BLACK DIAMOND FUNDS
FORM OF
SHAREHOLDER SERVICE AGREEMENT
AGREEMENT made this __ day of _______, 2003, between Black Diamond Funds
(the "Trust"), and the institution executing this document below
("Institution").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end management investment company
that may issue shares of beneficial interest of each series of the Trust;
WHEREAS, the Trust has adopted a Shareholder Service Plan (the "Service
Plan") with respect to the shares of beneficial interest ("Shares") of each
series of the Trust or class thereof identified in Appendix A hereto (each a
"Series," collectively the "Series") that authorizes The Trust to pay fees to
institutions for maintaining and providing services to shareholders accounts
invested in those Shares;
WHEREAS, the Trust desires that Institution perform certain service
activities with respect to the Series and Institution is willing to perform
those services on the terms and conditions set forth in this Agreement; and
NOW, THEREFORE, for and in consideration of the representations,
covenants and agreements contained herein and other valuable consideration,
the undersigned parties do hereby agree as follows:
SECTION 1. SERVICE ACTIVITIES
In connection with providing services and maintaining shareholder
accounts of the Trust with respect to its various customers, Institution may
provide one or more of the following services:
(a) handling shareholder inquiries regarding the Trust (e.g., responding
to questions concerning investments in the Trust, capital account
balances and reports and tax information provided by the Trust);
(b) assisting in the enhancement of relations and communications between
shareholders and the Trust;
(c) assisting in the establishment and maintenance of shareholder
accounts with the Trust;
(d) assisting in the maintenance of Trust records containing shareholder
information; and
(e) providing such other information and shareholder liaison services as
the Trust's distributor or investment adviser may reasonable
request.
Institution's appointment shall be nonexclusive, and the Trust may enter
into similar agreements with other persons.
SECTION 2. COMPENSATION
(a) As compensation for Institution's service activities with respect to
the Series, the Trust shall pay Institution a fee (the "Payments") at an
annual rate not to exceed (i) 0.25% of the average daily net assets of the
Blue Shares and Green Shares of each of the Index Series represented by the
shareholder accounts for which Institution maintains a service relationship,
(ii) 0.10% of the average daily net assets of the Blue Shares and Green Shares
of the LS Series represented by the shareholder accounts for which Institution
maintains a service relationship, or (iii) as agreed upon by the parties to
this agreement.
(b) The Payments shall be accrued and paid monthly or at such other
interval as the Trust and Institution shall agree.
(c) On behalf of the Trust, Institution may spend such amounts and incur
such expenses as it deems appropriate or necessary on any service activities.
Such expenses may include compensation to employees and expenses, including
overhead and telephone and other communication expenses, of the Institution.
Institution shall be solely liable for any expenses it incurs.
SECTION 3. REPRESENTATIONS OF INSTITUTION
Institution represents that:
(a) the compensation payable to it under this Agreement in connection
with the investment in the Trust of the assets of its customers: (i) will, to
the extent required by law, be disclosed by Institution to its customers, and
(ii) will not result in an excessive fee to Institution;
(b) the performance of all its obligations hereunder will comply with all
applicable laws and regulations, including any applicable state and federal
securities laws and self-regulatory organization regulations, any requirements
to deliver confirmations to its customers, the provisions of its charter
documents and bylaws and all material contractual obligations binding upon
Institution; and
(c) it will promptly inform the Trust of any change in applicable laws or
regulations (or interpretations thereof) or in its charter or bylaws or
material contracts that would prevent or impair full performance of any of its
obligations hereunder.
SECTION 4. TRUST LITERATURE
Institution is not authorized to make any representations concerning
shares of the Series except those contained in the appropriate then current
prospectus and statement of additional information ("SAI") and printed
information issued by the Trust. The Trust will supply Institution upon its
request with prospectuses, SAIs and additional information. Institution shall
have no responsibility with regard to the accuracy or completeness of any of
the printed information furnished by the Trust and shall be held harmless by
the Trust from and against any cost or loss arising therefrom.
SECTION 5. REPORTS
Institution shall prepare and furnish to the Trust, at the Trust's
request, written reports identifying the activities performed by Institution
and setting forth such other information as the Trust shall reasonably
request.
SECTION 6. INDEMNIFICATION
Institution agrees to indemnify and hold harmless the Trust from any
claims, expenses, or liabilities incurred by the Trust as a result of any act
or omission of Institution in connection with its services under this
Agreement except such acts or omissions in reliance upon or relative to
printed materials supplied by the Trust.
SECTION 7. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective on the date hereof and, upon
its effectiveness, shall supersede all previous agreements between the parties
covering the subject matter hereof.
(b) This Agreement may be terminated as follows:
(i) automatically in the event of the termination of the Service
Plan.
(ii) automatically in the event of the assignment of this Agreement
as defined in the Act; and
(iii) by either party to the Agreement without cause by giving the
other party at least sixty (60) days' written notice of its
intention to terminate.
SECTION 8. NOTICES
Any notice under this Agreement shall be in writing and shall be
addressed and delivered, or mailed postage prepaid, to the other party's
principal place of business, or to such other place as shall have been
previously specified by written notice given to the other party. Notices,
requests, instructions and communications received by the parties at their
respective principal places of business, or at such other address as a party
may have designated in writing, shall be deemed to have been properly given.
SECTION 9. AMENDMENTS
This Agreement may be amended by the parties at any time. In addition,
this Agreement may be amended by the Trust from time to time by the following
procedure: the Trust will mail a copy of the amendment to Institution at its
principal place of business or such other address as Institution shall in
writing provide to the Trust. If Institution does not object to the amendment
within thirty (30) days after its receipt, the amendment will become part of
the Agreement. Institution's objection must be in writing and be received by
the Trust within the thirty days.
SECTION 10. USE OF THE TRUST NAME
Institution shall not use the name of the Trust on any checks, bank
drafts, bank statements or forms for other than internal use in a manner not
approved by the Trust prior thereto in writing; provided however, that the
approval of the Trust shall not be required for the use of the Trust's name
which merely refers in accurate and factual terms to the Trust in connection
with Institution's role hereunder or which is required by any appropriate
regulatory, governmental or judicial authority; and further provided that in
no event shall such approval be unreasonably withheld or delayed.
SECTION 11. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees and the shareholders of the Trust shall not be liable for
any obligations of the Trust under this Agreement. Institution agrees that, in
asserting any rights or claims under the Agreement, it shall look only to the
assets and property of the Trust to which Institution's rights or claims
relate in settlement of those rights or claims and not to the Trustees or the
Trust.
SECTION 12. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement.
(b) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of Delaware.
(c) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(d) This Agreement may be executed by the parties hereto on any number of
counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(e) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion
or portions shall be considered severable and not be affected, and the rights
and obligations of the parties shall be construed and enforced as if the
Agreement did not contain the particular part, term or provision held to be
illegal or invalid. This Agreement shall be construed as if drafted jointly by
both the Trust and Institution and no presumptions shall arise favoring any
party by virtue of authorship of any provision of this Agreement.
(f) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(g) Nothing contained in this Agreement is intended to or shall require
the parties to perform any functions or duties on any day other than a Trust
business day. Functions or duties normally scheduled to be performed on any
day, which is not a Trust business day shall be performed on, and as of, the
next Trust business day, unless otherwise required by law.
(h) No affiliated person, employee, agent, director, office or manager of
the Trust shall be liable at law or in equity for the Trust's obligations
under this Agreement.
(i) Each of the undersigned warrants and represents that is has full
power and authority to sign this Agreement on behalf of the party indicated
and that its signature will bind the party indicated to the terms hereof. Each
party hereto warrants and represents that this Agreement, when executed and
delivered, will constitute a legal, valid and binding obligation of the party,
enforceable against the party in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured
parties.
(j) The terms "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Investment Company Act of 1940, as amended.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
BLACK DIAMOND FUNDS
By: __________________________________
Name: ________________________________
Title: _______________________________
INSTITUTION
By: __________________________________
Name: ________________________________
Title: _______________________________
Appendix A
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Applicable Classes:
Blue Shares and Green Shares of: the Black Diamond Principal Protected 500
Series I, Black Diamond Principal Protected 100 Series I, Black Diamond
Principal Protected 2000 Series I, Black Diamond Principal 400 Series I
(collectively, the "Index Series") and Black Diamond Principal Protected LS
Series I (the "LS Series").
03564.0004 #375133
