FORUM FUNDS
DISTRIBUTION PLAN
September 14, 2004
This Distribution Plan (the "Plan") is adopted by Forum Funds (the "Trust")
with respect to the Funds and classes thereof listed in Appendix A (individually
a "Fund," collectively the "Funds") in accordance with the provisions of Rule
12b-1 under the Investment Company Act of 1940, as amended (the "Act").
SECTION 1. DISTRIBUTOR
The Trust has entered into a Distribution Agreement (the "Agreement") with
Forum Fund Services, LLC ("Forum") whereby Forum acts as principal underwriter
of the Funds.
SECTION 2. PAYMENTS
(a) As compensation for Forum's distribution and service activities with
respect to A Shares of the Fund, the Trust shall pay Forum a fee at an annual
rate of 0.25% of the average daily net assets of the A Shares of each Fund. As
compensation for Forum's distribution and service activities with respect to C
Shares of the Fund, the Trust shall pay Forum a fee at an annual rate of 1.00%
of the average daily net assets of each class. Payments include any compensation
paid by the Trust to Forum under this Plan (the "Payments"). The Payments shall
be accrued daily and paid monthly or at such other interval, as the Trust's
Board of Trustees ("Board") shall determine.
(b) On behalf of the Trust, as principal underwriter of each Fund, Forum
may spend such amounts and incur such expenses as it deems appropriate or
necessary on any activities primarily intended to result in the sale of the each
Fund class specified in Appendix A (each a "Class") (distribution activities) or
for the servicing and maintenance of shareholder accounts of each Class (service
activities); provided, however that: (i) any agreement entered into pursuant to
Section 4 hereof shall apportion the payments made under the agreement between
distribution and service activities and (ii) a Class shall not directly or
indirectly pay any amounts, whether Payments or otherwise, that exceed any
applicable limits imposed by law or the National Association of Securities
Dealers, Inc. ("NASD").
(c) For purposes of the Plan, service activities shall mean any activities
covered by the definition of "service fee" contained in the NASD's Rules of Fair
Practice, as amended from time to time, and distribution activities shall mean
any activities in connection with Forum's performance of its obligations under
the Plan or the Agreement that are not deemed service activities.
SECTION 3. DISTRIBUTION AND SERVICE ACTIVITIES
Distribution and service activities include: (i) any sales, marketing and
other activities primarily intended to result in the sale of shares of a Class
and (ii) responding to a Class' shareholder inquiries regarding the
corresponding Fund's investment objective, policies and other operational
features. Expenses for such activities include compensation to employees, and
expenses, including overhead and telephone and other communication expenses, of
Forum and various financial institutions or other persons who engage in or
support the distribution of shares of a Class, or who respond to a Class'
shareholder inquiries regarding the corresponding Fund's operations; the
incremental costs of printing (excluding typesetting) and distributing
prospectuses, statements of additional information, annual reports and other
periodic reports for use in connection with the offering or sale of a Class to
any prospective investors; and the costs of preparing, printing and distributing
sales literature and advertising materials used by Forum or others in connection
with the offering of shares of a Class for sale to the public.
SECTION 4. MARKETING AND SERVICE AGREEMENTS
Pursuant to agreements the form of which shall be approved by the Board
("Agreements"), Forum may pay any or all amounts of the Payments to other
persons ("Service Providers") for any distribution or service activity. Each
Agreement shall contain a representation by the Service Provider that any
compensation payable to the Service Provider in connection with the investment
in shares of a Class by its customers: (i) will be disclosed by the Service
Provider to its customers; (ii) will be authorized by its customers; and (iii)
will not result in an excessive fee to the Service Provider. Each Agreement
shall provide that, in the event an issue pertaining to the Plan is submitted
for shareholder approval, the Service Provider will vote any shares held for its
own account in the same proportion as the vote of those shares held for the
accounts of the Service Provider's customers.
SECTION 5. REVIEW AND RECORDS
(a) Forum shall prepare and furnish to the Board, and the Board shall
review at least quarterly, written reports setting forth all amounts expended
under the Plan by the Trust and Forum and identifying the activities for which
the expenditures were made.
(b) The Trust shall preserve copies of the Plan, each agreement related to
the Plan and each report prepared and furnished pursuant to this Section in
accordance with Rule 12b-1 under the Act.
SECTION 6. EFFECTIVENESS; DURATION; AND TERMINATION
With respect to a Class:
(a) The Plan shall become effective with respect to the Class upon approval
by: (i) a vote of at least a majority of the outstanding voting securities of
that Class and (ii) the Board, including a majority of the trustees who are not
interested persons of the Trust and who have no direct or indirect financial
interest in the operation of the Plan or in any
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agreement related to the Plan (the "Qualified Trustees"), pursuant to a vote
cast in person at a meeting called for the purpose of voting on approval of the
Plan.
(b) The Plan shall remain in effect with respect to a Class for a period of
one year from the date of its effectiveness for that class, unless earlier
terminated in accordance with this Section, and thereafter shall continue in
effect for successive twelve-month periods, provided that such continuance is
specifically approved at least annually by the Board and a majority of the
Qualified Trustees pursuant to a vote cast in person at a meeting called for the
purpose of voting on continuance of the Plan.
(c) The Plan may be terminated with respect to a Class without penalty at
any time by a vote of: (i) a majority of the Qualified Trustees or (ii) a vote
of a majority of the outstanding voting securities of that Class.
SECTION 7. AMENDMENT
The Plan may be amended at any time by the Board, provided that: (i) any
material amendments to the Plan shall be effective only upon approval of the
Board and a majority of the Qualified Trustees pursuant to a vote cast in person
at a meeting called for the purpose of voting on the amendment to the Plan and
(ii) any amendment which increases materially the amount which may be spent by
the Trust pursuant to the Plan with respect to any Class shall be effective only
upon the additional approval a majority of the outstanding voting securities of
that Class.
SECTION 8. NOMINATION OF DISINTERESTED TRUSTEES
While the Plan is in effect, the trustees of the Trust who are not
interested persons of the Trust shall select and nominate any such disinterested
trustee.
SECTION 9. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each Fund shall not be
liable for any obligations of the Trust or of the Fund under the Plan, and the
Distributor agrees that, in asserting any rights or claims under this Plan, it
shall look only to the assets and property of the Trust or the Fund to which the
Distributor's rights or claims relate in settlement of such rights or claims,
and not to the Trustees of the Trust or the shareholders of the Fund.
SECTION 10. MISCELLANEOUS
(a) The terms "majority of the outstanding voting securities "and"
interested person" shall have the meanings ascribed thereto in the Act.
(b) If any provision of the Plan shall be held invalid by a court decision,
statute, rule or otherwise, the remainder of the Plan shall not be affected
thereby.
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FORUM FUNDS
DISTRIBUTION PLAN
Appendix A
Xxxxxx Focus Fund - A Shares
Xxxxxx Focus Fund - C Shares
A-1
