Exhibit 23M(1)
AMENDED AND RESTATED
SERVICE PLAN AND AGREEMENT
WITH
CITCO-QUAKER FUNDS DISTRIBUTOR, INC.
FOR CLASS A SHARES OF
THE PENN STREET FUNDS, INC.
This Service Plan and Agreement (the "Plan") is dated as of the 10th day of
December, 2003, by and between The Penn Street Funds, Inc. (the "Company"), on
behalf of each of its series (collectively, the "Funds" and individually, a
"Fund") and Citco-Quaker Funds Distributor, Inc. (the "Distributor").
1. THE PLAN. This Plan is each Fund's written service plan for Class A shares
of each Fund (the "Shares"), designed to comply with the provisions of Rule
12b-1 as it may be amended from time to time (the "Rule") under the Investment
Company Act of 1940 (the "1940 Act"). Pursuant to this Plan each Fund will
compensate the Distributor for its services in connection with the
ervice and maintenance of shareholder accounts that hold Shares ("Accounts").
The Company, on behalf of each Fund, may act as distributor of securities of
which it is the issuer, pursuant to the Rule, according to the terms of this
Plan. The terms and provisions of this Plan shall be interpreted and defined in
a manner consistent with the provisions and definitions contained in (i) the
Company's Xxxxxxxxxxxx Xxxxxxxxx, (xx) xxx 0000 Xxx, (xxx) the Rule, (iv) Rule
2830 of the Conduct Rules of the National Association of Securities Dealers,
Inc., or any applicable amendment or successor to such rule (the "NASD Conduct
Rules") and (v) any conditions pertaining either to distribution-related
expenses or to a plan of distribution to which the Company is subject under any
order on which the Company relies, issued at any time by the U.S. Securities and
Exchange Commission ("SEC").
2. DEFINITIONS. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has provided administrative support services with respect to
Shares held by Customers (defined below) of the Recipient; (ii) shall furnish
the Distributor (on behalf of each Fund) with such information as the
Distributor shall reasonably request to answer such questions as may arise
concerning the sale of Shares; and (iii) has been selected by the Distributor to
receive payments under the Plan.
(b) "Independent Directors" shall mean the members of the Company's Board
of Directors who are not "interested persons" (as defined in the 0000 Xxx) of
the Company and who have no direct or indirect financial interest in the
operation of this Plan or in any agreement relating to this Plan.
(c) "Customers" shall mean such brokerage or other customers or investment
advisory or other clients of a Recipient, and/or accounts as to which such
Recipient provides administrative support services or is a custodian or other
fiduciary.
(d) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such Recipient's
Customers, but in no event shall any such Shares be deemed owned by more than
one Recipient for purposes of this Plan. In the event that more than one person
or entity would otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Funds' respective books as
determined by the Distributor shall be deemed the Recipient as to such Shares
for purposes of this Plan.
3. PAYMENTS FOR ADMINISTRATIVE SUPPORT SERVICES.
(a) PAYMENTS TO THE DISTRIBUTOR. In consideration of the payments made by
the Company to the Distributor under this Plan, the Distributor shall provide
administrative support services to the Funds. Such services include
administrative support services rendered in connection with Shares (1) sold in
purchase transactions, (2) issued in exchange for shares of another investment
company for which the Distributor serves as distributor or sub-distributor, or
(3) issued pursuant to a plan of reorganization to which a Fund is a party. If
the Board believes that the Distributor may not be rendering appropriate
administrative support services in connection with the sale of Shares, then the
Distributor, at the request of the Board, shall provide the Board with a written
report or other information to verify that the Distributor is providing
appropriate services in this regard. For such services, the Funds will make the
following payments to the Distributor:
(i) ADMINISTRATIVE SUPPORT SERVICE FEES. Within ten (10) days of the
end of each month, the Company, on behalf of each Fund, will make payment in the
amount of 0.0208% (0.25% on an annual basis) of the average of the aggregate net
asset value of each Fund's Shares computed as of the close of each business day
(the "Service Fee") during that month. Such Service Fee payments received from
the Company, on behalf of each Fund, will compensate the Distributor for
providing administrative support services with respect to Accounts. The
administrative support services in connection with Accounts may include, but
shall not be limited to, the administrative support services that a Recipient
may render as described in Section 3(b)(i) below.
(ii) At the request of the Distributor, such payments may be made
directly by the Company to Recipients with whom the Company has entered into
agreements related to this Plan.
(b) PAYMENTS TO RECIPIENTS. The Distributor is authorized under the Plan
to pay Recipients service fees for rendering administrative support services
with respect to Accounts. However, no such payments shall be made to any
Recipient for any quarter in which its Qualified Holdings do not equal or
exceed, at the end of such quarter, the minimum amount ("Minimum Qualified
Holdings"), if any, that may be set from time to time by a majority of the
Independent Directors. All fee payments made by the Distributor hereunder are
subject to reduction or chargeback so that the aggregate service fee payments
and Advance
Service Fee Payments do not exceed the limits on payments to Recipients that
are, or may be, imposed by the NASD Conduct Rules. The Distributor may make Plan
payments to any "affiliated person" (as defined in the 0000 Xxx) of the
Distributor if such affiliated person qualifies as a Recipient or retain such
payments if the Distributor qualifies as a Recipient.
In consideration of the services provided by Recipients, the
Distributor shall make the following payments to Recipients:
(i) SERVICE FEE. In consideration of administrative support services
provided by a Recipient during a calendar quarter, the Distributor shall make
service fee payments to that Recipient quarterly, within forty-five (45) days of
the end of each calendar quarter, at a rate not to exceed 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the aggregate net
asset value of each Fund's Shares, computed as of the close of each business
day, constituting Qualified Holdings owned beneficially or of record by the
Recipient or by its Customers for a period of more than the minimum period (the
"Minimum Holding Period"), if any, that may be set from time to time by a
majority of the Independent Directors.
Alternatively, the Distributor may, at its sole option, make the
following service fee payments to any Recipient quarterly, within forty-five
(45) days of the end of each calendar quarter: (A) "Advance Service Fee
Payments" at a rate not to exceed 0.25% of the average during the calendar
quarter of the aggregate net asset value of Shares, computed as of the close of
business on the day such Shares are sold, constituting Qualified Holdings, sold
by the Recipient during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (B) service fee payments at a rate not to
exceed 0.0625% (0.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of Shares, computed as of the close of
each business day, constituting Qualified Holdings owned beneficially or of
record by the Recipient or by its Customers for a period of more than one (1)
year. At the Distributor's sole option, Advance Service Fee Payments may be made
more often than quarterly, and sooner than the end of the calendar quarter. In
the event Shares are redeemed less than one year after the date such Shares were
sold, the Recipient is obligated to and will repay the Distributor on demand a
pro rata portion of such Advance Service Fee Payments, based on the ratio of the
time such Shares were held to one (1) year.
The administrative support services to be rendered by Recipients in
connection with the Accounts may include, but shall not be limited to, the
following: answering routine inquiries concerning the Funds, assisting in the
establishment and maintenance of accounts or sub-accounts in the Funds and
processing Share redemption transactions, making the Funds' investment plans and
dividend payment options available, and providing such other information and
services in connection with the rendering of ervices and/or the
maintenance of Accounts, as the Distributor or the Funds may reasonably request.
(c) A majority of the Independent Directors may at any time or from time
to time (i) increase or decrease the rate of fees to be paid to the Distributor
or to any Recipient, but not to exceed the maximum rates set forth above, and/or
(ii) direct the Distributor to increase or decrease any Minimum Holding Period,
any maximum period set by a majority of the Independent Directors during which
fees will be paid on Shares constituting Qualified Holdings owned beneficially
or of record by a Recipient or by its Customers (the "Maximum Holding Period"),
or Minimum Qualified Holdings. The Distributor shall notify all Recipients of
any Minimum Qualified Holdings, Maximum Holding Period and Minimum Holding
Period that are established and the rate of payments hereunder applicable to
Recipients, and shall provide each Recipient with written notice within thirty
(30) days after any change in these provisions. Inclusion of such provisions or
a change in such provisions in a supplement or Statement of Additional
Information or amendment to or revision of the prospectus or Statement of
Additional Information of the Fund shall constitute sufficient notice.
(d) The Service Fee on Shares is subject to reduction or elimination under
the limits that apply to such fees under the NASD Conduct Rules relating to
sales of shares of open-end funds.
(e) Under the Plan, payments may also be made to Recipients: (i) by
Citco-Quaker Fund Advisors, Inc. ("CQFA") from its own resources (which may
include profits derived from the advisory fee it receives from the Funds), or
(ii) by the Distributor (a subsidiary of CQFA), from its own resources, or from
the proceeds of its borrowings, in either case, in the discretion of CQFA or the
Distributor, respectively.
(f) Recipients are intended to have certain rights as third-party
beneficiaries under this Plan, subject to the limitations set forth below. It
may be presumed that a Recipient has provided administrative support services
qualifying for payment under the Plan if it has Qualified Holdings of Shares
that entitle it to payments under the Plan. If either the Distributor or the
Board believe that, notwithstanding the level of Qualified Holdings, a Recipient
may not be rendering appropriate administrative support services for Accounts,
then the Distributor, at the request of the Board, shall require the Recipient
to provide a written report or other information to verify that said Recipient
is providing appropriate services in this regard. If the Distributor or the
Board of Directors still is not satisfied after the receipt of such report,
either may take appropriate steps to terminate the Recipient's status as a
Recipient under the Plan, whereupon such Recipient's rights as a third-party
beneficiary hereunder shall terminate. Additionally, in their discretion a
majority of the Company's Independent Directors at any time may remove any
broker, dealer, bank or other person or entity as a Recipient, whereupon such
person's or entity's rights as a third-party beneficiary hereof shall terminate.
Notwithstanding any other provision of this Plan, this Plan does not obligate or
in any way make the Funds or the Company liable to make any payment whatsoever
to any person or entity other than directly to the Distributor. The Distributor
has no obligation to pay any Service Fees to any Recipient if the Distributor
has not received payment of Service Fees from the Company, on behalf the Funds.
4. SELECTION AND NOMINATION OF DIRECTORS. While this Plan is in effect, the
selection and nomination of persons to be Independent Directors of the Company
shall be committed to the discretion of the incumbent Independent Directors.
Nothing herein shall prevent the incumbent Independent Directors from soliciting
the views or the involvement of others in such selection or nomination as long
as the final decision on any such selection and nomination is approved by a
majority of the incumbent Independent Directors.
5. REPORTS. While this Plan is in effect, the Treasurer of the Company shall
provide written reports to the Company's Board for its review, detailing the
amount of all payments made under this Plan and the purpose for which the
payments were made. The reports shall be provided quarterly.
6. RELATED AGREEMENTS. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by a vote of a majority of the Independent
Directors or by a vote of the holders of a "majority" (as defined in the 0000
Xxx) of each Fund's outstanding voting Class A shares; (ii) such termination
shall be on not more than sixty days' written notice to any other party to the
agreement; (iii) such agreement shall automatically terminate in the event of
its "assignment" (as defined in the 1940 Act); (iv) such agreement shall go into
effect when approved by a vote of the Board and its Independent Directors cast
in person at a meeting called for the purpose of voting on such agreement; and
(v) such agreement shall, unless terminated as herein provided, continue in
effect from year to year only so long as such continuance is specifically
approved at least annually by a vote of the Board and its Independent Directors
cast in person at a meeting called for the purpose of voting on such
continuance.
7. EFFECTIVENESS, CONTINUATION, TERMINATION AND AMENDMENT. This Plan has been
approved by a vote of the Board and its Independent Directors cast in person at
a meeting called on December 10, 2003, for the purpose of voting on this Plan.
Unless terminated as hereinafter provided, it shall continue in effect until
renewed by the Board in accordance with the Rule and thereafter from year to
year or as the Board may otherwise determine but only so long as such
continuance is specifically approved at least annually by a vote of the Board
and its Independent Directors cast in person at a meeting called for the purpose
of voting on such continuance.
This Plan may not be amended to increase materially the amount of payments
to be made under this Plan, without approval of the Class A Shareholders of the
relevant Funds at a meeting called for that purpose and all material amendments
must be approved by a vote of the Board and of the Independent Directors.
This Plan may be terminated at any time by a vote of a majority of the
Independent Directors or by the vote of the holders of a "majority" (as defined
in the 0000 Xxx) of each Fund's outstanding Class A voting shares voting
separately. In the event of such termination, the Board and its Independent
Directors shall determine whether the Distributor shall be entitled to payment
from the Fund of all or a portion of the Service
Fee and/or the Asset-Based Sales Charge in respect of Shares sold prior to the
effective date of such termination.
8. SEVERABILITY. The terms of this agreement shall severable with respect to
each Fund.
The Penn Street Funds, Inc.
on behalf of each of its series
By:
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Xxxx Xxxxxxx, Treasurer
Citco-Quaker Funds Distributor, Inc.
By:
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Xxxx Xxxxxxx, Chief Financial Officer
