Exhibit 99(e)(3)
DISTRIBUTION AGREEMENT
AGREEMENT made as of August 1, 2007, between HSBC Investor Funds (the
"Trust"), having an office at 0000 Xxxxxxx Xxxx, Xxxxxxxx, XX 00000, and
Foreside Distribution Services, L.P.("Distributor"), having an office at 000
Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
WHEREAS, the Trust 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 Trust, 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 Trust on behalf of each Fund for
the distribution of the Shares covered by the registration statement of Trust
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 Trust 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.
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 Trust 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 Trust. The Trust further understands that shareholders and
potential shareholders in the Trust may invest in shares of such other
investment companies. The Trust agrees that Distributor's duties to other
investment companies shall not be deemed in conflict with its duties to the
Trust under this Section 1.2.
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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 Trust's Board of Trustees.
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 Trust'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 Trust 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 Trust 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 Trust 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 Trust
warrants that the statements contained in any such supplemental information will
fairly show or represent what they purport to show or represent. The Trust shall
also furnish Distributor upon request with: (a) unaudited semi-annual statements
of the Funds' books and accounts prepared by the Trust, (b) a monthly itemized
list of the securities in the Funds, (c) monthly balance sheets as soon as
practicable after the end of each month, and (d) from time to time such
additional information regarding the financial condition of the Funds as the
Distributor may reasonably request.
1.8 The Trust represents and warrants to Distributor that all
registration statements, and each Prospectus, filed by the Trust 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. The registration statement
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and Prospectus shall contain all statements required to be stated therein in
conformity with said Acts and the rules and regulations of the Commission
thereunder, and all statements of fact contained in any such registration
statement and Prospectus are true and correct in all material respects.
Furthermore, neither any registration statement nor any Prospectus 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 Trust
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 Trust's counsel, be necessary or advisable. If the Trust shall not propose
any amendment or amendments and/or supplement or supplements within 15 days
after receipt by the Trust 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 Trust for, any
liability or loss resulting from the failure to implement such amendment. The
Trust 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 Trust's right to file at any time such amendments to any
registration statement and/or supplements to any Prospectus, of whatever
character, as the Trust may deem advisable, such right being in all respects
absolute and unconditional.
1.9 The Trust authorizes the Distributor and dealers to use any
Prospectus in the form furnished by the Trust 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 Trust, appoint in writing other parties
qualified to perform specific administration services reasonably acceptable to
the Trust (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 Trust, 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 Trust 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 duties, from reckless disregard by the Distributor of its
obligations and duties 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 Trust agrees to indemnify, defend and hold
harmless the Distributor, its officers, partners, employees, 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,
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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, shareholder servicing agreements or
similar agreements with financial intermediaries on behalf of the Trust; (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 Trust-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 Trust's request; provided, however, that the Trust'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 Trust 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 duties or the Distributor's reckless disregard of its obligations and
duties 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 Trust
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 Trust
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 Trust 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 Trust's part, the
Distributor shall have the right to participate in the defense. In the event the
Trust 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 Trust does not elect to assume the defense of
any such suit or in case the Distributor reasonably withholds approval of
counsel chosen by the Trust, the Trust 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 to a Claim
covered under this Section 1.11. The Trust'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.
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1.12 The Distributor agrees to indemnify, defend and hold harmless the
Trust, its officers, Trustees, employees, and any person who controls the Trust
within the meaning of Section 15 of the Securities Act (collectively, Trust
Indemnitees), from and against any and all Claims which the Trust 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
Trust-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 Trust 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 duties, or the
Distributor's reckless disregard of its obligations and duties 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 Trust-related advertisements or sales literature that fails
to comply with applicable laws notwithstanding the exercise of reasonable care
in the preparation and review thereof by the Distributor).
In the event of a Claim for which the Trust Indemnitees may be entitled
to indemnification hereunder, the Trust 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 Trust, 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 Trust 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 Trust, the Trust
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 Trust reasonably
withholds approval of counsel chosen by the Distributor, the Distributor will
reimburse the Trust 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 Trust Indemnitees, and shall survive the delivery of any Shares.
1.13 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 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
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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
Trust 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
Trust's obligation to repurchase Shares from any shareholder in accordance with
the provisions of the Trust's Prospectus, Agreement and Declaration of Trust, or
Bylaws.
1.14 The Trust 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 Trust 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 action of the Commission with respect to any
amendment to any registration statement or Prospectus which
may from time to time be filed with the Commission, which
could reasonably be expected to have a material negative
impact upon the offering of Shares.
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.
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 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 the
Distributor and required board approvals have been given, then the Funds shall
be responsible for all such compensation or such portions of it as have been
permitted and authorized under the Distribution Plan. If the Funds are not
permitted and authorized to compensate the Distributor in full in accordance
with Schedules C and D, then the Adviser shall agree with the Distributor in a
separate instrument that the Adviser
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shall compensate the Distributor in accordance with Schedules C and D to the
extent that the Funds are not so permitted or authorized. 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; provided,
however, that in no event shall any Retained Fees be applied in a manner that
results in a reduction of any obligation of the Adviser to compensate the
Distributor for services under this Distribution Agreement.
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 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 New York cleared 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.
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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 Trust reserves the right to issue, transfer or sell Load Shares at
net asset values (a) in connection with the merger or consolidation of the Trust
or the Load Fund(s) with any other investment company or the acquisition by the
Trust 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 through
December 12, 2007. 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 Trust's Board of Trustees 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 Trust's Board of Trustees 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 Trust's Board of Trustees, by
vote of a majority of the outstanding voting securities of the Trust, or by the
Distributor. 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 Trust to the
Distributor, or collected or retained by the Distributor to perform its duties
as distributor, shall be considered confidential information. The Distributor
shall not disclose or otherwise use any
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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 Trust 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 Trust 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 Trust'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 Trust.
8.3 Each of Distributor and the Trust 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
Trust, the Trust's anti-money laundering compliance officer and regulatory
agencies, reasonable access to copies of Distributor's AML Operations, books and
records pertaining to the Trust only. It is expressly understood and agreed that
the Trust and the Trust'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 to the party required to be served with such notice
at the following address: if to the Trust, to it c/o HSBC Investments (USA)
Inc., 000 0xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxxxxx X.
Xxxxxxxx; with a copy to the Company at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000,
Attn: President; and if to
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Distributor, to it at 000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attn:
Broker Dealer Chief Compliance Officer, with a copy to 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 Trust 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 Trust 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 duties and
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.
10. GOVERNING LAW .
This Agreement shall be construed in accordance with the laws of the
State of New York 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.
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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.
* * * * * *
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.
HSBC Investor Funds
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
Foreside Distribution Services, L.P.
By: /s/ Xxxxxx X. Xxxx
---------------------------------
Name: Xxxxxx X. Xxxx
Title: Chief Compliance Officer
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SCHEDULE A
FUNDS
HSBC Investor Aggressive Growth Strategy Fund
HSBC Investor Bond Fund
HSBC Investor California Tax-Free Money Market Fund
HSBC Investor Conservative Growth Strategy Fund
HSBC Investor Conservative Income Strategy Fund
HSBC Investor Growth and Income Fund
HSBC Investor Growth Fund
HSBC Investor Growth Strategy Fund
HSBC Investor High Yield Fixed Income Fund
HSBC Investor Limited Maturity Fund
HSBC Investor Mid-Cap Fund
HSBC Investor Moderate Growth Strategy Fund
HSBC Investor Money Market Fund
HSBC Investor New York Tax-Free Bond Fund
HSBC Investor New York Tax-Free Money Market Fund
HSBC Investor Opportunity Fund
HSBC Investor Overseas Equity Fund
HSBC Investor Tax-Free Money Market Fund
HSBC Investor U.S. Government Money Market Fund
HSBC Investor U.S. Treasury Money Market Fund
HSBC Investor Value Fund
HSBC Investor Cash Management Money Market Fund
12
SCHEDULE B
DISTRIBUTION PLAN
MASTER DISTRIBUTION PLAN FOR CLASS A SHARES
WHEREAS, HSBC Investor Funds (the "Trust") is registered as an open-end
management investment company under the Investment Company Act of 1940 (the
"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 (a "portfolio"); and
WHEREAS, the Trust employs HSBC Investments (USA) Inc. (the "Adviser")
to render investment management services with respect to such separate
investment portfolios (the "Funds") as the Trustees shall establish and
designate from time to time; and WHEREAS, each Fund issues Class A shares
(formerly designated as Class C shares in the case of certain funds); and
WHEREAS, the Trust employs BISYS Fund Services Limited Partnership
d/b/a BISYS Fund Services (the "Sponsor"; references herein to the Sponsor shall
be deemed to include any person that succeeds to or replaces BISYS as
distributor of the Fund's shares) to distribute the shares of each Fund pursuant
to the terms of a Distribution Agreement and to render certain management and
administrative services necessary for the operation of the Trust pursuant to the
terms of an Administration Agreement; and
WHEREAS, the Trust reimburses the Sponsor for (1) expenses incurred in
connection with advertising and marketing the Class A shares of the Funds (the
"Shares") and (2) payments to broker-dealers or other financial intermediaries
(other than banks) ("Financial Organizations") for services rendered in the
distribution of the Shares and for the provision of certain shareholder services
with respect to the Shares; and
WHEREAS, the Board of Trustees of the Trust has determined to amend the
Trust's previously approved Amended and Restated Master Distribution Plan and
readopt it as the Master Distribution Plan for Class A Shares (the "Plan") and
has determined that there is a reasonable likelihood that the Plan will benefit
the Trust and the Class A shareholders of the Funds.
NOW THEREFORE, the Trust hereby adopts the Plan as amended and restated
on April 11, 2003, on the following terms and conditions:
1. The Plan shall pertain to Class A shares of such as shall be
designated from time to time by the Trustees of the Trust in any Supplement to
the Plan ("Supplement").
2. The Trust will reimburse the Sponsor for costs and expenses incurred
in connection with the distribution and marketing of the Shares and for the
provision of certain shareholder services. Such distribution and shareholder
servicing costs and expenses would include (i) advertising by radio, television,
newspapers, magazines, brochures, sales literature, direct mail or any other
form of advertising, (ii) expenses of sales employees or agents of the Sponsor,
including salary, commissions, travel and related expense, (iii) payments to
broker-dealers and financial institutions for services in connection with the
provision of personal services and shareholder account maintenance services and
the distribution of Shares, including fees calculated with reference to the
average daily net asset value of the Shares held by shareholders who have a
brokerage or other service relationship with the broker-dealer or institution
receiving such fees, (iv) costs of printing prospectuses and other materials to
be given or sent to prospective
13
investors (including costs and fees incurred in registering the Shares in the
states in which they are to be sold) and (v) such other similar services as the
Trustees determine to be reasonably calculated to result in the sale of Shares.
The Sponsor will be reimbursed for such costs, expenses or payments on
a monthly basis, subject to an annual limit of the average daily net assets of
the Shares of each Fund as shall be set forth with respect to a Fund in any
Supplement to the Plan. Payments made out of or charged against the assets of
the Shares of a Fund must be in reimbursement for distribution services rendered
for or on behalf of the Shares of the Fund or for personal services or
shareholder account maintenance services rendered to holders of the Shares. The
Sponsor also may receive and retain brokerage commissions with respect to
portfolio transactions for a Fund to the extent not prohibited by the Fund's
Prospectus or Statement of Additional Information.
3. As consideration for providing (or causing to be provided) personal
services and shareholder account maintenance services, the Sponsor may pay
Financial Organizations a fee at an annual rate up to 0.25% of the average daily
net assets attributable to the Shares of a Fund for its then-current fiscal
year, and be reimbursed therefore under the terms of this Plan.
4. The Trust shall pay all costs and expenses in connection with
preparation, printing and distribution of the Trust's prospectuses and the
implementation and operation of the Plan.
5. The Plan shall not take effect with respect to Shares of a Fund
until it has been approved by a vote of at least a majority (as defined in the
Act) of the Shares of that Fund. With respect to the submission of the Plan for
such a vote, it shall have been effectively approved with respect to the Shares
of a Fund if a majority of the Shares of each Fund votes for approval of the
Plan, notwithstanding that the matter has not been approved by a majority of the
outstanding voting securities of the Trust.
The Plan shall take effect with respect to Shares of any other Fund
established in the Trust provided the Plan is approved with respect to such Fund
as set forth in this paragraph and provided the Trustees have executed a
Supplement as set forth in paragraph 1.
6. The Plan shall not take effect with respect to Shares of a Fund
until it has been approved, together with any related Agreements and
Supplements, by votes of a majority of both (a) the Board of Trustees of the
Trust and (b) those Trustees of the Trust who are not "interested persons" of
the Trust (as defined in the Act) and have no direct or indirect financial
interest in the operation of the Plan or any agreements related to it (the "Plan
Trustees"), cast in person at a meeting (or meetings) called for the purpose of
voting on the Plan and such related agreements.
7. The Plan shall continue in effect so long as such continuance is
specifically approved at least annually in the manner provided for approval of
the Plan in paragraph 6.
8. Any person authorized to direct the disposition of monies paid or
payable by the Trust pursuant to the Plan or any related agreement shall provide
to the Trust's Board of Trustees, and the Board shall review, at least
quarterly, a written report of the amounts so expended and the purposes for
which such expenditures were made.
9. Any agreement related to the Plan shall be in writing and shall
provide: (a) that such agreement may be terminated with respect to a Fund at any
time, without payment of any penalty, by vote of a majority of the Plan Trustees
or by vote of a majority of the outstanding
14
voting securities of a Fund, on not more than 60 days" written notice to any
other party to the agreement, and (b) that such agreement shall terminate
automatically in the event of its assignment.
10. The Plan may be terminated at any time, without payment of any
penalty, with respect to each Fund, by vote of a majority of the Trustees or by
vote of a majority of the Shares of that Fund.
11. The Plan may be amended at any time by the Board of Trustees
provided that (a) any amendment to increase materially the costs which a Fund
may bear for distribution of Shares pursuant to the Plan shall be effective only
upon approval by a vote of a majority of the Shares of the Fund and (b) any
material amendments of the terms of the Plan shall become effective only upon
approval as provided in paragraph 6 hereof.
12. While the Plan is in effect, the selection and nomination of
Trustees who are not interested persons (as defined in the Act) of the Trust
shall be committed to the discretion of the Trustees who are not interested
persons of the Trust.
13. The Trust shall preserve copies of the Plan and any related
agreements and all reports made pursuant to paragraph 8 hereof for a period of
not less than six years from the date of the Plan, the agreements or such
report, as the case may be, the first two years of which shall be in an easily
accessible place.
15
MASTER DISTRIBUTION PLAN FOR CLASS B SHARES
WHEREAS, HSBC Investor Funds (the "Trust") is registered as an open-end
management investment company under the Investment Company Act of 1940 (the
"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 (a "portfolio"); and
WHEREAS, the Trust employs HSBC Investments (USA) Inc. (the "Adviser")
to render investment management services with respect to such separate
investment portfolios (the "Funds") as the Trustees shall establish and
designate from time to time; and
WHEREAS, certain of the Funds propose to issue Class B shares that are
subject to a contingent deferred sales charge; and
WHEREAS, the Trust employs BISYS Fund Services Limited Partnership
d/b/a BISYS Fund Services (the "Sponsor"; references herein to the Sponsor shall
be deemed to include any person that succeeds to or replaces BISYS as
distributor of the Fund's shares) to distribute the shares of each Fund pursuant
to the terms of a Distribution Agreement and to render certain management and
administrative services necessary for the operation of the Trust pursuant to the
terms of an Administration Agreement; and
WHEREAS, the Trust reimburses the Sponsor for (1) expenses incurred in
connection with advertising and marketing the Class B shares of the Funds
(collectively, the "Class B Shares") and (2) payments to broker-dealers or other
financial intermediaries (other than banks) ("Financial Organizations") for
services rendered in the distribution of the Class B Shares and for the
provision of certain shareholder services with respect to the Class B Shares;
and
WHEREAS, the Board of Trustees of the Trust has determined to adopt
this Master Distribution Plan for Class B Shares (the "Plan") and has determined
that there is a reasonable likelihood that the Plan will benefit the Trust and
the Class B shareholders of the Funds.
NOW THEREFORE, the Trust hereby adopts the Plan as amended and restated
on April 11, 2003 on the following terms and conditions:
1. The Plan shall pertain to Class B Shares of such Funds as shall be
designated from time to time by the Trustees of the Trust in any Supplement to
the Plan ("Supplement").
2. The Trust will reimburse the Sponsor for costs and expenses incurred
in connection with the distribution and marketing of the Class B Shares and for
the provision of certain shareholder services. Such distribution and shareholder
servicing costs and expenses would include (i) advertising by radio, television,
newspapers, magazines, brochures, sales literature, direct mail or any other
form of advertising, (ii) expenses of sales employees or agents of the Sponsor,
including salary, commissions, travel and related expense, (iii) payments to
broker-dealers and financial institutions for services in connection with the
distribution of Class B Shares and the provision of personal services and
shareholder account maintenance services, including fees calculated with
reference to the average daily net asset value of the Class B Shares held by
shareholders who have a brokerage or other service relationship with the
broker-dealer or institution receiving such fees, (iv) costs of printing
prospectuses and other materials to be given
16
or sent to prospective investors (including costs and fees incurred in
registering the Class B Shares in the states in which they are to be sold) and
(v) such other similar services as the Trustees determine to be reasonably
calculated to result in the sale of Class B Shares.
The Sponsor will be reimbursed for such costs, expenses or payments on
a monthly basis, subject to an annual limit of the average daily net assets of
the Class B Shares of each Fund as shall be set forth with respect to a Fund in
any Supplement to the Plan and to the limitations on the payment of asset-based
sales charges set forth in the National Association of Securities Dealers'
Conduct Rules. Payments made out of or charged against the assets of the Class B
Shares of a Fund must be in reimbursement for distribution services rendered for
or on behalf of the Class B Shares of the Fund or for personal services or
shareholder account maintenance services rendered to holders of the Class B
Shares. The Sponsor also may receive and retain brokerage commissions with
respect to portfolio transactions for a Fund to the extent not prohibited by the
Fund's Prospectus or Statement of Additional Information.
The Trust will pay each person which has acted as principal distributor
of such Class B shares its Allocable Portion (as such term is defined in the
distribution agreement pursuant to which such person acts or acted as principal
distributor of the Class B shares (the "Applicable Distribution Agreement")) of
the Distribution Fee in respect of Class B shares of the Fund in consideration
of its services as principal distributor for the Class B shares of the Fund.
Such person shall be paid its Allocable Portion of such Distribution Fees
notwithstanding such person's termination as Distributor of the Class B shares
of the Fund, such payments to be changed or terminated only as required by: (i)
a change in applicable law or a change in accounting policy adopted by the
Investment Companies Committee of the AICPA and approved by FASB that results in
a determination by the Trust's independent accountants that any Sales Charges in
respect of such Fund, which are not Contingent Deferred Sales Changes and which
are not yet due and payable, must be accounted for by such Fund as a liability
in accordance with GAAP, each after the effective date of this Plan and
restatement; (ii) if in the sole discretion of the Board of Trustees, after due
consideration of the relevant factors considered when adopting and/or amending
this Plan including the transactions contemplated in that certain Purchase and
Sale Agreement entered into between the Fund's Distributor and the commission
financing entity, the Board of Trustees determines, subject to its fiduciary
duty, that this Plan and the payments thereunder must be changed or terminated
notwithstanding, the effect of this action might have on the Fund's ability to
offer and sell Class B shares; or (iii) in connection with a Complete
Termination of this Plan, it being understood that for this purpose a Complete
Termination of this Plan occurs only if this Plan is terminated and the Fund has
discontinued the distribution of Class B shares or other back-end load or
substantially similar classes of shares. The services rendered by a Distributor
for which that Distributor is entitled to receive its Allocable Portion of the
Distribution Fee shall be deemed to have been completed at the time of the
initial purchase of the Commission Shares (as defined in the Applicable
Distribution Agreement) (whether of that Fund or a second Fund) taken into
account in computing that Distributor's Allocable Portion of the Distribution
Fee.
The obligation of each Fund to pay the Distribution Fee shall terminate
upon the termination of this Plan in accordance with the terms hereof. Except as
provided in the preceding paragraph, the Fund' obligation to pay the
Distribution Fee to a Distributor of the Class B shares of the Fund shall be
absolute and unconditional and shall not be subject to any dispute, offset,
counterclaim or defense whatsoever (it being understood that nothing in this
sentence shall be deemed a waiver by the Trust or the Fund of its right
separately to pursue any claims it may have against such Distributor and enforce
such claims against any assets (other than its right to be paid
17
its Allocable Portion of the Distribution Fee and to be paid the contingent
deferred sales charges) of such Distributor).
The right of a Distributor to receive the Distribution Fee (but not the
relevant distribution agreement or that Distributor's obligations thereunder)
may be transferred by that Distributor in order to raise funds which may be
useful or necessary to perform its duties as principal underwriter, and any such
transfer shall be effective upon written notice form that Distributor to the
Trust. In connection with the foregoing, the Fund is authorized to pay all or
part of the Distribution Fee directly to such transferee as directed by that
Distributor.
3. As consideration for providing (or causing to be provided) personal
services and shareholder account maintenance services, the Sponsor may pay
Financial Organizations a fee at an annual rate up to 0.25% of the average daily
net assets attributable to the Class B Shares of a Fund for its then-current
fiscal year, and be reimbursed therefore under the terms of this Plan.
4. The Trust shall pay all costs and expenses in connection with
preparation, printing and distribution of the Trust's prospectuses and the
implementation and operation of the Plan.
5. The Plan shall not take effect with respect to Class B Shares of a
Fund until it has been approved by a vote of at least a majority (as defined in
the Act) of the Class B Shares of that Fund. With respect to the submission of
the Plan for such a vote, it shall have been effectively approved with respect
to the Class B Shares of a Fund if a majority of the Class B Shares of each Fund
votes for approval of the Plan, notwithstanding that the matter has not been
approved by a majority of the outstanding voting securities of the Trust. The
Plan shall take effect with respect to Class B Shares of any other Fund
established in the Trust provided the Plan is approved with respect to such Fund
as set forth in this paragraph and provided the Trustees have executed a
Supplement as set forth in paragraph 1.
6. The Plan shall not take effect with respect to Class B Shares of a
Fund until it has been approved, together with any related Agreements and
Supplements, by votes of a majority of both (a) the Board of Trustees of the
Trust and (b) those Trustees of the Trust who are not "interested persons" of
the Trust (as defined in the Act) and have no direct or indirect financial
interest in the operation of the Plan or any agreements related to it (the "Plan
Trustees"), cast in person at a meeting (or meetings) called for the purpose of
voting on the Plan and such related agreements.
7. The Plan shall continue in effect so long as such continuance is
specifically approved at least annually in the manner provided for approval of
the Plan in paragraph 6.
8. Any person authorized to direct the disposition of monies paid or
payable by the Trust pursuant to the Plan or any related agreement shall provide
to the Trust's Board of Trustees, and the Board shall review, at least
quarterly, a written report of the amounts so expended and the purposes for
which such expenditures were made.
9. Any agreement related to the Plan shall be in writing and shall
provide: (a) that such agreement may be terminated with respect to a Fund at any
time, without payment of any penalty, by vote of a majority of the Plan Trustees
or by vote of a majority of the outstanding voting securities of a Fund, on not
more than 60 days' written notice to any other party to the agreement, and (b)
that such agreement shall terminate automatically in the event of its
assignment.
18
10. The Plan may be terminated at any time, without payment of any
penalty, with respect to each Fund, by vote of a majority of the Trustees or by
vote of a majority of the Class B Shares of that Fund.
11. The Plan may be amended at any time by the Board of Trustees
provided that (a) any amendment to increase materially the costs which a Fund
may bear for distribution of Class B Shares pursuant to the Plan shall be
effective only upon approval by a vote of a majority of the Class B Shares of
the Fund and (b) any material amendments of the terms of the Plan shall become
effective only upon approval as provided in paragraph 6 hereof.
12. While the Plan is in effect, the selection and nomination of
Trustees who are not interested persons (as defined in the Act) of the Trust
shall be committed to the discretion of the Trustees who are not interested
persons of the Trust.
13. The Trust shall preserve copies of the Plan and any related
agreements and all reports made pursuant to paragraph 8 hereof for a period of
not less than six years from the date of the Plan, the agreements or such
report, as the case may be, the first two years of which shall be in an easily
accessible place.
19
MASTER DISTRIBUTION PLAN FOR CLASS C SHARES
WHEREAS, HSBC Investor Funds (the "Trust") is registered as an open-end
management investment company under the Investment Company Act of 1940 (the
"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 (a "portfolio"); and
WHEREAS, the Trust employs HSBC Investments (USA) Inc. (the "Adviser")
to render investment management services with respect to such separate
investment portfolios (the "Funds") as the Trustees shall establish and
designate from time to time; and
WHEREAS, certain of the Funds propose to issue Class C shares that are
subject to a contingent deferred sales charge; and
WHEREAS, the Trust employs BISYS Fund Services Limited Partnership
d/b/a BISYS Fund Services (the "Sponsor"; references herein to the Sponsor shall
be deemed to include any person that succeeds to or replaces BISYS as
distributor of the Fund's shares) to distribute the shares of each Fund pursuant
to the terms of a Distribution Agreement and to render certain management and
administrative services necessary for the operation of the Trust pursuant to the
terms of an Administration Agreement; and
WHEREAS, the Trust reimburses the Sponsor for (1) expenses incurred in
connection with advertising and marketing the Class C shares of the Funds
(collectively, the "Class C Shares") and (2) payments to broker-dealers or other
financial intermediaries (other than banks) ("Financial Organizations") for
services rendered in the distribution of the Class C Shares and for the
provision of certain shareholder services with respect to the Class C Shares;
and
WHEREAS, the Board of Trustees of the Trust has determined to adopt
this Master Distribution Plan for Class C Shares (the "Plan") and has determined
that there is a reasonable likelihood that the Plan will benefit the Trust and
the Class C shareholders of the Funds.
NOW THEREFORE, the Trust hereby adopts the Plan as amended and restated
on April 11, 2003 on the following terms and conditions:
1. The Plan shall pertain to Class C Shares of such Funds as shall be
designated from time to time by the Trustees of the Trust in any Supplement to
the Plan ("Supplement").
2. The Trust will reimburse the Sponsor for costs and expenses incurred
in connection with the distribution and marketing of the Class C Shares and for
the provision of certain shareholder services. Such distribution and shareholder
servicing costs and expenses would include (i) advertising by radio, television,
newspapers, magazines, brochures, sales literature, direct mail or any other
form of advertising, (ii) expenses of sales employees or agents of the Sponsor,
including salary, commissions, travel and related expense, (iii) payments to
broker-dealers and financial institutions for services in connection with the
distribution of Class C Shares and the provision of personal services and
shareholder account maintenance services, including fees calculated with
reference to the average daily net asset value of the Class C Shares held by
shareholders who have a brokerage or other service relationship with the
broker-dealer or institution receiving such fees, (iv) costs of printing
prospectuses and other materials to be given
20
or sent to prospective investors (including costs and fees incurred in
registering the Class C Shares in the states in which they are to be sold) and
(v) such other similar services as the Trustees determine to be reasonably
calculated to result in the sale of Class C Shares.
The Sponsor will be reimbursed for such costs, expenses or payments on
a monthly basis, subject to an annual limit of the average daily net assets of
the Class C Shares of each Fund as shall be set forth with respect to a Fund in
any Supplement to the Plan and to the limitations on the payment of asset-based
sales charges set forth in the National Association of Securities Dealers'
Conduct Rules. Payments made out of or charged against the assets of the Class C
Shares of a Fund must be in reimbursement for distribution services rendered for
or on behalf of the Class C Shares of the Fund or for personal services or
shareholder account maintenance services rendered to holders of the Class C
Shares. The Sponsor also may receive and retain brokerage commissions with
respect to portfolio transactions for a Fund to the extent not prohibited by the
Fund's Prospectus or Statement of Additional Information.
The Trust will pay each person which has acted as principal distributor
of such Class C shares its Allocable Portion (as such term is defined in the
distribution agreement pursuant to which such person acts or acted as principal
distributor of the Class C shares (the "Applicable Distribution Agreement")) of
the Distribution Fee in respect of Class C shares of the Fund in consideration
of its services as principal distributor for the Class C shares of the Fund.
Such person shall be paid its Allocable Portion of such Distribution Fees
notwithstanding such person's termination as Distributor of the Class C shares
of the Fund, such payments to be changed or terminated only as required by: (i)
a change in applicable law or a change in accounting policy adopted by the
Investment Companies Committee of the AICPA and approved by FASB that results in
a determination by the Trust's independent accountants that any Sales Charges in
respect of such Fund, which are not Contingent Deferred Sales Changes and which
are not yet due and payable, must be accounted for by such Fund as a liability
in accordance with GAAP, each after the effective date of this Plan and
restatement; (ii) if in the sole discretion of the Board of Trustees, after due
consideration of the relevant factors considered when adopting and/or amending
this Plan including the transactions contemplated in that certain Purchase and
Sale Agreement entered into between the Fund's Distributor and the commission
financing entity, the Board of Trustees determines, subject to its fiduciary
duty, that this Plan and the payments thereunder must be changed or terminated
notwithstanding, the effect of this action might have on the Fund's ability to
offer and sell Class C shares; or (iii) in connection with a Complete
Termination of this Plan, it being understood that for this purpose a Complete
Termination of this Plan occurs only if this Plan is terminated and the Fund has
discontinued the distribution of Class C shares or other back-end load or
substantially similar classes of shares. The services rendered by a Distributor
for which that Distributor is entitled to receive its Allocable Portion of the
Distribution Fee shall be deemed to have been completed at the time of the
initial purchase of the Commission Shares (as defined in the Applicable
Distribution Agreement) (whether of that Fund or a second Fund) taken into
account in computing that Distributor's Allocable Portion of the Distribution
Fee.
The obligation of each Fund to pay the Distribution Fee shall terminate
upon the termination of this Plan in accordance with the terms hereof. Except as
provided in the preceding paragraph, the Fund' obligation to pay the
Distribution Fee to a Distributor of the Class C shares of the Fund shall be
absolute and unconditional and shall not be subject to any dispute, offset,
counterclaim or defense whatsoever (it being understood that nothing in this
sentence shall be deemed a waiver by the Trust or the Fund of its right
separately to pursue any claims it may have against such Distributor and enforce
such claims against any assets (other than its right to be paid
21
its Allocable Portion of the Distribution Fee and to be paid the contingent
deferred sales charges) of such Distributor).
The right of a Distributor to receive the Distribution Fee (but not the
relevant distribution agreement or that Distributor's obligations thereunder)
may be transferred by that Distributor in order to raise funds which may be
useful or necessary to perform its duties as principal underwriter, and any such
transfer shall be effective upon written notice form that Distributor to the
Trust. In connection with the foregoing, the Fund is authorized to pay all or
part of the Distribution Fee directly to such transferee as directed by that
Distributor.
3. As consideration for providing (or causing to be provided) personal
services and shareholder account maintenance services, the Sponsor may pay
Financial Organizations a fee at an annual rate up to 0.25% of the average daily
net assets attributable to the Class C Shares of a Fund for its then-current
fiscal year, and be reimbursed therefore under the terms of this Plan.
4. The Trust shall pay all costs and expenses in connection with
preparation, printing and distribution of the Trust's prospectuses and the
implementation and operation of the Plan.
5. The Plan shall not take effect with respect to Class C Shares of a
Fund until it has been approved by a vote of at least a majority (as defined in
the Act) of the Class C Shares of that Fund. With respect to the submission of
the Plan for such a vote, it shall have been effectively approved with respect
to the Class C Shares of a Fund if a majority of the Class C Shares of each Fund
votes for approval of the Plan, notwithstanding that the matter has not been
approved by a majority of the outstanding voting securities of the Trust. The
Plan shall take effect with respect to Class C Shares of any other Fund
established in the Trust provided the Plan is approved with respect to such Fund
as set forth in this paragraph and provided the Trustees have executed a
Supplement as set forth in paragraph 1.
6. The Plan shall not take effect with respect to Class C Shares of a
Fund until it has been approved, together with any related Agreements and
Supplements, by votes of a majority of both (a) the Board of Trustees of the
Trust and (b) those Trustees of the Trust who are not "interested persons" of
the Trust (as defined in the Act) and have no direct or indirect financial
interest in the operation of the Plan or any agreements related to it (the "Plan
Trustees"), cast in person at a meeting (or meetings) called for the purpose of
voting on the Plan and such related agreements.
7. The Plan shall continue in effect so long as such continuance is
specifically approved at least annually in the manner provided for approval of
the Plan in paragraph 6.
8. Any person authorized to direct the disposition of monies paid or
payable by the Trust pursuant to the Plan or any related agreement shall provide
to the Trust's Board of Trustees, and the Board shall review, at least
quarterly, a written report of the amounts so expended and the purposes for
which such expenditures were made.
9. Any agreement related to the Plan shall be in writing and shall
provide: (a) that such agreement may be terminated with respect to a Fund at any
time, without payment of any penalty, by vote of a majority of the Plan Trustees
or by vote of a majority of the outstanding voting securities of a Fund, on not
more than 60 days' written notice to any other party to the agreement, and (b)
that such agreement shall terminate automatically in the event of its
assignment.
22
10. The Plan may be terminated at any time, without payment of any
penalty, with respect to each Fund, by vote of a majority of the Trustees or by
vote of a majority of the Class C Shares of that Fund.
11. The Plan may be amended at any time by the Board of Trustees
provided that (a) any amendment to increase materially the costs which a Fund
may bear for distribution of Class C Shares pursuant to the Plan shall be
effective only upon approval by a vote of a majority of the Class C Shares of
the Fund and (b) any material amendments of the terms of the Plan shall become
effective only upon approval as provided in paragraph 6 hereof.
12. While the Plan is in effect, the selection and nomination of
Trustees who are not interested persons (as defined in the Act) of the Trust
shall be committed to the discretion of the Trustees who are not interested
persons of the Trust.
13. The Trust shall preserve copies of the Plan and any related
agreements and all reports made pursuant to paragraph 8 hereof for a period of
not less than six years from the date of the Plan, the agreements or such
report, as the case may be, the first two years of which shall be in an easily
accessible place.
23
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 fund 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, and overhead, the Distributor shall receive an
annual fee of $37,500.
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 FINRA 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 the distribution agreement or otherwise arise in
the ordinary course of business, the Distributor shall be promptly reimbursed
for such payments upon invoicing them.
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SCHEDULE D
SPECIAL DISTRIBUTION SERVICES AND FEES
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SERVICES FEES
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1. WHOLESALING PERSONNEL SERVICES WHOLESALING PERSONNEL SERVICES FEES
Wholesaling Personnel may be external For each individual constituting the
wholesalers and/or internal wholesalers. Wholesaling Personnel employed by the
Distributor pursuant to this Agreement, the
Services include soliciting support of the Distributor shall receive annually an amount
Funds with selling broker dealers; equal to the sum of:
participating in promotional meetings,
presentations, conferences and other and (i) all compensation paid annually by the
forums; identifying high potential personnel Distributor to the employee; plus
of the Adviser and selling broker dealers;
and assisting with mail solicitations and (ii) a management oversight fee equal to:
literature fulfillment.
(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.
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EXPENSES APPLICABLE TO SPECIAL 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:
o reasonable travel and entertainment costs;
o 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 FINRA,
e.g., CRD fees and state fees;
o Sponsorships, Promotions, Sales Incentives;
o 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.);
o costs and expenses incurred for telephone service, photocopying and office
supplies;
o advertising costs;
o 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;
o packaging, shipping, postage, and photocopies; and
o 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.
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