FORM OF DISTRIBUTION AGREEMENT
Exhibit
23E
FORM
OF DISTRIBUTION AGREEMENT
AGREEMENT
made as of [date] between The Blue Fund Group (the “Company”), having an office
at 000 Xxxxxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, XX 00000, and BISYS Fund Services Limited Partnership (“Distributor”),
having an office at 000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
WHEREAS,
the Company is an open-end management investment company, organized as a
Massachusetts Business Trust and registered with the Securities and Exchange
Commission (the “Commission”) under the Investment Company Act of 1940, as
amended (the “1940 Act”); and
WHEREAS,
it is intended that Distributor act as the distributor of the shares of
beneficial interest (“Shares”) of each series of the Company, as listed on
Schedule A, and such series as are hereafter created (all of the foregoing
series individually referred to herein as a “Fund” and collectively as the
“Funds”).
NOW,
THEREFORE, in consideration of the mutual premises and covenants herein set
forth, the parties agree as follows:
1. Services
as Distributor.
1.1 Distributor
will act as agent of Company on behalf of each Fund for the distribution of
the
Shares covered by the registration statement of Company then in effect under
the
Securities Act of 1933, as amended (the “Securities Act”) and the 1940 Act. As
used in this Agreement, the term “registration statement” shall mean the
registration statement of the Company and any amendments thereto, then in
effect, including Parts A (the Prospectus), B (the Statement of Additional
Information) and C of each registration statement, as filed on Form N-1A, or
any
successor thereto, with the Commission, together with any amendments thereto.
The term “Prospectus” shall mean the then-current form of Prospectus and
Statement of Additional Information used by the Funds, in accordance with the
rules of the Commission, for delivery to shareholders and prospective
shareholders after the effective dates of the above-referenced registration
statements, together with any amendments and supplements thereto. The Company
will notify Distributor in advance of any proposed changes to Schedule A to
this
Agreement.
1.2 Consistent
with the understanding between the Funds and the Distributor, Distributor may
solicit orders for the sale of the Shares and may undertake such advertising
and
promotion as it believes reasonable in connection with such solicitation. The
Company understands that Distributor is now and may in the future be the
distributor of the shares of many other investment companies or series,
including investment companies having investment objectives similar to those
of
the Company. The Company further understands that shareholders and potential
shareholders in the Company may invest in shares of such other investment
companies. The Company agrees that Distributor’s obligations to other investment
companies shall not be deemed in conflict with its obligations to the Company
under this Section 1.2.
1
1.3 Consistent
with the understanding between the Funds and the Distributor, and subject to
the
last sentence of this Section 1.3, Distributor may engage in such activities
as
it deems appropriate in connection with the promotion and sale of the Shares,
which may include advertising, compensation of underwriters, dealers and sales
personnel, the printing and mailing of Prospectuses to prospective shareholders
other than current shareholders, and the printing and mailing of sales
literature. Distributor may enter into dealer agreements and other selling
agreements with broker-dealers and other intermediaries; provided, however,
that
Distributor shall have no obligation to make any payments to any third parties,
whether as finder’s fees, compensation or otherwise, unless (i) Distributor has
received a corresponding payment from the applicable Fund’s Distribution Plan
(as defined in Section 2 of this Agreement), the Fund’s investment adviser (the
“Adviser”) or from another source as may be permitted by applicable law, and
(ii) such corresponding payment has been approved by the Company’s Board of
Trustees (the “Board”).
1.4 In
its
capacity as distributor of the Shares, all activities of the Distributor and
its
partners, agents, and employees shall comply with all applicable laws, rules
and
regulations, including, without limitation, the 1940 Act, all applicable rules
and regulations promulgated by the Commission thereunder, and all applicable
rules and regulations adopted by any securities association registered under
the
Securities Exchange Act of 1934.
1.5 Whenever
in their judgment such action is warranted by unusual market, economic or
political conditions or by abnormal circumstances of any kind, the Company’s
officers may upon reasonable notice instruct the Distributor to decline to
accept any orders for or make any sales of the Shares until such time as those
officers deem it advisable to accept such orders and to make such
sales.
1.6 The
Company agrees to inform the Distributor from time to time of the states in
which the Fund or its administrator has registered or otherwise qualified shares
for sale, and the Company agrees at its own expense to execute any and all
documents and to furnish any and all information and otherwise to take all
actions that may be reasonably necessary in connection with the qualification
of
the Shares for sale in such states as the Distributor may designate.
1.7 The
Company shall furnish from time to time, for use in connection with the sale
of
the Shares, such supplemental information with respect to the Funds and the
Shares as Distributor may reasonably request; and the Company warrants that
the
statements contained in any such supplemental information will fairly show
or
represent what they purport to show or represent. The Company shall also furnish
Distributor upon request with: (a) unaudited semi-annual statements of the
Funds’ books and accounts prepared by the Company, and (b) from time to time
such additional information regarding the Funds as the Distributor may
reasonably request.
1.8 The
Company represents and warrants to Distributor that all registration statements,
and each Prospectus, filed by the Company with the Commission under the
Securities Act and the 1940 Act shall be prepared in conformity with
requirements of said Acts and rules and regulations of the Commission
thereunder, and all Company-related advertisement or sales literature shall
be
prepared in conformity with requirements of
2
applicable
laws and regulations. The registration statement, Prospectus and advertisement
or sales literature shall contain all statements required to be stated therein
in conformity with said Acts, laws and regulations and the rules and regulations
of the Commission thereunder or other applicable regulatory authority, and
all
statements of fact contained in any such registration statement, Prospectus
and
advertisement or sales literature are true and correct in all material respects.
Furthermore, neither any registration statement nor any Prospectus nor any
advertisement or sales literature includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser of the
Shares. The foregoing representations and warranties shall continue throughout
the term of this Agreement and be deemed to be of a continuing nature,
applicable to all Shares distributed hereunder. The Company may, but shall
not
be obligated to, propose from time to time such amendment or amendments to
any
registration statement and such supplement or supplements to any Prospectus
as,
in the light of future developments, may, in the opinion of the Company’s
counsel, be necessary or advisable. If the Company shall not propose any
amendment or amendments and/or supplement or supplements within 15 days after
receipt by the Company of a written request from Distributor to do so,
Distributor may, at its option, terminate this Agreement. In such case, the
Distributor will be held harmless from, and indemnified by Company for, any
liability or loss resulting from the failure to implement such amendment. The
Company shall not file any amendment to any registration statement or supplement
to any Prospectus without giving Distributor reasonable notice thereof in
advance; provided, however, that nothing contained in this Agreement shall
in
any way limit the Company’s right to file at any time such amendments to any
registration statement and/or supplements to any Prospectus, of whatever
character, as the Company may deem advisable, such right being in all respects
absolute and unconditional.
1.9 The
Company authorizes the Distributor and dealers to use any Prospectus in the
form
furnished by the Company from time to time in connection with the sale of the
Shares.
1.10 The
Distributor may utilize agents in its performance of its services and, with
prior notice to the Company, appoint in writing other parties qualified to
perform specific administration services reasonably acceptable to the Company
(individually, a “Sub-Agent”) to carry out some or all of its responsibilities
under this Agreement; provided, however, that a Sub-Agent shall be the agent
of
the Distributor and not the agent of the Company, and that the Distributor
shall
be fully responsible for the acts of such Sub-Agent and shall not be relieved
of
any of its responsibilities hereunder by the appointment of a
Sub-Agent.
1.11 The
Distributor shall not be liable for any error of judgment or mistake of law
or
for any loss suffered by the Company in connection with the matters to which
this Agreement relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on the Distributor’s part in the performance of its
obligations under this Agreement, from reckless disregard by the Distributor
of
its obligations under this Agreement, or from the Distributor’s failure to
comply with laws, rules and regulations applicable to it in connection with
its
activities hereunder. The Company agrees to indemnify, defend and hold harmless
the Distributor, its officers, partners, employees,
3
and
any
person who controls the Distributor within the meaning of Section 15 of the
Securities Act (collectively, “Distributor Indemnitees”), from and against any
and all claims, demands, liabilities and expenses (including the reasonable
cost
of investigating or defending such claims, demands or liabilities and any
reasonable counsel fees incurred in connection therewith) (collectively,
“Claims”) which the Distributor Indemnitees may incur under the Securities Act
or under common law or otherwise (a) as the result of the Distributor acting
as
distributor of the Funds and entering into selling agreements, participation
agreements or similar agreements with financial intermediaries on behalf of
the
Company; (b) arising out of or based upon (i) any untrue statement, or alleged
untrue statement, of a material fact contained in any registration statement
or
any Prospectus, (ii) any omission, or alleged omission, to state a material
fact required to be stated in any registration statement or any Prospectus
or
necessary to make the statements therein not misleading, or (iii) any untrue
statement, or alleged untrue statement, of a material fact in any
Company-related advertisement or sales literature, or any omission, or alleged
omission, to state a material fact required to be stated therein to make the
statements therein not misleading, in either case notwithstanding the exercise
of reasonable care in the preparation or review thereof by the Distributor;
or
(c) arising out of or based upon the electronic processing of orders over the
internet at the Company’s request; provided, however, that the Company’s
agreement to indemnify the Distributor Indemnitees pursuant to this Section
1.11
shall not be construed to cover any Claims (A) pursuant to subsection (b)
above to the extent such untrue statement, alleged untrue statement, omission,
or alleged omission, was furnished in writing, or omitted from the relevant
writing furnished, as the case may be, to the Company by the Distributor for
use
in the registration statement or in corresponding statements made in the
Prospectus, advertisement or sales literature; (B) arising out of or based
upon
the willful misfeasance, bad faith or gross negligence of the Distributor in
the
performance of its obligations under this Agreement or the Distributor’s
reckless disregard of its obligations under this Agreement; or (C) arising
out
of or based upon the Distributor’s failure to comply with laws, rules and
regulations applicable to it in connection with its activities
hereunder.
In
the
event of a Claim for which the Distributor Indemnitees may be entitled to
indemnification hereunder, the Distributor shall provide the Company with
written notice of the Claim, identifying the persons against whom such Claim
is
brought, promptly following receipt of service of the summons or other first
legal process, and in any event within 10 days of such receipt. The Company
will
be entitled to assume the defense of any suit brought to enforce any such Claim
if such defense shall be conducted by counsel of good standing chosen by the
Company and approved by the Distributor, which approval shall not be
unreasonably withheld. In the event any such suit is not based solely on an
alleged untrue statement, omission, or wrongful act on the Company’s part, the
Distributor shall have the right to participate in the defense. In the event
the
Company elects to assume the defense of any such suit and retain counsel of
good
standing so approved by the Distributor, the Distributor Indemnitees in such
suit shall bear the fees and expenses of any additional counsel retained by
any
of them, but in any case where the Company does not elect to assume the defense
of any such suit or in case the Distributor reasonably withholds approval of
counsel chosen by the Company, the Company will reimburse the Distributor
Indemnitees named as defendants in such suit, for the reasonable fees and
expenses of any counsel retained by them to the extent related
4
to
a
Claim covered under this Section 1.11. The Company’s indemnification agreement
contained in this Section 1.11 shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Distributor
Indemnitees, and shall survive the delivery of any Shares.
1.12 The
Distributor agrees to indemnify, defend and hold harmless the Company, its
officers, trustees, directors, employees, and any person who controls the
Company within the meaning of Section 15 of the Securities Act (collectively,
“Company Indemnitees”), from and against any and all Claims which the Company
Indemnitees may incur under the Securities Act or under common law or otherwise,
arising out of or based upon (a) any untrue statement, or alleged untrue
statement, of a material fact contained in any registration statement,
Prospectus, or Company-related advertisement or sales literature, or upon any
omission, or alleged omission, to state a material fact in such materials that
would be necessary to make the information therein not misleading, which untrue
statement, alleged untrue statement, omission, or alleged omission, was
furnished in writing, or omitted from the relevant writing furnished, as the
case may be, to the Company by the Distributor for use in the registration
statement or in corresponding statements made in the Prospectus, or
advertisement or sales literature; (b) the willful misfeasance, bad faith or
gross negligence of the Distributor in the performance of its obligations under
this Agreement, or the Distributor’s reckless disregard of its obligations under
this Agreement, or (c) the Distributor’s failure to comply with laws, rules
and regulations applicable to it in connection with its activities hereunder
(other than in respect of Fund-related advertisements or sales literature that
fail to comply with applicable laws despite the Distributor’s exercise of
reasonable care in the preparation and review thereof); provided, however,
that
the Distributor’s agreement to indemnify the Company Indemnitees pursuant to
this Section 1.12 shall not be construed to cover any Claims (A) arising out
of
or based upon the willful misfeasance, bad faith or gross negligence of the
Company in the performance of its obligations under this Agreement or the
Company’s reckless disregard of its obligations under this Agreement; or (B)
arising out of or based upon the Company’s failure to comply with laws, rules
and regulations applicable to it in connection with its activities
hereunder.
In
the
event of a Claim for which the Company Indemnitees may be entitled to
indemnification hereunder, the Company shall provide the Distributor with
written notice of the Claim, identifying the persons against whom such Claim
is
brought, promptly following receipt of service of the summons or other first
legal process, and in any event within ten (10) days of such receipt. The
Distributor will be entitled to assume the defense of any suit brought to
enforce any such Claim if such defense shall be conducted by counsel of good
standing chosen by the Distributor and approved by the Company, which approval
shall not be unreasonably withheld. In the event any such suit is not based
solely on an alleged untrue statement, omission, or wrongful act on the
Distributor’s part, the Company shall have the right to participate in the
defense. In the event the Distributor elects to assume the defense of any such
suit and retain counsel of good standing so approved by the Company, the Company
Indemnitees in such suit shall bear the fees and expenses of any additional
counsel retained by any of them, but in any case where the Distributor does
not
elect to assume the defense of any such suit or in case the Company reasonably
withholds approval of counsel chosen by the Distributor, the
5
Distributor
will reimburse the Company Indemnitees named as defendants in such suit, for
the
reasonable fees and expenses of any counsel retained by them to the extent
related to a Claim covered under this Section 1.12. The Distributor’s
indemnification agreement contained in this Section 1.12 shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of the Company Indemnitees, and shall survive the delivery of any
Shares.
1.13 No
Shares
shall be offered by either the Distributor or the Company under any of the
provisions of this Agreement and no orders for the purchase or sale of Shares
hereunder shall be accepted by the Company 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 Securities Act or if
and
so long as a current Prospectus as required by Section 10(b)(2) of said
Securities Act is not on file with the Commission; provided, however, that:
(a)
the Distributor will not be obligated to cease offering shares until it has
received from the Company written notice of such events, and (b) nothing
contained in this Section 1.13 shall in any way restrict or have an application
to or bearing upon the Company’s obligation to repurchase Shares from any
shareholder in accordance with the provisions of the Company’s Prospectus,
Agreement and Declaration of Trust, or By-laws.
1.14 The
Company agrees to advise the Distributor as soon as reasonably practical by
a
notice in writing delivered to the Distributor:
| (a) |
of
any request by the Commission for amendments to the registration
statement
or Prospectus then in effect or for additional
information;
|
| (b) |
in
the event of the issuance by the Commission of any stop order suspending
the effectiveness of the registration statement or Prospectus then
in
effect or the initiation by service of process on the Company of
any
proceeding for that purpose;
|
| (c) |
of
the happening of any event that makes untrue any statement of a material
fact made in the registration statement or Prospectus then in effect
or
which requires the making of a change in such registration statement
or
Prospectus in order to make the statements therein not misleading;
and
|
| (d) |
of
any other event which could reasonably be expected to have a material
adverse impact upon the offering of Shares or the Distributor’s provision
of services under this Agreement.
|
For
purposes of this section, informal requests by or acts of the Staff of the
Commission shall not be deemed actions of or requests by the Commission unless
they would reasonably be expected to have a material negative impact upon the
offering of Shares.
1.15 NOTWITHSTANDING
ANY PROVISION IN THIS AGREEMENT TO THE CONTRARY, UNDER NO CIRCUMSTANCES SHALL
EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INCIDENTAL, INDIRECT, SPECIAL,
PUNITIVE, CONSEQUENTIAL OR SIMILAR DAMAGES, INCLUDING LOST
6
REVENUE,
LOST PROFITS OR LOST OR DAMAGED DATA, EVEN IF SUCH PARTY HAS BEEN ADVISED OF
THE
POSSIBILITY OR LIKELIHOOD OF SUCH DAMAGES.
| 2. |
Fees.
|
2.1 Attached
as Schedule B to this Agreement are all plans of distribution under Rule 12b-1
under the 1940 Act approved by the Funds and in effect (collectively, the
“Distribution Plan”). The Funds will deliver to Distributor promptly after any
changes thereto updated copies of the Distribution Plan. For its services under
this Agreement, the Distributor shall be compensated and reimbursed for its
expenses as set forth on Schedules C and D to this Agreement. If the Funds
have
a Distribution Plan that permits and authorizes them to compensate and reimburse
the Distributor and required Board approvals have been given, then the Funds
shall be responsible for all such compensation and reimbursements or such
portions of it as have been permitted and authorized under the Distribution
Plan. It is contemplated by the Distributor that the Adviser
shall compensate and reimburse the Distributor for its provision to the
Funds of any distribution services for which the Funds are not authorized to
compensate and reimburse the Distributor. The fees set forth on Schedules C
and
D are subject to change by Distributor upon 30 days advance notice.
2.2 If:
(i)
the Distributor properly receives fees from the Funds under the
Distribution Plan, other than for services rendered or expenses
incurred, that the Distributor is not obligated to pay to third party
broker-dealers, plan administrators or others ("Retained Fees"), and (ii) the
Funds have authority under the Distribution Plan to pay for some or all of
the Distributor's services under this Agreement ("Permitted Services"), then
all
of the Retained Fees will either be (a) returned to the funds and/or
(b) credited against the compensation payable by the funds to the Distributor
for Permitted Services.
2.3 In
the
event that the Distributor is requested or authorized by the Company or is
required by governmental regulation, summons, subpoena, investigation,
examination or other legal or regulatory process to produce documents or
personnel with respect to services provided by the Distributor to the Company
or
any Fund, the Company will, so long as the Distributor is not the subject of
the
investigation or proceeding in which the information is sought, pay the
Distributor for its professional time (at its standard billing rates) and
reimburse the Distributor for its out-of-pocket expenses (including reasonable
attorneys fees) incurred in responding to such requests or
requirements.
| 3. |
Sale
and Payment.
|
3.1 Shares
of
a Fund may be subject to a sales load and may be subject to the imposition
of a
distribution fee pursuant to the Distribution Plan referred to above. To the
extent that Shares of a Fund are sold at an offering price which includes a
sales load or subject to a contingent deferred sales load with respect to
certain redemptions (either within a single class of Shares or pursuant to
two
or more classes of Shares), such Shares shall hereinafter be referred to
collectively as “Load Shares” (and in the case of Shares
7
that
are
sold with a front-end sales load, “Front-end Load Shares”, or Shares that are
sold subject to a contingent deferred sales load, “CDSL Shares”). Funds that
issue Front-End Load Shares shall hereinafter be referred to collectively as
“Front-End Load Funds.” Funds that issue CDSL Shares shall hereinafter be
referred to collectively as “CDSL Funds.” Front-end Load Funds and CDSL Funds
may individually or collectively be referred as “Load Funds.” Under this
Agreement, the following provisions shall apply with respect to the sale of,
and
payment for, Load Shares.
3.2 The
Distributor shall have the right to offer Load Shares at their net asset value
and to sell such Load Shares to the public against orders therefor at the
applicable public offering price, as defined in Section 4 hereof. The
Distributor shall also have the right to sell Load Shares to dealers against
orders therefor at the public offering price less a concession determined by
the
Distributor, which concession shall not exceed the amount of the sales charge
or
underwriting discount, if any, referred to in Section 4 below.
3.3 Prior
to
the time of delivery of any Load Shares by a Load Fund to, or on the order
of,
the Distributor, the Distributor shall pay or cause to be paid to the Load
Fund
or to its order an amount in same-day funds equal to the applicable net asset
value of such Shares. The Distributor may retain so much of any sales charge
or
underwriting discount as is not allowed by the Distributor as a concession
to
dealers.
3.4 With
respect to CDSL Funds, the following provisions shall be
applicable:
(a) The
Distributor shall be entitled to receive all contingent deferred sales load
charges, 12b-1 payments and all distribution and service fees set forth in
the
Distribution Plan adopted by a CDSL Fund (collectively, the “CDSL Payments”)
with respect to CDSL Shares. The Distributor may assign or sell to a third
party
(a “CDSL Financing Entity”) all or a part of the CDSL Payments on CDSL Shares
that the Distributor is entitled to receive under this Agreement. The
Distributor’s right to the CDSL Payments on such CDSL Shares, if assigned or
sold to a CDSL Financing Entity, shall continue after termination of this
Agreement.
(b) Unless
the Distributor is legally entitled to receive such fees as the financing
entity, the right to receive all CDSL Payments in respect of periods subsequent
to the termination of this Agreement shall terminate upon termination of this
Agreement. In the event Distributor assigns or sells all or a part of the CDSL
Payments to a CDSL Financing Entity and this Agreement is subsequently
terminated, Distributor shall have no obligation to assist the CDSL Financing
Entity in connection with such CDSL Financing Entity’s right to receive such
CDSL Payments subsequent to such termination.
(c) The
Distributor shall not be required to offer or sell CDSL Shares of a CDSL Fund
unless and until it has received a binding commitment from a CDSL Financing
Entity (a “Commitment”) satisfactory to the Distributor which Commitment shall
cover all expenses and fees related to the offer and sale of such CDSL Shares
including, but not limited to, dealer reallowances, financing commitment fees,
and legal fees. If at any time during the term of this Agreement
8
the
then-current CDSL financing is terminated through no fault of the Distributor,
the Distributor shall have the right to immediately cease offering or selling
CDSL Shares until substitute financing becomes effective.
(d)
The
Distributor and the Company hereby agree that the terms and conditions set
forth
herein regarding the offer and sale of CDSL Shares may be amended upon approval
of both parties in order to comply with the terms and conditions of any
agreement with a CDSL Financing Entity to finance the costs for the offer and
sale of CDSL Shares so long as such terms and conditions are in compliance
with
the Distribution Plan.
| 4. |
Public
Offering Price.
|
The
public offering price of a Load Share shall be the net asset value of such
Load
Share next determined, plus any applicable sales charge, all as set forth in
the
current Prospectus of the Load Fund. The net asset value of Load Shares shall
be
determined in accordance with the then-current Prospectus of the Load
Fund.
| 5. |
Issuance
of Shares.
|
The
Company reserves the right to issue, transfer or sell Load Shares at net asset
values (a) in connection with the merger or consolidation of the Company or
the
Load Fund(s) with any other investment company or the acquisition by the Company
or the Load Fund(s) of all or substantially all of the assets or of the
outstanding Shares of any other investment company; (b) in connection with
a pro
rata distribution directly to the holders of Shares in the nature of a stock
dividend or split; (c) upon the exercise of subscription rights granted to
the
holders of Shares on a pro rata basis; (d) in connection with the issuance
of
Load Shares pursuant to any exchange and reinvestment privileges described
in
any then-current Prospectus of the Load Fund; and (e) otherwise in accordance
with any then-current Prospectus of the Load Fund.
| 6. |
Term,
Duration and Termination.
|
This
Agreement shall become effective with respect to each Fund as of the date first
written above (the “Effective Date”) (or, if a particular Fund is not in
existence on such date, on the earlier of the date an amendment to Schedule
A to
this Agreement relating to that Fund is executed or the Distributor begins
providing services under this Agreement with respect to such Fund) and, unless
sooner terminated as provided herein, shall continue for a two year period
following the Effective Date. Thereafter, if not terminated, this Agreement
shall continue with respect to a particular Fund automatically for successive
one-year terms, provided that such continuance is specifically approved at
least
annually (a) by the vote of a majority of those members of the Board who are
not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting for the purpose of voting on such approval and (b) by the
vote of the Board or the vote of a majority of the outstanding voting securities
of such Fund. This Agreement is terminable without penalty with 60 days’ prior
written notice, by the Board, by vote of a majority of the outstanding voting
securities of the Company, or by the Distributor.
9
This
Agreement will also terminate automatically in the event of its assignment.
(As
used in this Agreement, the terms “majority of the outstanding voting
securities,” “interested persons” and “assignment” shall have the same meaning
as ascribed to such terms in the 1940 Act.)
| 7. |
Privacy.
|
Nonpublic
personal financial information relating to consumers or customers of the Funds
provided by, or at the direction of, the Company to the Distributor, or
collected or retained by the Distributor to perform its obligations as
distributor, shall be considered confidential information. The Distributor
shall
not disclose or otherwise use any nonpublic personal financial information
relating to present or former shareholders of the Funds other than for the
purposes for which that information was disclosed to the Distributor, including
use under an exception in Rules 13, 14 or 15 of Securities and Exchange
Commission Regulation S-P in the ordinary course of business to carry out those
purposes. The Distributor shall have in place and maintain physical, electronic
and procedural safeguards reasonably designed to protect the security,
confidentiality and integrity of, and to prevent unauthorized access to or
use
of, records and information relating to consumers and customers of the Funds.
The Company represents to the Distributor that it has adopted a Statement of
its
privacy policies and practices as required by Securities and Exchange Commission
Regulation S-P and agrees to provide the Distributor with a copy of that
statement annually.
| 8. |
Anti-Money
Laundering Compliance.
|
8.1 Each
of
Distributor and the Company acknowledges that it is a financial institution
subject to the USA Patriot Act of 2001 and the Bank Secrecy Act (collectively,
the “AML Acts”), which require, among other things, that financial institutions
adopt compliance programs to guard against money laundering. Each represents
and
warrants to the other that it is in compliance with and will continue to comply
with the AML Acts and applicable regulations in all relevant respects. The
Distributor shall also provide written notice to each person or entity with
which it entered an agreement prior to the date hereof with respect to sale
of
the Company’s Shares, such notice informing such person of anti-money laundering
compliance obligations applicable to financial institutions under applicable
laws and, consequently, under applicable contractual provisions requiring
compliance with laws.
8.2 The
Distributor shall include specific contractual provisions regarding anti-money
laundering compliance obligations in agreements entered into by the Distributor
with any dealer that is authorized to effect transactions in Shares of the
Company.
8.3 Each
of
Distributor and the Company agrees that it will take such further steps, and
cooperate with the other as may be reasonably necessary, to facilitate
compliance with the AML Acts, including but not limited to the provision of
copies of its written procedures, policies and controls related thereto (“AML
Operations”). Distributor undertakes that it will grant to the Company, the
Company’s anti-money laundering compliance officer and regulatory agencies,
reasonable access to copies of
10
Distributor’s
AML Operations, books and records pertaining to the Company only. It is
expressly understood and agreed that the Company and the Company’s compliance
officer shall have no access to any of Distributor’s AML Operations, books or
records pertaining to other clients of Distributor.
9. Notices.
Any
notice provided hereunder shall be sufficiently given when sent by registered
or
certified mail, or by nationally recognized overnight courier, to the party
required to be served with such notice at the following address: if to the
Company, to it at 000 Xxxxxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, XX 00000, Attention: President; and if to Distributor, to it at 000
Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Broker Dealer Chief
Compliance Officer, with a copy to BISYS Distribution Services, 0000 Xxxxxxx
Xxxx, Xxxxxxxx, Xxxx 00000, Attention: President, or at such other address
as
such party may from time to time specify in writing to the other party pursuant
to this Section.
10. Confidentiality.
During
the term of this Agreement, the Distributor and the Company may have access
to
confidential information relating to such matters as either party’s business,
trade secrets, systems, procedures, manuals, products, contracts, personnel,
and
clients. As used in this Agreement, “Confidential Information” means information
belonging to the Distributor or the Company which is of value to such party
and
the disclosure of which could result in a competitive or other disadvantage
to
either party, including, without limitation, financial information, business
practices and policies, know-how, trade secrets, market or sales information
or
plans, customer lists, business plans, and all provisions of this Agreement.
Confidential Information includes information developed by either party in
the
course of engaging in the activities provided for in this Agreement, unless:
(i)
the information is or becomes publicly known without breach of this Agreement,
(ii) the information is disclosed to the other party by a third party not under
an obligation confidentiality to the party whose Confidential Information is
at
issue of which the party receiving the information should reasonably be aware,
or (iii) the information is independently developed by a party without reference
to the other’s Confidential Information. Each party will protect the other’s
Confidential Information with at least the same degree of care it uses with
respect to its own Confidential Information, and will not use the other party’s
Confidential Information other than in connection with its obligations
hereunder. Notwithstanding the foregoing, a party may disclose the other’s
Confidential Information if (i) required by law, regulation or legal process
or
if requested by any Agency; (ii) it is advised by counsel that it may incur
liability for failure to make such disclosure; (iii) requested to by the other
party; provided that in the event of (i) or (ii) the disclosing party shall
give
the other party reasonable prior notice of such disclosure to the extent
reasonably practicably and cooperate with the other party (at such other party’s
expense) in any efforts to prevent such disclosure.
11
10. Governing
Law.
This
Agreement shall be construed in accordance with the laws of the State of New
York, without regard to New York’s conflicts of laws principles, and the
applicable provisions of the 1940 Act.
11. Prior
Agreements.
This
Agreement constitutes the complete agreement of the parties as to the subject
matter covered by this Agreement, and supersedes all prior negotiations,
understandings and agreements bearing upon the subject matter covered by this
Agreement.
12. Amendments.
No
amendment to this Agreement shall be valid unless made in writing and executed
by both parties hereto.
13. Matters
Relating to the Trust as a Massachusetts Business Trust.
It
is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agents
or
employees of the Trust personally, but shall bind only the trust property of
the
Trust. The execution and delivery of this Agreement have been authorized by
the
Trustees, and this Agreement has been signed and delivered by an authorized
officer of the Trust, acting as such, and neither such authorization by the
Trustees nor such execution and delivery by such officer shall be deemed to
have
been made by any of them individually or to impose any liability on them
personally, but shall bind only the trust property of the Trust as provided
in
the Trust’s Declaration of Trust.
* * * * * *
12
IN
WITNESS WHEREOF, the parties hereto have caused this instrument to be executed
by their officers designated below as of the day and year first written
above.
The
Blue
Fund Group
By:
____________________
Name:
Title:
BISYS
Fund Services Limited Partnership
By:
BISYS
Fund Services, Inc.,
its
General Partner
By:
____________________
Name:
Xxxx Xxxxxxx
Title:
President
13
SCHEDULE
A
FUNDS
The
Blue Fund
14
SCHEDULE
B
DISTRIBUTION
PLAN
[Company
to insert copies]
15
SCHEDULE
C
COMPENSATION
OF THE DISTRIBUTOR
1.
BASIC
DISTRIBUTION SERVICES.
For
providing the distribution entity and related infrastructure and platform,
including requisite registrations and qualifications, premises, personnel,
compliance, ordinary Board meeting preparation, maintenance of selling
agreements, clearance of advertising and sales literature with regulators,
filing appropriate documentation for advisory representatives to qualify as
registered representatives of the Distributor (provided that the Adviser is
solely responsible for its representatives’ meeting examination requirements)
and their related registrations and fees, ordinary supervisory services,
overhead, Financial Research Corporation’s Mutual
Fund Views on the News
and
Monitor
publications, and return on investment, the Distributor shall receive the
following annual fee, billed monthly, based on aggregate net assets of the
Funds:
Aggregate
Net Assets of the Funds Annual
Fee
$0
- $100
million $25,000
over
$100
million - $1 billion
$50,000
over
$1
billion
$75,000
2.
SPECIAL
DISTRIBUTION SERVICES.
For
special distribution services, including those set forth on Schedule D to this
Agreement, such as additional personnel, registrations, marketing services,
printing and fulfillment, website services, proprietary distribution expertise
for particular circumstances, and any other services in addition to the basic
distribution services covered by Paragraph 1 above, the Distributor shall be
reimbursed promptly upon invoicing its expenses for such services, including:
(a) all costs to support additional personnel; (b) regulatory fees including
NASD CRD costs associated with marketing materials; and (c) printing, postage
and fulfillment costs, and (d) amounts payable under additional agreements
to
which Distributor is a party.
3.
SPECIAL
CONDUIT SITUATIONS.
If the
Distribution Plan, or any other Fund plans of distribution under Rule 12b-1
that
contemplate up front and/or recurring commission and/or service payments to
broker dealers, retirement plan administrators or others by the Distributor
with
respect to back-end loads, level loads, or otherwise, unless expressly agreed
otherwise in writing between the parties, all such payments shall be made to
the
Distributor, which shall act as a conduit for making such payments to such
broker-dealers, retirement plan administrators or others.
4.
OTHER
PAYMENTS BY THE DISTRIBUTOR.
If the
Distributor is required to make any payments to third parties in respect of
distribution, which payments are contemplated by the parties to this Agreement
or otherwise arise in the ordinary course of business, the Distributor shall
be
promptly reimbursed for such payments upon invoicing them.
5.
FEE
ADJUSTMENTS. The
fixed
fees and other fees expressed as stated dollar amounts in this Schedule C and
in
this Agreement are subject to annual increases,
16
commencing on the one-year anniversary date of the date
of
this Agreement, in an amount equal to the percentage increase in consumer prices
for services as measured by the United States Consumer Price Index entitled
“All
Services Less Rent of Shelter,” or a similar index should such index no longer
be published, since such one-year anniversary or since the date of the last
fee
increase, as applicable.
17
SCHEDULE
D
SPECIAL
DISTRIBUTION SERVICES AND FEES
|
Services
|
Fees
|
|
1.
Wholesaling Personnel Services
Wholesaling
Personnel may be external wholesalers and/or internal wholesalers.
Services
include soliciting support of the Funds with selling broker dealers;
participating in promotional meetings, presentations, conferences
and
other and forums; identifying high potential personnel of the Adviser
and
selling broker dealers; and assisting with mail solicitations and
literature fulfillment.
|
Wholesaling
Personnel Services Fees
For
each individual constituting the Wholesaling Personnel employed by
the
Distributor pursuant to this Agreement, the Distributor shall receive
annually an amount equal to the sum of:
(i)
all compensation paid annually by the Distributor to the employee;
plus
(ii)
a management oversight fee equal to:
(a) if
one to four Wholesaling Personnel are employed, 30% of the salary
compensation and 5% of the bonus or commission compensation, or
(b) if
five or more Wholesaling Personnel are employed, 25% of the salary
compensation and 5% of the bonus or commission compensation;
plus
(iii)
18% of the total compensation (covering costs of the Distributor’s
employee benefits that are provided by the Distributor).
In
addition, the Distributor shall be reimbursed for all related costs
to
support, educate and train and maintain compliance oversight of
Wholesaling Personnel and other personnel such as sales management,
marketing and performance reporting personnel (including time and
expenses, continuing education, seminars, rent, supplies, phone,
computers, firm element, license, registration)
Upon
any termination of Wholesaling Personnel at the request of the Funds
or
upon termination of this Agreement by the Funds for any reason other
than
cause, the Distributor will be reimbursed its severance costs with
respect
to such terminated Wholesaling Personnel.
|
18
|
2.
Marketing and Related Services
Marketing
Execution:
services include identification and development of appropriate marketing
and communications programs, projects and other initiatives; collaboration
on initiating, researching, developing, and delivering appropriate
sales
and marketing materials; and management of marketing and advertising
projects.
Performance
Reporting:
services include creation of templates for monthly fact sheets and
quarterly fact sheets; populating templates with performance data
obtained
from third parties; and coordinating steps needed for final printing
and
distribution.
Creative
Communication and Editorial Services:
services include preparing drafts of textual commentary and management
discussion and analysis for annual; and semi-annual reports, including
portfolio manager interviews; providing creative design and direction;
and
coordinating production, including typesetting (initial composition
and
changes to composition), charts and ancillary items.
Production
Timing:
· No
timing guarantees can be made for completion of monthly and quarterly
fact
sheets where any of the information needed to produce the reports
is
generated by service providers other than the Distributor. However,
a
basic estimate of turnaround time may be given based upon when the
unit
receives all necessary data in good order. Under normal conditions,
the
Performance Reporting unit expects to make proofs ready for review
(either
printed or electronic PDF format) by the 4th business day after the
final
piece of data is received. If compliance review is necessary (e.g.,
when
Morningstar ratings data is used) an additional 2 days may be required
for
review.
· Printing
turnaround (once the factsheets are signed-off by the client) is
usually
approximately 4-5 calendar days with most jobs shipping by the 5th
day.
· If
requested, final electronic PDF files may be generated and e-mailed
on the
day the job is signed-off on by the client. These PDFs may be distributed
and printed as necessary until the final printed pieces
arrive.
|
Marketing
and Related Services Fees
Marketing
Execution:
Quote available upon request.
Performance
Reporting
Monthly
Reports
Monthly
Updating and Typesetting -- $850 - $1,000 per sheet per month (for
an
All-in-One style report)
Initial
Design and Setup (1-time charge) -- $500 per sheet
Quarterly
Reports
Quarterly
Updating and Typesetting -- $300 - $350 per Fund sheet per Share
Class per
quarter
Initial
Design and Setup per Fund sheet (1-time charge) -- $500 per Fund
sheet
Annual
& Semi-Annual Reports
Coordination:
· $3,000
Initial Fee (includes Chairman’s Letter and 1st Fund)
· $500
for each additional Fund
NOTE:
The above charges do not include the typesetting, printing, shipping,
fulfillment, Xxxxx filing or quick-turnaround charges that may be
incurred
from the financial printer. The above fees are for coordinating the
project only.
Creative
Communication and Editorial Services
Quote
available upon request.
|
19
|
3.
FRC Services
FRC’s
program components include:
-Market
Analytics Publications
-Advanced
Research Publications
-Analyst
Support
-SME
Direct Access
The
Company acknowledges that certain FRC publications may be provided
only to
parties that have entered into a written agreement or addendum that
sets
forth the terms of use of such publications and the associated fee.
The Company will notify the Distributor whether the Company or the
Adviser
or both will enter into such an agreement or addendum. The Company
acknowledges that if only one of the Company or the Adviser enters
into
such agreement or addendum, the other party will be prohibited from
receiving or using such publications.
|
FRC
Services Fees
Market
Analytics Publications:
Quote available upon request.
Advanced
Research Publications:
· Topic
Briefs
· FRC
Focus (typical cost is approximately $1,500)
White
Papers - FRC Vision (typical cost is approximately $2,500)
· Research
Studies (costs vary, however typically range between $3,500 and
$12,500)
Analyst
Support:
Quote available upon request
SME
Direct Access:
Quote available upon request
Other
FRC Fees:
· All
subsequent content and support hours may be purchased at a 20% discount
from standard pricing.
|
Expenses
Applicable to Distribution Services
Except
as
expressly set forth above, out-of-pocket expenses incurred by Distributor in
the
performance of its services under this Agreement are not included in the above
fees. Such out-of-pocket expenses may include, without limitation:
| · |
reasonable
travel and entertainment costs;
|
| · |
expenses
incurred by the Distributor in qualifying, registering and maintaining
the
registration of the Distributor and each individual comprising Wholesaling
Personnel as a registered representative of the Distributor under
applicable federal and state laws and rules of the NASD, e.g., CRD
fees
and state fees;
|
| · |
sponsorships,
promotions, sales incentives;
|
| · |
any
and all compensation to be paid to a third party as paying agent
for
distribution activities (platform fees, finders fees, sub-TA fees,
12b-1
pass thru, commissions, etc.);
|
| · |
costs
and expenses incurred for telephone service, photocopying and office
supplies;
|
| · |
advertising
costs;
|
20
| · |
costs
for printing, paper stock and costs of other materials, electronic
transmission, courier, talent utilized in sales materials (e.g. models),
design output, photostats, photography, and illustrations;
|
| · |
packaging,
shipping, postage, and photocopies;
|
| · |
taxes
that are paid or payable by the Distributor or its affiliates in
connection with its services hereunder, other than taxes customarily
and
actually imposed upon the income that the Distributor receives hereunder;
and
|
| · |
amounts
paid to the NASD based
on Distributor’s revenue and/or the number of Distributor’s registered
representatives.
|
21
