PRINCIPAL UNDERWRITER AGREEMENT
THIS AGREEMENT is made as of the 1st day of July, 2010, by and between the Dblaine Investment Trust, an open-end management investment company (the "Trust"), and First Dominion Capital Corp., a Virginia corporation (“FDCC”).
WHEREAS, FDCC is a broker-dealer registered with the Securities and Exchange Commission (the “Commission”) and a member of the Financial Industry Regulatory Authority (“FINRA”), formerly known as the National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust is registered as a diversified, open-end management investment company under the Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Trust is authorized to offer shares of beneficial interest (the “Shares”) in one or more separate series (each a “Fund” and together the “Funds”), each with one or more separate classes of Shares; and
WHEREAS, the Trust wishes to retain FDCC to provide statutory principal underwriting services to the Funds, all as more specifically described in this Agreement, and FDCC is willing to furnish such services; and
WHEREAS, the Board of Trustees of the Trust has approved such engagement:
NOW, THEREFORE, in consideration of the promises and agreements of the parties contained herein, and for good consideration, the receipt and sufficiency of which is acknowledged by both parties, the parties, intending to be legally bound, hereby agree as follows:
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1.
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Appointment.
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The Trust hereby engages FDCC as the Fund’s exclusive agent for the distribution of the Shares, and FDCC hereby accepts such appointment under the terms of this Agreement. While this Agreement is in force, the Trust shall not sell any Shares except on the terms set forth in this Agreement. Notwithstanding any other provision hereof, the Trust may terminate, suspend or withdraw the offering of Shares whenever, in each entity's sole discretion, it deems such action to be desirable.
FDCC shall perform the services set forth in this Agreement and as further set forth in Schedule A to this Agreement. Schedule A to this Agreement may be amended from time to time by written agreement of the parties.
2. Sale and Repurchase of Shares.
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(a)
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FDCC will have the right, as exclusive agent for the Funds, to enter into dealer agreements with responsible investment brokers and dealers, and to sell Shares to such investment dealers against orders therefore at the public offering price (as defined in subparagraph 2(d) hereof) stated in each Fund's currently effective Registration Statement on Form N-1A under the Act and the Securities Act of 1933, as amended, including the then current prospectus and statement of additional information (the "Registration Statement"). Upon receipt of an order to purchase Shares from a dealer with whom FDCC has a dealer agreement, FDCC will promptly cause such order to be filled by the appropriate Fund.
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(b)
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FDCC will also have the right, as exclusive agent for the Funds, to sell such Shares to the public against orders therefor at the public offering price.
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(c)
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FDCC will also have the right to take, as exclusive agent for the Funds, all actions which, in FDCC's reasonable judgment, are necessary to carry into effect the distribution of the Shares.
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(d)
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The public offering price for the Shares of each Fund shall be the respective net asset value of the Shares of that Fund then in effect, plus any applicable sales charge determined in the manner set forth in the Fund's currently applicable Registration Statement or as permitted by the Act and the rules and regulations of the Commission promulgated thereunder. In no event shall any applicable sales charge exceed the maximum sales charge permitted by the Rules of the FINRA Rulebook.
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(e)
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The net asset value of the Shares of each Fund shall be determined in the manner provided in the Fund's currently applicable Registration Statement, and when determined shall be applicable to transactions as provided for in the Fund's Registration Statement. The net asset value of the Shares of each Fund shall be calculated by the applicable Fund or its authorized designee on behalf of the Fund. FDCC shall have no duty to inquire into or liability for the accuracy of the net asset value per Share as calculated.
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(f)
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On every sale, the applicable Fund shall receive the applicable net asset value of the Shares promptly, but in no event later than the third business day following the date on which FDCC shall have received an order for the purchase of the Shares.
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(g)
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Upon receipt of purchase instructions, FDCC will transmit such instructions to the applicable Fund or its authorized transfer agent for registration of the Shares purchased.
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(h)
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Nothing in this Agreement shall prevent FDCC or any affiliated person (as defined in the Act) of FDCC from acting as FDCC or distributor for any other person, firm or corporation (including other investment companies) or in any way limit or restrict FDCC or any such affiliated person from buying, selling or trading any securities for its or their own account or for the accounts of others from whom it or they may be acting; provided, however, that FDCC expressly represents that it will undertake no activities which, in its reasonable judgment, will adversely affect the performance of its obligations to the Funds under this Agreement.
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(i)
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FDCC, as exclusive agent of and for the account of the Funds, shall repurchase the Shares at such prices and upon such terms and conditions as shall be specified in the Fund's currently applicable Registration Statement.
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3.
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Sale of Shares by the Fund.
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Each Fund reserves the right to issue any Shares at any time directly to the holders of Shares ("Shareholders"), to sell Shares to its Shareholders or to other persons at not less than net asset value and to issue Shares in exchange for substantially all the assets of any corporation or trust or for the shares of any corporation or trust.
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4.
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Basis of Sale of Shares.
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FDCC does not agree to sell any specific number of Shares. FDCC, as exclusive agent for the Funds, undertakes to sell Shares on a best efforts basis only against orders therefor.
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5.
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Rules of FINRA, etc.
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(a)
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FDCC will conform its activities to the Rules of FINRA and the securities laws of the Commission and any jurisdiction in which it sells, directly or indirectly, any Shares.
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(b)
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FDCC will require each dealer with whom FDCC has a dealer agreement to conform to the applicable provisions hereof and the Registration Statement with respect to the public offering price of the Shares, and neither FDCC nor any such dealers shall withhold the placing of purchase orders so as to make a profit thereby.
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(c)
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The Trust agrees to furnish to FDCC sufficient copies of any agreements, plans or other materials it intends to use in connection with any sales of Shares in reasonably adequate time for FDCC, on behalf of any applicable Fund, to file and clear them with the proper authorities before they are put in use, and not to use them until so filed and cleared.
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(d)
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FDCC, at its own expense, will qualify as dealer or broker, or otherwise, under all applicable state or federal laws required in order that Shares may be sold in such states as may be mutually agreed upon by the parties.
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(e)
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FDCC shall not make, or permit any representative, broker or dealer to make, in connection with any sale or solicitation of a sale of the Shares, any representations concerning the Shares except those contained in the then current prospectus and statement of additional information covering the Shares and in printed information approved by the Funds as information supplemental to such prospectus and statement of additional information. Copies of the then effective prospectus and statement of additional information and any such printed supplemental information will be supplied to FDCC in reasonable quantities upon request.
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6.
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Records to be Supplied by the Trust
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The Trust shall furnish to FDCC copies of all information, financial statements and other papers which FDCC may reasonably request for use in connection with the distribution of the Shares, and this shall include, but shall not be limited to, one certified copy, upon request by FDCC, of all financial statements prepared for the Funds by independent public accountants.
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7.
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Fees and Expenses.
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(a)
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FDCC is authorized to collect the gross proceeds derived from the sale of the Shares, remit the net asset value thereof to the Funds upon receipt of the proceeds and pay to selling brokers/dealers the applicable sales charge (if any), less any retainage as set forth in the applicable Fund's current prospectus.
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(b)
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FDCC may receive from each Fund a distribution fee and/or service fee at the rates under terms of and conditions of any distribution plans (“Plans”) adopted by each class of a Fund, as such Plans are in effect from time to time, and distribute those fees to selling broker/dealers, pursuant to applicable agreements relating to such fees. FDCC expressly acknowledges and agrees that the uses and expenditures of any and all fees relating to the Plans are subject to any and all limitations and directives for the use of such fees as the Trust’s Board of Trustees shall impose. The Trust may enter into an agreement with any financial intermediary directly, regardless of whether FDCC is also a party to such agreement, pursuant to which the Trust compensates the financial intermediary with fees payable pursuant to the Plans, and FDCC shall make such payments of of Plan fees as is required under such agreements. FDCC shall receive fees payable under the Plans only upon the express written consent of the Trust's Board of Trustees.
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(c)
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FDCC shall reallow any or all of the sales charge, distribution fee and service fee that it has received under this Agreement to a financial intermediary as it may from time to time determine in accordance with a schedule set forth in the Registration Statement of the Fund or as otherwise negotiated by FDCC. Payment of any sales charge shall be the sole obligation of FDCC. Notwithstanding the foregoing, FDCC may not reallow to any financial intermediary for shareholder services an amount in excess of 0.25% of the average annual net asset value of the shares with respect to which said intermediary provides shareholder services
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(d)
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FDCC may from time to time employ or associate with such person or persons as may be appropriate to assist FDCC in the performance of this Agreement. Such person or persons may be officers and employees who are employed or designated as officers by FDCC, the Fund, and/or affiliated entities of the Funds. To the extent that FDCC employs such persons, FDCC shall pay the compensation of such person or persons for such employment, and no obligation will be incurred by or on behalf of the Fund in such respect. Persons who become associated with FDCC as registered representatives or in like fashion shall not be compensated by FDCC other than pursuant to a separate agreement, if any.
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8.
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Indemnification of the Funds.
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FDCC agrees to indemnify and hold harmless the Trust and the Funds and each person who has been, is, or may hereafter be a trustee, officer, employee, shareholder or control person of the Trust against any loss, damage or expense (including the reasonable costs of investigation) reasonably incurred by any of them in connection with any claim or in connection with any action, suit or proceeding to which any of them may be a party, which arises out of or is alleged to arise out of or is based upon any untrue statement or alleged untrue statement of a material fact, or the omission or alleged omission to state a material fact necessary to make the statements not misleading, on the part of FDCC or any agent or employee of FDCC or any other person for whose acts FDCC is responsible, unless such statement or omission was made in reliance upon written information furnished by the Fund. FDCC likewise agrees to indemnify and hold harmless each Fund and each such person in connection with any claim or in connection with any action, suit or proceeding which arises out of or is alleged to arise out of FDCC's failure to exercise reasonable care and diligence with respect to its services, if any, rendered in connection with investment, reinvestment, automatic withdrawal and other plans for Shares. The term "expenses" for purposes of this and the next paragraph includes amounts paid in satisfaction of judgments or in settlements which are made with FDCC's consent. The foregoing rights of indemnification shall be in addition to any other rights to which the Funds or each such person may be entitled as a matter of law.
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9.
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Indemnification of FDCC.
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Each Fund agrees to indemnify and hold harmless FDCC and each person who has been, is, or may hereafter be a director, officer, employee, shareholder or control person of FDCC against any loss, damage or expense (including the reasonable costs of investigation) reasonably incurred by any of them in connection with the matters to which this Agreement relates, including clerical errors and mechanical failures, except a loss resulting from willful misfeasance, bad faith or negligence, on the part of any of such persons in the performance of FDCC's duties or from the reckless disregard by any of such persons of FDCC's obligations and duties under this Agreement, for all of which exceptions FDCC shall be liable to each Fund.
In order that the indemnification provisions contained in this Paragraph 9 shall apply, it is understood that if in any case a Fund may be asked to indemnify FDCC or any other person or hold FDCC or any other person harmless, such Fund shall be fully and promptly advised of all pertinent facts concerning the situation in question, and it is further understood that FDCC will use all reasonable care to identify and notify a Fund promptly concerning any situation which presents or appears likely to present the probability of such a claim for indemnification against a Fund. The Funds shall have the option to defend FDCC and any such person against any claim which may be the subject of this indemnification, and in the event that either party so elects, it will so notify FDCC, and thereupon the Trust shall take over complete defense of the claim, and neither FDCC nor any such person shall in such situation initiate further legal or other expenses for which it shall seek indemnification under this Paragraph 9. FDCC shall in no case confess any claim or make any compromise in any case in which a Fund will be asked to indemnify FDCC or any such person except with the appropriate Fund's written consent.
Notwithstanding any other provision of this Agreement, FDCC shall be entitled to receive and act upon advice of counsel (who may be counsel for the Funds or its own counsel) and shall be without liability for any action reasonably taken or thing reasonably done pursuant to such advice, provided that such action is not in violation of applicable federal or state laws or regulations.
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10.
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Termination and Amendment of this Agreement.
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This Agreement shall automatically terminate, without the payment of any penalty, in the event of its assignment. This Agreement may be amended only if such amendment is approved by the parties hereto and in a manner consistent with applicable law.
Either the Trust or FDCC may at any time terminate this Agreement on sixty (60) days' written notice delivered or mailed by registered mail, postage prepaid, to the other party.
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11.
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Effective Period of this Agreement.
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This Agreement shall take effect on the date referenced above, and shall remain in full force and effect until for a period of two (2) years thereafter (unless terminated as set forth in Paragraph 10), and shall continue from year to year thereafter, subject to annual approval as required by the Act.
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12.
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New Funds.
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The terms and provisions of this Agreement shall become automatically applicable to any additional Funds of the Trust established during the initial or renewal term of this Agreement.
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13.
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Successor Investment Fund.
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Unless this Agreement has been terminated in accordance with Paragraph 10, the terms and provisions of this Agreement shall become automatically applicable to any investment company which is a successor to the Trust as a result of reorganization, recapitalization or change of domicile.
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14.
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Limitation of Liability.
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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 Funds, personally, but bind only the trust property of the Funds. The execution and delivery of this Agreement have been authorized by the Trust and signed by an officer of each Fund, acting as such, and neither such authorization by such 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 any of them personally, but shall bind only the trust property of the Funds.
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15.
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Severability.
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In the event any provision of this Agreement is determined to be void or unenforceable, such determination shall not affect the remainder of this Agreement, which shall continue to be in force.
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16.
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Questions of Interpretation.
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(a)
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This Agreement shall be governed by the Act and the laws of the State of Virginia.
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(b)
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Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the Act shall be resolved by reference to such term or provision of the Act and to interpretation thereof, if any, by the United States courts or in the absence of any controlling decision of any such court, by rules, regulations or orders of the Securities and Exchange Commission issued pursuant to said Act. In addition, where the effect of a requirement of the Act, reflected in any provision of this Agreement is revised by rule, regulation or order of the Securities and Exchange Commission, such provision shall be deemed to incorporate the effect of such rule, regulation or order.
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17.
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Notices.
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Any notices under this Agreement shall be in writing, addressed and delivered or mailed postage paid to the other party, with a copy to the Fund’s counsel, at such address as such other party may designate for the receipt of such notice. Such notice will be effective upon receipt. Until further notice to the other party, it is agreed that the address of each party for this purpose shall be:
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(a)
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If to the Funds, to:
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0000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: President
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(b)
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If to FDCC, to:
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First Dominion Capital Corp.
0000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: President
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18.
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Execution.
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This Agreement may be executed by one or more counterparts, each of which shall be deemed an original, but all of which together will constitute one in the same instrument.
19. AML and Privacy.
FDCC represents that it is in compliance in all material respects, and will continue to so comply, with all applicable laws and regulations relating to guarding against terrorism and money laundering, and FDCC agrees to comply with the Trust’s anti-money laundering program to the extent applicable. FDCC also agrees to comply with the Trust’s privacy policies with respect to all information obtained pursuant to this Agreement.
20. Headings.
All Section headings contained in this Agreement are for convenience of reference only, do not form a part of this Agreement and will not affect in any way the meaning or interpretation of this Agreement. Words used herein, regardless of the number and gender specifically used, will be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine, or neuter, as the Agreement requires.
21. Entire Agreement.
This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, understandings and arrangements with respect to the subject matter hereof.
SIGNATURES
IN WITNESS WHEREOF, the Trust and FDCC have each caused this Agreement to be signed in duplicate on their behalf, all as of the day and year first above written.
By: /s/ Xxxxx Xxxxxxxx Date July 1, 2010
Print Name: Xxxxx Xxxxxxxx
Title: Chairman
FIRST DOMINION CAPITAL CORP.
By: /s/ Xxxx Xxxxx, III Date July 1, 2010
Print Name: Xxxx Xxxxx, III
Title: President
Schedule A
Services and Fees
I. Underwriter services include:
A. Preparation and execution of Underwriting, Selling Agreement, and Rule 12b-1 Distribution Plans.
• Monitoring accruals
• Monitoring expenses
• Disbursements for expenses and trail commissions
B. Provide Quarterly 12b-1 and/or Service Fee Reports to the Board of Trustees of the Trust for approval.
C. Review, recommend and submit sales materials to FINRA.
D. Initial FINRA Licensing and Transfers of Registered Representatives.
• U-4 Form and Fingerprint Submissions to FINRA
• Supplying Series 6, 7, 24 and 63 written study material
• Registration for Exam Preparation classes
• Renewals and Terminations of Representatives
E. Provide and regularly update written supervisory procedures and manuals for registered representatives.
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F.
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Ongoing compliance updates for representatives regarding sales practices, written correspondence and other communication with the public.
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G.
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Provide, monitor and ensure compliance with all FINRA Continuing Education Requirements for registered representatives.
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II. Fees for services:
$12,000 annually;
Underwriting commission on sale of Class A shares as set forth in the Funds' current prospectus.
