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EXHIBIT 99.e
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this 31st day of October, 1999, by and
between Choice Funds, a Delaware business trust (the "Trust"), and Sunstone
Distribution Services, LLC, a Wisconsin limited liability company (the
"Distributor").
WHEREAS, the Trust is an open-end investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act") and is authorized to
issue shares of beneficial interest (the "Shares") in separate series with each
such series representing interests in a separate portfolio of securities and
other assets;
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member of
the National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust and Distributor desire to enter into an agreement
pursuant to which Distributor shall be the distributor of the Shares of the
Trust representing the investment portfolios listed on Schedule A hereto and any
additional investment portfolios the Trust and Distributor may agree upon and
include on Schedule A as such Schedule may be amended from time to time (such
investment portfolios and any additional investment portfolios are individually
referred to as a "Fund" and collectively the "Funds").
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
1. APPOINTMENT OF THE DISTRIBUTOR.
The Trust hereby appoints the Distributor as agent for the
distribution of the Shares, on the terms and for the period set forth in this
Agreement. Distributor hereby accepts such appointment as agent for the
distribution of the Shares on the terms and for the period set forth in this
Agreement.
2. SERVICES AND DUTIES OF THE DISTRIBUTOR.
2.1 Distributor will act as agent for the distribution of Shares in
accordance with the instructions of the Trust's Board of Trustees and the
registration statement and prospectuses then in effect with respect to the Funds
under the Securities Act of 1933, as amended (the "1933 Act").
2.2 Distributor may incur expenses for appropriate distribution
activities which it deems reasonable which are primarily intended to result in
the sale of Shares, including, but not limited to,
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advertising, the printing and mailing of prospectuses to other than current
shareholders, and the printing and mailing of sales literature, provided that
the Fund approves any such activity. With the Fund's approval, Distributor may
enter into servicing and/or selling agreements with qualified broker/dealers and
other persons with respect to the offering of Shares to the public, and if it so
chooses Distributor will act only on its own behalf as principal. The
Distributor shall not be obligated to incur any specific expenses or sell any
certain number of Shares of any Fund.
2.3 All Shares of the Funds offered for sale by Distributor shall be
offered for sale to the public at a price per unit (the "offering price")
provided in the Funds' then current prospectus. The Distributor shall have no
liability for payment of the purchase price of the Shares sold pursuant to the
Agreement or with respect to redemptions or repurchases of Shares.
2.4 Distributor shall act as distributor of the Shares in compliance in
all material respects with all applicable laws, rules and regulations,
including, without limitation, all rules and regulations made or adopted
pursuant to the 1940 Act, by the Securities and Exchange Commission (the
"Commission") and the NASD.
2.5 Distributor shall not utilize any materials in connection with the
sales or offering of Shares except the Trust's prospectus and statement of
additional information and such other materials as the Trust shall provide or
approve. The Distributor agrees to provide compliance review of all sales
literature and marketing materials prepared for use by or on behalf of the Funds
in advance of the use of such materials. The Distributor will file the materials
as may be required with the NASD, SEC or state securities commissioners. Each
party agrees and represents that it will not use or authorize the use of any
advertising or sales materials unless and until such materials have been
approved and authorized for use by the other party hereto.
2.6 For its services hereunder, the Distributor shall receive the fees
and be reimbursed the expenses provided in Schedule B hereto.
3. DUTIES AND REPRESENTATIONS OF THE TRUST.
3.1 The Trust represents that it is registered as an open-end
management investment company under the 1940 Act and that it has and will
continue to act in conformity with its Declaration of Trust, By-Laws, its
registration statement as may be amended from time to time and resolutions and
other instructions of its Board of Trustees and has and will continue to comply
with all applicable laws, rules and regulations including without limitation the
1933 Act, the 1934 Act, the 1940 Act, the laws of the states in which shares of
the Funds are offered and sold, and the rules and regulations thereunder.
3.2 The Trust shall take or cause to be taken all necessary action to
register and maintain the registration of the Shares under the 1933 Act for sale
as herein contemplated and shall pay all costs and expenses in connection with
the registration of Shares under the 1933 Act, and be responsible for all
expenses in connection with maintaining facilities for the issue and transfer of
Shares and for supplying information, prices and other data to be furnished by
the Trust hereunder.
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3.3 The Trust shall execute any and all documents and furnish any and
all information and otherwise take all actions which may be reasonably necessary
in the discretion of the Trust's officers in connection with the qualification
of the Shares for sale in such states as Distributor and the Trust may approve,
shall maintain the registration of a sufficient number or amount of Shares
thereunder, and shall pay all expenses which may be incurred in connection with
such qualification.
3.4 The Trust shall, at its expense, keep the Distributor fully
informed with regard to its affairs. In addition, the Trust shall furnish
Distributor from time to time such information, documents and reports with
respect to the Trust and the Shares as Distributor may reasonably request, and
the Trust warrants that the statements contained in any such information shall
be true and correct and fairly represent what they purport to represent.
3.5 The Trust represents to Distributor that all registration
statements and prospectuses of the Trust filed or to be filed with the
Commission under the 1933 Act with respect to the Shares have been and will be
prepared in conformity with the requirements of the 1933 Act, the 1940 Act, and
the rules and regulations of the Commission thereunder. As used in this
Agreement the terms "registration statement" and "prospectus" shall mean any
registration statement and prospectus (together with the related statement of
additional information) at any time now or hereafter filed with the Commission
with respect to any of the Shares and any amendments and supplements thereto
which at any time shall have been or will be filed with said Commission. The
Trust represents and warrants to Distributor that any registration statement and
prospectus, when such registration statement becomes effective, will contain all
statements required to be stated therein in conformity with the 1933 Act, the
1940 Act and the rules and regulations of the Commission; that all information
contained in the registration statement and prospectus will be true and correct
in all material respects when such registration statement becomes effective; and
that neither the registration statement nor any prospectus when such
registration statement becomes effective will include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Trust agrees to
file from time to time such amendments, supplements, reports and other documents
as may be necessary or required in order to comply with the 1933 Act and the
1940 Act and in order that there may be no untrue statement of a material fact
in a registration statement or prospectus, or necessary or required in order
that there may be no omission to state a material fact in the registration
statement or prospectus which omission would make the statements therein
misleading. The Trust shall promptly notify the Distributor of any advice given
to it by counsel to the Trust regarding the necessity or advisability of
amending or supplementing the registration statement.
3.6 The Trust shall not file any amendment to the registration
statement or supplement to any prospectus without giving Distributor reasonable
notice thereof in advance and if the Distributor declines to assent to such
amendment (after a reasonable time), the Trust may terminate this Agreement
forthwith by written notice to the Distributor without payment of any penalty.
If the Trust shall not propose an amendment or amendments and/or supplement or
supplements promptly after receipt by the Trust of a written request in good
faith from Distributor to do so, Distributor may, at its option, immediately
terminate this Agreement. In addition, if, at any time during the term of this
Agreement, the Distributor requests the Trust to make any change in its
governing instruments or in
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its methods of doing business which are necessary in order to comply with any
requirement of applicable law or regulation, and the Trust fails (after a
reasonable time) to make any such change as requested, the Distributor may
terminate this Agreement forthwith by written notice to the Trust without
payment of any penalty. Nothing contained in this Agreement shall in any way
limit the Trust's right to file at any time any amendments to any registration
statement and/or supplements to any prospectus, of whatever character, as the
Trust may deem advisable, such right being in all respects absolute and
unconditional.
3.7 Whenever in their judgment such action is warranted by market,
economic or political conditions, or by circumstances of any kind, the Trust's
officers may decline to accept any orders for, or make any sales of, any Shares
until such time as they deem it advisable to accept such orders and to make such
sales and the Trust shall advise Distributor promptly of such determination.
3.8 The Trust agrees to advise the Distributor promptly in writing:
(i) of any correspondence or other communication by the Commission
or its staff relating to the Funds including requests by the Commission for
amendments to the registration statement or prospectuses;
(ii) in the event of the issuance by the Commission of any stop
order suspending the effectiveness of the registration statement or prospectuses
then in effect or the initiation of any proceeding for that purpose;
(iii) of the happening of any event which makes untrue any
statement of a material fact made in the registration statement or prospectuses
or which requires the making of a change in such registration statement or
prospectuses in order to make the statements therein not misleading; and
(iv) of all actions taken by the Commission with respect to any
amendments to any registration statement or prospectus which may from time to
time be filed with the Commission.
4. INDEMNIFICATION.
4.1(a) The Trust authorizes Distributor to use any prospectus or
statement of additional information, in the form furnished to Distributor from
time to time, in connection with the sale of Shares. The Trust shall indemnify,
defend and hold the Distributor, and each of its present or former directors,
members, officers, employees, representatives and any person who controls or
previously controlled the Distributor within the meaning of Section 15 of the
1933 Act, free and harmless from and against any and all losses, claims,
demands, liabilities, damages and expenses (including the costs of investigating
or defending any alleged losses, claims, demands, liabilities, damages or
expenses and any counsel fees incurred in connection therewith) which
Distributor, each of its present and former directors, officers, employees or
representatives or any such controlling person, may incur under the 1933 Act,
the 1934 Act, any other statute (including Blue Sky laws) or any rule or
regulation thereunder, or under common law or otherwise, (a) arising out of or
based upon any untrue
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statement, or alleged untrue statement, of a material fact contained in the
registration statement or any prospectus, as from time to time amended or
supplemented, or an annual or interim report to shareholders, or arising out of
or based upon any omission, or alleged omission, to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that the Trust's obligation to indemnify
Distributor and any of the foregoing indemnitees shall not be deemed to cover
any losses, claims, demands, liabilities, damages or expenses arising out of any
untrue statement or alleged untrue statement or omission or alleged omission
made in the registration statement, prospectus, or annual or interim report in
reliance upon and in conformity with information relating to the Distributor and
furnished to the Trust or its counsel by Distributor for the purpose of, and
used in, the preparation thereof; or (b) in connection with this Agreement or
arising out of or based on the Distributor's or any of the foregoing
indemnitee's performance hereunder, except to the extent any such losses result
from the Distributor's willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement. The Trust's agreement to indemnify
the Distributor, and any of the foregoing indemnitees, as the case may be, with
respect to any action, is expressly conditioned upon the Trust being notified of
such action brought against Distributor, or any of the foregoing indemnitees,
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
Distributor, or such person, such notification to be given by letter or by
telegram addressed to the Trust's President, but the failure so to notify the
Trust of any such action shall not relieve the Trust from any liability which
the Trust may have to the person against whom such action is brought by reason
of any such untrue, or alleged untrue, statement or omission, or alleged
omission, otherwise than on account of the Trust's indemnity agreement contained
in this Section 4.1.
4.1(b) The Trust shall 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 loss, claim, demand, liability, damage or expense, but if the
Trust elects to assume the defense, such defense shall be conducted by counsel
chosen by the Trust and approved by the Distributor, which approval shall not be
unreasonably withheld. In the event the Trust elects to assume the defense of
any such suit and retain such counsel, the indemnified defendant or defendants
in such suit shall bear the fees and expenses of any additional counsel retained
by them. If the Trust does not elect to assume the defense of any such suit, or
in case the Distributor does not, in the exercise of reasonable judgment,
approve of counsel chosen by the Trust, the Trust will reimburse the indemnified
person or persons named as defendant or defendants in such suit, for the fees
and expenses of any counsel retained by Distributor and them. The Trust's
indemnification agreement contained in this Section 4.1 and the Trust's
representations and warranties in this Agreement shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Distributor, and each of its present or former directors, officers,
employees, representatives or any controlling person, and shall survive the
delivery of any Shares and the termination of this Agreement. This agreement of
indemnity will inure exclusively to the Distributor's benefit, to the benefit of
each of its present or former directors, members, officers, employees or
representatives or to the benefit of any controlling persons and their
successors and estates. The Trust agrees promptly to notify Distributor of the
commencement of any litigation or proceedings against the Trust or any of its
officers or trustees in connection with the issue and sale of any of the Shares.
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4.1(c) The Trust acknowledges and agrees that in the event the
Distributor, at the request of the Trust, is required to give indemnification
comparable to that set forth in clause (a) of this Section to any entity selling
Shares or providing shareholder services to shareholders or others and such
entity shall make a claim for indemnification against the Distributor, the
Distributor shall make a similar claim for indemnification against the Trust and
shall be entitled to such indemnification.
4.2(a) Distributor shall indemnify, defend and hold the Trust, and each
of its present or former trustees, officers, employees, representatives, and any
person who controls or previously controlled the Trust within the meaning of
Section 15 of the 1933 Act, free and harmless from and against any and all
losses, claims, demands, liabilities, damages and expenses (including the costs
of investigating or defending any alleged losses, claims, demands, liabilities,
damages or expenses, and any counsel fees incurred in connection therewith)
which the Trust, and each of its present or former trustees, officers,
employees, representatives, or any such controlling person, may incur under the
1933 Act, the 1934 Act, any other statute (including Blue Sky laws) or any rule
or regulation thereunder, or under common law or otherwise, (a) arising out of
or based upon any untrue, or alleged untrue, statement of a material fact
contained in the Trust's registration statement or any prospectus, as from time
to time amended or supplemented, or annual or interim report to shareholders or
the omission, or alleged omission, to state therein a material fact required to
be stated therein or necessary to make the statement not misleading, but only if
such statement or omission was made in reliance upon, and in conformity with,
information relating to the Distributor and furnished to the Trust or its
counsel by the Distributor for the purpose of, and used in, the preparation
thereof; or (b) as a result of Distributor's failure to comply with the Terms of
this Agreement, except to the extent and such losses result from the Trust's
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of its reckless disregard of its obligations and duties,
under this Agreement. The Distributor's Agreement to indemnify the Trust, and
any of the foregoing indemnitees, is expressly conditioned upon the
Distributor's being notified of any action brought against the Trust, and any of
the foregoing indemnitees, such notification to be given by letter or telegram
addressed to Distributor's President, 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 Trust or such person, but the failure so to notify
Distributor of any such action shall not relieve Distributor from any liability
which Distributor may have to the person against whom such action is brought by
reason of any such untrue, or alleged untrue, statement or omission, otherwise
than on account of Distributor's indemnity agreement contained in this Section
4.2(a).
4.2(b) The Distributor shall 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 loss, claim, demand, liability, damage or expense,
but if the Distributor elects to assume the defense, such defense shall be
conducted by counsel chosen by the Distributor and approved by the Trust, which
approval shall not be unreasonably withheld. In the event the Distributor elects
to assume the defense of any such suit and retain such counsel, the indemnified
defendant or defendants in such suit shall bear the fees and expenses of any
additional counsel retained by them. If the Distributor does not elect to assume
the defense of any such suit, or in case the Trust does not, in the exercise of
reasonable judgment, approve of counsel chosen by the Distributor, the
Distributor will reimburse the indemnified person or persons named as defendant
or defendants in such suit, for the fees and expenses of any counsel retained by
the Trust and them. The Distributor's indemnification agreement contained in
this
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Section 4.2 and the Distributor's representations and warranties in this
Agreement shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Trust, and each of its present or
former trustees, officers, employees, representatives or any controlling person,
and shall survive the delivery of any Shares and the termination of this
Agreement. This Agreement of indemnity will inure exclusively to the Trust's
benefit, to the benefit of each of its present or former trustees, officers,
employees or representatives or to the benefit of any controlling persons and
their successors. The Distributor agrees promptly to notify the Trust of the
commencement of any litigation or proceedings against the Distributor or any of
its officers or directors in connection with the issue and sale of any of the
Shares.
5. OFFERING OF SHARES.
No Shares shall be offered by either the Distributor or the Trust under
any of the provisions of this Agreement and no orders for the purchase or sale
of such Shares hereunder shall be accepted by the Trust if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the 1933
Act, or if and so long as the current prospectus as required by Section 10 of
the 1933 Act, as amended, is not on file with the Commission; provided, however,
that nothing contained in this paragraph 5 shall in any way restrict or have an
application to or bearing upon the Trust's obligation to repurchase Shares from
any shareholder in accordance with the provisions of the prospectus or
Declaration of Trust.
6. LIMITATION OF LIABILITY.
6.1 The Distributor shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust in connection with the
performance of its obligations and duties under this Agreement, except a loss
resulting from the Distributor's willful misfeasance, bad faith or gross
negligence in the performance of such duties and obligations, or by reason of
its reckless disregard thereof. Furthermore, the Distributor shall not be liable
for any action taken or omitted to be taken in good faith in accordance with
instructions received by the Distributor from an officer or representative of
the Trust.
6.2 The Distributor assumes no responsibility hereunder, and shall
not be liable, for any damage, loss of data, errors, delay or any other loss
whatsoever caused by events beyond its reasonable control. The Distributor will,
however, take all reasonable steps to minimize service interruptions for any
period that such interruption continues beyond its control. At the request of
the Trust, the Distributor will provide to the Trust a copy of the Distributor's
current disaster recovery plan, or, at the discretion of the Distributor, a
summary thereof.
7. TERM.
7.1 This Agreement shall become effective with respect to each Fund
listed on Schedule A hereof as of the date hereof and, with respect to each Fund
not in existence on that date, on the date an amendment to Schedule A to this
Agreement relating to that Fund is executed. Unless sooner terminated as
provided herein, this Agreement shall continue in effect with respect to each
Fund until
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__________, 199_. Thereafter, if not terminated, this Agreement shall
continue automatically in effect as to each Fund for successive annual periods,
provided such continuance is specifically approved at least annually by (i) the
Trust's Board of Trustees or (ii) the vote of a majority (as defined in the 0000
Xxx) of the outstanding voting securities of a Fund, and provided that in either
event the continuance is also approved by the Distributor and by a majority of
the Trust's Board of Trustees who are not "interested persons" (as defined in
the 0000 Xxx) of any party to this Agreement, by vote cast in person at a
meeting called for the purpose of voting on such approval.
7.2 This Agreement may be terminated without penalty with respect to a
particular Fund (1) through a failure to renew this Agreement at the end of a
term, (2) upon mutual consent of the parties, or (3) on no less than thirty (30)
days' written notice, by the Trust's Board of Trustees, by vote of a majority
(as defined with respect to voting securities in the 1940 Act) of the
outstanding voting securities of a Fund, or by the Distributor (which notice may
be waived by the party entitled to such notice). In addition, this Agreement may
be terminated at any time, without penalty, with respect to a particular Fund by
vote of a majority of the members of the Board of Trustees who are not
interested persons of the Trust (as defined in the 0000 Xxx) and have no direct
or indirect financial interest in this Agreement. The terms of this Agreement
shall not be waived, altered, modified, amended or supplemented in any manner
whatsoever except by a written instrument signed by the Distributor and the
Trust. This Agreement will also terminate automatically in the event of its
assignment (as defined in the 1940 Act).
8. MISCELLANEOUS.
8.1 The services of the Distributor rendered to the Funds are not
deemed to be exclusive. The Distributor may render such services and any other
services to others, including other investment companies. The Trust recognizes
that from time to time directors, officers, and employees of the Distributor may
serve as directors, trustees, officers and employees of other entities
(including other investment companies), that such other entities may include the
name of the Distributor as part of their name and that the Distributor or its
affiliates may enter into distribution, administration, fund accounting,
transfer agent or other agreements with such other entities.
8.2 Distributor agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Trust all records relative
to the Funds and prior, present or potential shareholders of the Trust (and
clients of said shareholders), and not to use such records and information for
any purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Trust, which
approval may not be withheld where the Distributor may be exposed to civil or
criminal proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, when subject to governmental or
regulatory audit or investigation, or when so requested by the Trust. Records
and information which have become known to the public through no wrongful act of
the Distributor or any of its employees, agents or representatives shall not be
subject to this paragraph.
8.3 This Agreement shall be governed by Wisconsin law. To the extent
that the applicable laws of the State of Wisconsin, or any of the provisions
herein, conflict with the applicable provisions of the 1940 Act, the latter
shall control, and nothing herein shall be construed in a manner
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inconsistent with the 1940 Act or any rule or order of the Commission
thereunder. Any provision of this Agreement which may be determined by competent
authority to be prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
8.4 Any notice required or to be permitted to be given by either party
to the other shall be in writing and shall be deemed to have been given when
sent by registered or certified mail, postage prepaid, return receipt requested,
as follows: Notice to the Distributor shall be sent to Sunstone Distribution
Services, LLC, 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, XX, 00000,
Attention: Xxxxxx X. Xxxxxxx, and notice to the Trust shall be sent to Choice
Funds, x/x Xxxxxxxx Xxxxx Xxxxxxx & Xxxxx, XXX, Xxxxxxxxx: Xxxxxxx X. Xxxxxx,
Esquire.
8.5 This Agreement is executed by the Trust with respect to each of the
Funds and the obligations hereunder are not binding upon any of the trustees,
officers or shareholders of the Trust individually but are binding only upon the
Fund to which such obligations pertain and the assets and property of such Fund.
All obligations of the Trust under this Agreement shall apply only on a
Fund-by-Fund basis, and the assets of one Fund shall not be liable for the
obligations of another Fund. The Fund's Declaration of Trust is on file with the
Secretary of State of Delaware.
8.6 This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original agreement but such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer as of the day and year first above
written.
CHOICE FUNDS
(the "Trust")
By:
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Xxxxxxx X. Xxxxx
President
SUNSTONE DISTRIBUTION SERVICES, LLC
(the "Distributor")
By:
-----------------------------------------
Xxxxxx X. Xxxxxxx
President
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SCHEDULE A
TO
DISTRIBUTION AGREEMENT
NAME OF FUNDS
FUND EFFECTIVE DATE
Choice Focus Fund
Choice Balanced Fund
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SCHEDULE B
TO
DISTRIBUTION AGREEMENT
FEE SCHEDULE
ASSET BASED FEES
NAME OF FUND AVERAGE NET ASSETS BASIS POINTS MINIMUM
ANNUAL FEE
Focus Fund Up to $250 Million 2.0 basis points $25,000*
Over $250 Million 1.0 basis points
Balanced Fund Up to $250 Million 2.0 basis points $25,000*
Over $250 Million 1.0 basis points
*The minimum annual fee shall not exceed $100,000 per fund family.
DISTRIBUTION EXPENSES
Expenses of marketing, promoting and distributing the Funds are in addition to
the fees set forth above, including, but not limited to, prospectus development
and printing; advertising; direct mail; public relations activities; trade show
attendance; call management and fulfillment and fees paid to broker/dealers.
ADVERTISING COMPLIANCE
In addition to the above fees, the Trust shall pay to the Distributor a fee
based on the actual time spent by representatives of the Distributor providing
compliance review of sales literature and marketing materials at the rate of
$150 per hour, plus filing fees. The hourly rate shall not apply for any sales
or marketing pieces prepared by the Distributor's affiliate, 2XL.
OUT-OF-POCKET EXPENSES
In addition to the compensation payable to the Distributor, the Funds agree to
reimburse, upon request (or pay directly at the Distributor's discretion), the
Distributor's out-of-pocket expenses in providing services hereunder including,
without limitation, amounts paid or to be paid by Distributor to dealers or
others entering into selling, servicing or related agreements with the
Distributor or the Trust. The Distributor is not required to
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finance any activities and as such may, in its discretion, require prepayment of
expenses and in such event will not be required to incur any expense until
payment is received.
PAYMENT OF FEES
The fees and expenses set forth on this Schedule B shall be paid to the
Distributor by the respective Funds pursuant to the Trust's Rule 12b-1 Plan or,
if the Rule 12b-1 Plan payments are not sufficient to pay such fees and expenses
over an annual period, or if the Rule 12b-1 Plan is discontinued, or if the
Funds otherwise determine that Rule 12b-1 Plan fees may not be paid, in whole or
in part, to the Distributor, the Funds' adviser(s) shall be responsible for the
payment of the amount of such fees not covered by Rule 12b-1 payments and shall
reimburse Distributor or pay directly at the Distributor's discretion such
amounts. Fees and expenses shall be payable monthly, promptly after the receipt
by the Trust of an invoice for such fees and/or expenses.
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