EXHIBIT (E)(6)
SUB-DISTRIBUTION AGREEMENT
Dear Sir or Madam:
Forum Fund Services, LLC is one of the principal underwriters of Forum
Funds (the "Trust") and distributes shares of certain of the series of the Trust
(each a "Fund" and collectively the "Funds") pursuant to our Distribution
Services Agreement with the Trust and, in the case of certain other classes of
shares of certain of the Funds, pursuant to a distribution plan adopted by each
of those Funds (the "Plan") pursuant to Rule 12b-1 under the Investment Company
Act of 1940 (the "Act"). We are authorized to act as agent of the Trust, on
behalf of each Fund, to offer, and to solicit offers to subscribe to, unsold
shares of the Funds. We intend to act solely in that agent capacity for purposes
hereof, but under no circumstances are you authorized to act as agent of the
Funds. You shall instead act as our agent as provided herein.
We invite you to participate in the distribution of the shares of the
Funds, subject to the terms of this Agreement. In addition, as our agent we
authorize you to solicit and enter into Selected Dealer Agreements ("SDA") with
broker-dealers in the form attached hereto as Exhibit A (each an "SDA Broker").
1. You are to offer and sell shares of a Fund only at the public
offering price, which shall be currently in effect in accordance with the terms
of the then current prospectus of the Fund. You agree to act only as principal
in such transactions and shall not have authority to execute trades as agent for
the Fund, for us, or for any other dealer in any respect. All orders are subject
to acceptance by us and become effective only upon confirmation by us.
2. On each purchase of shares by you from us, the total sales charge
and discount to selected dealers shall be as stated in the Fund's then current
prospectus. Such sales charge and discount are subject to reductions under a
variety of circumstances as described in the Fund's then current prospectus. To
obtain these reductions, we must be notified when a sale takes place that would
qualify for the reduced charge. There is no sales charge or discount to selected
dealers on the reinvestment of dividends or distributions.
3. Pursuant to this Agreement you are hereby authorized (i) to place
orders with each Fund for its shares to be resold by us to you subject to the
applicable terms and conditions set forth in the Fund's then current prospectus
governing the placement of orders by us and compensation and (ii) to tender
shares directly to the Fund or its agent for redemption subject to the
applicable terms and conditions set forth in the Fund's then current prospectus.
In addition, you are hereby authorized by us to answer phones for, and respond
to, customer inquiries regarding the Funds and to distribute the Funds'
prospectuses to the general public and SDA Brokers.
4. Repurchases of shares will be made at the net asset value of such
shares and subject to any applicable contingent deferred sales charge in
accordance with the Fund's then current prospectus.
5. You represent and warrant that you are a registered broker or dealer
pursuant to the Securities and Exchange Act of 1934 ("1934 Act"), and a member
of the National Association of Securities Dealers, Inc. (the "NASD"), and that
you will maintain such registration and membership and abide by the Conduct
Rules, the Constitution and Bylaws of the NASD and all other rules and
regulations that are now or may become applicable to you and your activities
hereunder.
6. You represent and warrant that you are registered or qualified to
act as a broker or dealer (or are exempt from being required to register and
qualify as such) in the states or other jurisdictions where you transact
business. You agree that you will maintain such registrations or qualifications
in full force and effect throughout the terms of this Agreement (and if an
exemption becomes no longer available, to immediately so qualify or register).
You agree to comply with all applicable federal, state and local laws,
including, without limiting the generality of the foregoing, the Securities Act
of 1933 ("1933 Act"), the 1934 Act and the Act, and all the applicable rules or
regulations thereunder. You agree to offer and sell Shares only in the states
and other jurisdictions in which we have indicated that such offers and sales
can be made in which you are qualified to so act. You further agree not to offer
or sell Shares outside of the several states, territories and possessions of the
United States.
7. This Agreement is in all respects subject to Rule 2830 of the NASD
Conduct Rules, which shall control any provisions to the contrary in this
Agreement.
8. You agree:
(a) To immediately send to us copies by fax of executed SDAs.
(b) To purchase shares only from us or only from your customers.
(c) To purchase shares from us only for the purpose of covering
purchase orders already received or for your own bona fide investment.
(d) That you will not purchase any shares from your customers at prices
lower than the redemption or repurchase prices then quoted by the Fund.
You shall, however, be permitted to sell shares for the account of your
customer's record owners to the Fund at the repurchase prices currently
established for such shares and may charge the owner a fair commission
for handling the transaction.
9. We shall not accept from you any conditional orders for shares.
Delivery of certificates for shares purchased and book-entry recording on the
books of the Fund for shares purchased (if certificates have not been requested)
shall be made by the Fund only against receipt of the purchase price, subject to
deduction for any discount reallowed to you and our portion of any sales charge
applicable to such sale. Payment for the Fund shares by you shall be made on or
before the settlement date specified in our confirmation at the office of our
clearing agent or, at such time and place as you and we may agree form time to
time. Payment for Fund shares shall be by check or wire payable to the order of
Trust, which reserves the right to delay issuance or transfer of shares until
such payment is available in investable Federal Funds. If such payment is not
received by us, we reserve the right, without notice, forthwith either to cancel
the sale, or, at our option, to sell the shares ordered back to the Fund, and in
either case, we may hold you responsible for any loss, including loss of profit,
suffered by us or by the Fund resulting from your failure to make payment as
aforesaid.
10. You will not offer or sell any of the shares except under
circumstances that will result in compliance with the applicable Federal and
State securities laws, including any applicable requirements to deliver
confirmations to your customers, and in connection with sales and offers to sell
shares you will furnish to each person to whom any such sale or offer is made, a
copy of the Fund's then current prospectus. Nothing herein contained however,
shall be deemed to be a condition, stipulation or provision binding any persons
acquiring any securities to waive compliance with any provision of the 1933 Act,
the 1934 Act or the Rules and Regulations of the Securities and Exchange
Commission or to relieve the parties hereto from any liability arising under the
1933 Act. We shall advise you as to the states or other jurisdictions in which
shares of the Fund have been qualified for sale under, or are exempt from the
requirements of the respective securities laws of such states and jurisdictions.
11. From time to time during the term of this Agreement, and subject to
the provisions of this Section 11, we shall make payments to you pursuant to the
Plan in consideration, with respect to the B Shares of each Fund (or such other
shares as may be sold subject to contingent deferred sales charges), of your
furnishing distribution services hereunder and providing other services to
shareholder accounts. We have no obligation to make any such payments and you
waive the right to any such payment until we receive monies therefor from the
Fund. Any such payments made pursuant to this Section 11 shall be subject to the
following terms and conditions:
(a) Any such payments shall be in such amounts as we may from time to
time advise you in writing but in any event not in excess of the
amounts permitted by the Plan in effect with respect to a Fund. Any
such payments shall be in addition to the selling concession, if any,
allowed to you pursuant to this Agreement. Such payments shall include
a maintenance fee in an amount equal to 0.25 of 1% per annum of the
average daily net assets representing the B Shares of certain Funds
attributable to your clients. Any such maintenance fee shall be paid to
you solely for service to shareholder accounts.
(b) The provisions of this Section 11 relate to the Plan. In accordance
with Rule 12b-1, any person authorized to direct the disposition of
monies paid or payable by a Fund pursuant to this Section 11 shall
provide the Trust's Board of Trustees, and the Trustees shall review,
at least quarterly, a written report of the amounts so expended and the
purposes of which such expenditures were made.
(c) The provisions of this Section 11 shall automatically terminate in
the event of the assignment (as defined in the Act) of this Agreement,
in the event the Plan terminates or is not continued or in the event
this Agreement terminates or ceases to remain in effect. In addition,
the provisions of this Section 11 may be terminated at any time,
without penalty, by either party on not more than 60 days' nor less
than 30 days' written notice delivered or mailed by registered mail,
postage prepaid, to the other party.
12. No person is authorized to make any representations concerning
shares of a Fund except those contained in the Fund's then current prospectus
and printed information issued by the Fund or by us as information supplemental
to the prospectus. We shall supply you with prospectuses, reasonable quantities
of supplemental sales literature and additional information as issued or as
requested by you. You agree not to use other advertising or sales material
relating to a Fund unless approved in writing by us in advance of such use. Any
printed information furnished by us other than the then current prospectus,
periodic reports and proxy solicitation materials are our sole responsibility
and are not the responsibility of the Fund and you agree that the Fund shall
have no liability or responsibility to you in these respects unless expressly
assumed in connection therewith. You shall have no responsibility with regard to
the accuracy or completeness of any of the printed information furnished by us
and you shall be held harmless from and against any cost or loss arising
therefrom.
13. In connection with your distribution of shares of a Fund, you
shall conform to such written compliance standards as we may from time to
time provide to you.
14. This agreement shall terminate if we cease serving as principal
underwriter of the Trust, and we shall provide you prior written notice of the
date of any such termination. In addition, either party to this Agreement may
cancel this agreement by giving written notice to the other. Such notice shall
be deemed to have been given on the date on which it was either delivered
personally to the other party or any officer or member thereof or was mailed
postpaid or delivered in a telegraph office for transmission to the other party
at his or its address as shown below. This Agreement may be amended by us at any
time, any such amendment to be effective upon delivery to you, and your placing
of an order after the effective date of any such amendment shall constitute your
acceptance thereof.
15. Both we and you hereby agree and represent that each of our
information technology systems will be Year 2000 compliant in accordance with
the Year 2000 compliance requirements of the SEC and the National Association of
Securities Dealers ("NASD"). Each party shall notify the other if there is a
material adverse change in the status of their informational technology systems
or upon having a reasonable basis for believing that their informational
technology systems will not be Year 2000 Compliant.
"Year 2000 Compliant" or "Year 2000 Compliance" shall mean that the
systems or software in question shall be able to accurately process date or
date-related data, without creating any logical or mathematical inconsistencies,
from, into and between the twentieth and twenty-first centuries, when used in
accordance with the specifications set forth for such systems or software;
provided, however, that neither party shall be responsible for any failure of
its systems or software to be Year 2000 Compliant which is caused by or related
to the interaction or interface of such systems or software with the systems or
software of a third party which are not Year 2000 Compliant.
16. This Agreement shall be construed in accordance with the laws of
the State of New York and shall be binding upon both parties hereto when signed
by us and accepted by you in the space provided below.
17. (a) You agree to indemnify the Trust, its Transfer Agent and us for any
losses, claims, damages or expenses arising out of or in connection with any
wrongful act or omission by you or your representatives not in accordance with
this Agreement, provided that such losses, claims, damages or expenses were not
caused by the indemnitees' willful misfeasance, bad faith or negligence.
(b) We agree to indemnify you for any losses, claims, damages or
expenses arising out of or in connection with any wrongful act or omission by us
or our representatives not in accordance with this Agreement, provided that such
losses, claims, damages or expenses were not caused by the indemnitees' willful
misfeasance, bad faith or negligence.
(c) The agreement of the parties in this Paragraph to indemnify
each other is conditioned upon the party entitled to indemnification
("Indemnified Party") giving notice to the party required to provide
indemnification ("Indemnifying Party") promptly after the summons or other first
legal process for any claim as to which indemnity may be sought is served on the
Indemnified Party. The Indemnified Party shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting from it,
provided that counsel for the Indemnifying Party (which approval shall not
unreasonably be withheld), shall conduct the defense of such claim or any
litigation resulting from it, and that the Indemnified Party may participate in
such defense at its expense. The failure of the Indemnified Party to give notice
as provided in this paragraph (c) shall not relieve, the Indemnifying Party from
any liability other than its indemnity obligation under this Paragraph. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
without the consent of the Indemnified Party, consent to entry of any judgment
or enter into any settlement that does not include as an unconditional term the
giving by the claimant or plaintiff to the Indemnified Party of a release from
all liability in respect to such claim or litigation.
18. The provisions of Sections 5, 6, 11, 15, and 17 shall survive any
termination of this Agreement.
Very truly yours,
FORUM FUND SERVICES, LLC
By: /s/ Xxxxxxx X. Xxxxx
---------------------------
Xxxxxxx X. Xxxxx
Chief Compliance Officer
EXHIBIT A
FORUM FINANCIAL SERVICES, INC.
FORM OF
SELECTED DEALER AGREEMENT
FORUM FUNDS
SELECTED DEALER AGREEMENT
Ladies and Gentlemen:
We are the principal underwriter of Forum Funds ("Forum Funds") and
distribute shares of certain of the separate investment portfolios of Forum
Funds (each a "Fund" and collectively the "Funds") at their net asset value plus
applicable sales charges pursuant to our Distribution Services Agreement with
Forum Funds. We hereby invite you to participate as a principal in the
distribution of shares of the Funds upon the following terms and conditions:
1. You are to offer and sell shares of a Fund only at the public offering
price which shall be currently in effect in accordance with the terms of the
then current prospectus of the Fund. You agree to act only as principal in such
transactions and shall not have authority to act as agent for the Fund, for us,
or for any other dealer in any respect. All orders are subject to acceptance by
us and become effective only upon confirmation by us.
2. On each purchase of shares by you from us, the total sales charge and
discount to selected dealers shall be as stated in the Fund's then current
prospectus. Such sales charge and discount are subject to reductions under a
variety of circumstances as described in the Fund's then current prospectus. To
obtain these reductions, we must be notified when a sale takes place that would
qualify for the reduced charge. There is no sales charge or discount to selected
dealers on the reinvestment of dividends or distributions.
3. As a selected dealer, you are hereby authorized (i) to place orders with
the Fund for its shares to be resold by us to you subject to the applicable
terms and conditions set forth in the Fund's then current prospectus governing
the placement of orders by us and compensation and (ii) to tender shares
directly to the Fund or its agent for redemption subject to the applicable terms
and conditions set forth in the Fund's then current prospectus.
4. Repurchases of shares will be made at the net asset value of such shares
in accordance with the Fund's then current prospectus.
5. Both parties represent that they are members in good standing of the
National Association of Securities Dealers, Inc. and both parties agree to abide
by the Rules of Fair Practice of this association. Both parties represent that
they are qualified to act as a broker-dealer in the states or other
jurisdictions where they transact business, and agree to maintain such
registrations, qualifications and membership in good standing in full force and
effect throughout the term of this Agreement. Our obligations under this
Agreement are subject to all of the provisions of the Distribution Services
Agreement between us and Forum Funds.
6. This Agreement is in all respects subject to Rule 26 of the Rules of
Fair Practice of the National Association of Securities Dealers, Inc. which
shall control any provisions to the contrary in this Agreement.
7. You agree:
(a) To purchase shares only from us or only from your customers.
(b) To purchase shares from us only for the purpose of covering
purchase orders already received or for your own bona fide
investment.
(c) That you will not purchase any shares from your customers at
prices lower than the redemption or repurchase prices then quoted
by the Fund. You shall, however, be permitted to sell shares for
the account of their record owners to the Fund at the repurchase
prices currently established for such shares and may charge the
owner a fair commission for handling the transaction.
(d) That if any shares confirmed to you hereunder are redeemed or
repurchased by the Fund within seven business days after such
confirmation of your original order, you shall forthwith refund
to us the full discount reallowed to you on such sales. We shall
forthwith pay to the Fund both our share of the sales charge on
the original sale and the refund from you as herein provided. We
shall notify you of such redemption or repurchase within ten (10)
days from the date of the redemption or repurchase. Termination
or cancellation of this Agreement shall not relieve you or us
from the requirements of this subparagraph.
8. We shall not accept from you any conditional orders for shares.
Delivery of certificates for shares purchased and book-entry recording on the
books of the Fund for shares purchased (if certificates have not been requested)
shall be made by the Fund only against receipt of the purchase price, subject to
deduction for the discount reallowed to you and our portion of the sales charge
on such sale. Payment for the Fund shares by you shall be made on or before the
settlement date specified in our confirmation at the office of our clearing
agent or, at such time and place as you and we may agree from time to time.
Payment for Fund shares shall be by check or wire payable to the order of Forum
Funds, which reserves the right to delay issuance or transfer of shares until
such payment is available in investable Federal Funds. If such payment is not
received by us, we reserve the right, without notice, forthwith either to cancel
the sale, or, at our option, to sell the shares ordered back to the Fund, and in
either case, we may hold you responsible for any loss, including loss of profit,
suffered by us or by the Fund resulting from your failure to make payment as
aforesaid.
9. You will not offer or sell any of the shares except under
circumstances that will result in compliance with the applicable Federal and
State securities laws, as well as with all undertakings made by any Fund with
any state in connection with the sale of shares in such state to the extent such
undertakings are communicated to you, including any applicable requirements to
deliver confirmations to your customers, and in connection with sales and offers
to sell shares you will furnish to each person to whom any such sale or offer is
made, a copy of the Fund's then current prospectus and statement of additional
information, if requested. We shall be under no liability to you except for lack
of good faith and for obligations expressly assumed by us herein. Nothing herein
contained however, shall be deemed to be a condition, stipulation or provision
binding any persons acquiring any securities to waive compliance with any
provision of the Securities Act of 1933, the Securities Exchange Act of 1934 or
the Rules and Regulations of the Securities and Exchange Commission or to
relieve the parties hereto from any liability arising under the Securities Act
of 1933. We shall advise you as to the states or other jurisdictions in which
shares of the Fund have been qualified for sale under, or are exempt from the
requirements of the respective securities laws of such states and jurisdictions
and any undertakings made by any Fund with any state in connection with the sale
of shares in such states.
10. No person is authorized to make any representations concerning
shares of a Fund except those contained in the Fund's then current prospectus
and printed information issued by the Fund or by us as information supplemental
to the prospectus. We shall supply you with prospectuses, reasonable quantities
of supplemental sales literature and additional information as issued or as
requested by you. You agree not to use other advertising or sales material
relating to a Fund unless approved in writing by us in advance of such use. Any
printed information furnished by us other than the then current prospectus,
periodic reports and proxy solicitation materials are our sole responsibility
and are not the responsibility of the Fund and you agree that the Fund shall
have no liability or responsibility to you in these respects unless expressly
assumed in connection therewith. You shall have no responsibility with regard to
the accuracy or completeness of any of the printed information furnished by us
and you shall be held harmless from and against any cost or loss arising
therefrom.
You agree to hold us harmless and indemnify the Funds and us in the event
that you, or any of your sales representatives, violates any federal or state
law, rule or regulation or any provision of this agreement which may result in
any damage, liability or expense to the Funds or their trustees, or to us.
11. Either party to this Agreement may cancel this agreement by giving
written notice to the other. Such notice shall be deemed to have been given on
the date on which it was either delivered personally to the other party or any
officer or member thereof or was mailed postpaid or delivered in a telegraph
office for transmission to the other party at his or its address as shown below.
This Agreement may be amended by us at any time, any such amendment to be
effective upon delivery to you, and your placing of an order after the effective
date of any such amendment shall constitute your acceptance thereof.
12. This Agreement shall be construed in accordance with the laws of
the State of New York and shall be binding upon both parties hereto when signed
by us and accepted by you in the space provided below.
13. Any notice or communication to Forum shall be duly given if mailed,
telegraphed, telecopied or hand delivered to Forum Financial Services, Inc. at
the following address:
Forum Financial Services, Inc.
Attention: Xxxxx Xxxxxxxxxx
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Very truly yours,
FORUM FINANCIAL SERVICES, INC.
By: _________________________________
Xxxx X. Xxxxxx
President
Firm Name ____________________________________________________________________
Address ____________________________________________________________________
City ____________________________ State __________ Zip Code __________
ACCEPTED BY (signature) ______________________________________________________
Name _____________________________ Title ________________________________
Date _____________________________
