Exhibit (e)
DISTRIBUTION AGREEMENT
This Agreement made as of September 26, 2003 by and between The
Watchdog Fund Trust (the "Trust"), a Delaware business trust, and Ultimus Fund
Distributors, LLC, an Ohio limited liability company ("Distributor").
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, Distributor is a broker-dealer registered with the Securities
and Exchange Commission and a member of the National Association of Securities
Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust and Distributor are desirous of entering into an
agreement providing for the distribution by Distributor of shares of beneficial
interest (the "Shares") of each series of shares of the Trust listed on Schedule
A attached hereto (the "Series"), as such Schedule A may be amended from time to
time;
NOW, THEREFORE, in consideration of the premises and agreements of the
parties contained herein, the parties agree as follows:
1. Appointment.
The Trust hereby appoints Distributor as its exclusive agent for the
distribution of the Shares, and Distributor 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 its sole
discretion, it deems such action to be desirable.
2. Sale and Repurchase of Shares.
(a) Distributor will have the right, as agent for the Trust, to enter into
dealer agreements with responsible investment dealers, and to sell Shares
to such investment dealers against orders therefor at the public offering
price (as defined in subparagraph 2(d) hereof) stated in the Trust's
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
Distributor has a dealer agreement, Distributor will promptly cause such
order to be filled by the Trust.
(b) Distributor will also have the right, as agent for the Trust, to sell
such Shares to the public against orders therefor at the public offering
price.
(c) Distributor will also have the right to take, as agent for the Trust, all
actions which, in Distributor's reasonable judgment, are necessary to
carry into effect the distribution of the Shares.
(d) The public offering price for the Shares of each Series shall be the
respective net asset value of the Shares of that Series then in effect,
plus any applicable sales charge determined in the manner set forth in
the Registration Statement or as permitted by the Act and the rules and
regulations of the Securities and Exchange Commission promulgated
thereunder. In no event shall any applicable sales charge exceed the
maximum sales charge permitted by the Rules of the NASD.
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(e) The net asset value of the Shares of each Series shall be determined in
the manner provided in the Registration Statement, and when determined
shall be applicable to transactions as provided for in the Registration
Statement. The net asset value of the Shares of each Series shall be
calculated by the Trust or by another entity on behalf of the Trust.
Distributor shall have no duty to inquire into or liability for the
accuracy of the net asset value per Share as calculated.
(f) On every sale, the Trust 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 Distributor shall have received an order for
the purchase of the Shares.
(g) Upon receipt of purchase instructions, Distributor will transmit such
instructions to the Trust or its transfer agent for registration of the
Shares purchased.
(h) Nothing in this Agreement shall prevent Distributor or any affiliated
person (as defined in the Act) of Distributor from acting as distributor
for any other person, firm or corporation (including other investment
companies) or in any way limit or restrict Distributor 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 Distributor expressly represents
that it will undertake no activities which, in its reasonable judgment,
will adversely affect the performance of its obligations to the Trust
under this Agreement.
(i) Distributor, as agent of and for the account of the Trust, may repurchase
the Shares at such prices and upon such terms and conditions as shall be
specified in the Registration Statement.
3. Sale of Shares by the Trust.
The Trust 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.
4. Basis of Sale of Shares.
Distributor does not agree to sell any specific number of Shares.
Distributor, as agent for the Trust, undertakes to sell Shares on a best
efforts basis only against orders therefor.
5. Rules of NASD, etc.
(a) Distributor will conform to the Rules of the NASD and the securities laws
of any jurisdiction in which it sells, directly or indirectly, any
Shares.
(b) Distributor will require each dealer with whom Distributor 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 Distributor nor any such dealers shall withhold the
placing of purchase orders so as to make a profit thereby.
(c) Distributor agrees to furnish to the Trust 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 the Trust 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) Distributor, 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.
(e) Distributor 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 Trust 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 by the Trust to Distributor in reasonable
quantities upon request.
6. Records to be supplied by Trust.
The Trust shall furnish to Distributor copies of all information, financial
statements and other papers which Distributor 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 Distributor, of all
financial statements prepared for the Trust by independent public accountants.
7. Fees and Expenses.
For performing its services under this Agreement, Distributor will receive a
fee from the Trust or its investment adviser in accordance with agreements
between them as permitted by applicable laws, including the Act and rules and
regulations promulgated thereunder. The fee is $6,000 per annum, and shall be
paid on a monthly basis. The first monthly fee is due in the month following
the date that the Trust commences investment operations.The Trust or its
investment adviser shall promptly reimburse Distributor for any expenses that
are to be paid by the Trust in accordance with the following paragraph.
In the performance of its obligations under this Agreement, Distributor will pay
only the costs incurred in qualifying as a broker or dealer under state and
federal laws and in establishing and maintaining its relationships with the
dealers selling the Shares. All other costs in connection with the offering of
the Shares will be paid by the Trust or its investment adviser in accordance
with agreements between them as permitted by applicable laws, including the Act
and rules and regulations promulgated thereunder. These costs include, but are
not limited to, licensing fees, filing fees (including NASD), travel and such
other expenses as may be incurred by Distributor on behalf of the Trust. The
Distributor shall not be entitled to reimbursement of any expenses that may be
incurred by it unless those expenses were approved by the Trust in advance of
their incurrence.
8. Indemnification of Trust.
Distributor agrees to indemnify and hold harmless the Trust 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) and reasonable
attorneys' fees 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 Distributor or any
agent or employee of Distributor or any other person for whose acts
Distributor is responsible, unless such statement or omission was made in
reliance upon written information furnished by the Trust. Distributor
likewise agrees to indemnify and hold harmless the Trust 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 Distributor'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 Distributor will advance
attorneys' fees or other expenses incurred by any such person in defending a
proceeding, upon the undertaking by or on behalf of such person to repay the
advance if it is ultimately determined that such person is not entitled to
indemnification. 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 Distributor's consent. The foregoing rights
of indemnification shall be in addition to any other rights to which the
Trust or each such person may be entitled as a matter of law.
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9. Indemnification of Distributor.
The Trust agrees to indemnify and hold harmless Distributor and each person
who has been, is, or may hereafter be a director, officer, employee,
shareholder or control person of Distributor 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, except a loss resulting from willful misfeasance, bad faith or
negligence, including clerical errors and mechanical failures, on the part of
any of such persons in the performance of Distributor's duties or from the
reckless disregard by any of such persons of Distributor's obligations and
duties under this Agreement, for all of which exceptions Distributor shall be
liable to the Trust. The Trust will advance attorneys' fees or other expenses
incurred by any such person in defending a proceeding, upon the undertaking
by or on behalf of such person to repay the advance if it is ultimately
determined that such person is not entitled to indemnification.
In order that the indemnification provisions contained in this Paragraph 9
shall apply, it is understood that if in any case the Trust may be asked to
indemnify Distributor or any other person or hold Distributor or any other
person harmless, the Trust shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that Distributor will use all reasonable care to identify and
notify the Trust promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Trust. The Trust shall have the option to defend Distributor and any such
person against any claim which may be the subject of this indemnification,
and in the event that the Trust so elects it will so notify Distributor, and
thereupon the Trust shall take over complete defense of the claim, and
neither Distributor nor any such person shall in such situation initiate
further legal or other expenses for which it shall seek indemnification under
this Paragraph 9. Distributor shall in no case confess any claim or make any
compromise in any case in which the Trust will be asked to indemnify
Distributor or any such person except with the Trust's written consent.
Notwithstanding any other provision of this Agreement, Distributor shall be
entitled to receive and act upon advice of counsel (who may be counsel for
the Trust 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.
10. Representations of the Parties.
(a) The Trust certifies to Distributor that: (1) as of the date of the execution
of this Agreement, each Series that is in existence as of such date has
authorized unlimited shares, and (2) this Agreement has been duly authorized by
the Trust and, when executed and delivered by the Trust, will constitute a
legal, valid and binding obligation of the Trust, enforceable against the Trust
in accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the rights and
remedies of creditors and secured parties.
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(b) Distributor represents and warrants that: (1) the various procedures and
systems which Distributor has implemented with regard to safeguarding
from loss or damage attributable to fire, theft, or any other cause the
records and other data of the Trust and Distributor's records, data,
equipment facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes
therein from time to time as are required for the secure performance of
its obligations hereunder, and (2) this Agreement has been duly
authorized by Distributor and, when executed and delivered by
Distributor, will constitute a legal, valid and binding obligation of
Distributor, enforceable against Distributor in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting the rights and remedies of
creditors and secured parties.
11. Termination and Amendment of this Agreement.
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 (i) by Distributor, (ii) either by action of
the Board of Trustees of the Trust or at a meeting of the Shareholders of
the Trust by the affirmative vote of a majority of the outstanding Shares,
and (iii) by a majority of the Trustees of the Trust who are not interested
persons of the Trust or of Distributor by vote cast in person at a meeting
called for the purpose of voting on such approval.
Either the Trust or Distributor 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.
12. Effective Period of this Agreement.
This Agreement shall take effect upon its execution and shall remain in full
force and effect for a period of one (1) year from the date of its execution
(unless terminated automatically as set forth in Section 11), and from year
to year thereafter, subject to annual approval (i) by Distributor, (ii) by
the Board of Trustees of the Trust or a vote of a majority of the
outstanding Shares, and (iii) by a majority of the Trustees of the Trust who
are not interested persons of the Trust or of Distributor by vote cast in
person at a meeting called for the purpose of voting on such approval.
13. Successor Investment Company.
Unless this Agreement has been terminated in accordance with Paragraph 11,
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.
14. Limitation of Liability.
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 bind only the trust
property of the Trust. The execution and delivery of this Agreement have
been authorized by the Trustees of the Trust and signed by an officer of the
Trust, 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 Trust.
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15. Severability.
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.
16. Questions of Interpretation.
(a) This Agreement shall be governed by the laws of the State of Ohio.
(b) 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.
17. Notices.
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
Trust'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 the
Trust for this purpose shall be 00 Xxxx 00xx Xxxxxx, Xxxxx 0, Xxx Xxxx, Xxx
Xxxx 00000, Attn: Xxxxxx Xxxxxxxx; and that the address of Distributor for
this purpose shall be 000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxx
00000, Attn: Xxxxxx X. Xxxxxx.
18. Execution
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.
IN WITNESS WHEREOF, the Trust and Distributor have each caused this
Agreement to be signed in duplicate on their behalf, all as of the day and
year first above written.
ATTEST: THE WATCHDOG FUND TRUST
By:
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Name: Xxxxxx Xxxxxxxx
Its: President
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ATTEST: ULTIMUS FUND DISTRIBUTORS, LLC
By:
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Name: Xxxxxx X. Xxxxxx
Its: President
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SCHEDULE A
TO THE DISTRIBUTION AGREEMENT BETWEEN
THE WATCHDOG FUND TRUST
AND
ULTIMUS FUND DISTRIBUTORS, LLC
FUND PORTFOLIOS
The Watchdog Fund
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