EXHIBIT 23(e)(1)
DISTRIBUTION AGREEMENT
Distribution Agreement made as of February 11, 1997, and amended and
restated as of November 18, 1998, between THE INFINITY MUTUAL FUNDS, INC., a
Maryland corporation having its principal office and place of business at 0000
Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000-0000 (herein called the "Fund"), and BISYS
FUND SERVICES LIMITED PARTNERSHIP, an Ohio limited partnership having its
principal office and place of business at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx
00000-0000 (herein called the "Distributor").
WHEREAS, the Fund is an open-end, management investment company and is
so registered under the Investment Company Act of 1940, as amended (the "1940
Act"), and consisting of the portfolios set forth on Schedule 1 hereto, as such
Schedule may be revised from time to time (each, a "Series");
WHEREAS, the Fund desires to retain the Distributor as distributor for
certain Series' shares of common stock, par value $.001 per share (the
"Shares"), and the Distributor is willing to render such services; and
WHEREAS, this Agreement, as amended and restated, is intended to apply
to all Shares issued before or after such amendment and restatement;
NOW THEREFORE, in consideration of the premises and mutual covenants
set forth herein the parties hereto agree as follows:
I. DELIVERY OF DOCUMENTS
The Fund has delivered to the Distributor copies of the following
documents and will deliver to the Distributor all future amendments and
supplements thereto, if any:
(a) The Fund's Articles of Incorporation and all amendments and
supplements thereto (as presently in effect and as from time to time amended or
supplemented, herein called the "Charter");
(b) The Fund's By-laws (as presently in effect and as from time to
time amended, herein called the "By-laws");
(c) Resolutions of the Board of Directors of the Fund authorizing the
execution and delivery of this Agreement;
(d) The Fund's Registration Statement under the Securities Act of
1933, as amended (the "1933 Act"), and the 1940 Act on Form N-1A most recently
filed with the Securities and Exchange Commission (the "Commission") relating to
the Shares, and all subsequent amendments or supplements thereto (the
"Registration Statement");
(e) The Fund's Notification of Registration under the 1940 Act on Form
N-8A as filed with the Commission; and
(f) The Fund's current Prospectuses and Statements of Additional
Information of the Series (as presently in effect and as from time to time
amended and supplemented, herein called individually the "Prospectus" and
collectively the "Prospectuses").
II. DISTRIBUTION
1. APPOINTMENT OF DISTRIBUTOR. The Fund hereby appoints the
Distributor as principal distributor of the Series' Shares and the Distributor
hereby accepts such appointment and agrees to render the services and duties set
forth in this Section II.
2. SERVICES AND DUTIES.
(a) The Fund agrees to sell through the Distributor, as agent,
from time to time during the term of this Agreement, Shares of the Series
(whether authorized but unissued or treasury shares, in the Fund's sole
discretion) upon the terms and at the current offering price as described in the
applicable Prospectus. The Distributor will act only in its own behalf as
principal in making agreements with selected dealers or others for the sale and
redemption of Shares, and shall sell Shares only at the offering price thereof
as set forth in the applicable Prospectus. The Distributor shall devote its best
efforts to effect the sale of Shares of each Series, but shall not be obligated
to sell any certain number of Shares.
(b) In all matters relating to the sale and redemption of Shares,
the Distributor will act in conformity with the Fund's Charter, By-laws and
Prospectuses and with the instructions and directions of the Fund's Board of
Directors and will conform to and comply with the requirements of the 1933 Act,
the 1940 Act, the regulations of the National Association of Securities Dealers,
Inc. and all other applicable Federal or state laws and regulations. In
connection with the sale of Shares, the Distributor acknowledges and agrees that
it is not authorized to provide any information or make any representation other
than as contained in the Fund's Registration Statement or Prospectuses and any
sales literature specifically approved by the Fund.
(c) Unless the Fund has adopted with respect to the Series a plan
pursuant to Rule 12b-1 under the 1940 Act which provides otherwise, the
Distributor will bear the costs and expenses of (i) printing and distributing to
prospective investors copies of any Prospectus (including any supplement
thereto) and annual and interim reports of the Series (after such items have
been prepared and set in type by the Fund) which are used in connection with the
offering of Shares of a Series; and (ii) preparing, printing and distributing
any other literature used by the Distributor in connection with the sale of the
Shares; PROVIDED, HOWEVER, that the Distributor shall not be obligated to bear
the expenses incurred by the Fund in connection with the preparation and
printing Prospectuses used for regulatory purposes and for distribution to
existing shareholders.
(d) All Shares of the Series offered for sale by the Distributor
shall be offered for sale to the public at a price per Share (the "offering
price") equal to (i) their net asset value (determined in the manner set forth
in the Fund's Charter and then-current Prospectuses) plus, (ii) a sales charge
(if any) which shall be the percentage of the offering price of such Shares as
set forth in the Fund's then-current Prospectuses. The offering price, if not an
exact multiple of one cent, shall be adjusted to the nearest cent. In addition,
Shares of any class of the Fund offered for sale by the Distributor may be
subject to a contingent deferred sales charge ("CDSC") as set forth in the
Fund's then-current prospectus. The Distributor shall be entitled to receive any
sales charge or CDSC in respect of the Shares. If a sales charge or CDSC is in
effect, the Distributor shall have the right to pay a portion of the sales
charge or CDSC to broker-dealers and other persons who have sold shares of the
Series. Concessions by the Distributor to broker-dealers and other persons
shall be set forth in either the selling agreements between the Distributor and
such broker-dealers and persons or, if such concessions are described in the
then-current Prospectuses, shall be as so set forth. No broker-dealer or other
person who enters into a selling agreement with the Distributor shall be
authorized to act as agent for the Fund in connection with the offering or sale
of its Shares to the public or otherwise. The Fund reserves the right to reject
any order but will not do so without reasonable cause.
(e) If any Shares sold by the Distributor under the terms of this
Agreement are redeemed or repurchased by the Fund or by the Distributor as agent
or are tendered for redemption within seven business days after the date of
confirmation of the original purchase of said Shares, the Distributor shall
forfeit the amount (if any) above the net asset value received by it in respect
of such Shares, provided that the portion, if any, of such amount (if any)
re-allowed by the Distributor to broker-dealers or other persons shall be
repayable to the Fund only to the extent recovered by the Distributor from the
broker-dealer or other person concerned. The Distributor shall include in the
forms of agreement with such broker-dealers and persons a corresponding
provision for the forfeiture by them of their concession with respect to Shares
sold by them or their principals and redeemed or repurchased by the Fund or by
the Distributor as agent (or tendered for redemption) within seven business days
after the date of confirmation of such initial purchases.
(f) In consideration of the Distributor's services described
herein and in the Fund's distribution plan (the "ISG Distribution Plan") in
respect of Class B Shares of each Series listed on Schedule 2 hereof, the Fund
agrees: (I) to pay to the Distributor monthly in arrears its "Allocable Portion"
(as hereinafter defined) of a fee (the "Class B Distribution Fee") which shall
accrue daily in an amount equal to the product of (A) the daily equivalent of
0.75% per annum multiplied by (B) the net asset value of the Class B Shares of
such Series outstanding on such day, and (II) to withhold from redemption
proceeds such Distributor's Allocable Portion of the CDSCs in respect of Class B
Shares of such Series and to pay the same over to such Distributor or at its
direction. Furthermore, the Allocation Schedule attached hereto as Schedule A
and each of the provisions set forth in clauses (I) through (V) of the second
sentence of Section 1(b) of the ISG Distribution Plan as in effect on the date
of this Agreement, as amended and restated, together with the related
definitions, are hereby incorporated herein by reference with the same force and
effect as if set forth herein in their entirety.
3. SALES AND REDEMPTIONS.
(a) The Fund shall pay all costs and expenses in connection with
the registration of the Shares under the 1933 Act, and all expenses in
connection with maintaining facilities for the issue and transfer of the Shares
and for supplying information, prices and other data to be furnished by the Fund
hereunder, and all expenses in connection with preparing, printing and
distributing any Prospectus, except as set forth in subsection 2(c) of Section
II hereof.
(b) The Fund shall execute all documents, furnish all information
and otherwise take all actions which may be reasonably necessary in the
discretion of the Fund's officers in connection with the qualification of the
Shares for sale in such states as the Distributor may designate to the Fund and
the Fund may approve, and the Fund shall pay all fees which may be incurred in
connection with such qualification. The Distributor shall pay all expenses
connected with its qualification as a dealer under state or Federal laws and,
except as otherwise specifically provided in this Agreement, all other expenses
incurred by the Distributor in connection with the sale of the Shares as
contemplated in this Agreement. It is understood that certain advertising,
marketing, shareholder servicing, administration and/or distribution expenses to
be incurred in connection with the Shares may be paid as provided in any plan
which may be adopted by the Fund in accordance with Rule 12b-1 under the 1940
Act.
(c) The Fund shall have the right to suspend the sale of Shares
of any Series at any time in response to conditions in the securities markets or
otherwise, and to suspend the redemption of Shares of any Series at any time
permitted by the 1940 Act or the rules of the Commission.
(d) The Fund reserves the right to reject any order for Shares.
(e) No Shares shall be offered by either the Fund or the
Distributor under any of the provisions of this Agreement and no orders for the
purchase or sale of Shares hereunder shall be accepted by the Fund if and so
long as the effectiveness of the Registration Statement shall be suspended under
any of the provisions of the 1933 Act, or if and so long as a Prospectus as
required by Section 10 of the 1933 Act is not on file with the Commission;
provided, however, that nothing contained in this sub-paragraph shall in any way
restrict or have any application to or bearing upon the Fund's obligation to
repurchase any Shares from any shareholder in accordance with the provisions of
the Charter or Prospectuses.
4. CONFIDENTIALITY. The Distributor will treat confidentially and as
proprietary information of the Fund all records and other information relative
to the Fund and each Series' prior or present shareholders or those persons or
entities who respond to inquiries concerning investment in a Series and, except
as provided below, will not use such records or information for any other
purpose other than for the performance of its responsibilities and duties with
regard to the Series which now exist or which may be added in the future. Any
other use by the Distributor of the records and information referred to above
may be made only after prior notification to and approval in writing by the
Fund. Such approval shall not be unreasonably withheld and may not be withheld
where (i) the Distributor may be exposed to civil or criminal contempt
proceedings for failure to divulge such information; (ii) the Distributor is
requested to divulge such information by duly constituted authorities; or (iii)
the Distributor is so requested by the Fund.
III. LIMITATION OF LIABILITY
The Distributor shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund or any Series in connection
with the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the Distributor's part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Any person, even though also an
officer, director, partner, employee 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 to any Series, or acting on any business
of the Fund or of any Series (other than services or business in connection with
the Distributor's duties as distributor hereunder), to be rendering such
services to or acting solely for the Fund or a Series and not as an officer,
director, partner, employee or agent or one under the control or direction of
the Distributor even though paid by the Distributor.
IV. INDEMNIFICATION
1. FUND REPRESENTATIONS. The Fund represents and warrants to the
Distributor that at all times the Registration Statement and Prospectuses will
in all material respects conform to the applicable requirements of the 1933 Act
and the rules and regulations thereunder and will not include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation or warranty in this subsection shall apply to statements or
omissions made in reliance upon and in conformity with written information
furnished to the Fund by, or on behalf of, and with respect to, the Distributor
expressly for use in the Registration Statement or Prospectuses.
2. DISTRIBUTOR'S REPRESENTATIONS. The Distributor represents and
warrants to the Fund that it is duly organized as an Ohio limited partnership
and is and at all times will remain duly authorized and licensed to carry out
its services as contemplated herein.
3. FUND INDEMNIFICATION. The Fund will indemnify, defend and hold
harmless the Distributor, its several officers and directors, and any person who
controls the Distributor within the meaning of Section 15 of the 1933 Act, from
and against any losses, claims, damages or liabilities, joint or several, to
which any of them may become subject under the 1933 Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, the Prospectuses or in any application or other document executed by
or on behalf of the Fund, or arise out of, or are based upon, information
furnished by or on behalf of the Fund filed in any state in order to qualify the
Shares under the securities or blue sky laws thereof ("Blue Sky Application"),
or arise out of, or are based upon, the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Distributor, its
several officers and directors, and any person who controls the Distributor
within the meaning of Section 15 of the 1933 Act, for any legal or other
expenses reasonably incurred by any of them in investigating, defending or
preparing to defend any such action, proceeding or claim; PROVIDED, HOWEVER,
that the Fund shall not be liable in any case to the extent that such loss,
claim, damage or liability arises out of, or is based upon, any untrue
statement, alleged untrue statement, or omission or alleged omission made in the
Registration Statement, the Prospectuses, any Blue Sky Application or any
application or other document executed by or on behalf of the Fund in reliance
upon and in conformity with written information furnished to the Fund by or on
behalf of and with respect to the Distributor specifically for inclusion
therein.
The Fund shall not indemnify any person pursuant to this subsection 3
unless the court or other body before which the proceeding was brought has
rendered a final decision on the merits that such person was not liable by
reason of his willful misfeasance, bad faith or gross negligence in the
performance of his duties, or his reckless disregard of obligations and duties,
under this Agreement ("disabling conduct") or, in the absence of such a
decision, a reasonable determination (based upon a review of the facts) that
such person was not liable by reason of disabling conduct has been made by the
vote of a majority of a quorum of Directors of the Fund who are neither
"interested persons" of the Fund (as defined in the 0000 Xxx) nor parties to the
proceeding, or by an independent legal counsel in a written opinion.
The Fund shall advance attorneys' fees and other expenses incurred by
any person in defending any claim, demand, action or suit which is the subject
of a claim for indemnification pursuant to this subsection 3, so long as such
person shall: (i) undertake to repay all such advances unless it is ultimately
determined that he is entitled to indemnification hereunder; and (ii) provide
security for such undertaking, or the Series shall be insured against losses
arising by reason of any lawful advances, or a majority of a quorum of the
disinterested, non-party Directors of the Fund (or an independent legal counsel
in a written opinion) shall determine based on a review of readily available
facts (as opposed to a full trial-type inquiry) that there is reason to believe
that such person ultimately will be found entitled to indemnification hereunder.
4. DISTRIBUTOR'S INDEMNIFICATION. The Distributor will indemnify,
defend and hold harmless the Fund, each Series, the Fund's several officers and
Directors and any person who controls the Fund or any Series within the meaning
of Section 15 of the 1933 Act, from and against any losses, claims, damages or
liabilities, joint or several, to which any of them may become subject under the
1933 Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect hereof) arise out of, or are based upon,
any breach of its representations and warranties in subsection 2 hereof or its
agreements in subsection 2 of Section II of this Agreement, or which arise out
of, or are based upon, any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, the Prospectuses, any
Blue Sky Application or any application or other document executed by or on
behalf of the Fund, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, which statement or omission was made in reliance upon
and in conformity with information furnished in writing to the Fund or any of
its several officers and Directors by or on behalf of and with respect to the
Distributor specifically for inclusion therein, and will reimburse the Fund,
each Series, the Fund's several officers and Directors, and any person who
controls the Fund or any Series within the meaning of Section 15 of the 1933
Act, for any legal or other expenses reasonably incurred by any of them in
investigating, defending or preparing to defend any such action, proceeding or
claim.
5. GENERAL INDEMNITY PROVISIONS. No indemnifying party shall be liable
under its indemnity agreement contained in subsection 3 or 4 hereof with respect
to any claim made against such indemnifying party unless the indemnified party
shall have notified the indemnifying party in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon the indemnified party (or after the
indemnified party shall have received notice of such service on any designated
agent), but failure to notify the indemnifying party of any such claim shall not
relieve it from any liability which it may otherwise have to the indemnified
party. The indemnifying party will be entitled to participate at its own expense
in the defense or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, and if the indemnifying party elects to assume the
defense, such defense shall be conducted by counsel chosen by it and reasonably
satisfactory to the indemnified party. In the event the indemnifying party
elects to assume the defense of any such suit and retain such counsel, the
indemnified party shall bear the fees and expenses of any additional counsel
retained by the indemnified party.
V. TERM
This Agreement shall continue automatically for successive annual
periods ending on December 31 of each year, provided such continuance is
specifically approved at least annually by (a) the Fund's Board of Directors or
(b) vote of a majority (as defined in the 0000 Xxx) of the Fund's outstanding
voting securities, provided that in either event its continuance also is
approved by a majority of the Fund's Directors who are not "interested persons"
(as defined in the 0000 Xxx) of any party to this Agreement, cast in person at a
meeting called for the purpose of voting on such approval. This Agreement is
terminable without penalty, on 60 days' written notice to the Distributor, by
vote of a majority of the Fund's outstanding voting securities or, as to each
Series, by the Fund's Board of Directors or, on 90 days' written notice to the
Fund, by the Distributor. This Agreement will automatically terminate, as to the
relevant Series, in the event of its assignment (as defined in the 1940 Act).
VI. MISCELLANEOUS
1. AMENDMENTS. No provision of this Agreement may be changed, waived,
discharged or terminated except by an instrument in writing signed by the party
against which an enforcement of the change, waiver, discharge or termination is
sought.
2. CONSTRUCTION. 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 or effect. 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. Subject to the provisions of Section IV hereof, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and shall be governed by New York law; PROVIDED,
HOWEVER, that nothing herein shall be construed in a manner inconsistent with
the 1940 Act or any rule or regulation thereunder.
3. NOTICE. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Fund shall be sufficiently given
if addressed to the Fund and mailed or delivered to it at its office at the
address first above written, or at such other place as the Fund may from time to
time designate in writing. Any notice or other instrument in writing, authorized
or required by this Agreement to be given to the Distributor shall be
sufficiently given if addressed to the Distributor and mailed or delivered to it
at its office at the address first above written, or at such other place as the
Distributor may from time to time designate in writing.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below as of the day and year first
above written.
THE INFINITY MUTUAL FUNDS, INC.
By:___________________________
Xxxxxxx X. Xxxxxxx,
President and Chairman of
the Board
Attest:_______________________
BISYS FUND SERVICES LIMITED
PARTNERSHIP
By: BISYS Fund Services, Inc.,
General Partner
By:___________________________
Attest:________________________
SCHEDULE 1
NAME OF SERIES DATE ESTABLISHED
-------------- ------------------------
ISG Aggressive Growth Portfolio August 12, 1998
ISG Capital Growth Fund February 15, 1994
ISG Income Fund February 15, 1994
ISG Current Income Portfolio August 12, 1998
ISG Equity Income Fund February 15, 1994
ISG Equity Value Fund May 14, 1998
ISG Government Income Fund May 14, 1998
ISG Government Money Market May 14, 1998
Fund
ISG Growth Portfolio August 12, 1998
ISG Growth & Income Portfolio August 12, 1998
ISG International Equity May 14, 1998
Fund
ISG Large-Cap Equity Fund May 14, 1998
ISG Limited Term Income February 15, 1994
Fund
ISG Limited Term February 11, 1997
Tennessee Tax-Exempt Fund
ISG Limited Term U.S. February 11, 1997
Government Fund
ISG Mid-Cap Fund May 14, 1998
ISG Moderate Growth & Income August 12, 1998
Fund
ISG Municipal Income May 14, 1998
Fund
ISG Prime Money Market February 15, 1994
Fund
ISG Small-Cap Opportunity Fund May 14, 1998
ISG Tax-Exempt Money Market May 14, 1998
Fund
ISG Tennessee Tax-Exempt Fund February 15, 1994
ISG Treasury February 15, 1994
Money Market Fund
Correspondent Cash Reserves October 30, 1990
Money Market Portfolio
Correspondent Cash Reserves October 30, 1990
Tax Free Money Market Portfolio
Stewardship Large-Cap February 25, 1999
Equity Fund
Stewardship Small-Cap February 25, 1999
Equity Fund
Stewardship Mid-Cap February 25, 1999
Equity Fund
Revised: February 25, 1999
SCHEDULE 2
NAME OF SERIES SUBJECT TO SUBSECTION 2(F) OF SECTION II
ISG Aggressive Growth Portfolio
ISG Capital Growth Fund
ISG Income Fund
ISG Current Income Portfolio
ISG Equity Income Fund
ISG Equity Value Fund
ISG Government Income Fund
ISG Growth Portfolio
ISG Growth & Income Portfolio
ISG International Equity Fund
ISG Large-Cap Equity Fund
ISG Limited Term Income Fund
ISG Limited Term Tennessee Tax-Exempt Fund
ISG Limited Term U.S. Government Fund
ISG Mid-Cap Fund
ISG Moderate Growth & Income Portfolio
ISG Municipal Income Fund
ISG Small-Cap Opportunity Fund
ISG Tennessee Tax-Exempt Fund
ISG Tax-Exempt Money Market Fund
ISG Government Money Market Fund
ISG Prime Money Market Fund
Stewardship Large-Cap Equity Fund
Stewardship Small-Cap Equity Fund
Stewardship Mid-Cap Equity Fund
Revised: February 25, 1999
SCHEDULE A
to the
Distribution Agreement
DISTRIBUTION AGREEMENT ALLOCATION PROCEDURES
CDSCs and Class B Distribution Fees related to Class B Shares of each
Series of the Fund designated on Schedule 2 hereof (each, an "ISG Fund") shall
be allocated by the Fund between the Distributor and any replacement principal
distributor for Class B Shares of any ISG Fund (the "Successor Distributor") in
accordance with this Schedule A.
Defined terms used in this Schedule A and not otherwise defined herein
shall have the meaning assigned to them in the Distribution Agreement to which
this Schedule A is attached. As used in this Schedule A the following terms
shall have the meanings indicated:
"COMMISSION SHARE" means, in respect of any ISG Fund, each Share of such
ISG Fund which is issued under circumstances which would normally give rise to
an obligation of the holder of such Share to pay a CDSC upon redemption of such
Share (including, without limitation, any Share of such ISG Fund issued in
connection with a Free Exchange) and any such Share shall continue to be a
Commission Share of such ISG Fund prior to the redemption (including a
redemption in connection with a Free Exchange) or conversion of such Share, even
though the obligation to pay the CDSC may have expired or conditions for waivers
thereof may exist.
"DATE OF ORIGINAL ISSUANCE" means in respect of any Commission Share, the
date with reference to which the amount of the CDSC payable on redemption
thereof, if any, is computed.
"FREE EXCHANGE" means an exchange of a Commission Share of one ISG Fund for
a Commission Share of another ISG Fund under circumstances where the CDSC which
would have been payable in respect of a redemption of the exchanged Commission
Share on the date of such exchange is waived and the Commission Share issued in
such exchange is treated as a continuation of the investment in the Commission
Share exchanged for purposes of determining the CDSC payable if such Commission
Share issued in the exchange is thereafter redeemed.
"FREE SHARE" means, in respect of any ISG Fund, each Share of such ISG
Fund, other than a Commission Share, including, without limitation, any Share
issued in connection with the reinvestment of dividends or capital gains.
"INCEPTION DATE" means, in respect of any ISG Fund, the first date on which
such ISG Fund issued Shares.
"NET ASSET VALUE" means, (i) with respect to any ISG Fund, as of the date
any determination thereof is made, the net asset value of such ISG Fund computed
in the manner such value is required to be computed by such ISG Fund in its
reports to its shareholders, and (ii) with respect to any Share of such ISG Fund
as of any date, the quotient obtained by dividing: (A) the net asset value of
such ISG Fund (as computed in accordance with clause (i) above) allocated to
Shares of such ISG Fund (in accordance with the constituent documents for such
ISG Fund) as of such date, by (B) the number of Shares of such ISG Fund
outstanding on such date.
"SHARE" means, in respect of any ISG Fund, each Class B Share of such ISG
Fund.
PART I: ATTRIBUTION OF SHARES
Shares of each ISG Fund, which are outstanding from the time to time, shall
be attributed to the Distributor and any Successor Distributor in accordance
with the following rules;
(1) COMMISSION SHARES:
(a) Commission Shares attributed to the Distributor shall be Commission
Shares the Date of Original Issuance of which occurred on or after the Inception
Date of such ISG Fund and on or prior to the last day on which the Distributor
acts as principal distributor of Shares for such ISG Fund.
(b) Commission Shares attributable to the Successor Distributor shall be
Commission Shares the Date of Original Issuance of which occurs on or after the
first day on which such Successor Distributor acts as principal distributor of
Shares of such ISG Fund and on or prior to the last day such Successor
Distributor acts as principal distributor of Shares for such ISG Fund.
(c) A Commission Share of a particular ISG Fund (the "ISSUING ISG FUND")
issued in consideration of the investment of proceeds of the redemption of a
Commission Share of another ISG Fund (the "REDEEMING ISG FUND") in connection
with a Free Exchange, is deemed to have a Date of Original Issuance identical to
the Date of Original Issuance of the Commission Share of the Redeeming ISG Fund
and any such Commission Share will be attributed to the Distributor or the
Successor Distributor based upon such Date of Original Issuance in accordance
with Part I(a) and (b) above.
(d) A Commission Share redeemed (other than in connection with a Free
Exchange) or converted to a Class A Share is attributable to the Distributor or
Successor Distributor based upon the Date of Original Issuance in accordance
with Part I(a), (b) and (c) above.
(2) FREE SHARES:
Free Shares of an ISG Fund outstanding on any date shall be attributed to
the Distributor or Successor Distributor, as the case may be, in the same
proportion that the Commission Shares of such ISG Fund outstanding on such date
are attributed to it on such date; PROVIDED that if the Distributor reasonably
determines that the Fund's transfer agent is able to produce monthly reports
which track the Date of Original Issuance for the Commission Shares related to
such Free Shares, then the Free Shares shall be allocated pursuant to clause
1(a), (b) and (c) above.
PART II: ALLOCATION OF CDSCS
(1) CDSCS RELATED TO THE REDEMPTION OF COMMISSION SHARES:
CDSCs in respect of the redemption of Commission Shares shall be allocated
to the Distributor or Successor Distributor depending upon whether the related
redeemed Commission Share is attributable to the Distributor or Successor
Distributor, as the case may be, in accordance with Part I above.
PART III: ALLOCATION OF CLASS B DISTRIBUTION FEES
Assuming that the Class B Distribution Fee remains constant over time and
among the ISG Funds so that Part IV hereof does not become operative:
(1) The portion of the aggregate Class B Distribution Fees accrued in
respect of all Shares of all ISG Funds during any calendar month allocable to
the Distributor or a Successor Distributor is determined by multiplying the
total of such Class B Distribution Fees by the following fraction:
(A+C)/2
(B+D)/2
where:
A= The aggregate Net Asset Value of all Shares of all ISG Funds attributed to
the Distributor or such Successor Distributor, as the case may be, and
outstanding at the beginning of such calendar month
B= The aggregate Net Asset Value of all Shares of all ISG Funds at the
beginning of such calendar month
C= The aggregate Net Asset Value of all Shares of all ISG Funds attributed to
the Distributor or such Successor Distributor, as the case may be, and
outstanding at the end of such calendar month
D= The aggregate Net Asset Value of all Shares of all ISG Funds at the end of
such calendar month
(2) if the Distributor reasonably determines that the ISG Fund or its
transfer agent is able to produce automated monthly reports which allocate the
average Net Asset Value of the Commission Shares (or all Shares if available) of
all ISG Funds among the Distributor and each Successor Distributor in a manner
consistent with the methodology detailed in Part I and Part III(1) above, the
portion of the Class B Distribution Fees accrued in respect of all such Shares
of all ISG Funds during a particular calendar month will be allocated to the
Distributor or each Successor Distributor by multiplying the total of such Class
B Distribution Fees by the following fraction:
(A)/(B)
where:
A= Average Net Asset Value of all such Shares of all ISG Funds for such
calendar month attributed to the Distributor or such Successor Distributor,
as the case may be
B= Total average Net Asset Value of all Shares of all ISG Funds for such
calendar month
PART IV: ADJUSTMENT OF THE DISTRIBUTOR'S
SHARE AND SUCCESSOR DISTRIBUTORS' SHARES
The parties to the Distribution Agreement recognize that if the terms of
any Distribution Agreement, any Plan, any Prospectus, the Conduct Rules or any
other applicable law change the rate at which Class B Distribution Fees or
service fees pursuant to the Fund's Shareholder Services Plan for the ISG Funds
are computed with reference to the Net Asset Value of Shares of any ISG Fund,
these allocation procedures must be revised in light of such changes in a manner
which carries out the intent of these allocations procedures.
