Exhibit (m)(2)
MONARCH FUNDS
SERVICE CLASS DISTRIBUTION PLAN
as of July 1, 2000
This Distribution Plan (the "Plan") is adopted by Monarch Funds (the
"Trust") with respect to the Service Class of shares of beneficial interest of
each of the Funds identified in Appendix A (individually a "Fund" and
collectively the "Funds") in accordance with the provisions of Rule 12b-1 under
the Investment Company Act of 1940, as amended (the "Act").
SECTION 1. DISTRIBUTOR
The Trust has entered into a Distribution Agreement (the "Agreement")
with Forum Fund Services, LLC ("Forum") whereby Forum acts as principal
underwriter of the Funds.
SECTION 2. PAYMENTS
(a) As compensation for Forum's distribution and service activities
with respect to the Service Class of each Fund, the Trust shall pay Forum a fee
at an annual rate of 0.75% of the average daily net assets of the Service Class
of each Fund (the "Payments"). The Payments shall be accrued daily and paid
monthly or at such other interval as the Trust's Board of Trustees ("Board")
shall determine.
(b) On behalf of the Trust, as principal underwriter of each Fund,
Forum may spend such amounts and incur such expenses as it deems appropriate or
necessary on any activities primarily intended to result in the sale of the
shares of the Service Class of each Fund (distribution activities) or for the
servicing and maintenance of shareholder accounts of the Service Class of each
Fund (service activities); provided, however that: (i) any agreement entered
into pursuant to Section 4 hereof shall apportion the payments made under the
agreement between distribution and service activities and (ii) the Service Class
of each Fund shall not directly or indirectly pay any amounts, whether Payments
or otherwise, that exceed any applicable limits imposed by law or the National
Association of Securities Dealers, Inc. ("NASD").
(c) For purposes of the Plan, service activities shall mean any
activities covered by the definition of "service fee" contained in the NASD's
Rules of Fair Practice, as amended from time to time, and distribution
activities shall mean any activities in connection with Forum's performance of
its obligations under the Plan or the Agreement that are not deemed service
activities.
SECTION 3. DISTRIBUTION AND SERVICE ACTIVITIES
Distribution and service activities include: (i) any sales, marketing
and other activities primarily intended to result in the sale of Service Class
shares and (ii) responding to Service Class shareholder inquiries regarding the
Funds' investment objectives, policies and other operational features. Expenses
for such activities include compensation to employees, and expenses, including
overhead and telephone and other communication expenses, of Forum and various
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financial institutions or other persons who engage in or support the
distribution of Service Class shares, or who respond to Service Class
shareholder inquiries regarding the Funds' operations; the incremental costs of
printing (excluding typesetting) and distributing prospectuses, statements of
additional information, annual reports and other periodic reports for use in
connection with the offering or sale of Service Class shares to any prospective
investors; and the costs of preparing, printing and distributing sales
literature and advertising materials used by Forum or others in connection with
the offering of Service Class shares for sale to the public.
SECTION 4. MARKETING AND SERVICE AGREEMENTS
Pursuant to agreements the form of which shall be approved by the Board
("Agreements"), Forum may pay any or all amounts of the Payments to other
persons ("Service Providers") for any distribution or service activity. Each
Agreement shall contain a representation by the Service Provider that any
compensation payable to the Service Provider in connection with the investment
in the Service class of a Fund of the assets of its customers: (i) will be
disclosed by the Service Provider to its customers; (ii) will be authorized by
its customers; and (iii) will not result in an excessive fee to the Service
Provider. Each Agreement shall provide that, in the event an issue pertaining to
the Plan is submitted for shareholder approval, the Service Provider will vote
any shares held for its own account in the same proportion as the vote of those
shares held for the accounts of the Service Provider's customers.
SECTION 5. REVIEW AND RECORDS
(a) Forum shall prepare and furnish to the Board, and the Board shall
review at least quarterly, written reports setting forth all amounts expended
under the Plan by the Trust and Forum and identifying the activities for which
the expenditures were made.
(b) The Trust shall preserve copies of the Plan, each agreement related
to the Plan and each report prepared and furnished pursuant to this Section in
accordance with Rule 12b-1 under the Act.
SECTION 6. EFFECTIVENESS; DURATION; AND TERMINATION
With respect to the Service Class of a Fund:
(a) The Plan shall become effective upon approval by the Board,
including a majority of the trustees who are not interested persons of the Trust
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreement related to the Plan (the "Qualified Trustees"),
pursuant to a vote cast in person at a meeting called for the purpose of voting
on approval of the Plan.
(b) The Plan shall remain in effect for a period of one year from the
date of its effectiveness, unless earlier terminated in accordance with this
Section, and thereafter shall continue in effect for successive twelve-month
periods, provided that such continuance is specifically approved at least
annually by the Board and a majority of the Qualified Trustees pursuant to a
vote cast in person at a meeting called for the purpose of voting on continuance
of the Plan.
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(c) The Plan may be terminated without penalty at any time by a vote
of: (i) a majority of the Qualified Trustees or (ii) a vote of a majority of the
outstanding voting securities of the Service Class of the Fund.
SECTION 7. AMENDMENT
The Plan may be amended at any time by the Board, provided that: (i)
any material amendments to the Plan shall be effective only upon approval of the
Board and a majority of the Qualified Trustees pursuant to a vote cast in person
at a meeting called for the purpose of voting on the amendment to the Plan and
(ii) any amendment which increases materially the amount which may be spent by
the Trust pursuant to the Plan with respect to the Service Class of a Fund shall
be effective only upon the additional approval a majority of the outstanding
voting securities of the Service Class of that Fund.
SECTION 8. NOMINATION OF DISINTERESTED TRUSTEES
While the Plan is in effect, the trustees of the Trust who are not
interested persons of the Trust shall select and nominate any such disinterested
trustee.
SECTION 9. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under the Plan, and
the Distributor agrees that, in asserting any rights or claims under this Plan,
it shall look only to the assets and property of the Trust or the Fund to which
the Distributor's rights or claims relate in settlement of such rights or
claims, and not to the Trustees of the Trust or the shareholders of the Funds.
SECTION 10. MISCELLANEOUS
(a) The terms "majority of the outstanding voting securities" and
"interested person" shall have the meanings ascribed thereto in the Act.
(b) If any provision of the Plan shall be held invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not be
affected thereby.
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MONARCH FUNDS
SERVICE CLASS DISTRIBUTION PLAN
APPENDIX A
As of July 1, 2000
Cash Fund
As of September __, 2000
Treasury Cash Fund
Government Cash Fund
