1
EXHIBIT (e)(1)
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this 23rd day of April, 2000, by and
between e-xxxxxx 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 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 described on Schedule A hereto and
any additional shares and/or 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 shares and any additional shares are referred to as the "Shares"
and 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, advertising, the printing and
mailing of prospectuses to other than current shareholders, and the
1
2
printing and mailing of sales literature. At the direction of the Trust,
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 as principal. The Distributor
shall not be obligated to incur any specific expenses nor 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 share (the "offering price")
provided in the Funds' then current prospectus. The Distributor shall have no
liability for the payment of the purchase price of the Shares sold pursuant to
this Agreement or with respect to redemptions or repurchases of Shares. The
price the Funds shall receive for any Shares purchased by investors shall be the
net asset value used in determining the public offering price applicable to the
sale of such Shares, as calculated in the manner set forth in the Funds'
Registration Statement (as hereinafter defined). The Distributor may reallocate
any portion of any front-end sales charge that is imposed on such sales to
selected dealers as set forth in the Registration Statement, subject to
applicable NASD rules. Any portion of the front-end sales charge that is not so
reallocated, as well as any back-end or deferred sales charge or load not
otherwise to be retained by the Fund, shall be retained by the Distributor as a
commission for its services hereunder. Notwithstanding anything herein to the
contrary, Distributor shall not be required to finance the payment to any dealer
or other organization of any sales charges or fees.
2.4 If any shares sold by the Funds are redeemed or repurchased by the
Funds, or by Distributor as agent, or are tendered for redemption, within seven
business days after the date of confirmation of the original purchase of said
Shares, Distributor shall forfeit the amount above the net asset value received
by Distributor in respect of such Shares, provided that the portion, if any, of
such amount re-allowed, by Distributor to broker/dealers or other persons shall
be repayable to the Funds only to the extent recovered by Distributor from the
broker/dealer or other person concerned. Distributor shall include in the forms
of agreement with such broker/dealers and other persons a corresponding
provision for the forfeiture by them of their concession with respect to Shares
sold by them or their principals and redeemed or repurchased by the Funds or by
Distributor as agent (or tendered for redemption) within seven business days
after the date of confirmation of such initial purchases.
2.5 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.
2.6 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 Trust
in advance of the use of such materials. The Fund agrees to incorporate such
changes to such materials as the Distributor shall request. The Distributor will
file the materials as may be required with the NASD, SEC or state securities
commissioners. The Trust represents that it will not use or authorize the use of
any advertising or sales material unless and until such materials have been
approved and authorized for use by the Distributor.
2
3
2.7 As compensation for the services performed hereunder and the
expenses incurred by Distributor, the Distributor shall be entitled to the fees
and be reimbursed the expenses as provided in Exhibit 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 or its designee 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.
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 costs and expenses in connection with such
qualification. The Trust or its designee shall notify the Distributor, or cause
it to be notified, of the states in which the Shares may be sold and shall
notify the Distributor of any change to the information.
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
3
4
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 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, with advice of its counsel, 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 may
decline to accept any orders for, or make any sales of, any Shares until such
time as it deems 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;
4
5
(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 materially 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 final 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 ("Distributor Indemnitees"), free and harmless (a) from and
against any and all losses, claims, demands, liabilities, damages, charges,
payments, costs and expenses (including the costs of investigating or defending
any alleged losses, claims, demands, liabilities, damages, charges, payments,
costs or expenses and any reasonable counsel fees incurred in connection
therewith) of any and every nature ("Losses") which Distributor and each of the
Distributor Indemnitees 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, arising out of or based upon any untrue, or alleged
untrue statement, of a material fact contained in the registration statement or
any prospectus, an annual or interim report to shareholders or sales literature,
or any amendments or supplements thereto, 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 arising out
of any untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with information
relating to the Distributor and furnished to the Trust or its counsel by
Distributor in writing for the purpose of, and used in, the preparation thereof;
(b) from and against any and all Losses which Distributor and each of the
Distributor Indemnitees may incur in connection with this Agreement or the
Distributor's performance hereunder, except to the extent the 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; or (c) from and against any and all
Losses which Distributor and each of the Distributor Indemnitees may incur when
acting in accordance with instructions from the Trust or its representatives.
Promptly after receipt by the Distributor of notice of the commencement of an
investigation, action, claim or proceeding, the Distributor shall, if a claim
for indemnification in respect thereof is to made under this section, notify the
Trust in writing of the commencement thereof, although the failure to do so
shall not prevent recovery by the Distributor or any Distributor Indemnitee.
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,
5
6
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 and
notifies the Distributor of such election, the indemnified defendant or
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by them subsequent to the receipt of the Trust's election. 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, or in case there is a conflict of interest between the
Trust and the Distributor or any of the Distributor Indemnitees, the Trust will
reimburse the indemnified person or persons named as defendant or defendants in
such suit, for the reasonable 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 the
Distributor Indemnitees, 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 the
Distributor Indemnitees and their estates and successors. 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.
4.1(c) The Trust acknowledges and agrees that in the event the
Distributor, at the direction of the Trust, is required to give indemnification
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 ("Trust Indemnitees"), free and harmless from and
against any and all Losses which the Trust, and each of the Trust Indemnitees,
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, annual or interim report to shareholders or sales literature, as
from time to time amended or supplemented, or the omission, or alleged omission,
to state therein a material fact required to be stated therein or necessary to
make the statements 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 in writing to the Trust or its counsel by the
Distributor for the purpose of, and used in, the preparation thereof, or (b) to
the extent any Losses arise out of or 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. Distributor's agreement to indemnify the Trust and any of the Trust
Indemnitees shall not be deemed to cover any Losses to the extent they arise out
of or result from the Trust's willful misfeasance, bad faith or negligence in
the performance of its duties, or by reason of its reckless disregard of its
obligations and duties, under this Agreement. Promptly after receipt by the
Trust of notice of the commencement of an investigation, action, claim or
proceeding, the Trust shall, if a claim for indemnification in respect thereof
is to made
6
7
under this section, notify the Distributor in writing of the commencement
thereof, although the failure to do so shall not prevent recovery by the Trust
or any Trust Indemnitee.
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 and notifies the
distributor of such election, the indemnified defendant or defendants in such
suit shall bear the fees and expenses of any additional counsel retained by them
subsequent to the receipt of the Distributor's election. 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 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 or any
of the Trust Indemnitees, 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 the Trust
Indemnitees and their estates and 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 members 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.
7
8
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, notwithstanding anything herein to
the contrary, the Distributor shall not be liable for any action taken or
omitted to be taken in accordance with instructions received by the Distributor
from an officer or authorized representative of the Trust.
6.2 The Distributor assumes no responsibility hereunder, and shall not
be liable, for any default, 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.
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 April 23, 2001. 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 1940
Act and Rule 18f-2 thereunder) 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 and Rule 18f-2
thereunder) of the outstanding voting securities of a Fund, or by the
Distributor (which notice may be waived by the party entitled to such notice).
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).
7.3 In the event of termination of this Agreement, all reasonable
expenses associated with movement of records and materials and conversion
thereof shall be borne by the Funds.
8
9
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 members, officers, and employees of the Distributor may
serve as directors, members, 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 shareholders of the Trust, 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, and information which was already in the possession of the
Distributor prior to receipt thereof, shall not be subject to this paragraph.
8.3 This Agreement shall be governed by Wisconsin law, excluding the
laws on conflicts of laws. 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 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. In such case, the parties shall in good faith modify or
substitute such provision consistent with the original intent of the parties.
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 e-xxxxxx
Funds, 000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxx Xxxxxxxx.
8.5 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.
8.6 The captions of this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise effect their construction or effect.
9
10
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.
E-XXXXXX FUNDS
(the "Trust")
By:
--------------------------------------
President
SUNSTONE DISTRIBUTION SERVICES, LLC
(the "Distributor")
By:
--------------------------------------
Xxxxxx X. Xxxxxxx
President
10
11
SCHEDULE A
TO THE
DISTRIBUTION AGREEMENT
BY AND BETWEEN
E-XXXXXX FUNDS
AND
SUNSTONE DISTRIBUTION SERVICES, LLC
NAME OF FUNDS
FUND EFFECTIVE DATE
e-xxxxxx Internet Fund
e-xxxxxx Net30 Index Fund
11
12
SCHEDULE B
TO THE
DISTRIBUTION AGREEMENT
BY AND BETWEEN
E-XXXXXX FUNDS
AND
SUNSTONE DISTRIBUTION SERVICES, LLC
ASSET BASED FEES
As compensation for the services performed by the Distributor, the Trust shall
pay the Distributor a fee payable monthly in arrears, equal to the following:
MINIMUM
NAME OF FUND AVERAGE NET ASSETS BASIS POINTS ANNUAL FEE
------------ ------------------ ------------ -----------
e-xxxxxx Internet Fund Up to $250 Million 2.0 $25,000
Over $250 Million 1.0
MINIMUM
NAME OF FUND AVERAGE NET ASSETS BASIS POINTS ANNUAL FEE
------------ ------------------ ------------ ----------
e-xxxxxx Net30 Index Fund Up to $250 Million 2.0 $25,000
Over $250 Million 1.0
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, Sunstone 2XL.
OUT-OF-POCKET EXPENSES
In addition to the compensation payable to the Distributor, the Trust agrees 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 finance any
activities and as such may, in its discretion,
12
13
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 Fund pursuant to the Trust's Rule 12b-1 Plan. 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, it is intended that the Fund's adviser(s) shall be
responsible for the payment of the amount of such fees not covered by Rule 12b-1
payments and that the adviser 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.
MISCELLANEOUS
Notwithstanding the foregoing, any portion of the front-end sales charge that is
not so reallocated, as well as any back-end or deferred sales charge or load not
otherwise to be retained by the Fund, shall be retained by the Distributor as a
commission for its services hereunder.
13
