EXHIBIT B
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FORM OF
DISTRIBUTION PLAN
OF
AZZAD INCOME FUND
PURSUANT TO RULE 12b-1
Distribution Plan, (the "Plan") of Azzad Income Fund (the "Fund"), a series
of Azzad Funds (the "Company"), a Massachusetts business trust.
WHEREAS, the Fund anticipates entering into a Distribution Agreement with a
broker-dealer registered under the Securities Exchange Act of 1934 (the
"Distributor), pursuant to which the Distributor will act as principal
underwriter of shares of the Fund for sale to the public;
WHEREAS, the Trustees of the Company have determined to adopt this
Distribution Plan (the "Plan") on behalf of the Fund, in accordance with the
requirements of the Investment Company Act of 1940, as amended (the "Act") and
have determined that there is a reasonable likelihood that the Plan will benefit
the Fund and its shareholders.
NOW, THEREFORE, the Fund hereby adopts the Plan on the following terms and
conditions:
(1) The Fund shall reimburse the Distributor or the Adviser, at the end of each
month, up to a maximum on an annual basis of 0.25% of the average daily
value of the net assets of the Fund, subject to any applicable restrictions
imposed by rules of the National Association of Securities Dealers, Inc.,
for distribution expenditures incurred by the Distributor or the Adviser in
connection with the sale and promotion of the Fund and the furnishing of
services to shareholders of the Fund. Such expenditures shall consist of:
(i) commissions to sales personnel for selling shares of the Fund; (ii)
compensation, sales incentives and payments to sales, marketing and service
personnel; (iii) payments to broker-dealers and other financial
institutions which have entered into agreements with the Distributor in the
form of the Dealer Agreement for National Affiliated Investment Companies
for services rendered in connection with the sale and distribution of
shares of the Fund; (iv) payment of expenses incurred in sales and
promotional activities, including advertising expenditures related to the
Fund; (v) the costs of preparing and distributing promotional materials;
(vi) the cost of printing the Fund's Prospectus and Statement of Additional
Information for distribution to potential investors; and (vii) such other
similar services that the Trustees of the Company determine are reasonably
calculated to result in sales of shares of the Fund; provided, however,
that a portion of such amount paid to the Distributor, which portion shall
be equal to or less than 0.25%
annually of the average daily net assets of the Fund shares, may be paid
for reimbursing the costs of providing services to shareholders, including
assistance in connection with inquiries related to shareholder accounts
(the "Service Fee").
Amounts paid or payable by the Fund under this Plan or any agreement with
any person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall, given
all surrounding circumstances, represent charges within the range of what would
have been negotiated at arm's-length as payment for the specific sales or
promotional services and activities to be financed hereunder and any related
agreement, as determined by the Trustees, in the exercise of reasonable business
judgment, in light of fiduciary duties under state law and Sections 36(a) and
(b) of the Act and based upon appropriate business estimated and projections.
(2) At least quarterly in each year the Plan remains in effect, the Fund's
Principal Financial Officer or Treasurer, or such other person authorized
to direct the disposition of monies paid or payable by the Fund, shall
prepare and furnish to the Trustees for their review, and the Trustees
shall review a written report complying with the requirements of Rule 12b-1
under the Act regarding the amounts expended under the Plan and the
purposes for which such expenditures were made.
(3) This Plan shall not take effect until it, together with any related
agreements, have been approved by a vote of at least a majority of the
Trustees, as well as a vote of at least a majority of the Trustees who are
not interested persons (as defined in the Act) of the Fund and who have no
direct or indirect financial interest in the operation of the Plan or in
any related agreements (the "Disinterested Trustees"), cast in person at a
meeting called for the purpose of voting on the Plan or any related
agreement, and the Plan shall not take effect with respect to the Fund
until it has been approved by a vote of at least a majority of the
outstanding voting securities (as defined in the Act) of the Fund.
(4) This Plan shall remain in effect for one year from the date of its
execution and may be continued thereafter if specifically approved at least
annually by a vote of at least a majority of the Trustees, as well as a
majority of the Disinterested Trustees. This Plan may be amended at any
time, provided that (a) the Plan may not be amended to increase materially
the amount of the distribution expenses provided in Paragraph 1 hereof
(including the Service Fee) without the approval of at least a majority of
the outstanding voting securities (as defined in the Act) of the Fund and
(b) all material amendments to this Plan must be approved by a vote of the
Trustees and the Disinterested Trustees cast in person at a meeting called
for the purpose of such vote.
(5) While this Plan is in effect, the selection and nomination of Trustees who
are not interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Disinterested Trustees then in office.
(6) Any related agreement shall be in writing and shall provide that (a) such
agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of
the Fund on not more than 60 days' written notice to the other party to the
agreement, and (b) such agreement shall terminate automatically in the
event of its assignment.
(7) This Plan may be terminated at any time by a vote of a majority of the
Disinterested Trustees or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Fund. In the event this Plan is
terminated or otherwise discontinued, no further payments hereunder will be
made by the Plan.
(8) The Fund shall preserve copies of this Plan and any related agreements and
all reports made pursuant to paragraph 2 hereof, and any other information,
estimates, projections and other materials that serve as a basis therefor,
considered by the Trustees, for a period of not less than six years from
the date of this Plan, the agreement or report, as the case may be, the
first two years in an easily accessible place.
Adopted as of the ___ day of October, 2001.