AMENDED & RESTATED DISTRIBUTION AGREEMENT
AMENDED
& RESTATED DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of June 15,
1998, as revised and restated on March 1, 2001 and February 11, 2009, among the
Direxion Funds Trust (the “Trust”), a Massachusetts business trust, Xxxxxxxx
Asset Management, LLC (“Xxxxxxxx”), a New York limited liability corporation,
and Xxxxxxxx Capital Markets, LLC (“Distributor”), a limited liability company
organized and existing under the laws of the State of New York and the successor
to Xxxxxxxx Capital Markets, Inc., the original distributor under this
Agreement. (All future references herein to this Agreement refer to
this Agreement as revised and restated on February 11, 2009.)
WHEREAS the Trust is registered under
the Investment Company Act of 1940, as amended (“1940 Act”), as an open-end
management investment company, and has registered its shares of beneficial
interest (“Shares”) for sale to the public under the Securities Act of 1933, as
amended (“1933 Act”), and has qualified its shares for sale to the public under
various state securities laws; and
WHEREAS the Trust offers for public
sale distinct series of Shares, each of which offers one or more classes of
Shares, and each of which corresponds to a distinct portfolio as listed on
Schedule A to this Agreement, as such Schedule A may be amended from time to
time (“Series”); and
WHEREAS Xxxxxxxx is registered as an
investment adviser under the Investment Advisers Act of 1940, as amended, and
serves as investment adviser to the Trust; and
WHEREAS the Trust and Xxxxxxxx desire
to retain the Distributor as principal underwriter in connection with the
offering and sale of the Shares of each Series listed on Schedule A (as amended
from time to time) to this Agreement; and
WHEREAS this Agreement has been
approved by a vote of the Trust’s Board of Trustees and its disinterested
Trustees in conformity with Section 15(c) under the 1940 Act; and
WHEREAS the Distributor is willing to
act as principal underwriter for the Trust on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the
promises and mutual covenants herein contained, it is agreed between the parties
hereto as follows:
1. Appointment. The
Trust hereby appoints the Distributor as its exclusive agent to be the principal
underwriter to promote the Trust, solicit orders for the purchase of the Shares
and accept orders for the purchase and redemption of Shares on behalf of the
Trust, subject to the terms and for the period set forth in this
Agreement. The Distributor hereby accepts such appointment and agrees
to act hereunder.
2. Services
and Duties of the Distributor.
(a) The Distributor agrees
to sell the Shares on a best efforts basis from time to time during the term of
this Agreement as agent for the Trust and upon the terms described in the
Registration Statement. As used in this Agreement, the term
“Registration Statement” shall mean the currently effective Form N-1A
registration statement of the Trust, and any supplements thereto, under the 1933
Act and the 0000 Xxx.
(b) The Distributor will
hold itself available to receive purchase orders satisfactory to the Distributor
for Shares and will accept such orders on behalf of the
Trust. Purchase orders shall be deemed effective at the time and in
the manner set forth in the Registration Statement.
(c) The Distributor shall
print and distribute to prospective investors Prospectuses, and shall print and
distribute, upon request, to prospective investors Statements of Additional
Information (“SAIs”), and may print and distribute such other sales literature,
reports, forms and advertisements in connection with the sale of the Shares as
comply with the applicable provisions of federal and state law. In
connection with such sales and offers of sales, the Trust authorizes the
Distributor to provide only such information and make only such statements or
representations as are contained in the Series’ then-current Prospectus, SAI, or
in such financial or other statements furnished in writing to the Distributor by
the Trust or as may properly be included in sales literature or advertisements
in accordance with the provisions of the 1933 Act, the 1940 Act and applicable
rules of self-regulatory organizations. Neither the Trust nor any
Series shall be responsible in any way for any other information, statements or
representations given or made by the Distributor or its representatives or
agents other than those described in the preceding sentence. Except
as specifically provided in this Agreement, the Trust shall bear none of the
expenses of the Distributor in connection with its promotion, offer and sale of
Shares.
(d) The offering price of
the Shares shall be the net asset value per Share as next determined by the
Trust as set forth in the most-current Prospectus. The Trust shall
make available to the Distributor a statement of each computation of net asset
value and the details of entering into such computation.
(e) The Distributor may at
its sole discretion repurchase Shares offered for sale by the
shareholders. Repurchase of Shares by the Distributor shall be at the
price determined in accordance with, and in the manner set forth in, the
most-current Prospectus. At the end of each business day, the
Distributor shall notify, by any appropriate means, the Trust and its transfer
agent of the orders for repurchase of Shares received by the Distributor since
the last such report, the amount to be paid for such Shares, and the identity of
the shareholders offering Shares for repurchase. The Trust reserves
the right to suspend such repurchase right upon written notice to the
Distributor. The Distributor further agrees to act as agent for the
Trust to receive and transmit promptly to the Trust’s transfer agent shareholder
requests for redemption of Shares.
(f) The Distributor shall
not be obligated to sell any certain number of Shares.
(g) The Distributor shall
have the right to use any lists of shareholders of the Trust or any Series or
any other lists of investors that it obtains in connection with its provision of
services under this Agreement; provided, however, that the Distributor shall not
sell or knowingly provide such lists of shareholders to any unaffiliated person
of the Trust without the consent of the Trust’s Board of Trustees.
2
3. Duties of
the Trust.
(a) The Trust shall keep the
Distributor fully informed of its affairs and shall make available to the
Distributor copies of all information, financial statements, and other papers
that the Distributor may reasonably request for use in connection with the
distribution of Shares, including, without limitation, certified copies of any
financial statements prepared for the Trust by its independent public accountant
and such reasonable number of copies of the most current Prospectus, SAI, and
annual and interim reports as the Distributor may request, and the Trust shall
fully cooperate in the efforts of the Distributor to promote, sell and arrange
for the sale of the Shares and in the performance of the Distributor's duties
under this Agreement.
(b) The Trust shall maintain
a currently effective Registration Statement with respect to such Series,
maintain qualification with states and file with the Securities and Exchange
Commission (the “SEC”) such reports and other documents as may be required under
the 1933 Act and the 1940 Act or by the rules and regulations of the SEC
thereunder. Each Series shall bear all expenses related to preparing
and typesetting such Prospectuses, SAI and other materials required by law and
such other expenses, including printing and mailing expenses, related to such
Series’ communication with persons who are shareholders of that
Series.
(c) Each Series represents
and warrants that the Registration Statement, post-effective amendments,
Prospectus and SAI (excluding statements relating to the Distributor and the
services it provides that are based upon written information furnished by the
Distributor expressly for inclusion therein) of such Series shall not contain
any untrue statement of material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, and that all statements or information furnished to the Distributor,
pursuant to Section 3(a) hereof, shall be true and correct in all material
respects.
4. Other
Broker-Dealers. The Distributor in its discretion may enter
into agreements to sell Shares of each Series to such registered and qualified
retail dealers, as it may select.
5. Withdrawal
of Offering. The Trust reserves the right at any time to
withdraw all offerings of any or all Series by written notice to the Distributor
at its principal office.
6. Services
Not Exclusive. The services furnished by the Distributor
hereunder are not to be deemed exclusive and the Distributor shall be free to
furnish similar services to others so long as its services under this Agreement
are not impaired thereby. Nothing in this Agreement shall limit or
restrict the right of any director, officer or employee of the Distributor, who
also may be a director, officer or employee of the Trust, to engage in any other
business or to devote his or her time and attention in part to the management or
other aspects of any other business, whether of a similar or a dissimilar
nature.
7. Expenses
of the Trust. The Trust shall bear all costs and expenses of
registering the Shares with the SEC and state and other regulatory bodies, and
shall assume expenses related to communications with shareholders of the Trust,
including (i) fees and disbursements of its counsel and independent public
accountant; (ii) the preparation, filing, and printing of Registration
Statements and/or Prospectuses or SAIs; (iii) the preparation and mailing of
annual and interim reports, Prospectuses, SAIs, and proxy materials to
shareholders; and (iv) the qualifications of Shares for sale under the
securities laws of such jurisdictions as shall be selected by the Trust pursuant
to Paragraph 3(b) hereof, and the costs and expenses payable to each such
jurisdiction for continuing qualification therein.
3
8. Expenses
of the Distributor. Distributor shall bear all costs and
expenses of (i) preparing, printing and distributing any materials not prepared
by the Trust and other materials used by the Distributor in connection with the
sale of Shares under this Agreement, including the additional cost of printing
copies of Prospectuses, SAIs, and annual and interim shareholder reports other
than copies thereof required for distribution to existing shareholders or for
filing with any Federal or state securities authorities; (ii) any expenses of
advertising incurred by the Distributor in connection with such offering; (iii)
the expenses of registration or qualification of the Distributor as a broker or
dealer under federal or state laws and the expenses of continuing such
registration or qualification; and (iv) all compensation paid to the
Distributor’s employees and others for selling Shares, and all expenses of the
Distributor, its employees, and others who engage in or support the sale of
Shares as may be incurred in connection with their sales efforts.
9. Compensation. As
compensation for the services performed and the expenses assumed by the
Distributor under this Agreement, the Distributor shall receive the amounts set
forth in Schedule B. Nothing in this Agreement shall be deemed to
preclude the Distributor from making transfers of any compensation received by
it hereunder to Xxxxxxxx or to another party as payment or reimbursement for
expenses paid or incurred by Xxxxxxxx or such other party in connection with
distribution-related activities, including (but not limited to) financing
arrangements relating to classes of Shares that are subject to a contingent
deferred sales charge.
10. Indemnification.
(a) The Trust agrees to
indemnify, defend, and hold the Distributor, its officers and directors, and any
person who controls the Distributor within the meaning of Section 15 of the 1933
Act, free and harmless from and against any and all claims, demands,
liabilities, and expenses (including the cost of investigating or defending such
claims, demands, or liabilities and any counsel fees incurred in connection
therewith) that the Distributor, its officers, directors, or any such
controlling person may incur under the 1933 Act, or under common law or
otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in the Registration Statement, Prospectus or SAI or
arising out of or based upon any alleged omission to state a material fact
required to be stated in the either thereof or necessary to make the statements
therein not misleading, except insofar as such claims, demands,
liabilities, or expenses arise out of or are based upon any such untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with information furnished in writing by the Distributor
to the Trust for use in the Registration Statement; provided, that in no event
shall anything contained herein be so construed as to protect the Distributor
against any liability to the Trust or its shareholders to which the Distributor
would otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations under this Agreement.
4
(b) The Trust shall not be
liable to the Distributor under this Agreement with respect to any claim made
against the Distributor or any person indemnified unless the Distributor or
other such person shall have notified the Trust in writing of the claim within a
reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon the
Distributor or such other person (or after the Distributor or the person shall
have received notice of service on any designated agent). However,
failure to notify the Trust of any claim shall not relieve the Trust from any
liability that it may have to the Distributor or any person against whom such
action is brought otherwise than on account of this Agreement.
(c) 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 claims subject to this
Agreement. If the Trust elects to assume the defense of any such
claim, the defense shall be conducted by counsel chosen by the Trust and
satisfactory to indemnified defendants in the suit whose approval shall not
be unreasonably withheld. In the event that the Trust elects to
assume the defense of any suit and retain counsel, the indemnified defendants
shall bear the fees and expenses of any additional counsel retained by
them. If the Trust does not elect to assume the defense of a suit, it
will reimburse the indemnified defendants for the reasonable fees and expenses
of any counsel retained by the indemnified defendants. The Trust
agrees to promptly notify the Distributor of the commencement of any litigation
or proceedings against it or any of its officers or directors in connection with
the issuance or sale of any of its Shares.
(d) The Distributor agrees
to indemnify, defend, and hold the Trust, its officers and directors, and any
person who controls the Trust within the meaning of Section 15 of the 1933 Act,
free and harmless from and against any and all claims, demands, liabilities, and
expenses (including the cost of investigating or defending against such claims,
demands, or liabilities and any counsel fees incurred in connection therewith)
that the Trust, its directors or officers, or any such controlling person may
incur under the 1933 Act, or under common law or otherwise, resulting from the
Distributor’s willful misfeasance, bad faith or negligence in the performance of
its obligations and duties under this Agreement, or arising out of or based upon
any alleged untrue statement of a material fact contained in information
furnished in writing by the Distributor to the Trust for use in the Registration
Statement, Prospectus or SAI arising out of or based upon any alleged omission
to state a material fact in connection with such information required to be
stated in either thereof or necessary to make such information not misleading,
or arising out of any agreement between the Distributor and any retail dealer,
or arising out of any supplemental sales literature or advertising used by the
Distributor in connection with its duties under this Agreement.
(e) 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 the claim, but if the
Distributor elects to assume the defense, the defense shall be conducted by
counsel chosen by the Distributor and satisfactory to the indemnified defendants
whose approval shall not be unreasonably withheld. In the event that
the Distributor elects to assume the defense of any suit and retain counsel, the
defendants in the 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 suit, it will reimburse the indemnified defendants in the
suit for the reasonable fees and expenses of any counsel retained by
them.
11. Services
Provided to the Trust by Employees of the Distributor. Any
person, even though also an officer, director, employee, or agent of the
Distributor who may be or become an officer, director, employee, or agent of the
Trust, shall be deemed, when rendering services to the Trust or acting in any
business of the Trust, to be rendering such services to or acting for solely the
Trust and not as an officer, director, employee, or agent or one under the
control or direction of the Distributor even though paid by the
Distributor.
5
12. Duration
and Termination.
(a) Unless
sooner terminated as provided herein, this Agreement will continue in effect for
two years from the above written date. Thereafter, if not terminated,
this Agreement shall continue in effect with respect to each Series for
successive annual periods, provided that such continuance is specifically
approved at least annually (i) by a vote of a majority of the Trust’s Trustees
who are neither interested persons (as defined in the 0000 Xxx) of the Trust
(“Independent Trustees”) or the Distributor, cast in person at a meeting called
for the purpose of voting on such approval, and (ii) by the Board or by vote of
a majority of the outstanding voting securities of the Trust.
(b) Notwithstanding
the foregoing, this Agreement may be terminated with respect to any Series or in
its entirety at any time, without the payment of any penalty, by vote of the
Board, by vote of a majority of the Independent Trustees, or by vote of a
majority of the outstanding voting securities of the Trust on sixty days'
written notice to the Distributor or by the Distributor at any time, without the
payment of any penalty, on sixty days' written notice to the
Trust. This Agreement will automatically terminate in the event of
its assignment.
13. Amendment
of this Agreement. No provision of this Agreement may be
changed, waived, discharged, or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge, or termination is sought. This Agreement may be amended as
to any Series with the approval of the Trustees or of a majority of the
outstanding voting securities of such Series; provided, that in either case,
such amendment also shall be approved by a majority of the Disinterested
Trustees.
14. Limitation
of Liability. Trustees and shareholders of each Series shall
not be personally liable for obligations of that Series in connection with any
matter arising from or in connection with this Agreement.
15. Notice. Any
notice required or permitted to be given by either party to the other shall be
deemed sufficient upon receipt in writing at the other party's principal
offices.
6
16. Miscellaneous. (a)
The captions in this Agreement are included for convenience of reference only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. (b) If any provision of this Agreement
shall be held or made invalid by a court decision, statute, rule, or otherwise,
the remainder of this Agreement shall not be affected thereby. (c)
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors. (d) As used in this
Agreement, the terms “majority of the outstanding voting securities,”
“interested person,” and “assignment” shall have the same meaning as such terms
have in the 1940 Act and any related regulations and
interpretations. (e) Notice is hereby given that the Trust’s
Declaration of Trust is on file with the Secretary of State of the Commonwealth
of Massachusetts, and that Declaration of Trust and this Agreement is executed
by Trustees and/or officers of the Trust solely in their capacities as Trustees
and/or officers, and any obligations imposed by the Declaration of Trust and
this Agreement are not obligations of said Trustees and/or officers or of the
shareholders of the Trust; rather, they are binding only upon the assets and
property of the Trust.
17. Governing
Law. This Agreement shall be construed in accordance with the
laws of the State of New York and the 1940 Act. To the extent that
the applicable laws of the State of New York conflict with the applicable
provisions of the 1940 Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be executed by their officers designated
below.
DIREXION
FUNDS
XXXXXXXX
ASSET MANAGEMENT, LLC
By:
Xxxxxx
X’Xxxxx
By:
Xxxxxx
X’Xxxxx
XXXXXXXX
CAPITAL MARKETS, LLC
By:
Xxxxxx X.
Xxxxxxxxx
7
DISTRIBUTION
PLAN
SCHEDULE
A
The maximum annualized fee rate
pursuant to Paragraph 1 of the Direxion Funds Investor Class Distribution Plan
shall be as follows:
|
Developed
Markets Bull 2X Fund
|
Developed
Markets Bear 2X Fund
|
|
Emerging
Markets Bull 2X Fund
|
Emerging
Markets Bear 2X Fund
|
|
NASDAQ-100®
Bull 2.5X Fund
|
NASDAQ-100®
Bear 2.5X Fund
|
|
S&P
500® Bull 2.5X Fund
|
S&P
500® Bear 2.5X Fund
|
|
Small
Cap Bull 2.5X Fund
|
Small
Cap Bear 2.5X Fund
|
|
Dollar
Bull 2.5X Fund
|
Dollar
Bear 2.5X Fund
|
|
10
Year Note Bull 2.5X Fund
|
10
Year Note Bear 2.5X Fund
|
|
China
Bull 2X Fund
|
Commodity
Bull 2X Fund
|
|
Latin
America Bull 2X Fund
|
HY
Bear Fund
|
|
Direxion/Wilshire
Dynamic Fund
|
Dynamic
XX Xxxx Fund
|
|
Commodity
Trends Strategy Fund
|
Financial
Trends Strategy Fund
|
|
Evolution
All-Cap Equity Fund
|
PSI
Core Strength Fund
|
|
Evolution
Managed Bond Fund
|
PSI
Macro Trends Fund
|
|
Evolution Market
Leaders Fund
|
PSI
Total Return Fund
|
|
Evolution
Alternative Investment Fund
|
Up to 1.00% of the average daily net
assets.
The maximum annualized fee rate
pursuant to Paragraph 1 of the Direxion Funds Service Class Distribution Plan
shall be as follows:
|
Commodity
Trends Strategy Fund
|
Financial
Trends Strategy Fund
|
|
Direxion/Wilshire
Dynamic Fund
|
|
|
Spectrum
Equity Opportunity Fund
|
Spectrum
Global Perspective Fund
|
|
Spectrum
Select Alternative Fund
|
Up to 1.00% of the average daily net
assets;
|
HCM
Freedom Fund
|
Up to 0.80% of the average daily net
assets.
Last
revised as of February 11, 2009
8
SCHEDULE
B
DISTRIBUTION
AGREEMENT among the DIREXION FUNDS,
XXXXXXXX
ASSET MANAGEMENT, LLC and
XXXXXXXX
CAPITAL MARKETS, LLC
Pursuant to Section 9 of the
Distribution Agreement among the Direxion Funds (the “Trust”), Xxxxxxxx Asset
Management, LLC (“Adviser”) and Xxxxxxxx Capital Markets, LLC (“Distributor”),
Adviser shall pay to Distributor a monthly fee of $7,500. This
monthly payment shall be in addition to the following amounts:
(i) Rule
12b-1 fees of 0.25% of average annual fund assets of the Investor Class Shares
of the S&P 500® Bull 2.5X Fund, S&P 500® Bear 2.5X Fund, NASDAQ-100®
Bull 2.5X Fund, NASDAQ-100® Bear 2.5X Fund, Small Cap Bull 2.5X Fund,
Small Cap Bear 2.5X Fund, Dollar Bear 2.5X Fund, Dollar Bull 2.5X Fund, Emerging
Markets Bull 2X Fund, Emerging Markets Bear 2X Fund, Developed Markets Bull 2X
Fund, Developed Markets Bear 2X Fund, China Bull 2X Fund, Latin America Bull 2X
Fund, Commodity Bull 2X Fund, 10 Year Note Bull 2.5X Fund, 10 Year Note Bear
2.5X Fund, Dynamic XX Xxxx Fund, HY Bear Fund, Commodity Trends Strategy Fund,
Financial Trends Strategy Fund, Direxion/Wilshire Dynamic Fund, Evolution
Managed Bond Fund, Evolution All-Cap Equity Fund, Evolution Market Leaders Fund,
Evolution Alternative Investment Fund, PSI Core Strength Fund, PSI Macro Trends
Fund, and PSI Total Return Fund;
(ii) Rule
12b-1 fees of 0.75% of average annual fund assets of the Service Class Shares of
the Commodity Trends Strategy Fund, Financial Trends Strategy Fund, and
Direxion/Wilshire Dynamic Fund;
(iii)
Rule 12b-1 fees of 0.80% of average annual fund assets of the Service Class
Shares of the HCM Freedom Fund;
(iv) Rule
12b-1 fees of 1.00% of average annual fund assets of the Service Class Shares of
the Spectrum Select Alternative Fund, Spectrum Global Perspective Fund, and
Spectrum Equity Opportunity Fund;
(v) such
additional fees as shall be set forth from time to time in this Schedule
B.
The
parties hereto have caused this Schedule B to be executed by their officers
designated below as of the date designated below.
DIREXION
FUNDS
XXXXXXXX
ASSET MANAGEMENT, LLC
By: Xxxxxx
X’Xxxxx By: Xxxxxx
X’Xxxxx
XXXXXXXX
CAPITAL MARKETS, LLC
By: Xxxxxx X.
Xxxxxxxxx
Last
Revised as of February 11, 2009
9
