
The Adviser will bear all expenses in connection with the performance of
its services under this Agreement. The Fund will bear certain other expenses to
be incurred in its operation, including: taxes, interest, brokerage fees and
commissions, if any, fees of Directors of the Company who are not officers,
directors, or employees of the Adviser; Securities and Exchange Commission fees
and state blue sky qualification fees; charges of custodians and transfer and
dividend disbursing agents; the Fund's proportionate share of insurance
premiums; outside auditing and legal expenses; costs of maintenance of the
Fund's existence; costs attributable to investor services, including, without
limitation, telephone and personnel expenses; charges of an independent pricing
service; costs of preparing and printing prospectuses and statements of
additional information for regulatory purposes and for distribution to existing
shareholders' costs of shareholders' reports and meetings of the shareholders of
the Fund and of the officers or Board of Directors of the Company; and any
extraordinary expenses. In addition, the Fund will pay distribution fees
pursuant to a Distribution Plan adopted under Rule 12b-1 of the 1940 Act.
10. Reduction of Fees or Reimbursement to the Fund
If in any fiscal year, the aggregate expenses of the Fund (including fees
pursuant to this Agreement and the Fund's administration agreement, but
excluding distribution fees, interest, taxes, brokerage and extraordinary
expenses) exceed the expense limitation of any state having jurisdiction over
the Fund, the Adviser will reduce its fees or reimburse the Fund for such excess
expense in the same proportion as its advisory fee bears to the Fund's combined
fee for investment advice and administration. The Adviser's obligation to reduce
its fees or reimburse the Fund will be limited to the amount of its fees
received pursuant to this Agreement. Such reduction in fees or reimbursement, if
any, will be estimated, reconciled and, in the case of reimbursement, paid on a
quarterly basis.
11. Services to Other Companies or Accounts
The investment advisory services of the Adviser to the Fund under this
Agreement are not to be deemed exclusive, and the Adviser, or any affiliate
thereof, shall be free to render similar services to other investment companies
and other clients (whether or not their investment objectives and policies are
similar to those of the Fund) and to engage in other activities, so long as its
services hereunder are not impaired thereby.
12. Duration and Termination
This Agreement shall become effective on September 30, 1998, and remain in
effect, unless sooner terminated as provided herein, for two years from such
date and shall continue from year to year thereafter, provided each continuance
is specifically approved at least annually by:
(i) the vote of a majority of the Board of Directors of the Company or,
(ii) a vote of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities;
Provided that in either event the continuance is also approved by a majority of
the Board of Directors who are not "interested persons" (as defined in the 1940
Act) of any party to this Agreement, by vote cast in person at a meeting called
for the purpose of voting on such approval. This Agreement is terminable,
without penalty, on sixty (60) days written notice by the Board of Directors of
the Company or by vote of holders of a majority of the Fund's shares or upon
ninety (90) day's written notice by the Advisor. This Agreement will also
terminate automatically in the event of its "assignment" (as defined in the 1940
Act).
13. Amendment
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective until approved by
an affirmative vote of:
(i) a majority of the outstanding voting securities of the Fund, and
(ii) a majority of the Directors of the Company, including a majority of
Directors who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of
voting on such approval, if such approval is required by applicable
law
14. Use of Name
It is understood that the name of Robert Bender & Associates, Inc. or any
derivative thereof or logo associated with that name is the valuable property of
Robert Bender & Associates, Inc. and its affiliates, and that the Fund has the
right to use such name (or derivative or logo) only so long as this Agreement
shall continue with respect to the Fund. Upon termination of this Agreement, the
Fund shall forthwith cease to use such name (or derivative or logo) and shall
promptly amend its Articles of Incorporation to change its name to comply
herewith.
15. Miscellaneous
(a) This Agreement constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof.
(b) Titles or captions of Sections contained in this Agreement are
inserted only as a matter of convenience and for reference, and in no
way define, limit, extend or describe the scope of this Agreement or
the intent of any provisions thereof.
(c) This Agreement may be executed in several counterparts, all of which
together shall for all purposes constitute one agreement, binding on
all the Parties.
(d) This Agreement and the rights and obligations of the parties hereunder
shall be governed by, and interpreted, construed and enforced in
accordance with the laws of the State of California.
(e) If any provision of this Agreement or the application thereof to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the
remainder of this Agreement or the application of such provision to
such person or circumstance, other than those to which it is so
determined to be invalid or unenforceable, shall not be affected
thereby, and each provision hereof shall be valid and shall be
enforced to the fullest extent permitted by law.
(f) Notices of any kind to be given to the Advisor by the Company shall be
in writing and shall be duly given if mailed or delivered to the
Advisor at: SBG Capital Management Company, Inc., 333 South Grand
Avenue, Suite 4075, Los Angeles, CA 90071, Attn: John P. Odell, or at
such other address or to such individual as shall be specified by the
Advisor to the Company. Notices of any kind to be given to the Company
by the Advisor shall be in writing and shall be duly given if mailed
or delivered to The Santa Barbara Group of Mutual Funds, Inc., 333
South Grand Avenue, Suite 4075, Los Angeles, CA 90071, Attn: Steven
Arnold, or at such other address or to such individual as shall be
specified by the Company to the Advisor.
IN WITNESS WHEREOF, The Company, on behalf of the Fund, and SBG have
executed this Investment Management Agreement as of the 30th day of September,
1998, to be effective as of that date.
THE SANTA BARBARA GROUP OF MUTUAL FUNDS, INC.
- ---------------------------------------------
By: Steven W. Arnold
Its: President
SBG CAPITAL MANAGEMENT, INC.
- ---------------------------------------------
By: Steven W. Arnold
Its: President
<PAGE>
EXHIBIT C
FORM OF
PLAN PURSUANT TO RULE 12B-1
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Santa Barbara Group of Mutual Funds, Inc. (the "Company")
engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, shares of common stock of the Company currently consist of a sole
series of shares, designated by the Company as The Bender Growth Fund (the
"Fund");
WHEREAS, the Company employs Declaration Distributors, Inc. ("DDI" or
"Distributor") as the principal underwriter for the securities of which the
Company is the issuer;
WHEREAS, the shares of common stock of the Fund presently are divided into
separate classes of shares, designated by the Company as Class Y, Class A and
Class C;
WHEREAS, the Company and DDI have entered into a distribution agreement
dated August 1, 1998, pursuant to which the Company has employed DDI as
principal underwriter during the continuous offering of shares of the Company.
NOW THEREFORE, the Company hereby adopts on behalf of the Fund with respect
to its Class Y, Class A and Class C Shares, and DDI hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-1 under the Act, on the following
terms and conditions.
1. The Fund shall pay to DDI, as distributor of the Class Y shares of the
Fund, a fee for distribution of the shares at the rate of 0.25% on an
annualized basis of the average daily net assets of the Fund's Class Y
shares, provided that, at any time such payment is made, whether or
not this Plan continues in effect, the making thereof will not cause
the limitation upon such payments established by the Plan to be
exceeded. Such fee shall be calculated and accrued daily and paid at
such intervals as the Board of Directors shall determine, subject to
any applicable restrictions imposed by rules of the National
Association of Securities Dealers.
2. The Fund shall pay to DDI, as distributor of the Class A shares of the
Fund, a fee for distribution of the shares at the rate of 0.25% on an
annualized basis of the average daily net assets of the Fund's Class A
shares, provided that, at any time such payment is made, whether or
not this Plan continues in effect, the making thereof will not cause
the limitation upon such payments established by the Plan to be
exceeded. Such fee shall be calculated and accrued daily and paid at
such intervals as the Board of Directors shall determine, subject to
any applicable restrictions imposed by rules of the National
Association of Securities Dealers.
3. The Fund shall pay to DDI, as distributor of the Class C shares of the
Fund, a servicing fee at the rate of 0.25% on an annualized basis of
the average daily net assets of the Fund's Class C shares, provided
that, at any time such payment is made, whether or not this Plan
continues in effect, the making thereof will not cause the limitation
upon such payments established by the Plan to be exceeded. Such fee
shall be calculated and accrued daily and paid at such intervals as
the Board of Directors shall determine, subject to any applicable
restrictions imposed by rules of the National Association of
Securities Dealers.
4. The Fund shall pay to DDI, as distributor of the Class C shares of the
Fund, a fee for distribution of the shares at the rate of 0.75% on an
annualized basis of the average daily net assets of the Fund's Class C
shares, provided that, at any time such payment is made, whether or
not this Plan continues in effect, the making thereof will not cause
the limitation upon such payments established by the Plan to be
exceeded. Such fee shall be calculated and accrued daily and paid at
such intervals as the Board of Directors shall determine, subject to
any applicable restrictions imposed by rules of the National
Association of Securities Dealers.
5. The amounts set forth in paragraphs 1, 2 and 4 of this Plan shall be
paid to DDI for its services as distributor of the shares of the Fund
in connection with any activities of expenses primarily intended to
result in the sale of the Class Y, Class A, and Class C shares of the
Fund, including, but not limited to, payment of compensation,
including incentive compensation, to securities dealers 9which may
include the Distributor itself) and other financial organizations and
institutions (collectively the "Service Organizations") to obtain
various distribution related and/or administrative services for the
Fund. These services include, among other things, processing new
shareholder account applications, preparing and transmitting to the
Fund's Transfer Agent computer processable tapes of all transactions
by customers, and serving as the primary source of information to
customers in answering questions concerning the Fund and their
transactions with the Fund. The Distributor is also authorized to
engage in advertising, the preparation and distribution of sales
literature and other promotional activities on behalf of the Fund. In
addition, this plan authorizes payment by the Fund of the costs of
preparing, printing and distributing Fund prospectuses and statements
of additional information to prospective investors an of implementing
and operating the Plan. Distribution expenses also include an
allocation of overhead of the Distributor and accruals for interest on
the amount of distribution expenses that exceed distribution fees and
contingent deferred sales charges received by DDI. Payments under the
Plan are not tied exclusively to actual distribution and service
expenses, and such payments may exceed distribution and service
expenses actually incurred.
6. The amount set forth in paragraph 3 of this Plan may be used by the
Distributor to pay Service Organizations (which may include DDI
itself) for servicing shareholder accounts, including a continuing fee
which may begin to accrue immediately after the sale of the shares.
7. This Plan shall not take effect with respect to any Class of shares
included in the Plan until and unless the Pan has been approved by
vote of a majority of the shareholders of the Class of shares affected
by the Plan. Further, the Plan shall not take effect until it,
together with any related documents, has also been approved by votes
of both (a) the Directors of the Company, and (b) those Directors who
are not "interested persons" of the Company (as defined in the Act)
and who have no direct or indirect financial interest in the operation
of this Plan or any agreements relating to it, cast in person at a
meeting called for the purpose of voting on this plan and any such
related documents.
8. After approval has been obtained as set forth in paragraph 7 above,
this Plan shall take effect. The Plan shall continue in effect for an
initial period of two years from the date of its effectiveness, and
may be continued annually thereafter only so long as its continuation
is approved in the manner provided by subsections (a) and (b) of
paragraph 7.
9. DDI shall provide to the Directors of the Company, and the Directors
shall review, at least quarterly, a written report of the amounts
expended under this plan and the purposes for which such expenditures
were made.
10. This plan may be terminated at any time, with respect to the Fund or
to any Class of shares of the Fund, without penalty, by vote of the
directors of the Company and concurring vote of the "uninterested"
Directors, or by vote of a majority of the outstanding shares of the
Fund, or any Class of the Fund with respect to the Provisions of this
Plan affecting that Class, upon thirty days (30) written notice to any
other party to this Plan.
11. This Plan may not be amended to increase materially the fees payable
under paragraphs 1, 2, 3, and 4, unless such amendment is approved in
then manner set forth in paragraph 6 of this plan, and no material
amendment of any kind may be made to this Plan unless approved in the
manner provided for approval and annual renewal of this Plan in
paragraph 8 hereof.
12. While this Plan is in effect, the selection and nomination of
Directors who are not "interested persons" of the Company shall be
committed to the discretion of the Directors who are not such
interested persons.
13. The Company shall preserve copies of this Plan and any related
agreements, and any and all reports pursuant to paragraph 9 of this
Plan, for a period of not less than six (6) years from the date of
their making, the first two years in an easily accessible place.
IN WITNESS WHEREOF, The Company, on behalf of the Fund, and DDI have
executed this Service and Distribution Plan as of the 30th day of September,
1998, to be effective as of that date.
THE SANTA BARBARA GROUP OF MUTUAL FUNDS, INC.
- ---------------------------------------------
By: Steven W. Arnold
Its: President
DECLARATION DISTRIBUTORS, INC.
- ---------------------------------------------
By: Terence P. Smith
Its: President
<PAGE>
EXHIBIT D
FORM OF
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT
----------------------
THE SANTA BARBARA GROUP OF MUTUAL FUNDS, INC.
---------------------------------------------
THIS DISTRIBUTION AGREEMENT (the "Agreement") is made as of the 30th day of
September, 1998 by and among The Santa Barbara Group of Mutual Funds, Inc. (the
"Fund"), a Maryland corporation, SBG Capital Management Company, Inc. (the
"Adviser"), a California Corporation, and Declaration Distributors, Inc. (the
"Distributor"), a Pennsylvania corporation.
WITNESSETH THAT:
----------------
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act")
and has registered its shares of common stock (the "Shares") under the
Securities Act of 1933, as amended (the "1933 Act") in one or more distinct
series of Shares (the "Portfolio" or "Portfolios");
WHEREAS, the Adviser has been appointed investment adviser to the Fund;
WHEREAS, the Distributor is a broker-dealer registered with the U.S.
Securities and Exchange Commission (the "SEC") and a member in good standing of
the National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Fund, the Adviser and the Distributor desire to enter into
this Agreement pursuant to which the Distributor will provide distribution
services to the Portfolios of the Fund identified on Schedule A, as may be
amended from time to time, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Fund, the Adviser and the Distributor,
intending to be legally bound hereby, agree as follows:
1. Appointment of Distributor. The Fund hereby appoints the Distributor as
its exclusive agent for the distribution of the Shares, and the Distributor
hereby accepts such appointment under the terms of this Agreement. The Fund
shall not sell any Shares to any person except to fill orders for the Shares
received through the Distributor; provided, however, that the foregoing
exclusive right shall not apply: (i) to Shares issued or sold in connection with
the merger or consolidation of any other investment company with the Fund or the
acquisition by purchase or otherwise of all or substantially all of the assets
of any investment company or substantially all of the outstanding shares of any
such company by the Fund; (ii) to Shares which may be offered by the Fund to its
shareholders for reinvestment of cash distributed from capital gains or net
investment income of the Fund; or (iii) to Shares which may be issued to
shareholders of other funds who exercise any exchange privilege set forth in the
Fund's Prospectus. Notwithstanding any other provision hereof, the Fund may
terminate, suspend, or withdraw the offering of the Shares whenever, in its sole
discretion, it deems such action to be desirable, and the Distributor shall
process no further orders for Shares after it receives notice of such
termination, suspension or withdrawal.
2. Fund Documents. The Fund has provided the Administrator with properly
certified or authenticated copies of the following Fund related documents in
effect on the date hereof: the Fund's organizational documents, including
Articles of Incorporation and by-laws; the Fund's Registration Statement on Form
N-1A, including all exhibits thereto; the Fund's most current Prospectus and
Statement of Additional Information; and resolutions of the Fund's Board of
Directors authorizing the appointment of the Distributor and approving this
Agreement. The Fund shall promptly provide to the Distributor copies, properly
certified or authenticated, of all amendments or supplements to the foregoing.
The Fund shall provide to the Distributor copies of all other information which
the Distributor may reasonably request for use in connection with the
distribution of Shares, including, but not limited to, a certified copy of all
financial statements prepared for the Fund by its independent public
accountants. The Fund shall also supply the Distributor with such number of
copies of the current Prospectus, Statement of Additional Information and
shareholder reports as the Distributor shall reasonably request.
3. Distribution Services. The Distributor shall sell and repurchase Shares
as set forth below, subject to the registration requirements of the 1933 Act and
the rules and regulations thereunder, and the laws governing the sale of
securities in the various states ("Blue Sky Laws"):
a. The Distributor, as agent for the Fund, shall sell Shares to the
public against orders therefor at the public offering price, as
determined in accordance with the Fund's then current Prospectus and
Statement of Additional Information.
b. The net asset value of the Shares shall be determined in the manner
provided in the then current Prospectus and Statement of Additional
Information. The net asset value of the Shares shall be calculated by
the Fund or by another entity on behalf of the Fund. The Distributor
shall have no duty to inquire into or liability for the accuracy of
the net asset value per Share as calculated.
c. Upon receipt of purchase instructions, the Distributor shall transmit
such instructions to the Fund or its transfer agent for registration
of the Shares purchased.
d. The Distributor shall also have the right to take, as agent for the
Fund, all actions which, in the Distributor's judgment, are necessary
to effect the distribution of Shares.
e. Nothing in this Agreement shall prevent the Distributor or any
"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 the Distributor expressly
agrees that it shall not for its own account purchase any Shares of
the Fund except for investment purposes and that it shall not for its
own account sell any such Shares except for redemption of such Shares
by the Fund, and that it shall not undertake activities which, in its
judgment, would adversely affect the performance of its obligations to
the Fund under this Agreement.
f. The Distributor, as agent for the Fund, shall repurchase Shares at
such prices and upon such terms and conditions as shall be specified
in the Prospectus.
4. Distribution Support Services. In addition to the sale and repurchase of
Shares, the Distributor shall perform the distribution support services set
forth on Schedule B attached hereto, as may be amended from time to time. Such
distribution support services shall include: Review of sales and marketing
literature and submission to the NASD; NASD recordkeeping; and quarterly reports
to the Fund's Board of Directors. Such distribution support services may also
include: fulfillment services, including telemarketing, printing, mailing and
follow-up tracking of sales leads; and licensing Adviser or Fund personnel as
registered representatives of the Distributor and related supervisory
activities.
5. Reasonable Efforts. The Distributor shall use all reasonable efforts in
connection with the distribution of Shares. The Distributor shall have no
obligation to sell any specific number of Shares and shall only sell Shares
against orders received therefor. The Fund shall retain the right to refuse at
any time to sell any of its Shares for any reason deemed adequate by it.
6. Compliance. In furtherance of the distribution services being provided
hereunder, the Distributor and the Fund agree as follows:
a. The Distributor shall comply with the Rules of Conduct of the NASD and
the securities laws of any jurisdiction in which it sells, directly or
indirectly, Shares.
b. The Distributor shall require each dealer with whom the Distributor
has a selling agreement to conform to the applicable provisions of the
Fund's most current Prospectus and Statement of Additional
Information, with respect to the public offering price of the Shares.
c. The Fund agrees to furnish to the Distributor sufficient copies of any
agreements, plans, communications with the public or other materials
it intends to use in connection with any sales of Shares in a timely
manner in order to allow the Distributor to review, approve and file
such materials with the appropriate regulatory authorities and obtain
clearance for use. The Fund agrees not to use any such materials until
so filed and cleared for use by appropriate authorities and the
Distributor.
d. The Distributor, at its own expense, shall qualify as a broker or
dealer, or otherwise, under all applicable Federal or state laws
required to permit the sale of Shares in such states as shall be
mutually agreed upon by the parties; provided, however that the
Distributor shall have no obligation to register as a broker or dealer
under the Blue Sky Laws of any jurisdiction if it determines that
registering or maintaining registration in such jurisdiction would be
uneconomical.
e. The Distributor shall not, in connection with any sale or solicitation
of a sale of the Shares, or make or authorize any representative,
service organization, broker or dealer to make, any representations
concerning the Shares except those contained in the Fund's most
current Prospectus covering the Shares and in communications with the
public or sales materials approved by the Distributor as information
supplemental to such Prospectus.
7. Expenses. Expenses shall be allocated as follows:
a. The Fund and/or the Adviser shall bear the following expenses:
preparation, setting in type, and printing of sufficient copies of the
Prospectus and Statement of Additional Information for distribution to
existing shareholders; preparation and printing of reports and other
communications to existing shareholders; distribution of copies of the
Prospectus, Statement of Additional Information and all other
communications to existing shareholders; registration of the Shares
under the Federal securities laws; qualification of the Shares for
sale in the jurisdictions mutually agreed upon by the Fund and the
Distributor; transfer agent/shareholder servicing agent services;
supplying information, prices and other data to be furnished by the
Fund under this Agreement; and any original issue taxes or transfer
taxes applicable to the sale or delivery of the Shares or certificates
therefor.
b. The Adviser shall pay all other expenses incident to the sale and
distribution of the Shares sold hereunder, including, without
limitation: printing and distributing copies of the Prospectus,
Statement of Additional Information and reports prepared for use in
connection with the offering of Shares for sale to the public;
advertising in connection with such offering, including public
relations services, sales presentations, media charges, preparation,
printing and mailing of advertising and sales literature; data
processing necessary to support a distribution effort; distribution
and shareholder servicing activities of broker-dealers and other
financial institutions; filing fees required by regulatory authorities
for sales literature and advertising materials; any additional
out-of-pocket expenses incurred in connection with the foregoing and
any other costs of distribution.
8. Compensation. For the distribution and distribution support services
provided by the Distributor pursuant to the terms of the Agreement, the Adviser
shall pay to the Distributor the compensation set forth in Schedule A attached
hereto, which schedule may be amended from time to time. The Adviser shall also
reimburse the Distributor for its out-of-pocket expenses related to the
performance of its duties hereunder, including, without limitation,
telecommunications charges, postage and delivery charges, record retention
costs, reproduction charges and traveling and lodging expenses incurred by
officers and employees of the Distributor. The Fund shall pay the Distributor's
monthly invoices for distribution fees and out-of-pocket expenses within five
days of the respective month-end. If this Agreement becomes effective subsequent
to the first day of the month or terminates before the last day of the month,
the Fund shall pay to the Distributor a distribution fee that is prorated for
that part of the month in which this Agreement is in effect. All rights of
compensation and reimbursement under this Agreement for services performed by
the Distributor as of the termination date shall survive the termination of this
Agreement.
9. Use of Distributor's Name. The Fund shall not use the name of the
Distributor or any of its affiliates in the Prospectus, Statement of Additional
Information, sales literature or other material relating to the Fund in a manner
not approved prior thereto in writing by the Distributor; provided, however,
that the Distributor shall approve all uses of its and its affiliates' names
that merely refer in accurate terms to their appointments or that are required
by the Securities and Exchange Commission (the "SEC") or any state securities
commission; and further provided, that in no event shall such approval be
unreasonably withheld.
10. Use of Fund's Name. Neither the Distributor nor any of its affiliates
shall use the name of the Fund or material relating to the Fund on any forms
(including any checks, bank drafts or bank statements) for other than internal
use in a manner not approved prior thereto by the Fund; provided, however, that
the Fund shall approve all uses of its name that merely refer in accurate terms
to the appointment of the Distributor hereunder or that are required by the SEC
or any state securities commission; and further provided, that in no event shall
such approval be unreasonably withheld.
11. Liability of Distributor. The duties of the Distributor shall be
limited to those expressly set forth herein, and no implied duties are assumed
by or may be asserted against the Distributor hereunder. The Distributor shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the matters to which this Agreement
relates, except to the extent of a loss resulting from willful misfeasance, bad
faith or negligence, or reckless disregard of its obligations and duties under
this Agreement. As used in this Section 9 and in Section 10 (except the second
paragraph of Section 10), the term "Distributor" shall include directors,
officers, employees and other agents of the Distributor.
12. Indemnification of Distributor. The Fund shall indemnify and hold
harmless the Distributor against any and all liabilities, losses, damages,
claims and expenses (including, without limitation, reasonable attorneys' fees
and disbursements and investigation expenses incident thereto) which the
Distributor may incur or be required to pay hereafter, in connection with any
action, suit or other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which the Distributor may be involved as
a party or otherwise or with which the Distributor may be threatened, by reason
of the offer or sale of the Fund shares prior to the effective date of this
Agreement.
Any director, officer, employee, shareholder or agent of the Distributor
who may be or become an officer, director, employee or agent of the Fund, shall
be deemed, when rendering services to the Fund or acting on any business of the
Fund (other than services or business in connection with the Distributor's
duties hereunder), to be rendering such services to or acting solely for the
Fund and not as a director, officer, employee, shareholder or agent, or one
under the control or direction of the Distributor, even though receiving a
salary from the Distributor.
The Fund agrees to indemnify and hold harmless the Distributor, and each
person, who controls the Distributor within the meaning of Section 15 of the
1933 Act, or Section 20 of the Securities Exchange Act of 1934, as amended
("1934 Act"), against any and all liabilities, losses, damages, claims and
expenses, joint or several (including, without limitation, reasonable attorneys'
fees and disbursements and investigation expenses incident thereto) to which
they, or any of them, may become subject under the 1933 Act, the 1934 Act, the
1940 Act or other Federal or state laws or regulations, at common law or
otherwise, insofar as such liabilities, losses, damages, claims and expenses (or
actions, suits or proceedings in respect thereof) arise out of or relate to any
untrue statement or alleged untrue statement of a material fact contained in a
Prospectus, Statement of Additional Information, supplement thereto, sales
literature or other written information prepared by the Fund and provided by the
Fund to the Distributor for the Distributor's use hereunder, or arise out of or
relate to any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading. The Distributor (or any person controlling the Distributor) shall
not be entitled to indemnity hereunder for any liabilities, losses, damages,
claims or expenses (or actions, suits or proceedings in respect thereof)
resulting from (i) an untrue statement or omission or alleged untrue statement
or omission made in the Prospectus, Statement of Additional Information, or
supplement, sales or other literature, in reliance upon and in conformity with
information furnished in writing to the Fund by the Distributor specifically for
use therein or (ii) the Distributor's own willful misfeasance, bad faith,
negligence or reckless disregard of its duties and obligations in the
performance of this Agreement.
The Distributor agrees to indemnify and hold harmless the Fund, and each
person who controls the Fund within the meaning of Section 15 of the 1933 Act,
or Section 20 of the 1934 Act, against any and all liabilities, losses, damages,
claims and expenses, joint or several (including, without limitation reasonable
attorneys' fees and disbursements and investigation expenses incident thereto)
to which they, or any of them, may become subject under the 1933 Act, the 1934
Act, the 1940 Act or other Federal or state laws, at common law or otherwise,
insofar as such liabilities, losses, damages, claims or expenses arise out of or
relate to any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus or Statement of Additional Information or any
supplement thereto, or arise out of or relate to any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, if based upon
information furnished in writing to the Fund by the Distributor specifically for
use therein.
A party seeking indemnification hereunder (the "Indemnitee") shall give
prompt written notice to the party from whom indemnification is sought
("Indemnitor") of a written assertion or claim of any threatened or pending
legal proceeding which may be subject to indemnity under this Section; provided,
however, that failure to notify the Indemnitor of such written assertion or
claim shall not relieve the Indemnitor of any liability arising from this
Section. The Indemnitor shall be entitled, if it so elects, to assume the
defense of any suit brought to enforce a claim subject to this Indemnity and
such defense shall be conducted by counsel chosen by the Indemnitor and
satisfactory to the Indemnitee; provided, however, that if the defendants
include both the Indemnitee and the Indemnitor, and the Indemnitee shall have
reasonably concluded that there may be one or more legal defenses available to
it which are different from or additional to those available to the Indemnitor
("conflict of interest"), the Indemnitor shall not have the right to elect to
defend such claim on behalf of the Indemnitee, and the Indemnitee shall have the
right to select separate counsel to defend such claim on behalf of the
Indemnitee. In the event that the Indemnitor elects to assume the defense of any
suit pursuant to the preceding sentence and retains counsel satisfactory to the
Indemnitee, the Indemnitee shall bear the fees and expenses of additional
counsel retained by it, except for reasonable investigation costs which shall be
borne by the Indemnitor. If the Indemnitor (i) does not elect to assume the
defense of a claim, (ii) elects to assume the defense of a claim but chooses
counsel that is not satisfactory to the Indemnitee or (iii) has no right to
assume the defense of a claim because of a conflict of interest, the Indemnitor
shall advance or reimburse the Indemnitee, at the election of the Indemnitee,
reasonable fees and disbursements of any counsel retained by Indemnitee,
including reasonable investigation costs.
13. Dual Employees. The Adviser agrees that only its employees who are
registered representatives of the Distributor ("dual employees") shall offer or
sell Shares of the Portfolios and further agrees that the activities of any such
employees as registered representatives of the Distributor shall be limited to
offering and selling Shares. If there are dual employees, one employee of the
Adviser shall register as a principal of the Distributor and assist the
Distributor in monitoring the marketing and sales activities of the dual
employees. The Adviser shall maintain errors and omissions and fidelity bond
insurance policies providing reasonable coverage for its employees activities
and shall provide copies of such policies to the Distributor. The Adviser shall
indemnify and hold harmless the Distributor against any and all liabilities,
losses, damages, claims and expenses (including reasonable attorneys' fees and
disbursements and investigation costs incident thereto) arising from or related
to the Adviser's employees' activities as registered representatives of the
Distributor, including, without limitation, any and all such liabilities,
losses, damages, claims and expenses arising from or related to the breach by
such dual employees of any rules or regulations of the NASD or SEC.
14. Force Majeure. The Distributor shall not be liable for any delays or
errors occurring by reason of circumstances not reasonably foreseeable and
beyond its control, including, but not limited, to acts of civil or military
authority, national emergencies, work stoppages, fire, flood, catastrophe, acts
of God, insurrection, war, riot or failure of communication or power supply. In
the event of equipment breakdowns which are beyond the reasonable control of the
Distributor and not primarily attributable to the failure of the Distributor to
reasonably maintain or provide for the maintenance of such equipment, the
Distributor shall, at no additional expense to the Fund, take reasonable steps
in good faith to minimize service interruptions, but shall have no liability
with respect thereto.
15. Scope of Duties. The Distributor and the Fund shall regularly consult
with each other regarding the Distributor's performance of its obligations and
its compensation under the foregoing provisions. In connection therewith, the
Fund shall submit to the Distributor at a reasonable time in advance of filing
with the SEC copies of any amended or supplemented Registration Statement of the
Fund (including exhibits) under the 1940 Act and the 1933 Act, and at a
reasonable time in advance of their proposed use, copies of any amended or
supplemented forms relating to any plan, program or service offered by the Fund.
Any change in such materials that would require any change in the Distributor's
obligations under the foregoing provisions shall be subject to the Distributor's
approval. In the event that a change in such documents or in the procedures
contained therein increases the cost or burden to the Distributor of performing
its obligations hereunder, the Distributor shall be entitled to receive
reasonable compensation therefore.
16. Duration. This Agreement shall become effective as of the date first
above written, and shall continue in force for two years from that date and
thereafter from year to year, provided continuance is approved at least annually
by either (i) the vote of a majority of the Directors of the Fund, or by the
vote of a majority of the outstanding voting securities of the Fund, and (ii)
the vote of a majority of those Directors of the Fund who are not interested
persons of the Fund, and who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on the approval.
17. Termination. This Agreement shall terminate as follows:
a. This Agreement shall terminate automatically in the event of its
assignment.
b. This Agreement shall terminate upon the failure to approve the
continuance of the Agreement after the initial two year term as set
forth in Section 16 above.
c. This Agreement shall terminate at any time upon a vote of the majority
of the Directors who are not interested persons of the Fund or by a
vote of the majority of the outstanding voting securities of the Fund,
upon not less than 60 days prior written notice to the Distributor.
d. The Distributor may terminate this Agreement upon not less than 60
days prior written notice to the Fund.
Upon the termination of this Agreement, the Fund shall pay to the
Distributor such compensation and out-of-pocket expenses as may be payable for
the period prior to the effective date of such termination. In the event that
the Fund designates a successor to any of the Distributor's obligations
hereunder, the Distributor shall, at the expense and direction of the Fund,
transfer to such successor all relevant books, records and other data
established or maintained by the Distributor pursuant to the foregoing
provisions.
Sections 7, 8, 9, 10, 11, 12, 13, 14, 15, 17, 21, 22, 24, 25 and 26 shall
survive any termination of this Agreement.
18. Amendment. The terms of this Agreement shall not be waived, altered,
modified, amended or supplemented in any manner whatsoever except by a written
instrument signed by the Distributor and the Fund and shall not become effective
unless its terms have been approved by the majority of the Directors of the Fund
or by a "vote of a majority of the outstanding voting securities" of the Fund
and by a majority of those Directors who are not "interested persons" of the
Fund or any party to this Agreement.
19. Non-Exclusive Services. The services of the Distributor rendered to the
Fund are not exclusive. The Distributor may render such services to any other
investment company.
20. Definitions. As used in this Agreement, the terms "vote of a majority
of the outstanding voting securities," "assignment," "interested person" and
"affiliated person" shall have the respective meanings specified in the 1940 Act
and the rules enacted thereunder as now in effect or hereafter amended.
21. Confidentiality. The Distributor shall treat confidentially and as
proprietary information of the Fund all records and other information relating
to the Fund and prior, present or potential shareholders and shall not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder, except as may be required by
administrative or judicial tribunals or as requested by the Fund.
22. Notice. Any notices and other communications required or permitted
hereunder shall be in writing and shall be effective upon delivery by hand or
upon receipt if sent by certified or registered mail (postage prepaid and return
receipt requested) or by a nationally recognized overnight courier service
(appropriately marked for overnight delivery) or upon transmission if sent by
telex or facsimile (with request for immediate confirmation of receipt in a
manner customary for communications of such respective type and with physical
delivery of the communication being made by one or the other means specified in
this Section 20 as promptly as practicable thereafter). Notices shall be
addressed as follows:
(a) if to the Fund:
The Santa Barbara Group of Mutual Funds, Inc.
333 South Grand Avenue, Suite 4075
Los Angeles, CA 90071
Attention: Steven W. Arnold, President
(b) if to the Adviser:
SBG Capital Management Company, Inc.
333 South Grand Avenue, Suite 4075
Los Angeles, CA 90071
Attention: John P. Odell, President
(c) if to the Distributor:
Declaration Distributors, Inc.
555 North Lane, Suite 6160
Conshohocken, PA 19428
Attn: Terence P. Smith, President
or to such other respective addresses as the parties shall designate by like
notice, provided that notice of a change of address shall be effective only upon
receipt thereof.
23. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
24. Governing Law. This Agreement shall be administered, construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania to the
extent that such laws are not preempted by the provisions of any law of the
United States heretofore or hereafter enacted, as the same may be amended from
time to time.
25. Entire Agreement. This Agreement (including the Exhibits attached
hereto) contains the entire agreement and understanding of the parties with
respect to the subject matter hereof and supersedes all prior written or oral
agreements and understandings with respect thereto.
26. Miscellaneous. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof. The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction. This Agreement may be executed in two counterparts,
each of which shall be an original, but when taken together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
THE SANTA BARBARA GROUP OF MUTUAL FUNDS, INC.
By: ______________________________________
Steven W. Arnold, President
SBG CAPITAL MANAGEMENT COMPANY, INC.
By: ______________________________________
John P. Odell, President
DECLARATION DISTRIBUTORS, INC.
By: ______________________________________
Terence P. Smith, President
<PAGE>
SCHEDULE A
SANTA BARBARA GROUP OF MUTUAL FUNDS, INC.
PORTFOLIO AND FEE SCHEDULE
Portfolios covered by Distribution Agreement:
The Bender Growth Fund
Fees for distribution and distribution support services on behalf of the
Portfolios:
$20,000.00
<PAGE>
SCHEDULE B
SANTA BARBARA GROUP OF MUTUAL FUNDS, INC.
DISTRIBUTION SUPPORT SERVICES
1. Provide national broker dealer for Fund registration.
2. Review and submit for approval to the NASD all advertising and promotional
materials.
3. Maintain all books and records required by the NASD.
4. Subject to approval of Distributor, license personnel as registered
representatives of the Distributor to distribute no load fund shares
sponsored by the Adviser.
5. Telemarketing services (additional cost- to be negotiated).
6. Fund fulfillment services, including sampling prospective shareholders
inquiries and related mailings (additional cost- to be negotiated).
<PAGE>
EXHIBIT E
FORM OF
SUB-ADVISORY AGREEMENT
INVESTMENT SUB-ADVISOR AGREEMENT
--------------------------------
AGREEMENT, made this 30th day of September, 1998, between SBG Capital
Management, Inc. (the "Fund Manager") on behalf of the Bender Growth Fund (the
"Fund") and Robert Bender & Associates, Inc. (the "Sub-Advisor"), a California
Corporation.
WHEREAS, the Fund Manager has previously entered into an investment
advisory agreement with The Santa Barbara Group of Mutual Funds, Inc. (the
"Company").
WHEREAS, the Company is a Maryland corporation authorized to issue shares
in series and is registered as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"), and the Fund is
one of the series of the Company;
WHEREAS, the Sub-Advisor is registered as an investment advisor under the
Investment Advisors Act of 1940, as amended ( "Advisors Act");
WHEREAS, the Fund Manager wishes to retain the Sub-Advisor to render
investment advisory services to the Fund, and the Sub-Advisor is willing to
furnish such services to the Fund;
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the Fund Manager and the Sub-Advisor as follows:
1. Appointment
The Fund Manager hereby appoints the Sub-Advisor to act as Investment
Sub-Advisor to the Fund for the periods and on the terms set forth herein. The
Sub-Advisor accepts the appointment and agrees to furnish the services set forth
herein for the compensation provided herein.
2. Services as Investment Sub-Advisor
Subject to the general supervision and direction of the Board of Directors
of the Company, the Sub-Advisor will (a) manage the fund in accordance with the
Fund's investment objective and policies as stated in the Fund's Prospectus and
the Statement of Additional Information filed with the Securities and Exchange
Commission, as they may be amended from time to time; (b) make investment
decisions for the Fund; (c) place purchase and sale orders on behalf of the
Fund; and , (d) employ professional portfolio managers and securities analysts
to provide research services to the Fund. In providing those services, the
Sub-Advisor will provide the Fund with ongoing research, analysis, advice, and
judgements regarding individual investments, general economic conditions and
trends and long-range investment policy. In addition, the Sub-Advisor will
furnish the Fund with whatever statistical information the Fund may reasonably
request with respect to the securities that the Fund may hold or contemplate
purchasing.
The Sub-Advisor further agrees that, in performing it's duties hereunder,
it will:
f. comply with the 1940 Act and all rules and regulations thereunder, the
Advisor's Act, the Internal Revenue Code of 1986, as amended (the
"Code") and all other applicable federal and state laws and
regulations, and with any applicable procedures adopted by the
Directors;
g. use reasonable efforts to manage the Fund so that it will qualify, and
continue to qualify, as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder;
h. maintain books and records with respect to the Fund's securities
transactions, render to the Board of Directors of the Company such
periodic and special reports as the Board may reasonably request, and
keep the Directors informed of developments materially affecting the
Fund's portfolio;
i. make available to the Fund's administrator, and the Company, promptly
upon their request, such copies of its investment records and ledgers
with respect to the Fund as may be required to assist the
administrator and the Company in their compliance with applicable laws
and regulations. The Sub-Advisor will furnish the Directors with such
periodic and special reports regarding the Fund as they may reasonably
request;
j. immediately notify the Company in the event that the Sub-Advisor or
any of its affiliates: (1) becomes aware that it is subject to a
statutory disqualification that prevents the Sub-Advisor from serving
as an investment Sub-Advisor pursuant to this Agreement; or (2)
becomes aware that it is the subject of an administrative proceeding
or enforcement action by the Securities and Exchange Commission or
other regulatory authority. The Sub-Advisor further agrees to notify
the Company immediately of any material fact known to the Sub-Advisor
respecting or relating to the Sub-Advisor that is not contained in the
Company's Registration Statement regarding the Fund, or any amendment
or supplement thereto, but that is required to be disclosed therein,
and of any statement contained therein that becomes untrue in any
material respect.
3. Documents
The Fund has delivered properly certified or authenticated copies of each
of the following documents to the Sub-Advisor and will deliver to it all future
amendments and supplements thereto, if any:
c. certified resolution of the Board of Directors of the Company
authorizing the appointment of the Sub-Advisor and approving the form
of this Agreement;
d. The Registration Statement as filed with the Securities and Exchange
Commission and any amendments thereto;
c. Exhibits, powers of attorneys, certificates and any and all other
documents relating to or filed in connection with the Registration
Statement described above.
4. Brokerage
In selecting brokers or dealers to execute transactions on behalf of the
Fund, the Sub-Advisor will use its best efforts to seek the best overall terms
available. In assessing the best overall terms available for any Fund
transaction, the Sub-Advisor will consider all factors it deems relevant,
including, but not limited to, the breadth of the market in the security, the
price of the security, the financial condition and execution capability of the
broker or dealer and the reasonableness of the commission, if any, for the
specific transaction and on a continuing basis. In selecting brokers or dealers
to execute a particular transaction, and in evaluating the best overall terms
available, the Sub-Advisor is authorized to consider the brokerage and research
services (as those terms are defined in section 28(e) of the Securities and
Exchange Act of 1934, as amended ( the "1934 Act") provided to the Fund and/or
other accounts over which the Sub-Advisor or its affiliates exercise investment
discretion. In accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T)
thereunder, and subject to any other applicable laws and regulations, the
Sub-Advisor and its affiliates are authorized to effect portfolio transactions
for the Fund and to retain brokerage commissions on such transactions.
5. Records
The Sub-Advisor agrees to maintain and to preserve for the periods
prescribed under the 1940 Act any such records as are required to be maintained
by the Sub-Advisor with respect to the Fund by the 1940 Act. The Sub-Advisor
further agrees that all records which it maintains for the Fund are the property
of the Fund and it will promptly surrender any of such records upon request.
6. Standard of Care
The Sub-Advisor shall exercise its best judgment in rendering the services
under this Agreement. The Sub-Advisor shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund or the Fund's
shareholders in connection with the matters to which this Agreement relates,
provided that nothing herein shall be deemed to protect or purport to protect
the Sub-Advisor against any liability to the Fund or to its shareholders to
which the Sub-Advisor would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or by reason of the Sub-Advisor's reckless disregard of its obligations
and duties under this Agreement. As used in this Section 6, the term
"Sub-Advisor" shall include any officers, directors, employees, or other
affiliates of the Sub-Advisor performing services with respect to the Fund.
7. In consideration of the services rendered pursuant to this Agreement, the
SBG will pay the Sub-Adviser the following fees, at an annual rate as follows:
APPLICABLE ASSETS MANAGEMENT FEE
($000)
- ----------------- --------------
$0 - $250,000..................... 0.40%
$250,000 - $1,000,000............. 0.40%
$1,000,000 - $2,500,000........... 0.40%
$2,500,000 - $5,000,000........... 0.40%
$5,000,000 - $7,500,000........... 0.40%
$7,500,000 - $10,000,000.......... 0.40%
$10,000,000 - $12,500,000......... 0.40%
Over $12,500,000.................. 0.40%
This fee shall be computed and accrued daily and payable quarterly. For the
purpose of determining fees payable to the Sub-Adviser, the value of the Fund's
average daily net assets shall be computed at the times and in the manner
specified in the Fund's Prospectus or Statement of Additional Information in the
Fund's Prospectus or Statement of Additional Information.
8. Expenses
The Sub-Advisor will bear all expenses in connection with the performance
of its services under this Agreement. The Fund will bear certain other expenses
to be incurred in its operation, including: taxes, interest, brokerage fees and
commission, if any, fees of Directors of the Company who are not officers,
directors, or employees of the Sub-Advisor; Securities and Exchange Commission
fees and state blue sky qualification fees; charges of custodians and transfer
and dividend disbursing agents; the Fund's proportionate share of insurance
premiums; outside auditing and legal expenses; costs of maintenance of the
Fund's existence; costs attributable to investor services, including, without
limitation, telephone and personnel expenses; charges of an independent pricing
service; costs of preparing and printing prospectuses and statements of
additional information for regulatory purposes and for distribution to existing
shareholders; costs of shareholders' reports and meetings of the shareholders of
the Fund and of the officers or Board of Directors of the Company; and any
extraordinary expenses. In addition, the Fund will pay distribution fees
pursuant to a Distribution Plan adopted under Rule 12b-1 of the 1940 Act.
9. Reduction of Fees or Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the Fund (including fees
pursuant to this Agreement and the Fund's administration agreement, but
excluding distribution fees, interest, taxes, brokerage and extraordinary
expenses) exceed the expense limitation of any state having jurisdiction over
the Fund, the Sub-Advisor will reduce its fees or reimburse the Fund for such
excess expense in the same proportion as its advisory fee bears to the Fund's
combined fee for investment advice and administration. The Sub-Advisor's
obligation to reduce its fees or reimburse the Fund will be limited to the
amount of its fees received pursuant to this Agreement. Such reduction in fees
or reimbursement, if any, will be estimated, reconciled and, in the case of
reimbursement, paid on a quarterly basis.
10. Services to Other Companies or Accounts
The investment advisory services of the Sub-Advisor to the Fund under this
Agreement are not to be deemed exclusive, and the Sub-Advisor, or any affiliate
thereof, shall be free to render similar services to other investment companies
and other clients (whether or not their investment objectives and policies are
similar to those of the Fund) and to engage in other activities, so long as its
services hereunder are not impaired thereby.
11. Duration and Termination
This Agreement shall become effective on October 15, 1996, in effect,
unless sooner terminated as provided herein, for two years from such date and
shall continue from year to year thereafter, provided each continuance is
specifically approved at least annually by
(ii) the vote of a majority of the Board of Directors of the Company or,
(iii)a vote of a "majority" (as defined in the 1940 act) of the Fund's
outstanding voting securities, provided that in either event the
continuance is also approved by a majority of the Board of Directors
who are not "interested persons" (as defined in the 1940 Act) of any
party to this Agreement, by vote cast in person at a meeting called
for the purpose of voting on such approval. This Agreement is
terminable, without penalty, on sixty (60) days written notice by the
Board of Directors of the Company or by vote of holders of a majority
of the Fund's shares or upon ninety (90) days written notice by the
Sub-Advisor. This Agreement will also terminate automatically in the
event of its "assignment" (as defined in the 1940 Act).
12. Amendment
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective until approved by
an affirmative vote of
(i) a majority of the outstanding voting securities of the Fund, and
(ii) a majority of the Directors of the Company, including a majority of
Directors who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of
voting on such approval, if such approval is required by applicable
law.
13. Use of Name
It is understood that the name of Robert Bender & Associates, Inc. or any
derivative thereof or logo associated with that name is the valuable property of
the Sub-Advisor and its affiliates, and that the Fund has the right to use such
name (or derivative or logo) only so long as this Agreement shall continue with
respect to the Fund. Upon termination of this Agreement, the Fund shall
forthwith cease to use such name (or derivative or logo) and shall promptly
amend its Articles of Incorporation to change its name to comply herewith.
14. Miscellaneous
(a) This Agreement constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof.
(b) Titles or captions of Sections contained in this Agreement are
inserted only as a matter of convenience and for reference, and in no
way define, limit, extend or describe the scope of this Agreement or
the intent of any provisions thereof.
(c) This Agreement may be executed in several counterparts, all of which
together shall for all purposes constitute one agreement, binding on
all the Parties.
(g) This Agreement and the rights and obligations of the parties hereunder
shall be governed by, and interpreted, construed and enforced in
accordance with the laws of the State of California.
(h) If any provision of this Agreement or the application thereof to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the
remainder of this Agreement or the application of such provision to
such person or circumstance, other than those as to which it is so
determined to be invalid or unenforceable, shall not be affected
thereby, and each provision hereof shall be valid and shall be
enforced to the fullest extent permitted by law.
(i) Notices of any kind to be given to the Sub-Advisor by the Company
shall be in writing and shall be duly given if mailed or delivered to
the Sub-Advisor at: Robert Bender & Associates, Inc., 525 Starlight
Crest Drive, La Canada, CA 91011, Attn: Robert L. Bender, or at such
other address or to such individual as shall be specified by the
Sub-Advisor to the Company. Notices of any kind to be given to the
Company by the Sub-Advisor shall be in writing and shall be duly given
if mailed or delivered to The Santa Barbara Group of Mutual Funds,
Inc., 333 South Grand Avenue, Los Angeles, CA 90071, Attn: Steven W.
Arnold, or at such other address or to such individual as shall be
specified by the Company to the Sub-Advisor.
IN WITNESS WHEREOF, The SBG Capital Management Company, Inc., on behalf of
the Fund, and Robert Bender & Associates, Inc. have executed this Investment
Sub-Advisory Agreement as of the 30th day of September, 1998, to be effective as
of that date.
SBG CAPITAL MANAGEMENT, INC. ROBERT BENDER & ASSOCIATES, INC.
- -------------------------------- -------------------------------
By: Steven W. Arnold By: Robert L. Bender
Its: President Its: President
<PAGE>
EXHIBIT F
BROKERAGE COMMISSIONS PAID FOR FISCAL YEAR 1998
TOTAL NET ASSETS* BROKERAGE FEES AS %
FUND (MILLIONS) FEES PAID** OF EXPENSES
- -------- ----------------- ----------- -----------
BENDER*** $9,040,155 $8,778 .0971%
STARBUCK 0.00 NONE
* Total Net Assets, in millions, as of March 31, 1998.
** No brokerage fees were paid solely as a result of research or other services
provided to SBG or RBA
*** RBA serves as sub-adviser.
<PAGE>
EXHIBIT G
FEES AND EXPENSES
BENDER
------
Fiscal Year End................................. 03/31/98
Investment Advisory Fees........................ $ 76,604
Administrator Fees.............................. $ 60,000
Custodian Fees.................................. $ 11,386
Transfer Agent Fees............................. $ 42,419
Professional Fees............................... $ 15,330
Director Fees................................... $ 6,770
Registration Fees............................... $ 43,499
Distribution Fees, Class Y...................... $ 4,006
Distribution Fees, Class C...................... $ 45,235
Printing Fees................................... $ 1,749
Amortization of Deferred Organizational Costs... $ 8,225
Miscellaneous Expenses.......................... $ 104
- --------------------------------------------------------------------------------
Total expenses before waivers & contributions $315,327
- --------------------------------------------------------------------------------
Waiver of Investment Advisory Fees $(76,604)
Contribution from Adviser $(36,355)
- --------------------------------------------------------------------------------
Total Expenses, Net $202,368
- --------------------------------------------------------------------------------
Thank you for mailing your ballot promptly!
We appreciate your continuing support and look forward to serving
your future investment needs.
<PAGE>
THE SANTA BARBARA GROUP OF MUTUAL FUNDS, INC.
1. Elect the following persons as Directors.
(3) Steven W. Arnold, (2) Robert L. Bender, (3) John P. Odell,
(4) John W. Svendsen, (5) William H. Phelps, (6) Harvey A. Marsh,
(7) Wayne Turkheimer, (8) Glory Burns
For All For All Except Withhold All
/ / / / / /
- --------------------------------------------------------------------------------
To withhold authority to vote on any individual nominee(s), please print the
number(s)of the nominee(s) on the line above.
2. Approve a new investment management agreement with SBG Capital Management
Company, Inc. on new terms which result in a decrease in fees to the fund.
For Against Abstain
/ / / / / /
3.A For Class A Shareholders Only. Approve a new Rule 12b-1 distribution plan
on the same terms as the current plan.
For Against Abstain
/ / / / / /
3.Y For Class Y Shareholders Only. Approve a new Rule 12b-1 distribution plan
on the same terms as the current plan.
For Against Abstain
/ / / / / /
3.C For Class C Shareholders Only. Approve a new Rule 12b-1 distribution plan
on the same terms as the current plan.
For Against Abstain
/ / / / / /
4. Approve a new distribution agreement with Declaration Distributors, Inc. on
the same terms as the current agreement.
For Against Abstain
/ / / / / /
5. Approve a new sub-advisory agreement with Robert Bender & Associates, Inc.
on new terms which result in a decrease in fees to the fund.
For Against Abstain
/ / / / / /
Signature(s) (All registered owners of accounts shown to the left must sign. If
signing for a corporation, estate or trust, please indicate your capacity or
title.)
X
- --------------------------------------------------------------------------------
Signature Date
X
- --------------------------------------------------------------------------------
Signature Date
PLEASE VOTE TODAY! PLEASE VOTE PROMPTLY!
Your vote is needed! Please vote on the reverse side of this form and sign in
the space provided. Return your completed proxy in the enclosed envelope today.
You may receive additional proxies for your other accounts with SBGMF. These are
not duplicates; you should sign and return each proxy card in order for your
votes to be counted. Please return them as soon as possible to help save the
cost of additional mailings.
The signers of this proxy hereby appoint Lisa Jo Barnes and Richard E Dinger,
and each of them, attorneys and proxies, with power of substitution in each, to
vote all shares for the signers at the special meeting of shareholders to be
held September 30, 1998, and at any adjournments thereof, as specified herein,
and in accordance with their best judgement, on any other business that may
properly come before this meeting. If no specification is made herein, all
shares will be voted "FOR" the proposals set forth on this proxy. The proxy is
solicited by the Board of SBGMF which recommends a vote "FOR" all matters.
